1. Third Quarter 2008 Results
Earnings Conference Call
Investor Relations Contact
Julia Freitas
ri@gafisa.com.br
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2. Overview of 3Q08 Results - Wilson Amaral, CEO
Financial and Operational Performance
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3. Highlights of the Quarter
3Q08 launches increased 79% over 3Q07
Launches increased to R$762 million in 3Q08 from R$426 million in 3Q07
Pre-sales increased 37% from 3Q07
Pre-sales increased to R$504 million in 3Q08 from R$367 million in 3Q07
Net operating revenues rose 19% from 3Q07
Net operating revenues increased to R$373 million in 3Q08 from R$313 million in 3Q07
3Q08 EBITDA reached R$64 million (17.2% EBITDA margin) a 40% increase from 3Q07
Net income increased to R$38 million in 3Q08, a 5% increase from R$36 million in 3Q07
Gafisa consolidates presence in low income segment, with Fit showing R$187 million in
launches and R$124 million in pre-sales in 3Q08
In this quarter, Gafisa completed five projects totaling 820 units. Fit completed its first
development, Fit Jaçanã in São Paulo.
Note: 2007 adjusted for capitalized interest and land swaps.
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4. Recent Developments
Leadership in Low Income Segment Enhanced: On October 21, the merger of Fit
Residencial and Construtora Tenda S.A was approved by 98% of Tenda shareholders
present at a general meeting. Gafisa now holds 60% of the total capital and voting
shares.
Strategic Investor Increases Participation: Gafisa announced that Equity International
(“EI”) had acquired an additional 3.3 million Gafisa ADRs representing 6.6 million
shares. The new stake brings EI ownership of Gafisa outstanding shares up to 18.7%
from 13.7%.
Strengthens Accounting Practices: We have started to account for land acquired
through product swaps, which previously did not flow through our financial
statements. This has increased our revenue and cost recognition.
SAP and SOX implementation : The implementation of the SAP management is on
track and will serve as an important tool in managing the company’s operations. In
October 2008 we began the SOX certification testing period.
Moody’s Ba2 international rating and Aa3.br Brazil national scale rating.
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5. Gafisa now controls Construtora Tenda, a leading low income
real estate developer that incorporated Fit Residencial.
98% of Tenda shareholders present at the General Meeting on October 21st
approved the incorporation of 100% of Fit's shares into Tenda.
Gafisa owns 60% of Tenda's shares after the transaction.
Tenda will continue to operate as a publicly traded company, listed on Bovespa.
Tenda has:
The strongest balance sheet and cash position in the segment,
One of the largest land banks,
Strong distribution platform,
Housing for the 4-20 time minimum wage segments.
We expect this transaction to be highly accretive.
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6. Increased Mortgage Penetration
Pre Sales financed by Gafisa vs. financed by Banks
16% 14%
34%
12%
54% 20%
32%
74%
30% 64%
34%
16%
2005 2006 2007 9M08
Gafisa direct financing longer than 36 months
Gafisa direct financing up to delivery of keys
Mortgage Loans
 Reduction in accounts receivables duration, improves Gafisa’s working capital
 Higher returns
 Higher asset turnover
 Improving terms for clients with lower rates and longer payment periods
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7. Mortgage Lending Expanding Rapidly
Strong growth in mortgage lending still does not meet pent-up demand
Housing Credit (R$ bn) Savings Accounts SBPE Balance (R$ bn)
CAGR (2003-2007): 43% 28.2 Sep 2008 Savings grew 19% from Sep 2007
25.3
5.4
55% 80%
6.9
16.3
15.7
57% -1%
3.7
10.4 7.0 205
51% 27% 98% 46%
22.8
15% 187
6.9 18.4
6.0 41%
5.5
3% 90%
90% 12.0 150
3.9 63% 9.3 135
3.8 36%
126
4.9 115
2.2 3.0
Savings up to Sep
2003 2004 2005 2006 2007 Jun-07up toJun-08
FGTS June 2003 2004 2005 2006 2007 Sep-08
2007 2008
Mortgages using resources from FGTS
Mortgages using resources from Savings Accounts
Sources: ABECIP, Central Bank of Brazil, CEF and FGV.
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8. Delivering on Growth Strategy: Diversification and Expansion
3Q Launches (R$ million)
New Markets
Rio de Janeiro 76
2
953
São Paulo Bairro Novo 3%
79% 334
Gafisa 69%
42 Fit 24%
6
471
188
243 Alphaville 7% Gafisa 66%
87
151 185
3Q07 3Q08
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9. Delivering on Growth Strategy: Strong Pre-sales
3Q Pre-sales (R$ million)
New Markets
Rio de Janeiro
Bairro Novo 3%
São Paulo 504
37%
367
250 Fit 25%
134 Gafisa 61%
Gafisa 62%
68 64 Alphaville 10%
Fit 25%
165 189
3Q07 3Q08
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10. One of the Most Geographically Diverse Homebuilders
Vision - Gafisa
States where we already launched projects.
Campo Belo – São Paulo, SP
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11. Diversified, High-Quality Land Bank Provides Strong
Platform for Growth
220 different sites, in 21 states, in 66 cities
Potential Future Sales
Potential Units Swap
Segment Units % Gafisa
% Gafisa Agreements %
100% R$ mi
Gafisa 26,422 22,182 7,754 47%
AlphaVille 32,953 16,365 2,914 99%
Fit Residencial 13,887 17,796 1,633 16%
Bairro Novo 24,326 12,163 802 82%
Total 97,588 68,506 13,103 73%
73% acquired by swap agreements.
Low income represents 44% of potential Gafisa units in land bank.
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12. Dedicated Management Teams for Each Market Segment,
Product Line
Mid, Mid High and 60% owned by Gafisa 60% owned by Gafisa
Low Affordable Entry 50/50 JV with Odebrecht Own Sales Force
High
Mid High and High Low Affordable Entry
Level
Vertical Level In São Paulo, Rio de
Horizontal (lots) Horizontal / Vertical Janeiro and Northeast
Metropolitan areas Metropolitan Areas and Horizontal / Vertical
Outside Metropolitan
Outskirts Metropolitan Areas and Selling Machine
Financing: Banks Areas
Financing: CEF and Outskirts Management of
Unique Projects Financing: Direct Banks Financing: CEF and Banks Channels & CRM
Unit Prices: > R$200K Unique Projects Standardized Projects Standardized Projects Management of
Unit Prices: R$50K – Unit Prices: < R$100K
Unit prices: R$70K – Outsourced & Local SC
R$200K
R$500K
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13. Our Differentials
Professional
Management
and Established
Organization
World-class Shareholders
Industry Leadership and and the Highest
Strong Brand Recognition Standards of Corporate
Governance
Geographic Diversification
Supported by Strategic Growth Through
Land Bank Product
Diversification
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14. Overview of 3Q08 Results
Financial and Operational Performance – Duilio Calciolari, CFO
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15. 3Q08 Operating Highlights
Net Revenues (R$ million) Gross Profit (R$ million)
35.0%
19%
29.0%
44%
131
374
313 91
3Q07 3Q08 3Q07 3Q08
Net Revenues Gross Profit Gross Margin
Adjusted EBITDA (R$ million) Adjusted Net Income (R$ million)
17.2%
14.7% 11.6% 10.2%
40%
64 5%
46
36 38
3Q07 3Q08 3Q07 3Q08
Adjusted EBITDA Adjusted EBITDA Margin Adjusted Net Income Adjusted Net Margin
2007 adjusted for Capitalized Interest and land swaps.
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16. Strong Pre-Sales Positively Impact Backlog of Revenues to Be
Recognized
R$711 million of results to be recognized (69% growth compared to 3Q07)
3Q08 2Q08 3Q07 3Q08 x 2Q08 3Q08 x 3Q07
Gross sales to be recognized 2,045.1 1,927.5 1,208.6 6% 69%
Sales net of 3.65% sales tax to be recognized 1,970.4 1,857.1 1,164.5 6% 69%
Cost of units sold to be recognized (1,259.9) (1,190.1) (743.5) 6% 69%
Backlog of results to be recognized 710.6 667.1 421.0 7% 69%
Backlog margin - yet to be recognized 34.7% 34.6% 34.8% 14 bps 23 bps
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17. Land for Product Swaps
This quarter we began to account for land acquired through product swaps in our
income statement, targeting best accounting practices
Previously, product swaps did not flow through our income statements, but
financial swaps did
9M08 3Q08 2Q08 1Q08 2007
Swap Effect on Gross Revenues 27,175 5,313 9,008 12,855 20,088
Swap Effect on Net Revenues 26,184 5,119 8,679 12,386 19,355
Swap Effect on COGS (18,538) (3,664) (6,318) (8,556) (13,414)
Swap Effect on Gross Profit 7,646 1,455 2,361 3,830 5,939
Net Revenues including land swaps 1,149,879 373,632 444,380 331,868 1,191,529
COGS including land swaps 762,273 242,839 298,392 221,042 810,328
Gross Profit including land swaps 387,606 130,793 145,988 110,826 381,200
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18. Gafisa’s Strong Financial Position Will Allow it to Execute
Growth Strategy and Access Credit Markets
R$250 million in securitizable receivables in addition to R$790 million cash.
R$3.5 billion in construction finance lines of credit provided by all of the major banks:
R$1.6 billion signed contracts
R$1.2 billion contracts in process
R$682 million additional availability
3Q08 2Q08
Total Debt 1,377 1,084
Obligation to Investors 300 300
Cash and Cash Equivalents 790 775
Net Debt & Obligation to Investors (Cash) 887 609
Shareholder’s Equity 1,689 1,637
Total Capitalization 3,066 2,721
Net Debt & Obligation to Investors / Equity 52.5% 37.3%
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19. Outlook for 2008
Tenda consolidation starting in fourth quarter 2008
Launch guidance for 2008 maintained at R$3.5 billion, equivalent to
R$3.3 billion excluding R$200 million of Fit 4th quarter launches
EBITDA margin guidance maintained at 16% to 17% for 2008
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20. Safe-Harbor Statement
We make forward-looking statements that are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of our management, and on
information currently available to us. Forward-looking statements include statements
regarding our intent, belief or current expectations or that of our directors or executive
officers.
Forward-looking statements also include information concerning our possible or assumed
future results of operations, as well as statements preceded by, followed by, or that include
the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,''
''estimates'' or similar expressions. Forward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions because they relate to future
events and therefore depend on circumstances that may or may not occur. Our future results
and shareholder values may differ materially from those expressed in or suggested by these
forward-looking statements. Many of the factors that will determine these results and values
are beyond our ability to control or predict.
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