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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 2007
Commission File Number: 001-33356
Gafisa S.A.
(Translation of registrant's name into English)
Av. Nacoes Unidas No. 4777, 9th floor
Sao Paulo, SP, 05477-000
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F |X| Form 40-F |_|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
Yes |_| No |X|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Yes |_| No |X|
Indicate by check mark whether by furnishing the information contained in this
Form, the Registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes |_| No |X|
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
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Gafisa S.A.
TABLE OF CONTENTS
Item
1 Communication dated November 07, 2007, regarding the earning release of
3Q07 e 9M07 results (long version).
2 Communication dated November 07, 2007, regarding the earning release of
3Q07 e 9M07 results (short version).
2
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Gafisa Reports Strong Third Quarter and Nine Month Results
--- 3Q07 Launches Increase 119% to R$426 million and Pre-sales Increase 56% to
R$367 million ---
--- Land Bank Grows 44% from Previous Quarter to R$8.9 billion ---
--- Company Updates 2007 Expectations for Launches and Provides 2008 Outlook ---
Sao Paulo, November 7, 2007 - Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), Brazil's
leading diversified national homebuilder, today reported its financial results
for the third quarter ended September 30, 2007 (3Q07) and nine months ended
September 30, 2007 (9M07). The following financial and operating information,
unless otherwise indicated, was prepared and presented in accordance with
Brazilian GAAP (BR GAAP) and in Brazilian Reais (R$). Additionally, financial
statements and operating information consolidate the numbers for Gafisa and its
subsidiaries, and refer to Gafisa's stake (or participation) in its
developments.
Commenting on results, Wilson Amaral, chief executive officer of Gafisa S.A.
said, "We continue to see robust growth in the Brazilian housing industry and
strong prospects for accelerated growth in the future driven by increased access
to financing, especially in the lower income population segments. Through Fit
Residencial and Bairro Novo, we are now creating the conditions to lead the
housing industry in serving the lower income segment of the population which we
believe will fuel long term-growth in the industry. And, while implementing
these programs, we have continued to drive profitable growth across the
organization."
Amaral continued, "I am very pleased with our third quarter and year to date
financial and operating results. We are on track to meet our profitability
targets and expect to exceed our earlier outlook for launches by year end 2007.
We also expect significant growth in launches during 2008. Pre-sales, a strong
indicator of Gafisa's ability to meet market demand, remain strong with year to
date growth of 56%, reaching R$964 million, while EBITDA increased 77% during
the same period."
IR Contact
Email: ir@gafisa.com.br
Tel: +55 (11) 3025-9297
IR Website:
www.gafisa.com.br/ir
3Q07 Earnings Results
Conference Call
Thursday, November 8, 2007
> In English
09:00am EST
12:00pm Brasilia Time
Phone: +1 (480) 293-1744
Code: 3797967
Replay: +1 (303) 590-3030
Code: 3797967
> In Portuguese
7:00am EST
10:00am Brasilia Time
Phone: +55 (11) 2188-0188
Code: Gafisa
Replay: +55 (11) 2188-0188
Code: Gafisa
Operating & Financial Highlights for the 3Q07
o Consolidated launches totaled R$426 million in 3Q07, a 119% increase over
3Q06.
o Pre-sales were R$367 million in 3Q07, a 56% increase over 3Q06.
o Net operating revenues, recognized by the Percentage of Completion ("PoC")
method, rose 91% to R$309 million from R$162 million in 3Q06.
o 3Q07 EBITDA reached R$48 million (15.5% EBITDA margin), a 61% increase
compared to the R$30 million 3Q06 EBITDA (18.5% EBITDA margin). 9M07
EBITDA reached R$122 million (15.3% EBITDA margin) vs R$69 million (16.3%
EBITDA margin) in the same period in 2006.
o Net Income was R$31 million (10% net margin), an increase of 12% compared
with R$28 million in 3Q06 (17% net margin). 3Q07 EPS were R$.24, versus
R$.27 in 3Q06. 9M07 adjusted net income was R$81 million (10.1% adjusted
net margin) and 9M06 was R$60.4 million (14.2% adjusted net margin).
o The Backlog of Results to be recognized under the PoC method reached R$465
million, a 60% growth over 3Q06. The Backlog Margin to be recognized
reached 38.5%.
o Gafisa joined 2 major indexes of Brazil's stock markets in addition to the
MSCI emerging markets index, the Bovespa Index (Ibovespa) and IBrX-50,
further strengthening our stock liquidity.
o Gafisa's land bank totaled R$8.9 billion, a 44% growth over 2Q07. Bairro
Novo contributed with R$468 million.
3
CEO Commentary and Corporate Highlights for Fiscal 3Q07
As we near the end of 2007, I am pleased to reconfirm that we have put in place
the appropriate strategies for long term profitable growth and market
leadership. There are a number of important factors to be successful over the
long term and some significant barriers to entry including, the proven ability
to deliver the appropriate product to the consumer, a robust and geographically
diverse land bank and long term access to capital. The underlying macroeconomic
conditions are very favorable and we expect conditions to improve for long term
housing expansion.
Increasing access to mortgage financing is fueling growth. Overall savings
deposits, an important source of mortgage financing, increased 9.6% in the first
nine months of 2007 as compared to the same period in 2006. This translated into
an 81% increase in the amount of mortgages provided utilizing this source of
funding over the same period. At the same time commercial banks are offering
longer repayment terms and lower interest rates. Additionally, we are working
closely with banks to streamline access to financing for our clients and intend
to continue to play an important role in this process.
To date, we have created the infrastructure and teams to serve all segments of
the population. Our long-established products, complimented by the acquisition
of Alphaville earlier in the year, solidify our leadership position in serving
the high and mid-high end of the population with a diverse product offering. In
addition, we developed Fit Residencial to serve the low income market with
increased access to financing through programs established by the Caixa
Economica Federal (CEF) and commercial banks. We have already launched 3
projects in different geographies under the Fit brand. We also partnered with
Odebrecht, one of Brazil's strongest construction and engineering players to put
us in the best position to successfully develop the large scale housing and
community infrastructure required to meet the needs of the low affordable entry
level segment. We have already made substantial progress in this arena with a
dedicated team in place, and a highly strategic initial land bank, which made it
possible for us to accelerate the expected launch of our first project from the
first half of 2008 to the end of the fourth quarter 2007.
Our strategy not only addresses segment diversification, but also geographic
diversification. Gafisa's current land bank has grown to R$8.9 billion, 61% of
which is located outside of Sao Paulo and Rio, distributed over 118 different
sites. This land bank represents future developments in all our targeted
demographic segments. The Gafisa brand, reputation and diverse product offering
has helped attract excellent partners that complement us with local market
knowledge and access to high quality land. Our recent acquisition of Cipesa, a
leader in the Northeastern state of Alagoas is a strong example of the result of
a successful partnership.
While pre-sales is a strong current indicator of our ability to deliver an
appropriate product to our target consumers, it is our investment in human
capital that will assure our on-going ability to execute and deliver the most
appropriate products on the market. We have dedicated teams developing,
executing and selling the products that serve unique market segments. And,
through our trainee program, we are guaranteeing that we will have a steady flow
of expertise into the future. Our trainee program is among the top three largest
and most competitive across all industries in Brazil.
Finally, I am very pleased to say that we are exceeding our earlier expectations
in terms of launches and that our new initiatives, namely Fit and Bairro Novo,
are evolving as planned and will play an important role in the future of this
company. With this in mind, we are updating our guidance on launches and now
expect to deliver a potential sales value of R$1.9 billion for full year 2007
launches, and R$3 billion for 2008.
We intend to continue to fortify our leadership position as a diversified
homebuilder with a focus on long term profitable growth.
Wilson Amaral
CEO - Gafisa S.A.
4
Recent Developments
Bairro Novo's land bank reached R$468 million in potential sales value: The
Company now has a land bank of R$ 468 million and a professional management team
in place focused on developing, managing and building the large scale Affordable
Entry Level (AEL) projects in suburban areas. The company was inspired after the
Mexican affordable housing model and will develop large standardized
communities, complete with the necessary infrastructure. Given the quality of
the land bank and certain permits that were already in place, we now expect to
launch Bairro Novo's first project by the end of Q407 rather than in the first
half of 2008. This project will be in the city of Cotia, in the state of Sao
Paulo, in a 436 thousand square meter piece of land that will have a total of
around 2,300 units (Gafisa's stake is 50% of this). The project will be divided
into 5 launching phases and the first should bring a potential sales value of R$
15 million to Gafisa. Bairro Novo's first project will have an important role
for developing the company's future strategy since we will be able to test many
hypotheses regarding the product, the financing, and the marketing,
consolidating our knowledge on this new and highly promising market.
Acquisition of Cipesa expands Gafisa reach in Northeast: At the end of October,
Gafisa announced that it acquired a 70% stake in Cipesa, the leading homebuilder
in the state of Alagoas. This acquisition strengthens the Company's long-term
position in the North and Northeast and adds approximately R$1.1 billion in land
bank on a consolidated basis to Gafisa. The two companies have worked together
since 2006 and under the current partnership agreement plan to launch R$109 MM
of new developments by the end of 2007. Gafisa and Cipesa will create a new
company ("Cipesa Empreendimentos Imobiliarios") to be 70% owned by Gafisa and
30% owned by Cipesa, and this new entity will serve as the sole vehicle for
Gafisa and Cipesa to develop projects in the states of Alagoas and Sergipe.
Fit Residencial increases its national footprint: With a land bank of R$560
million in potential sales value, Fit Residencial is leveraging Gafisa's
existing national relationships and expanding its footprint throughout Brazil.
With the launch of Fit Coqueiro in Belem in the state of Para and Fit Citta in
Salvador in the state of Bahia, FIT is providing local Gafisa partners with an
entry strategy into the affordable entry level segment while building on
Gafisa's overall strategy of segment and geographic diversification and closing
deals with new partners.
Gafisa joins key Brazilian and emerging markets indices: In September Gafisa
joined the Bovespa Index (Ibovespa), the main indicator of the Brazilian stock
market's average performance and the IBrX-50, an index measuring the total
return on a theoretical portfolio composed of 50 stocks selected among BOVESPA's
most actively traded securities. Additionally, the Company is part of the MSCI
Emerging Markets Index which is a free float-adjusted market capitalization
index that is designed to measure equity market performance in the global
emerging markets. Through the inclusion on these indices, Gafisa's stock has
expanded opportunity for increased liquidity. Prior to joining the indices
Gafisa traded a daily average of R$38.1 million (or 1.3 million shares) and
after joining the indices it increased an average R$57.4 million (or 2.1 million
shares).
5
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Operating and Financial Highlights 3Q07 3Q06 Chg (%) 9M07 9M06 Chg (%)
----------- ----------- ------- ----------- ---------- --------
Project Launches (R$000) (% Gafisa) 425,727 193,984 119% 1,199,546 630,223 90%
Project Launches (R$000) (including partners stakes) 616,171 243,050 154% 1,639,964 777,270 111%
Project Launches (Units) (including partners stakes) 2,918 613 376% 7,479 2,349 218%
Average Project Launch Price (R$/sq.m) (100% without lots) 2,333 2,760 -15% 2,498 2,943 -15%
Pre-Sales (R$000) (% Gafisa) 366,912 235,337 56% 964,183 616,542 56%
Sales from current project launches (R$000) (% Gafisa) 270,512 155,501 74% 570,033 341,664 67%
Sales from inventory (R$000) (% Gafisa) 96,400 79,836 21% 394,150 274,878 43%
Pre-Sales (R$000) (including partners stakes) 503,053 271,981 85% 1,248,577 708,157 76%
Pre-Sales (Units) (including partners stakes) 1,962 896 119% 4,954 2,328 113%
Average Sales Price (R$/sq.m) (100% without lots) 3,028 2,769 9% 2,876 2,811 2%
Net Operating Revenues 308,555 161,542 91% 799,418 425,560 88%
Gross Profits 92,733 56,646 64% 240,774 130,695 84%
Gross Margin 30.1% 35.1% -5.01pp 30.1% 30.7% -0.59pp
EBITDA 47,849 29,807 61% 122,472 69,241 77%
EBITDA Margin 15.5% 18.5% -2.94pp 15.3% 16.3% -0.95pp
Extraordinary Expenses -- -- -- 30,174 29,176 3%
Adjusted Net Income 30,939 27,667 12% 80,696 60,436 34%
Adjusted Net Margin 10,0% 17,1% -7.1pp 10.1% 14.2% -4.11pp
Adjusted Earnings per Share 0.24 0.27 -11% 0.65 0.61 6%
Average number of shares, basic 129,258,353 103,111,609 25% 123,713,380 98,663,074 25%
Backlog of Revenues 1,209 666 82%
Backlog of Results 465 291 60%
Backlog Margin(1) 38.48% 43.67% -5.18pp
Net Debt (Cash) 4,455 (78,724) -106%
Cash 372,092 330,206 13%
Shareholders' Equity 1,493,361 809,802 84%
Total Assets 2,417,273 1,348,111 79%
Note: (1) In order to increase transparency and visibility of future earnings,
during the fourth quarter ended December 31st 2006, the Company changed the
accounting practice adopted with respect to the costs and earnings to be
recognized in our backlog.
6
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Project Launches and Pre-Sales
Gafisa's project launches increased 90%, from R$630 million in 9M06 to R$1,200
million in 9M07. Following our strategy of diversification into high-potential,
less explored markets, during 3Q07 Gafisa launched in Curitiba (in the state of
Parana), Belem (in the state of Para), and Maceio (in the state of Alagoas); Fit
Residencial launched in Salvador (in the state of Bahia) and in Belem (in the
state of Para); and AlphaVille launched in Sao Luis (in the state of Maranhao).
In 9M07, 51% of the launches were in new markets.
The decrease in the average price per square meter for the developments launched
during 3Q07 (R$2,333, compared to R$2,760 during the same period in 2006) is due
to entrance of Fit Residencial. Without Fit the the average price per square
meter for 3Q07 would be R$3,154 representing a growth of 14.3% compared to the
same period last year.
The tables below detail new projects launched in the third quarter and the first
9 months of 2007:
Table 1 - Launches 3Q07
Launching price (R$/sq.m) Launching (usable area - sq.m)
Launches (R$000) (% Gafisa) (100%) (100%)
------------------------------- --------------------------- ----------------------------------
Segments 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06
-------------- ------------------------------- --------------------------- ----------------------------------
HIG 143,634 47,432 203% 4,120 3,623 14% 34,864 16,364 113%
MHI 111,477 24,294 359% 2,732 2,850 -4% 62,587 8,523 634%
MID 43,444 157,452 -72% 2,788 2,563 9% 19,852 75,942 -74%
AEL (FIT) 44,988 -- NA 1,078 NA NA 76,819 -- NA
LOT 82,184 (35,194) -334% 140 NA NA 1,170,330 (122,740) 1054%
COM -- -- NA NA NA NA -- -- NA
-------------- ------------------------------- --------------------------- ----------------------------------
TOTAL 425,727 193,984 119% 2,333 2,760 -15% 1,364,452 (21,911) 6327%
-------------- ------------------------------- --------------------------- ----------------------------------
Table 2 - Launches by Region 3Q07
------------------------------- --------------------------- ----------------------------------
Geog. Region 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06
-------------- ------------------------------- ----------------------------------------------------------------
Sao Paulo 150,946 100,759 50% 4,120 2,521 63% 709,861 39,967 1676%
Rio de Janeiro 87,312 66,917 30% 2,750 3,178 -13% 329,573 24,785 1230%
New Markets 187,468 61,501 205% 1,850 2,736 -32% 325,018 36,077 801%
Novo Portinho NA -35,194 NA -- -- -- -- (122,740) --
-------------- ------------------------------- --------------------------- ----------------------------------
TOTAL 425,727 193,984 119% 2,333 2,760 -15% 1,364,452 (21,911) 6327%
-------------- ------------------------------- --------------------------- ----------------------------------
Table 3 - Launches YTD
Launching price (R$/sq.m) Launching (usable area - sq.m)
Launches (R$000) (% Gafisa) (100%) (100%)
--------------------------------- ---------------------------- ---------------------------------
Segments 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06
-------------- --------------------------------- ---------------------------- ---------------------------------
HIG 143,634 129,829 11% 4,120 3,712 11% 34,864 38,172 -9%
MHI 288,266 196,428 47% 2,984 3,241 -8% 144,174 83,641 72%
MID 585,395 257,165 128% 2,474 2,427 2% 300,888 124,046 143%
AEL 65,049 6,983 832% 1,175 1,808 -35% 90,208 3,862 2236%
LOT 117,202 7,109 1549% 155 265 -42% 1,395,599 89,260 1464%
COM -- 32,709 NA NA 5,169 NA -- 6,328 -100%
-------------- --------------------------------- ---------------------------- ---------------------------------
TOTAL 1,199,546 630,223 90% 2,498 2,943 -15% 1,965,732 345,309 469%
-------------- --------------------------------- ---------------------------- ---------------------------------
Table 4 - Launches by Region YTD
Geog. Region 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06
-------------- --------------------------------- ------------------------------- ---------------------------------
Sao Paulo 372,148 257,188 45% 2,734 2,988 -8% 820,310 101,227 710%
Rio de Janeiro 221,094 204,712 8% 2,962 3,482 -15% 390,823 70,640 453%
New Markets 606,303 203,517 198% 2,296 2,437 -6% 754,599 296,181 155%
Novo Portinho NA (35,194) NA NA NA NA (122,740)
-------------- --------------------------------- ------------------------------- ---------------------------------
TOTAL 1,199,546 630,223 90% 2,498 2,943 -15% 1,965,732 345,309 469%
-------------- --------------------------------- ------------------------------- ---------------------------------
7
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Pre-sales increased by 56% for Q307 to R$366.9 million from R$235.3 million at
Q306. For the 9M07 period increased 56% to R$964.2 compared to R$616.5 million
during the same period in 2006. We have been experiencing very high overall
sales velocity, even in the face of more intense competition, especially in the
more traditional markets such as Sao Paulo and Rio de Janeiro.
Our diversification strategy is showing strong results, as we continue to launch
and sell quickly in new markets as well. Our pre-sales in new markets increased
181%, and accounted for 44.9% of our total pre-sales in 3Q07.
In 3Q07, 58.6% of our pre-sales came from Gafisa's core business in the mid
(MID) and mid-high (MHI) segments, while 39.3% came from LOTS and high income
(HIG), affordable entry level (AEL) and commercial (COM) accounted for the
remaining 2,0%. The large growth in the HIG and LOT segments refers to the
launch of Supremo in the city of Sao Paulo and to the launches from AlphaVille.
The real estate market is benefiting from rising consumer confidence, decreasing
interest rates, expansion of loan terms and the strong inflow of commercial bank
mortgages and this is positively impacting our ability to sell our products.
The tables below set forth a detailed breakdown of our pre-sales for the third
quarter and the first nine months of 2007:
Table 5 - 3Q07 Pre-Sales by Segment
Sales price (R$/sq.m) Pre-Sales - usable area (sq.m)
Pre-Sales (R$000) (%Gafisa) (100%) (100%)
------------------------------- --------------------------- -------------------------------
Segments 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06
-------- ------------------------------- --------------------------- ------------------------------
HIG 60,422 14,000 332% 3,890 4,072 -4% 15,687 3,896 303%
MHI 129,862 71,349 82% 3,047 3,180 -4% 61,564 28,509 116%
MID 85,226 131,669 -35% 2,728 2,524 8% 40,137 56,607 -29%
AEL 4,783 4,546 5% 1,758 1,660 6% 2,857 2,738 4%
LOT 83,905 13,301 531% 1,316 734 79% 436,639 23,718 1741%
COM 2,713 472 475% 4,293 3,248 32% 759 207 267%
-------- ------------------------------- --------------------------- -----------------------------
TOTAL 366,912 235,337 56% 3,028 2,769 9% 557,642 115,675 382%
-------- ------------------------------- --------------------------- -----------------------------
Table 6 - 3Q07 - Pre-Sales by Region
Geog. Region 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06
-------------- ------------------------------- --------------------------- -------------------------------
Sao Paulo 134,098 112,758 19% 3,117 2,712 15% 48,151 43,508 11%
Rio de Janeiro 68,147 63,925 7% 3,143 3,136 0% 182,749 32,961 454%
New Markets 164,667 58,654 181% 2,850 2,560 11% 326,741 39,206 733%
-------------- ------------------------------- --------------------------- -------------------------------
TOTAL 366,912 235,337 56% 3,028 2,769 9% 557,642 115,675 382%
-------------- ------------------------------- --------------------------- -------------------------------
Table 7 - 2Q07 Pre-Sales by Launch Year
Launching year 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06 3Q07 3Q06 3Q07 x 3Q06
------------------ ------------------------------- --------------------------- -------------------------------
Launches from 2007 270,512 -- NA 2,974 -- NA 424,386 -- NA
Launches from 2006 48,863 155,501 -69% 3,110 2,640 18% 45,354 67,432 -33%
Launches from 2005 47,537 79,836 -40% 3,638 3,130 NA 87,902 48,243 NA
------------------ ------------------------------- --------------------------- -------------------------------
TOTAL 366,912 235,337 56% 3,028 2,769 9% 557,642 115,675 382%
------------------ ------------------------------- --------------------------- -------------------------------
Note: (1) For information about segmentation refer to the glossary in the end of
this report. (2) Fit Residencial recognizes sales only after the client has
received the final approval by Caixa Economica Federal.
Table 8 - 9M07 Pre-Sales by Segment
Sales price (R$/sq.m) Pre-Sales - usable area (sq.m)
Pre-Sales (R$000) (%Gafisa) (100%) (100%)
------------------------------- --------------------------- ---------------------------------
Segments 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06
------------------------------------------ --------------------------- ---------------------------------
HIG 106,700 79,028 35% 3,813 3,895 -2% 28,288 20,767 36%
MHI 240,896 231,110 4% 3,144 3,229 -3% 106,530 90,483 18%
MID 439,422 229,879 91% 2,614 2,380 10% 212,967 103,597 106%
AEL 20,604 29,188 -29% 1,909 1,481 29% 11,392 19,797 -42%
LOT 130,024 22,278 484% 264 713 -63% 705,786 45,974 1435%
COM 26,536 25,059 6% 5,076 4,733 7% 5,348 5,581 -4%
-------- ------------------------------------------------------------- ---------------------------------
TOTAL 964,183 616,542 56% 2,876 2,811 2% 1,070,311 286,199 274%
-------- ------------------------------- --------------------------- ---------------------------------
Table 9 - 9M07 - Pre-Sales by Region
Geog. Region 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06
------------------------------------------------------------------------------------------------------------------
Sao Paulo 369,128 339,096 9% 2,857 2,824 1% 151,428 129,961 17%
Rio de Janeiro 112,470 159,291 -29% 3,043 3,131 -3% 223,690 72,472 209%
New Markets 482,585 118,156 308% 2,840 2,414 18% 695,193 83,767 730%
------------------------------------------------------------------------------------------------------------------
TOTAL 964,183 616,542 56% 2,876 2,811 2% 1,070,311 286,199 274%
------------------------------------------------------------------------------------------------------------------
8
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Table 10 - 9M07 Pre-Sales by Launch Year
Launching year 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06 9M07 9M06 9M07 x 9M06
------------------ ------------------------------- --------------------------- ---------------------------------
Launches from 2007 570,033 -- NA 2,760 -- NA 661,730 -- NA
Launches from 2006 249,124 341,664 -27% 3,029 3,020 0% 142,001 131,594 8%
Launches from 2005 145,026 274,878 -47% 3,211 2,559 NA 266,580 154,605 72%
------------------------------- --------------------------- ---------------------------------
TOTAL 964,183 616,542 56% 2,876 2,811 2% 1,070,311 286,199 274%
=============================== =========================== =================================
Operations
Gafisa now has 93 projects under construction in 15 different states. With a
strong record of managing multiple construction sites spread over a wide
geographical area, we believe Gafisa is uniquely positioned to deliver on an
aggressive launch strategy.
Gafisa performs exceptionally well throughout all phases of our business cycle.
We have a proven track record of delivering high quality standards on projects
within budgeted construction costs and, in line with planned schedules. As the
most geographically diversified homebuilder in Brazil we have built the know-how
required to deliver quality projects in regions where challenges existed. For
example, we have taught local service providers how to deliver materials that
fit our quality standards. Furthermore, our integrated systems and solid
controls have also supported our ability to continue to manage numerous
construction sites all over the country in a high growth environment
Land Reserves
Consistent with our established land bank policies, the Company owns
approximately R$8.9 billion in its land bank composed of 118 different sites.
The land bank totals 17.3 million square meters, which is equivalent to 79,684
units.
We have added the land bank owned by Bairro Novo and Cipesa. Bairro Novos's land
bank totals R$468 million, which is equivalent to 0.7 million square meters, and
15,260 units. Cipesa's land bank totals R$1,098 million, which is equivalent to
1.572 million square meters, and 5,342 potential units.
In accordance with our land bank diversification strategy, at the end of the
quarter 61% of the consolidated land bank was outside of Rio de Janeiro and Sao
Paulo. Our land bank reflects our strategy of servicing all segments of the
homebuyer market. One of our goals going forward is to continue increasing Fit
Residencial and Bairro Novo's land banks aimed at the Affordable Entry Level
segment and the Low Affordable Entry Level segment, respectively.
The tables below show a detailed breakdown of our current land bank:
Table 11 - Lanbank Gafisa
Future Usable Potential Units 100% Potential Units % Gafisa
Sales % acquired Area -------------------------------------- --------------------------------------
(R$MM) through swap '000 sqm HIGH MID & MHI AEL COM & LOTS HIGH MID & MHI AEL COM & LOTS
--------------------------------- -------------------------------------- --------------------------------------
Sao Paulo 1,178 41.0% 338 687 1,838 -- 10 627 1,838 -- 10
Rio de Janeiro 605 86.2% 267 641 264 -- 274 494 230 -- 219
New Markets 3,402 70.1% 3,051 480 10,500 1,772 2,563 269 8,451 1,240 1,660
--------------------------------- -------------------------------------- --------------------------------------
Total 5,185 69.6% 3,656 1,808 12,602 1,772 2,847 1,390 10,519 1,240 1,890
================================= ====================================== ======================================
% of Total 10% 66% 9% 15% 7% 55% 7% 10%
====================================== ======================================
9
[GRAPHIC]
Table 12 - Land Bank FIT
Potential Potential
Future Sales % acquired Usable Area Units Units
(R$MM) through swap '000 sqm 100% % FIT
-----------------------------------------------------------------
Sao Paulo 116 0.0% 110 2,382 1,521
Rio de Janeiro -- 0.0% -- -- --
New Markets 444 17.5% 288 5,323 4,717
-----------------------------------------------------------------
Total 560 12.7% 399 7,705 6,238
=================================================================
Table 13 - Land Bank Alphaville (AUSA)
% of
landbank Potential Potential
Future Sales acquired Usable Area Units Units
(R$MM) through swap '000 sqm 100% % AUSA
-----------------------------------------------------------------
Sao Paulo 1,087 98.5% 5,946 16,076 9,472
Rio de Janeiro 131 100.0% 449 1,120 630
New Markets 1,430 95.2% 6,148 20,494 10,797
-----------------------------------------------------------------
Total 2,648 97.2% 12,543 37,690 20,899
=================================================================
Table 14 - Land Bank Bairro Novo (BN)
% of
landbank Potential Potential
Future Sales acquired Usable Area Units Units
(RMM) through swap '000 sqm 100% % BN
-----------------------------------------------------------------
Sao Paulo 75 0.0% 11 2,368 1,184
Rio de Janeiro 230 80.7% 395 7,492 3,746
New Markets 163 81.9% 258 5,400 2,700
-----------------------------------------------------------------
Total 468 66.1% 664 15,260 7,630
=================================================================
Table 15 - Total Land Bank
% of Potential
landbank Potential Units
Future Sales acquired Usable Area Units Company
(R$MM) through swap '000 sqm 100% stake
-----------------------------------------------------------------
Total 8,861 84.2% 17,261 79,684 49,805
=================================================================
3Q07 - Revenues
Total net operating revenue for the three months ending September 30, 2007 rose
91% to R$308.6 million from R$161.5 million during the same period of the
previous year. This growth was primarily due to the recognition of higher
pre-sales from previous periods.
Revenues for 9M07 reached R$799.4 million, a growth of 87.9% compared to the
same period last year.
Revenues for the industry are recognized based on actual cost versus total
budgeted costs of land and construction (Percentage of Completion method or PoC
method) and the pre-sales portfolio is recognized in future periods even if the
company has already completely pre-sold developments.
10
[GRAPHIC]
The table below presents detailed information of pre-sales and recognized
revenues by launch year:
Table 16 - Pre-sales x Recognized revenues
3Q07 3Q06
------------------------------------------------- -------------------------------------------------
Pre-Sales % of Total Revenues % of Revenues Pre-Sales % of Total Revenues % of Revenues
------------------------------------------------- -------------------------------------------------
Launched in 2007 270,512 73.7% 68,801 22.3%
Launched in 2006 48,863 13.3% 92,940 30.1% 155,501 66.1% 32,179 19.9%
Launched in 2005 23,282 6.3% 103,983 33.7% 45,775 19.5% 47,282 29.3%
Launched up to 2004 24,255 6.6% 42,829 13.9% 34,061 14.5% 82,081 50.8%
------------------------------------------------- -------------------------------------------------
TOTAL 366,912 100.0% 308,554 100.0% 235,337 100.0% 161,542 100.0%
================================================= =================================================
Table 17 - Pre-sales x Recognized revenues
9M07 9M06
------------------------------------------------- -------------------------------------------------
Pre-Sales % of Total Revenues % of Revenues Pre-Sales % of Total Revenues % of Revenues
------------------------------------------------- -------------------------------------------------
Launched in 2007 570,033 59.1% 84,866 10.6%
Launched in 2006 249,124 25.8% 230,010 28.8% 341,664 55.4% 50,347 11.8%
Launched in 2005 81,046 8.4% 333,063 41.7% 174,369 28.3% 106,623 25.1%
Launched up to 2004 63,980 6.6% 151,480 18.9% 100,509 16.3% 268,590 63.1%
------------------------------------------------- -------------------------------------------------
TOTAL 964,183 100.0% 799,419 100.0% 616,542 100.0% 425,560 100.0%
================================================= =================================================
3Q07 - Gross Profits
Gross profits for 3Q07 totaled R$92.7 million (R$240.8 million for 9M07), an
increase of 63.7% compared to the third quarter of 2006 (84.2% versus 9M06). The
gross margin for 3Q07 was 30.1% (30.1% for 9M07), 500 basis points (bps) lower
than the same period of 2006 (60bps less than 9M06).
It is important to mention that 3Q06 gross profits benefited from R$10 million
in additional revenue (6.2% of 3Q06 net revenues) that came from higher interest
inflows from accounts receivables.
3Q07 - Selling, General, and Administrative Expenses (SG&A)
Our aggressive growth strategy and investment in infrastructure for future
growth leads to higher G&A expenses. 3Q07 growth as compared to 3Q06, is due to
the consolidation of AlphaVille (R$4.8 million), and the ramp-up of Fit
Residencial (R$2.4 million). Additionally, bonus provisions (R$5.9 million),
which were previously accrued at year end and are part of the G&A expenses now
accrued on a quarterly basis.
It is more appropriate to track SG&A expenses with the company's launches, than
with revenues, as Gafisa expenses SG&A on a cash basis, and revenue recognition
follows the percentage of completion method.
As can be seen on the table below, we have gained productivity in terms of
selling expenses. We hope to dilute the G&A from our new initiatives soon, as
these initiatives begin to contribute to our consolidated business with the
revenues from their projects.
Table 18 - SG&A expenses
3Q07 3Q06
---------------
Selling Expenses 18,941 15,874
G&A Expenses 28,173 11,900
SG&A 47,114 27,774
9M07 9M06
----------------
Selling Expenses 48,277 35,586
G&A Expenses 74,453 28,522
SG&A 122,730 64,108
3Q07 3Q06
---------------
Selling Expenses / Launches 4.4% 8.2%
G&A Expenses / Launches 6.6% 6.1%
SG&A / Launches 11.1% 14.3%
9M07 9M06
----------------
Selling Expenses / Launches 4.0% 5.6%
G&A Expenses / Launches 6.2% 4.5%
SG&A / Launches 10.2% 10.2%
11
[GRAPHIC]
3Q07 - EBITDA
EBITDA for 3Q07 totaled R$47.8 million (R$122.5 million for the 9M07 period),
61% higher than the R$29.8 million in 3Q06 (77% higher than the R$ 69.2 million
in 3Q06). As a percentage of net revenues, EBITDA decreased from 18.5% in 3Q06
to 15.5% in the 3Q07 (15.3% in 9M07 versus 16.3% in 9M06).
As we recognize 100% of expenses as they are incurred, but use the PoC method to
recognize revenues, SG&A expense increases in advance of the revenues and has a
material impact on our current EBITDA. As previously discussed, our aggressive
growth strategy and investment in the requisite infrastructure for sustained
long term growth led to higher SG&A expenses. Please refer to the 4Q06 Earnings
Release for a detailed description of the SG&A accounting.
It is also important to mention that, starting in 2007, we are accruing our
bonus provision on a quarterly basis. During 2006 we provisioned the yearly
bonus fully in the last quarter, strongly impacting the quarter's EBITDA. The
impact in 2007 will be distributed in all four quarters, with an R$5.9 million
provision in 3Q07, which represents 1.9% of net revenues.
In order to make these impacts clearer, we have simulated what our EBITDA would
look like under certain scenarios:
Table 19 - % of Net Revenues Taken from EBITDA Margin from:
3Q07 9M07
-----------
Bonus Provision 1.9% 1.8%
Fit's EBITDA 0.9% 0.8%
Not deferring selling expenses 2.0% 1.4%
-----------
Total 4.8% 3.9%
===========
EBITDA Margin Without the Effect of:
3Q07 9M07
-----------
Bonus Provision 17.4% 17.1%
Fit's EBITDA 16.4% 16.1%
Not deferring selling expenses 17.5% 16.7%
-----------
Total 20.3% 19.3%
===========
The above simulation's intent is to illustrate the impact our strategy of
creating a start-up company to access the low-income market, as well as our
chosen accounting methods would have on our EBITDA. Nevertheless, our correct
EBITDA figures are the ones published on our financial statements.
3Q07 - Depreciation and Amortization
Depreciation and amortization in 3Q07 amounted to R$2.0 million, an increase of
116.3% compared to the R$0.9 million in 3Q06. In the 9M07 period, depreciation
and amortization amounted to R$12.6 million (of which R$7.5 million are from the
amortization of the goodwill generated from the AlphaVille acquisition), an
increase of 373.9% compared to the R$2.7 million in 9M06
In regards to the amortization of the goodwill generated from the AlphaVille
acquisition, it is important to mention that we used a linear calculation for
the 1Q07 and 2Q07 results. For 3Q07 and 4Q07 this figure will be equal to zero,
and from 1Q08 on we will amortize this goodwill through a progressive
exponential calculation following the EBIT, in the percentages described below:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
----------------------------------------------------------------------------------------
4.49% 6.28% 7.22% 10.11% 11.52% 14.02% 11.78% 11.67% 11.45% 11.46%
12
[GRAPHIC]
3Q07 - Financial Results
Net financial results totaled a negative R$ 3.4 million in 3Q07 (negative R$15.0
million for the 9M07 period) compared to a negative R$ 0.5 million in 3Q06
(negative R$3.4 million in 9M06). Financial expenses during 3Q07 totaled R$15
million in 3Q07 (9M07 totaled R$50.3 million), an increase of 7.5% over R$ 13.9
million in 3Q06 (R$44.2 million in 9M06). Financial income decreased from R$
13.4 million in 3Q06 (R$40.7 million in 9M06) to R$ 11.5 million in 3Q07 (R$35.3
million in 9M07), primarily due to the effect in cash and cash equivalents of
the lower interest rates.
3Q07 - Income Taxes
Net income taxes and social contribution for 3Q07 amounted to R$8.7 million
(R$7.9 million in 9M07) versus R$0.7 million in same period of last year (R$ 2.7
million in 9M06). The lower figures in 2006 were mainly because of tax credits.
3Q07 - Net Income and Earnings per Share
Net income for 3Q07 was R$30.9 million (10.0% of net revenues), R$3.2 million or
11.8% higher than the net income of R$27.7 million (17.1% of net revenues)
registered in the same period of 2006.
For the 9M07 figure, adjusted net income was R$80.7 million in 2007, versus
R$60.4 million in 2006, with 10.1% and 14.2% adjusted net margins, respectively.
Net earnings per share was R$0.24 in 3Q07 (R$0.65 for the 9M07 period) compared
to net earnings per share of R$0.27 in 3Q06 (R$0.61 for the 9M06 period). Basic
weighted average shares outstanding were 129 million in 3Q07 and 103 million in
3Q06.
Backlog of Revenues and Results
The backlog of results to be recognized under the PoC method reached R$465
million in 3Q07, R$175 million higher than the 3Q06 and R$46 million more than
2Q07.
The table below shows our revenues, costs and results to be recognized, as well
as the amount of the corresponding costs and the expected margin:
Table 20 - Revenues and results to be recognized (R$000)
(for the period end) 3Q07 2Q07 3Q06(1) 3Q07 x 2Q07 3Q07 x 3Q06
--------------------------------------------------- -------------------------------------------------------
Sales to be recognized--end of period 1,208.6 1,100.2 665.7 9.9% 81.6%
Cost of units sold to be recognized - end of period (743.5) (681.4) (375.0) 9.1% 98.3%
Backlog of Results to be recognized 465.2 418.8 290.7 11.07% 60.02%
Backlog Margin - yet to be recognized 38.5% 38.1% 43.7% 0.4 pp -5.2 pp
Note: (1) In order to increase transparency and visibility of future earnings,
during the fourth quarter ended December 31st 2006, the Company changed the
accounting practice adopted with respect to the costs and earnings to be
recognized in our backlog.
13
[GRAPHIC]
Balance Sheet
Cash and Cash Equivalents
On September 30 2007, cash and cash equivalents were equal to R$372 million, 25%
lower than June 30, 2007 R$496 million, and 13% higher than 3Q06's R$330
million.
Accounts Receivables
Accounts receivable increased 89% to R$2 billion in September 2007 when compared
to the R$1.1 billion figure of 3Q06, and 14% compared to the R$1.7 billion that
was registered in June 2007. In 3Q07, receivables of completed units
(post-completion receivables) reached R$304 million or 15% of the total accounts
receivables.
Table 21 - Accounts Receivables from Clients
Real estate development receivables: 3Q07 3Q06 2Q07 3Q07 x 3Q06 3Q07 x 2Q07
------------------------------------ -------------------------------------------------------------
Current 458,936 356,370 411,256 28.78% 11.59%
Long-term 384,934 72,852 316,057 428.38% 21.79%
-------------------------------------------------------------
Total 843,870 429,222 727,313 96.60% 16.03%
=============================================================
Receivables to be recognized on our balance sheet according to PoC method and
BRGAAP (for more details, see note 5 on our Financial Statements:
3Q07 3Q06 2Q07 3Q07 x 3Q06 3Q07 x 2Q07
-------------------------------------------------------------
Current 397,491 81,054 270,288 390.40% 47.06%
Long-term 793,972 567,732 793,470 39.85% 0.06%
-------------------------------------------------------------
Total 1,191,463 648,786 1,063,758 83.64% 12.01%
=============================================================
Total Accounts Receivables 2,035,333 1,078,008 1,791,071 88.80% 13.64%
=============================================================
Inventory (Properties for Sale)
Our inventory includes land paid in cash, construction in progress, and finished
units. Our inventory increased to R$709.1 million in 3Q07, an increase of 85.0%
as compared to the R$383.1 million registered in 3Q06 due to recent land
acquisitions in cash (more details in the "Land Reserves" section of this
report) and developments under construction. It is important to note that the
increase in units completed is due to the consolidation of AlphaVille.
The tables below details inventory for the 3Q07:
Table 22 - Inventory
3Q07 2Q07 3Q06 3Q07 x 2Q07 3Q07 x 3Q06
-------------------------------------------------------
Land 290,129 187,257 100,528 54,9% 188,6%
Properties under construction 380,362 351,753 237,183 8,1% 60,4%
Units completed 38,624 55,003 45,425 -29,8% -15,0%
-------------------------------------------------------
Total 709,115 594,013 383,136 54,9% 188,6%
=======================================================
The table below details inventory at market value for the 3Q07:
Table 23 - Inventory at market value:
Segments 3Q07 2Q07 3Q06 3Q07 x 2Q07 3Q07 x 3Q06
-------------- -----------------------------------------------------------
HIG 153,944 69,856 148,833 120% 3%
MHI 357,001 375,429 229,250 -5% 56%
MID 347,258 385,465 155,451 -10% 123%
AEL 52,281 10,549 9,359 396% 459%
LOT 204,583 157,182 28,110 30% 628%
COM 13,074 15,760 116,928 -17% -89%
-----------------------------------------------------------
TOTAL 1,128,140 1,014,242 687,930 11% 64%
===========================================================
Geog. Region 3Q07 2Q07 3Q06 2Q07 x 1Q07 2Q07 x 2Q06
-------------- -----------------------------------------------------------
Sao Paulo 295,559 269,476 304,959 10% -3%
Rio de Janeiro 267,581 248,971 235,464 7% 14%
New Markets 565,001 495,794 147,508 14% 283%
-----------------------------------------------------------
TOTAL 1,128,140 1,014,242 687,930 11% 64%
===========================================================
14
[GRAPHIC]
Launching year 3Q07 2Q07 3Q06 2Q07 x 1Q07 2Q07 x 2Q06
-----------------------------------------------------------------------------
Launches from 2007 642,934 487,986 NA 32% NA
Launches from 2006 221,270 263,959 294,546 -16% -25%
Launches from 2005 151,316 161,553 189,510 -6% -20%
Prior to 2004 112,621 100,744 203,874 12% -45%
-----------------------------------------------------------------------------
TOTAL 1,128,140 1,014,242 687,930 11% 64%
-----------------------------------------------------------------------------
Liquidity
The following table sets forth information on our indebtedness as of September
30, 2007:
Table 24 - Debt breakdown
Type of transaction Rates 3Q07 2Q07 3Q07 x 2Q07
--------------------------------------------------------------------------------
Debentures 1.3%p.a. + CDI 242,043 250,481 -3.4%
Construction Financing (SFH) 6.2-11%p.a. + TR 42,134 38,295 10.0%
Downstream Merger obligation 10-12%p.a. + TR 14,569 16,237 -10.3%
Funding for developments 1.3-3.2%p.a. + CDI -- 22,359 -100.0%
Working Capital 3.5-6.2%p.a. + CDI 77,801 41,387 88.0%
Others (Alphaville) 19.6-25.7%p.a -- 1,998 -100.0%
--------------------------------------------------------------------------------
Total 376,547 370,757 1.6%
================================================================================
Total Cash 372,092 496,016 -25%
================================================================================
Net Debt (Cash) 4,455 -125,259 -104%
================================================================================
Debt payment schedule as of September 30, 2007:
Table 25 - Debt Maturity
2011 and
Type Total 2007 2008 2009 2010 later
--------------------------------------------------------------------------------
Debentures 242,043 2,043 -- 48,000 96,000 96,000
Construction Financing (SFH) 42,134 26,427 7,494 6,451 1,762 --
Downstream Merger obligation 14,569 3,226 3,865 5,257 2,221 --
Funding for developments -- -- -- -- -- --
Working Capital 77,801 7,941 1,107 3,446 16,161 49,146
Others -- -- -- -- -- --
--------------------------------------------------------------------------------
Total 376,547 39,637 12,466 63,154 116,144 145,146
================================================================================
As of September 30 2007, our net debt to equity ratio was 0.3% compared to
negative 10% in 3Q06 and negative 9% in 2Q07.
Outlook
At the end of 3Q07, Gafisa reached 72% of the guidance provided for full year
2007 launches. Therefore, we are we are increasing 2007 full year launch
guidance to R$1.9 billion (from R$1.65 billion) given our accelerated schedule
for the fourth quarter. The Company now expects an increase of 90% in
consolidated project launches over 2006. Approximately R$1.5 billion of the
year's launches are expected to come from Gafisa's core business, R$200 million
from Fit Residencial, R$200 million from AlphaVille.
For 2008, Gafisa expects to launch R$3 billion for the consolidated company.
The Company continues to expect a full year 2007 EBITDA margin of between 15%
and 16%.
15
[GRAPHIC]
Glossary
Backlog of Results - As a result of the Percentage of Completion Method of
recognizing revenues, we recognize revenues and expenses over a multi-year
period for each residential unit we sell. Our backlog of results represents
revenues minus costs that will be incurred in future periods from past sales.
Backlog of Revenues - As a result of the Percentage of Completion Method of
recognizing revenues, we recognize revenues over a multi-year period for each
residential unit we sell. Our backlog represents revenues that will be incurred
in future periods from past sales.
Backlog Margin - Equals to "Backlog of results" divided "Backlog of Revenues" to
be recognized in future periods.
Land Bank - Land that Gafisa holds for future development paid either in Cash or
through swap agreements. Each decision to acquire land is analyzed by our
investment committee and approved by our board of directors.
PoC Method - Under Brazilian GAAP, real estate development revenues, costs and
related expenses are recognized using percentage-of-completion ("PoC") method of
accounting by measuring progress towards completion in terms of actual costs
incurred versus total budgeted expenditures for each stage of a development.
Pre-sales - Contracted pre-sales are the aggregate amount of sales resulting
from all agreements for the sale of units entered into during a certain period,
including new units and units in inventory. Contracted pre-sales will be
recorded as revenue as construction progresses (PoC method). There is no
definition of "contracted pre-sales" under Brazilian GAAP.
HIG (High Income) - segment with residential units sold at minimum price of
R$3,600 per square meter.
MHI (Mid-High) - segment with residential units sold at prices ranging from
R$2,800 to 3,600 per square meter.
MID (Middle Income) - segment with residential units sold at prices ranging from
R$2,000 to 2,800 per square meter.
AEL (Affordable Entry Level) - residential units targeted to the mid-low and low
income segments with prices ranging from R$1,500 to 2,000 per square meter.
LOT (Urbanized Lots) - land subdivisions, or lots, with prices ranging from
R$150 to R$800 per square meter
COM (Commercial buildings) - Commercial and corporate units developed only for
sale with prices ranging from R$4,000 to R$7,000 per square meter.
SFH Funds - Funds from SFH are originated from the Governance Severance
Indemnity Fund for Employees (FGTS) and from savings accounts deposits. Banks
are required to invest 65% of the total savings accounts balance in the housing
sector, either to final customers or developers, at lower interest rates than
the private market.
Swap Agreements - A system in which we grant the land-owner a certain number of
units to be built on the land or a percentage of the proceeds from the sale of
units in such development in exchange for the land. By acquiring land through
this system, we intend to reduce our cash requirements and increase our returns.
16
About Gafisa
We are one of Brazil's leading diversified national homebuilders. Over the last
50 years, we have been recognized as one of the foremost professionally-managed
homebuilders, having completed and sold more than 900 developments and
constructed over 37 million square meters of housing, which we believe is more
than any other residential development company in Brazil. We believe "Gafisa" is
one of the best-known brands in the real estate development market, enjoying a
reputation among potential homebuyers, brokers, lenders, landowners and
competitors for quality, consistency and professionalism.
Investor Relations:
Bruno Teixeira
Phone: +55 11 3025-9297
Email: ir@gafisa.com.br
Website: www.gafisa.com.br/ir
Media Relations (US - Europe)
Eileen Boyce
Reputation Partners
Phone: +011 312 222 9126
Fax: +011 312 222 9755
E-mail: eileen@reputationpartners.com
Media Relations (Brazil)
Joana Santos
Maquina da Noticia
Phone: +55 11 3147-7900
Fax: +55 11 3147-7900
E-mail: joana.santos@maquina.inf.br
This release contains forward-looking statements relating to the prospects of
the business, estimates for operating and financial results, and those related
to growth prospects of Gafisa. These are merely projections and, as such, are
based exclusively on the expectations of management concerning the future of the
business and its continued access to capital to fund the Company's business
plan. Such forward-looking statements depend, substantially, on changes in
market conditions, government regulations, competitive pressures, the
performance of the Brazilian economy and the industry, among other factors;
therefore, they are subject to change without prior notice.
17
Appendix
The following table sets forth detailed information of projects launched in 2007
by quarter:
Appendix
Sales
Value at
Gafisa's % Sold
Month of Usable Area # of Units Gafisa's Stake up to
Projects launched in 1Q07 Launch Segment Location (s.q.m)(100%) (100%) Stake (R$000) 09/30/07
------------------------------------------------------------------------------------------------------------------------------------
Fit Jacana March AEL Sao Paulo - SP 9,181 184 100% 16,974 84%
Isla March Mid Sao Caetano - SP 31,423 240 100% 75,683 70%
Grand Valley March Mid Rio de Janeiro - RJ 16,908 240 100% 44,014 54%
Acqua Residence (Fase 1) March Mid Nova Iguacu - RJ 28,400 380 100% 71,701 44%
Celebrare March Mid Caxias - RJ 14,679 188 100% 35,189 78%
Reserva do Lago March Mid Goiania - GO 16,800 96 50% 24,567 58%
AlphaVille - Campo Grande March Lot Campo Grande - MS 225,269 489 67% 35,018 48%
------------------------------------------------------------------------------------------------------------------------------------
Total 342,660 1,817 303,147 60%
====================================================================================================================================
Sales
Value at
Gafisa's % Sold
Month of Usable Area # of Units Gafisa's Stake up to
Projects launched in 2Q07 Launch Segment Location (s.q.m)(100%) (100%) Stake (R$000) 09/30/07
------------------------------------------------------------------------------------------------------------------------------------
CFS - Primula June Mid Sao Paulo - SP 13,897 96 100% 29,906 57%
CSF - Dalia June Mid Sao Paulo - SP 9,000 68 100% 18,430 61%
CSF - Acacia Mid Sao Paulo - SP 23,461 192 100% 47,784 74%
Jatiuca Trade Residence June Mid Maceio - AL 32,651 500 50% 39,546 50%
Enseada das Orquideas June Mid-High Santos - SP 52,589 475 80% 125,721 32%
London Green June Mid-High Rio de Janeiro - RJ 28,998 300 50% 51,069 37%
Horizonte May Mid Belem -PA 7,505 29 60% 12,704 98%
Secret Garden May Mid Rio de Janeiro - RJ 15,344 252 100% 38,699 54%
Evidence April Mid Sao Paulo - SP 23,487 144 50% 32,425 32%
Fit Maceio April AEL Maceio - AL 4,207 54 50% 3,087 37%
Acquarelle April Mid Manaus - AM 17,742 259 85% 35,420 38%
Palm Ville April Mid Salvador - BA 13,582 112 50% 15,106 90%
Art Ville April Mid Salvador - BA 16,157 263 50% 20,777 92%
------------------------------------------------------------------------------------------------------------------------------------
Total 258,621 2,744 470,673 50%
====================================================================================================================================
Sales
Value at
Gafisa's % Sold
Month of Usable Area # of Units Gafisa's Stake up to
Projects launched in 3Q07 Launch Segment Location (s.q.m)(100%) (100%) Stake (R$000) 09/30/07
------------------------------------------------------------------------------------------------------------------------------------
Privilege September Mid-High Rio de Janeiro - RJ 16,173 194 80% 35,576 8%
Jatiuca Trade Residence (Fase 2) September Mid Maceio - AL 8,520 140 50% 11,911 3%
Parc Paradiso (Fase 2) September Mid-High Belem -PA 10,427 108 60% 17,147 12%
AlphaVille - Rio Costa do Sol September Lot Rio das Ostras - RJ 313,400 616 58% 51,737 47%
AlphaVille - Cajamar September Lot Cajamar - SP 674,997 2 55% 7,312 100%
Fit Citta September AEL Salvador - BA 26,779 204 50% 14,889 0%
Fit Coqueiro September AEL Belem -PA 50,040 621 60% 30,098 0%
Supremo August High Sao Paulo - SP 34,864 192 100% 143,634 30%
Orbit August Mid Curitiba - PR 11,332 185 100% 31,532 10%
Parc Paradiso August Mid-High Belem -PA 35,987 324 60% 58,754 73%
AlphaVille - Aracagy August Lot Sao Luis - MA 181,933 332 38% 23,136 72%
------------------------------------------------------------------------------------------------------------------------------------
Total 1,364,452 2,918 425,727 34%
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
Total YTD 2007 1,965,732 7,479 1,199,546 46%
====================================================================================================================================
Fit Residencial recognizes sales only after the client has received the final
approval by Caixa Economica Federal.
18
[GRAPHIC]
The following table sets forth the financial completion of the construction in
progress in 2007 and 2006 and the related revenue recognized during those years:
Final Percentage Revenue
Month/Year Total area Completion sold- Recognized Gafisa
launched (m(2)) (%) accumulated (BRL000) Stake (%)
---------- ---------- ---------- ----------- -------------- -------------
Development 3Q07 3Q06 3Q07 3Q06 3Q07 3Q06
----------------------------------------------------------------------------------------- -------------- -------------
Arena dez-05 29,256 76% 25% 100% 99% 11,287 6,230 100%
Villagio Panamby- Mirabilis mar-06 23,355 59% 9% 88% 69% 10,594 4,884 100%
Enseada das Orquideas jun-07 52,589 20% 0% 32% 0% 9,324 -- 80%
Olimpic Resort out-05 21,851 81% 25% 100% 99% 8,886 6,695 100%
Del Lago mai-05 62,022 60% 28% 96% 67% 7,848 4,803 80%
Villagio Panamby - Jazz Duet set-05 13,400 87% 28% 88% 38% 7,635 1,153 100%
Peninsula Fit mar-06 24,080 48% 3% 57% 52% 7,132 420 100%
Beach Park Acqua nov-05 9,770 67% 12% 89% 83% 7,044 301 90%
Olimpic - Chacara Sto Antonio ago-06 24,988 37% 19% 95% 59% 6,928 6,641 100%
Villagio Panamby - Agrias nov-06 21,390 39% 0% 72% 0% 6,663 -- 100%
Espaco Jardins mai-06 28,926 32% 12% 99% 65% 6,479 5,117 100%
Isla mar-07 31,423 16% 0% 70% 0% 6,449 -- 100%
The Gold dez-05 10,465 81% 41% 79% 46% 6,174 6,393 100%
Sunspecial Resid. Service mar-05 21,189 87% 29% 83% 82% 6,130 5,260 100%
Sunplaza Personal Office mar-06 6,328 76% 11% 94% 69% 6,098 489 100%
Bem Querer nov-05 11,136 94% 11% 100% 98% 5,683 2,001 100%
Blue Land ago-03 18,252 71% 36% 66% 36% 5,557 3,542 100%
Villagio Panamby - Domaine Du Soleil set-05 8,225 90% 34% 92% 57% 5,493 2,205 100%
Espacio Laguna ago-06 16,364 38% 0% 32% 3% 5,076 -- 80%
Alphaville Salvador II fev-06 853,344 46% NA 88% NA 5,022 NA 55%
Alphaville Eusebio set-05 534,314 74% NA 60% NA 4,992 NA 65%
Alphaville D. Pedro ago-04 616,224 94% NA 100% NA 4,940 NA 58%
Alphaville Aracagy ago-07 195,829 25% NA 85% NA 4,922 NA 50%
Alphaville Manaus ago-05 464,688 69% NA 100% NA 4,918 NA 63%
Villagio Panamby - Parides nov-06 13,093 58% 0% 100% 0% 4,557 -- 100%
Vistta Ibirapuera mai-06 9,963 59% 34% 100% 100% 4,287 765 100%
CSF - Saint Etienne mai-05 11,261 79% 22% 96% 93% 4,058 2,348 100%
Palm D'Or set-05 8,493 75% 31% 100% 53% 4,055 1,976 100%
Paco das Aguas mai-06 24,080 53% 36% 75% 57% 4,043 6,586 45%
Blue Vision - Sky e Infinity jun-06 18,514 74% 37% 84% 74% 3,992 2,444 50%
Parc Paradiso ago-07 35,987 8% 0% 73% 0% 3,955 - 60%
Town Home nov-05 8,319 60% 16% 60% 35% 3,904 799 100%
Sundeck nov-03 13,043 100% 80% 95% 75% 3,579 5,307 100%
Blue II e Concept dez-05 28,296 89% 51% 60% 55% 3,515 3,315 50%
Beach Park - Living jun-06 14,913 23% 0% 69% 49% 3,358 -- 80%
Secret Garden mai-07 15,344 15% 0% 54% 0% 3,200 -- 100%
Alphaville Burle Max abr-05 1,305,022 69% NA 21% NA 2,601 NA 50%
Weber Art jun-05 5,812 82% 22% 96% 86% 2,581 1,688 100%
Alphaville Campo Grande mar-07 517,869 39% NA 48% NA 2,382 NA 67%
CSF - Santtorino ago-06 14,979 19% 7% 100% 80% 2,249 1,791 100%
Mirante do Rio out-06 8,125 21% 0% 100% 0% 2,210 -- 60%
La Place mai-04 8,416 100% 83% 100% 79% 2,143 4,647 100%
Ville Du Soleil out-06 8,920 46% 0% 29% 0% 2,134 -- 100%
Alphaville Gravatai jun-06 1,309,397 41% NA 40% NA 2,100 NA 64%
Collori nov-06 39,462 42% 0% 48% 0% 2,098 -- 50%
Evidence abr-07 23,487 19% 0% 32% 0% 2,041 -- 50%
Felicita - Evangelina 2 dez-06 11,323 20% 0% 74% 0% 1,972 -- 100%
FIT Jacana mar-07 9,181 18% NA 84% NA 1,863 NA 100%
Terras de Sao Francisco jul-04 114,160 100% 98% 97% 88% 1,656 1,481 50%
The House out-05 5,313 38% 25% 96% 89% 1,507 1,152 100%
Lumiar fev-05 7,193 94% 35% 100% 52% 1,489 1,296 100%
Icarai Corporate dez-06 5,683 33% 0% 85% 0% 1,486 -- 100%
CSF - Paradiso nov-06 16,286 12% 0% 75% 0% 1,356 -- 100%
Alphaville Recife ago-06 704,051 38% NA 94% NA 1,354 NA 65%
Quinta Imperial jul-06 8,422 21% 2% 77% 66% 1,297 266 100%
Alphaville Rio Costa do Sol set-07 1,521,753 4% NA 53% NA 1,288 NA 58%
CSF - Acacia jun-07 23,461 3% 0% 74% 0% 1,160 -- 100%
Campo D'Ourique dez-05 11,775 65% 11% 32% 9% 1,116 127 50%
Fit Niteroi ago-06 8,523 34% 0% 84% 34% 1,054 -- 100%
Montenegro Boulevard jun-05 174,862 95% 67% 100% 100% 1,046 875 100%
Alphaville Gramado jun-04 431,663 98% NA 43% NA 984 NA 67%
Side Park - Ed. Style jul-04 10,911 95% 54% 100% 96% 859 4,770 100%
Celebrare mar-07 14,679 16% 0% 78% 0% 821 -- 100%
Alphaville Cuiaba nov-03 545,631 100% NA 94% NA 793 NA 55%
Riviera Ponta Negra - Cannes e Marseille jan-04 22,332 100% 88% 73% 68% 763 5,120 50%
Reserva do Lago jun-06 16,800 8% 0% 74% 0% 707 -- 50%
CSF - Benne Sonanz set-03 9,437 100% 100% 93% 80% 603 406 50%
Others 53,882 60,007
309,373 163,304
19
[GRAPHIC]
Consolidated Statements of Income
R$ 000 3Q07 3Q06 2Q07 3Q07 x 3Q06 3Q07 x 2Q07
---------------------------------------------------------------------------------------------------------------
Gross Operating Revenue 320,787 168,690 280,121 90.2% 14.5%
Real State development and sales 309,373 163,304 264,319 89.4% 17.0%
Construction and services rendered 11,414 5,386 15,802 111.9% -27.8%
Deductions (12,232) (7,148) (13,573) 71.1% -9.9%
----------------------------------------------------------
Net Operating Revenue 308,555 161,542 266,548 91.0% 15.8%
----------------------------------------------------------
Operating Costs (215,822) (104,896) (186,467) 105.7% 15.7%
----------------------------------------------------------
Gross profit 92,733 56,646 80,081 63.7% 15.8%
----------------------------------------------------------
Operating Expenses (44,884) (26,839) (41,665) 67.2% 7.7%
Selling expenses (18,941) (15,874) (17,330) 19.3% 9.3%
General and administrative expenses (28,173) (11,900) (22,207) 136.7% 26.9%
Equity Income 33 962 (37) -96.6% -189.2%
Other Operating Revenues 2,197 (27) (2,091) na -205.1%
----------------------------------------------------------
EBITDA 47,849 29,807 38,416 60.5% 24.6%
----------------------------------------------------------
Depreciation and Amortization (1,986) (918) (5,517) 116.3% -64.0%
Extraordinary expenses -- -- 0 na na
----------------------------------------------------------
EBIT 45,863 28,889 32,899 58.8% 39.4%
----------------------------------------------------------
Financial Income 11,543 13,399 15,395 -13.9% -25.0%
Financial Expenses (14,959) (13,909) (18,340) 7.5% -18.4%
----------------------------------------------------------
Income before taxes on income 42,447 28,379 29,954 49.6% 41.7%
----------------------------------------------------------
Deffered Taxes (1,987) (1,061) 5,703 87.3% -134.8%
Income tax and social contribution (6,744) 349 (1,774) -2032.4% 280.2%
----------------------------------------------------------
Income after taxes on income 33,716 27,667 33,883 21.9% -0.5%
----------------------------------------------------------
Minority Shareholders (2,777) -- (1,743) na 59.3%
----------------------------------------------------------
Net income 30,939 27,667 32,140 11.8% -3.7%
==========================================================
Adjusted net income per thousand shares outstanding 0.24 0.27 0.25 na na
20
[GRAPHIC]
Consolidated Statements of Income
R$ 000 9M07 9M06 9M07 x 9M06
--------------------------------------------------------------------------------------
Gross Operating Revenue 836,248 444,923 88.0%
Real State development and sales 815,893 425,887 91.6%
Construction and services rendered 20,355 19,036 6.9%
Deductions (36,829) (19,363) 90.2%
---------------------------------
Net Operating Revenue 799,419 425,560 87.9%
---------------------------------
Operating Costs (558,645) (294,865) 89.5%
---------------------------------
Gross profit 240,774 130,695 84.2%
---------------------------------
Operating Expenses (118,301) (61,454) 92.5%
Selling expenses (48,277) (35,586) 35.7%
General and administrative expenses (74,453) (28,522) 159.7%
Equity Income (263) 3,315 -107.9%
Other Operating Revenues 4,692 (661) na
---------------------------------
EBITDA 122,473 69,241 76.9%
---------------------------------
Depreciation and Amortization (12,564) (2,651) 373.9%
Extraordinary expenses (30,174) (29,176) na
---------------------------------
EBIT 79,735 37,414 113.1%
---------------------------------
Financial Income 35,260 40,722 -13.4%
Financial Expenses (50,307) (44,154) 13.9%
---------------------------------
Income before taxes on income 64,688 33,982 90.4%
---------------------------------
Deffered Taxes (5,352) (3,031) 76.6%
Income tax and social contribution (2,592) 309 -938.8%
---------------------------------
Income after taxes on income 56,744 31,260 81.5%
---------------------------------
Minority Shareholders (6,221) -- na
---------------------------------
Net income 50,523 31,260 61.6%
=================================
Adjusted net income per thousand shares outstanding 0.65 0.61 na
21
[GRAPHIC]
Consolidated Balance Sheet
R$ 000 3Q07 3Q06 2Q07 3Q07 x 3Q06 3Q07 x 2Q07
---------------------------------------------------------------------------------------------------------------
ASSETS
Current assets
Cash and banks 30,454 11,766 21,328 158.8% 42.8%
Financial investments 341,638 318,440 474,688 7.3% -28.0%
Receivables from clients 485,989 356,370 435,887 36.4% 11.5%
Properties for sale 709,115 383,136 594,013 85.1% 19.4%
Other accounts receivable 119,062 103,560 119,417 15.0% -0.3%
Deferred selling expenses 29,136 15,505 25,259 87.9% 15.3%
Prepaid expenses 7,921 2,051 13,238 286.2% -40.2%
-------------------------------------------------------------
1,723,315 1,190,828 1,683,830 44.7% 2.3%
Long-term assets
Receivables from clients 384,934 72,852 316,057 428.4% 21.8%
Deferred taxes 77,316 30,614 73,913 152.6% 4.6%
Other 42,738 42,802 38,704 -0.1% 10.4%
-------------------------------------------------------------
504,988 146,268 428,674 245.2% 17.8%
Permanent assets
Investments 167,574 2,838 167,709 5804.7% -0.1%
Properties and equipment 21,396 8,177 15,169 161.6% 41.1%
-------------------------------------------------------------
188,970 11,015 182,878 1615.5% 3.3%
-------------------------------------------------------------
Total assets 2,417,273 1,348,111 2,295,382 79.3% 5.3%
=============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Loans and financings 31,731 41,828 51,710 -24.1% -38.6%
Debentures 2,043 183,126 10,481 -98.9% -80.5%
Real estate development obligations 4,168 14,529 5,710 -71.3% -27.0%
Obligations for purchase of land 166,286 69,407 108,913 139.6% 52.7%
Materials and service suppliers 78,655 36,717 75,638 114.2% 4.0%
Taxes and contributions 67,860 45,170 60,349 50.2% 12.4%
Taxes, payroll charges and profit sharing 29,929 7,944 21,141 276.8% 41.6%
Advances from clients - real state and services 29,504 34,980 50,181 -15.7% -41.2%
Dividends -- -- 2,823 -- -100.0%
Other 17,036 16,203 15,359 5.1% 10.9%
-------------------------------------------------------------
427,212 449,904 402,305 -5.0% 6.2%
Long-term liabilities
Loans and financings 102,773 26,527 68,566 287.4% 49.9%
Debentures 240,000 -- 240,000 -- 0.0%
Obligations for purchase of land 28,600 8,373 13,501 241.6% 111.8%
Deferred taxes 62,407 20,979 52,260 197.5% 19.4%
Unearned income from property sales 637 3,320 1,053 -80.8% -39.5%
Other 48,129 29,206 51,365 64.8% -6.3%
-------------------------------------------------------------
482,546 88,405 426,745 445.8% 13.1%
Deferred income
Deferred income on acquisition of subsidiary -- -- 345 -- --
Minority Shareholders 14,154 -- 3,616 -- 291.4%
Shareholders' equity
Capital 1,220,542 591,315 1,220,490 106.4% 0.0%
Treasury shares (18,050) (47,026) (18,050) -61.6% 0.0%
Capital reserves 167,276 167,276 167,276 0.0% 0.0%
Revenue reserves 123,593 51,211 92,655 141.3% 33.4%
-------------------------------------------------------------
1,493,361 809,802 1,462,371 84.4% 2.1%
-------------------------------------------------------------
Total liabilities and shareholders' equity 2,417,273 1,348,111 2,295,382 79.3% 5.3%
=============================================================
22
[GRAPHIC]
Gafisa Reports Strong Third Quarter
-- 3Q07 Launches Increase 119% to R$426 million and Pre-sales Increase 56% to
R$367 million --
-- Land Bank Grows 44% from Previous Quarter to R$8.9 billion --
-- Company Updates 2007 Expectations for Launches and Provides 2008 Outlook --
Sao Paulo, November 7, 2007 - Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), one of
Brazil's leading diversified national homebuilders, today reported its financial
results for the third quarter (3Q07) and nine months ended September 30, 2007
(9M07). The following financial and operating information, unless otherwise
indicated, was prepared and presented in accordance with Brazilian GAAP (BR
GAAP) and in Brazilian Reais (R$). Additionally, financial statements and
operating information consolidate the numbers for Gafisa and its subsidiaries,
and refer to Gafisa's stake (or participation) in its developments. To view a
more detailed review of third quarter results filed with the Brazilian Comissao
de Valores Mobiliarios ("CVM"), please visit Gafisa's website
www.gafisa.com.br/ir.
Net operating revenue for the third quarter, recognized by the Percentage of
Completion ("PoC") method, increased 91% to R$309 million from R$162 million in
the prior year period. Backlog of Results to be recognized under the PoC method
at the end of the third quarter reached R$465 million (Backlog margin of 38.5%),
an increase of 60% from the previous year's quarter.
Project launches during the quarter totaled R$426 million, an increase of 119%
over the same period in 2006. Pre-sales reached R$366.9 million, an increase of
56% over the 3Q06 pre-sales of R$235.3 million.
The Company's land bank is currently R$8.9 billion of future sales, close to 3
times our 2008 potential launch value, and 44% higher than at the end of 2Q07.
The increase is largely due to the addition of the Bairro Novo land bank of
R$468 million and R$1.1 billion, corresponding to the 70% share of the land bank
acquired through the Cipesa transaction. This acquisition gives Gafisa a strong
foothold in the Northeast region of the country.
Selling, general and administrative (SG&A) expenses were R$47.1 million in 3Q07
versus R$27.8 million in the prior year. The increase in SG&A is primarily due
to the Company's rapid expansion and management expenses associated with the new
divisions targeting Brazil's lower income segments, Fit and Bairro Novo.
Additionally, 3Q07 amounts include the consolidation of Alphaville and the
implementation of quarterly accruals for bonuses during 2007.
EBITDA for the third quarter increased 61% to R$47.8 million from R$29.8 million
in the prior year period. Net Income for the third quarter increased 12% to
R$30.9 million, or R$0.24 per share from R$27.7 million in the third quarter of
2006. Net Income taxes for the quarter were R$8.7 million versus R$0.7 million
in 3Q06. The lower tax figures in 2006 were mainly due to utilized tax credits.
Nine month EBITDA reached R$122 million (15.3% EBITDA margin) in 2007 versus
R$69 million (16.3% EBITDA margin) in 2006 and adjusted net income was R$81
million (10.1% adjusted net margin) in 9M07 compared to R$60.4 million (14.2%
adjusted net margin) in 9M06.
Commenting on results, Wilson Amaral, chief executive officer of Gafisa S.A.
said, "We continue to see robust growth in the Brazilian housing industry and
strong prospects for accelerated growth in the future driven by increased access
to financing, especially in the lower income population segments. Through Fit
Residencial and Bairro Novo, we are now creating the conditions to lead the
housing industry in serving the lower income segments of the population which we
believe will fuel long term growth in the industry. And, while implementing
these programs, we have continued to drive profitable growth across the
organization."
Amaral continued, "I am very pleased with our third quarter and year to date
operating and financial results. We are on track to meet our profitability
targets and expect to exceed our earlier outlook for launches by year end 2007.
We also expect significant growth in launches during 2008. In fact, we now
expect the first launch of a Bairro Novo development targeting the lower income
segment with large scale housing developments, to take place by the end of 4Q07
rather than in the first half of 2008. Bairro Novo's high quality land bank with
certain existing permits allowed us to accelerate the launch of this project.
23
[GRAPHIC]
"Pre-sales, a strong indicator of Gafisa's ability to meet market demand, remain
strong with year to date growth of 56%, reaching R$964 million, while EBITDA
increased 77% during the same period. We have also continued to launch new
projects in diverse geographies at an unprecedented rate. During the first nine
months of the year Gafisa's new developments reached nearly R$1.2 billion."
Commenting on the Company's strategy, Amaral said, "To date, we have created the
infrastructure and teams to serve all segments of the market. Our
long-established products, complemented by the acquisition of Alphaville earlier
in the year, solidify our leadership position in serving the high and mid-high
end of the population with a differentiated product offering. Fit Residencial
and Bairro Novo will serve the lower income markets with increased access to
financing through programs established by the Caixa Economica Federal (CEF) and
commercial banks. We have already launched 3 projects in diverse geographies
under the Fit brand and are announcing today the expected launch of our first
Bairro Novo project by the end of this year.
"Our strategy not only addresses segment diversification, but also geographic
diversification. Gafisa's R$8.9 billion land bank is distributed over 118
separate land parcels, 61% of which is located outside of Sao Paulo and Rio. The
Gafisa brand, reputation and diverse products have helped attract excellent
partners that complement Gafisa with local market knowledge and access to high
quality land. Our recent acquisition of Cipesa, a leader in the Northeastern
state of Alagoas was the result of a successful partnership.
"Our investment in human capital will assure our on-going ability to
aggressively execute and deliver the most appropriate products on the market. We
have dedicated teams developing, executing and selling the products that serve
unique market segments. And, through our trainee program, we are guaranteeing
that we will have a steady flow of expertise into the future. Our trainee
program is among the top three largest and most competitive across all
industries in Brazil.
"Finally, the underlying macroeconomic conditions are very favorable and we
expect conditions to continue to improve for long term housing expansion.
Overall savings deposits, an important source of mortgage financing, increased
9.6% in the first nine months of 2007 as compared to the same period in 2006.
This translated into an 81% increase in the amount of mortgages provided
utilizing this source of funding over the same period. Commercial banks are
offering longer repayment periods and lower interest rates. Additionally, we are
working closely with banks to streamline access to financing for our clients and
intend to continue to play an important role in this process", concluded Amaral.
Outlook
At the end of 3Q07, Gafisa reached 72% of the guidance provided for full year
2007 launches. Therefore, we are increasing 2007 full year launch guidance to
R$1.9 billion (from R$1.65 billion) given our accelerated schedule for the
fourth quarter. The Company now expects an increase of 90% in consolidated
project launches over 2006. Approximately R$1.5 billion of the year's launches
are expected to come from Gafisa's core business, R$200 million from Fit
Residencial, R$200 million from AlphaVille.
For 2008, Gafisa expects to launch R$3 billion for the consolidated company.
The Company continues to expect a full year 2007 EBITDA margin of between 15%
and 16%. Gafisa's core business continues to increase its EBITDA margin, but the
consolidated figure will be impacted by the costs associated with ramping up Fit
Residencial and Bairro Novo.
24
[GRAPHIC]
Conference Call
The management of Gafisa will host a conference call in English on November 8,
2007, at 9:00 a.m. EST/12:00 p.m. SP. To access the call, dial +1 (480) 293-1744
and enter the code # 3797967. A replay of the conference call will be available
until November 08, 2007. To access the replay, dial +1 (303) 590-3030 and enter
the code # 3797967. A live webcast of the conference call will be available on
the internet at www.gafisa.com.br/ir.
About Gafisa
We are one of Brazil's leading diversified national homebuilders. Over the last
50 years, we have been recognized as one of the foremost professionally-managed
homebuilders, having completed and sold more than 900 developments and
constructed over 37 million square meters of housing, which we believe is more
than any other residential development company in Brazil. We believe "Gafisa" is
one of the best-known brands in the real estate development market, enjoying a
reputation among potential homebuyers, brokers, lenders, landowners, and
competitors for quality, consistency, and professionalism.
This release contains forward-looking statements relating to the prospects of
the business, estimates for operating and financial results, and those related
to growth prospects of Gafisa. These are merely projections and, as such, are
based exclusively on the expectations of management concerning the future of the
business and its continued access to capital to fund the Company's business
plan. Such forward-looking statements depend, substantially, on changes in
market conditions, government regulations, competitive pressures, the
performance of the Brazilian economy and the industry, among other factors;
therefore, they are subject to change without prior notice
Investor Relations:
Bruno Teixeira
Phone: +55 11 3025-9297
Email: ir@gafisa.com.br
Website: www.gafisa.com.br/ir
Media Relations (US - Europe)
Eileen Boyce
Reputation Partners
Phone: +011 312 222 9126
Fax: +011 312 222 9755
E-mail: eileen@reputationpartners.com
Media Relations (Brazil)
Joana Santos
Maquina da Noticia
Phone: +55 11 3147-7900
Fax: +55 11 3147-7900
Email: joana.santos@maquina.inf.br
--- Tables to follow ---
25
[GRAPHIC]
Consolidated Statements of Income
R$ 000 3Q07 3Q06 2Q07 3Q07 x 3Q06 3Q07 x 2Q07
--------------------------------------------------- ----------------------------------------------------------
Gross Operating Revenue 320,787 168,690 280,121 90.2% 14.5%
Real State development and sales 309,373 163,304 264,319 89.4% 17.0%
Construction and services rendered 11,414 5,386 15,802 111.9% -27.8%
Deductions (12,232) (7,148) (13,573) 71.1% -9.9%
-------- -------- -------- ------- ------
Net Operating Revenue 308,555 161,542 266,548 91.0% 15.8%
-------- -------- -------- ------- ------
Operating Costs (215,822) (104,896) (186,467) 105.7% 15.7%
-------- -------- -------- ------- ------
Gross profit 92,733 56,646 80,081 63.7% 15.8%
-------- -------- -------- ------- ------
Operating Expenses (44,884) (26,839) (41,665) 67.2% 7.7%
Selling expenses (18,941) (15,874) (17,330) 19.3% 9.3%
General and administrative expenses (28,173) (11,900) (22,207) 136.7% 26.9%
Equity Income 33 962 (37) -96.6% -189.2%
Other Operating Revenues 2,197 (27) (2,091) na -205.1%
-------- -------- -------- ------- ------
EBITDA 47,849 29,807 38,416 60.5% 24.6%
-------- -------- -------- ------- ------
Depreciation and Amortization (1,986) (918) (5,517) 116.3% -64.0%
Extraordinary expenses -- -- 0 na na
-------- -------- -------- ------- ------
EBIT 45,863 28,889 32,899 58.8% 39.4%
-------- -------- -------- ------- ------
Financial Income 11,543 13,399 15,395 -13.9% -25.0%
Financial Expenses (14,959) (13,909) (18,340) 7.5% -18.4%
-------- -------- -------- ------- ------
Income before taxes on income 42,447 28,379 29,954 49.6% 41.7%
-------- -------- -------- ------- ------
Deffered Taxes (1,987) (1,061) 5,703 87.3% -134.8%
Income tax and social contribution (6,744) 349 (1,774) -2032.4% 280.2%
-------- -------- -------- ------- ------
Income after taxes on income 33,716 27,667 33,883 21.9% -0.5%
-------- -------- -------- ------- ------
Minority Shareholders (2,777) -- (1,743) na 59.3%
-------- -------- -------- ------- ------
Net income 30,939 27,667 32,140 11.8% -3.7%
======== ======== ======== ======= ======
Adjusted net income per thousand shares outstanding 0.24 0.27 0.25 na na
26
[GRAPHIC]
Consolidated Statements of Income
R$ 000 9M07 9M06 9M07 x 9M06
--------------------------------------------------- ---------------------------------
Gross Operating Revenue 836,248 444,923 88.0%
Real State development and sales 815,893 425,887 91.6%
Construction and services rendered 20,355 19,036 6.9%
Deductions (36,829) (19,363) 90.2%
-------- -------- ------
Net Operating Revenue 799,419 425,560 87.9%
-------- -------- ------
Operating Costs (558,645) (294,865) 89.5%
-------- -------- ------
Gross profit 240,774 130,695 84.2%
-------- -------- ------
Operating Expenses (118,301) (61,454) 92.5%
Selling expenses (48,277) (35,586) 35.7%
General and administrative expenses (74,453) (28,522) 159.7%
Equity Income (263) 3,315 -107.9%
Other Operating Revenues 4,692 (661) na
-------- -------- ------
EBITDA 122,473 69,241 76.9%
-------- -------- ------
Depreciation and Amortization (12,564) (2,651) 373.9%
Extraordinary expenses (30,174) (29,176) na
-------- -------- ------
EBIT 79,734 37,414 113.1%
-------- -------- ------
Financial Income 35,260 40,722 -13.4%
Financial Expenses (50,307) (44,154) 13.9%
-------- -------- ------
Income before taxes on income 64,688 33,982 90.4%
-------- -------- ------
Deffered Taxes (5,352) (3,031) 76.6%
Income tax and social contribution (2,592) 309 -938.8%
-------- -------- ------
Income after taxes on income 56,744 31,260 81.5%
-------- -------- ------
Minority Shareholders (6,221) -- na
-------- -------- ------
Net income 50,523 31,260 61.6%
======== ======== ======
Adjusted net income per thousand shares outstanding 0.65 0.61 na
27
[GRAPHIC]
Consolidated Balance Sheet
R$ 000 3Q07 3Q06 2Q07 3Q07 x 3Q06 3Q07 x 2Q07
----------------------------------------------- -------------------------------------------------------------
ASSETS
Current assets
Cash and banks 30,454 11,766 21,328 158.8% 42.8%
Financial investments 341,638 318,440 474,688 7.3% -28.0%
Receivables from clients 485,989 356,370 435,887 36.4% 11.5%
Properties for sale 709,115 383,136 594,013 85.1% 19.4%
Other accounts receivable 119,062 103,560 119,417 15.0% -0.3%
Deferred selling expenses 29,136 15,505 25,259 87.9% 15.3%
Prepaid expenses 7,921 2,051 13,238 286.2% -40.2%
--------- --------- --------- ------ ------
1,723,315 1,190,828 1,683,830 44.7% 2.3%
Long-term assets
Receivables from clients 384,934 72,852 316,057 428.4% 21.8%
Deferred taxes 77,316 30,614 73,913 152.6% 4.6%
Other 42,738 42,802 38,704 -0.1% 10.4%
--------- --------- --------- ------ ------
504,988 146,268 428,674 245.2% 17.8%
Permanent assets
Investments 167,574 2,838 167,709 5804.7% -0.1%
Properties and equipment 21,396 8,177 15,169 161.6% 41.1%
--------- --------- --------- ------ ------
188,970 11,015 182,878 1615.5% 3.3%
--------- --------- --------- ------ ------
Total assets 2,417,273 1,348,111 2,295,382 79.3% 5.3%
========= ========= ========= ------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Loans and financings 31,731 41,828 51,710 -24.1% -38.6%
Debentures 2,043 183,126 10,481 -98.9% -80.5%
Real estate development obligations 4,168 14,529 5,710 -71.3% -27.0%
Obligations for purchase of land 166,286 69,407 108,913 139.6% 52.7%
Materials and service suppliers 78,655 36,717 75,638 114.2% 4.0%
Taxes and contributions 67,860 45,170 60,349 50.2% 12.4%
Taxes, payroll charges and profit sharing 29,929 7,944 21,141 276.8% 41.6%
Advances from clients - real state and services 29,504 34,980 50,181 -15.7% -41.2%
Dividends -- -- 2,823 -- -100.0%
Other 17,036 16,203 15,359 5.1% 10.9%
--------- --------- --------- ------ ------
427,212 449,904 402,305 -5.0% 6.2%
Long-term liabilities
Loans and financings 102,773 26,527 68,566 287.4% 49.9%
Debentures 240,000 -- 240,000 -- 0.0%
Obligations for purchase of land 28,600 8,373 13,501 241.6% 111.8%
Deferred taxes 62,407 20,979 52,260 197.5% 19.4%
Unearned income from property sales 637 3,320 1,053 -80.8% -39.5%
Other 48,129 29,206 51,365 64.8% -6.3%
--------- --------- --------- ------ ------
482,546 88,405 426,745 445.8% 13.1%
Deferred income
Deferred income on acquisition of subsidiary -- -- 345 -- --
Minority Shareholders 14,154 -- 3,616 -- 291.4%
Shareholders' equity
Capital 1,220,542 591,315 1,220,490 106.4% 0.0%
Treasury shares (18,050) (47,026) (18,050) -61.6% 0.0%
Capital reserves 167,276 167,276 167,276 0.0% 0.0%
Revenue reserves 123,593 51,211 92,655 141.3% 33.4%
--------- --------- --------- ------ ------
1,493,361 809,802 1,462,371 84.4% 2.1%
--------- --------- --------- ------ ------
Total liabilities and shareholders' equity 2,417,273 1,348,111 2,295,382 79.3% 5.3%
========= ========= ========= ====== ======
28