2Q16 Earnings Release

Transcription

1 Rodobens Reports 2Q16 Results São Paulo, August 11, 2016: Rodobens Negócios Imobiliários (BM&FBovespa: RDNI3), a residential real estate developer and builder, announces today its audited results for the second quarter of 2016 (2Q16). The following financial and operating information is presented on a consolidated basis in accordance with generally accepted accounting practices in Brazil based on Brazilian Corporation Law, International Financial Reporting Standards (IFRS) and the rules issued by the Brazilian Accounting Pronouncements Committee (CPC). Recovery in Launch Volume: R$169 million in 1H16, compared to R$98 million in 1H15. In 2Q16, we launched our first development project in Sinop with total PSV of R$82 million. Gross Sales: R$110 million in 2Q16. Strong sales volume growth in Stillo segment, to R$64 million, which was 2.2 times higher than sales volume in 1Q16. Transfers: R$36 million in 2Q16, up 65% from 1Q16, with transfers in the SBPE system of R$19 million. Reduction in corporate debt: from R$298 million in 1Q16 to R$196 million in 2Q16. Net Debt (ex-production debt/equity): -3.3% in 2Q16, one of the lowest levels in the industry. Solid cash position: cash (R$224 million) plus performed receivables free of debt (R$207 million) represented 2.19 times the Company's corporate debt at end-2q16. Conference Call to discuss the 2Q16 Results: Portuguese (with simultaneous translation into English) August 12, at 15:00 p.m. (Brasília time) /14:00 p.m. (New York time) Brazil: +55 (11) Replay in Portuguese: +55 (11) USA: +1 (646) Code: Rodobens Other countries: +1 (646) Replay in English: +55 (11) Code: Rodobens Code: Rodobens *Excluding legal expenses Page 1 of 26

2 OPERATING AND FINANCIAL HIGHLIGHTS The complete consolidated financial statements for 2Q16, accompanied by the respective notes, can be found in the Quarterly Information (ITR) report, which is available on our Investor Relations website ( and on the website of the Securities and Exchange Commission of Brazil CVM ( Page 2 of 26

3 CONTENTS MESSAGE FROM MANAGEMENT... 4 LAUNCHES... 6 CONTRACTED SALES... 7 Inventory Turnover Ratio INVENTORY* PROJECTS DELIVERED TRANSFER TO BANKS OF CLIENT BALANCES / OFF-PLAN PROPERTIES LANDBANK - DEVELOPMENT LANDBANK - SUBDIVISION FINANCIAL PERFORMANCE INCOME STATEMENT Cash Position Trade Accounts Receivable Borrowings RDNI3 Stock Performance Consolidated Balance Sheet Consolidated Statement of Income Consolidated Cash Flow APPENDIX A: Supplementary Operating Data Launches *Inventory net of commissions Page 3 of 26

4 MESSAGE FROM MANAGEMENT We ended the first half of the year more optimistic. We believe that the worst is now behind us; during the second quarter, the economy began to show signs of a recovery, which included an increase in consumer confidence, which could help support a recovery in our sales volume. In view of this more favorable environment, we opted to resume launches, with a focus on unique products in less competitive markets in which the group enjoys expertise and strong brand recognition. In 1H16, total potential sales value (PSV) launched stood at R$169 million, which corresponds to 71% of the volume launched in 1H15. For the next semester, our new business area continues to work on the approval of projects in our landbank, especially in the Subdivision segment, which has a longer approval cycle. This will ensure the sustainability of our business and a pipeline of projects ready for launch. Gross sales of Stillo products in 2Q16 were 2.2 times higher than in 1Q16, with Total Gross PSV of R$64 million, and returned to the sales levels observed in late For the second half of the year, we are planning to deliver six SBPE projects that were launched in 2012 and 2013, with combined total PSV of R$544 million. Given the more restrictive posture adopted by banks for approving mortgage loans, we believe that some of our customers will be unable to obtain a mortgage loan to settle their unit, leading to a higher volume of cancellations for the company in the Stillo segment. To minimize this impact, we are giving incentives to clients who settle their units in full by working with partner banks to accelerate transfers and mapping the client portfolio, already canceling the agreements of clients who have lost the capacity to obtain loans from financial institutions or offering new units that are compatible with their new borrowing capacity. Of the total cancellations of R$53 million in the SBPE system in 2Q16, R$40 million involved units scheduled for delivery by year-end. In line with our plan to monetize non-strategic assets, we divested in the quarter eight commercial properties from the landbank of Rodobens Malls for the aggregate amount of R$11 million. Moreover, as already announced, we are in the advanced stages of negotiations for the sale of four development properties located in the city of São Paulo. In 2Q16, we reduced our corporate debt by R$104 million, as follows: R$59 million with the payment of debentures and R$45 million with the amortization of the outstanding balance on the Real Estate Credit Notes (CCB Imobiliária). We ended the quarter with a ratio of net debt (excluding production debt) to equity of -3.3% and a solid cash position of R$224 million. Page 4 of 26

5 To strengthen the company s cash balance to support a new cycle of launches, we are constantly analyzing options for financing our projects, especially in the subdivision segment. The Management Page 5 of 26

6 LAUNCHES In line with our strategy of concentrating launches in the Development segment in the country s Midwest and in the interior of São Paulo state, where our brand is well-known and competition is lower, in April 2016 we launched in Sinop, Mato Grosso, the Allegro project, with total PSV of R$82 million (RNI s interest 100%). In the first half of the year, we launched two projects with total PSV of R$169 million (RNI s interest 74%), with one in the Development segment and the other in the Subdivision segment (Recanto das Emas in Goiânia, Goiás). %RNI 59% N/A N/A 50% 100% 59% N/A 74% Page 6 of 26

7 CONTRACTED SALES Gross sales amounted to R$110 million in 2Q16, with RNI s interest 87%. In the SBPE segment, gross sales were R$64 million, an increase of 122% from 1Q16. The highlight was the launch in Sinop, Mato Grosso, which already has sold 25% of units for gross sales of R$22 million. In 1H16, gross sales amounted to R$240 million. Subdivision sales amounted to R$96 million, in line with the first half of last year. * %RNI Vendas Líquidas 87% 86% 70% 59% 63% 86% 80% 60% * Excludes the nonrecurring cancellation from the Ilumina project (R$11.8 million) Page 7 of 26

8 %RNI Vendas Brutas 84% 85% 86% 71% 87% 85% 85% 78% Page 8 of 26

9 * * Excludes the nonrecurring cancellation from the Ilumina project (R$11.8 million) As already mentioned, we are constantly monitoring our customer portfolio to anticipate cancellations of customers who lost their capacity to obtain mortgage loans from financial institutions in order to avoid high concentrations of cancellations when the projects are delivered. The increase in cancellations in the SBPE segment in 2Q16 is due to this effort to map/manage the portfolio of projects expected to obtain certificates of occupancy in the second half of Page 9 of 26

10 Inventory Turnover Ratio The Inventory Turnover Ratio for launches stood at 26% in 2Q16. The Inventory Turnover Ratio in the quarter stood at 3%. INVENTORY* On June 30, 2016, the total market value of our inventory stood at R$681 million, represented by 2,072 units. The share of finished units in the Company s total inventory increased from 9% in 1Q16 to 10% in 2Q16 due to the cancellations of finished units that returned to inventory at market value. The change in the PSV of the SBPE inventory is mainly due to the launch of the project in Sinop in the period, which added 212 units to inventory with total PSV of R$59 million. Page 10 of 26

11 The highest concentration of inventory is in the states of São Paulo and Mato Grosso, which together account for 72% of total PSV. *Inventory net of commissions PROJECTS DELIVERED In 2Q16, we delivered only two phases (420 units) of an MHML project in Feira de Santana, Bahia, which combined represent PSV of R$50 million. Page 11 of 26

12 TRANSFER TO BANKS OF CLIENT BALANCES / OFF-PLAN PROPERTIES Transfers of client balances and off-plan properties amounted to R$36 million in 2Q16. Of the total amount transferred, R$19 million was classified under the SBPE system. The increase in transfers in this segment compared to 1Q16 was due to the transfer of units from the Madison project in São Jose do Rio Preto, São Paulo, whose certificate of occupancy should be issued in 3Q16. Page 12 of 26

13 LANDBANK - DEVELOPMENT The potential sales value of the landbank for residential projects (acquired or secured by purchase options) reached R$2.3 billion. Of this amount, R$2.1 billion (91% of the total) was in properties effectively acquired and R$0.2 billion (9% of the total) was in properties secured by purchase options, which were distributed across 13 cities in five states. The variation in the acquired landbank in the quarter was mainly due to: (i) the acquisition of one property in the interior of São Paulo state, with PSV of R$101 million; (ii) the launch of the project in Sinop, Mato Grosso with PSV of R$82 million; and (iii) the elimination of a property in the state of Mato Grosso, which generated a loss of R$2.2 million in the quarter, as recorded under other operating expenses. In the case of properties secured by purchase options, we eliminated two properties, with one in the interior of São Paulo state and the other in the state of Mato Grosso do Sul, with combined PSV of R$435 million. Page 13 of 26

14 LANDBANK - SUBDIVISION The following table shows the landbank for subdivision properties. The only change in the subdivision landbank in the period was the option on a property in the state of Goiás with PSV of R$42 million. Page 14 of 26

15 FINANCIAL PERFORMANCE INCOME STATEMENT Consolidated Net Revenue amounted to R$75.2 million in 2Q16, compared to R$89.0 million in 1Q16 and R$146.0 million in 2Q15. The variation in revenue in 2Q16 compared to 1Q16 was mainly due to the higher volume of cancellations of finished units or units in the advanced stage of construction. Meanwhile, the variation compared to 2Q15 was due not only to cancellations, but also to the reduction in the number of active construction sites, from 29 at the end of 2Q15 to 21 at the end of 2Q16. Gross Margin from Development in 2Q16 stood at 2.8%. The 11.4% decline in margin compared to 1Q16 was mainly due to: (i) the lower dilution of costs with the technical department due to the lower number of active construction sites for apportionment; (ii) the discounts granted in the period on the sale of MHML and Stillo units that are completed or whose certificate of occupancy should be issued in 2016, in line with our strategy of monetizing assets. In 1H16, Gross Margin from Development stood at 7.4%, compared to 23.3% in 1H15. Page 15 of 26

16 Gross Margin from Subdivision increased by 9.2 p.p., from 61.1% in 1Q16 to 70.3% in 2Q16, driven by the project Jardim dos Buritis in São José do Rio Preto, which has a margin higher than that of other projects and 95% of which has already been sold. In 1H16, Gross Margin from Subdivision stood at 64.7%, increasing 16.6 p.p. from 47.9% in 1H15. Including 100% of the revenue from the launch of the subdivision project Recanto das Emas and other nonconsolidated projects, net revenue in 2Q16 would be R$97.9 million, with gross margin of 23.3%. The following table provides a detailed reconciliation of revenue and gross margin from nonconsolidated projects. Selling expenses amounted to R$8.6 million in 2Q16, compared to R$8.0 million in 1Q16. This 9% increase in the period is mainly due to the higher volume of cancellations, which led to the immediate apportionment of sales commissions that before would have been recognized in accordance with the percentage of completion. Compared to 2Q15, selling expenses decreased by 34%. In 1H16, Selling Expenses amounted to R$16.6 million, decreasing 37% from 1H15. In 2Q16, General and Administrative Expenses amounted to R$12.3 million, up 11% from 1Q16. This increase is due to wage increases under the collective bargaining agreement and to higher expenses with property tax (IPTU) and condominium fees of finished units due to the lower inventory turnover ratio in the year. In 1H16, general and administrative expenses amounted to R$23.5 million, down 24% from 1H15. The main reason for the decrease was the optimization of the administrative structure carried out during Legal Expenses came to R$5.6 million in 2Q16, compared to R$4.6 million in 1Q16. Page 16 of 26

17 * EBITDA: net income from the period plus income tax, financial expenses net of financial income, and depreciation, amortization and depletion. Adjusted EBITDA refers to the adjustment of expenses with capitalized interest, given the operational nature of this expense. Adjusted EBITDA came to negative R$7.1 million in 2Q16, due to the lower revenue in the period. In 1H16, Adjusted EBITDA came to R$12.6 million, with Adjusted EBITDA margin of 7.7%. The Net Financial Income (Expense) in 2Q16 corresponded to income of R$0.9 million, compared to income of R$6.1 million in the previous quarter. Backlog Margin ended 2Q16 at 34.3%, in line with 1Q16. Note that the amounts recorded in Backlog Margin have not yet been subjected to PIS/COFINS taxes and do not include the financial expenses related to COGS. Page 17 of 26

18 BALANCE SHEET: Main items Cash Position RNI ended 2Q16 with a cash position of R$224 million. The main cash outflows during 2Q16 were: (i) amortization of the balance of Real Estate Credit Notes (CCB Imobiliária) - R$45 million; (ii) payment of debentures - R$59 million; (iii) payment of dividends - R$10 million; and (iv) payment of properties - R$7 million. The reduction in cash burn between 2Q16 and 1Q16 was due to higher amounts received from clients in the period. Excluding the amounts related to payments for properties (R$7 million), cash burn in the quarter was R$6 million. In the second half of the year, we plan to deliver six SBPE projects with combined lauched PSV of around R$544 million and consequently to monetize/transfer a significant portion of the portfolios of these projects with the settlement of the balance of debt from business plans and the potential for cash generation. Page 18 of 26

19 Trade Accounts Receivable The balance of Trade Accounts Receivable stood at R$831 million on June 30, 2016, of which R$656 million is recorded on the balance sheet with the associated revenue already recognized. Of this amount, R$448 million is recorded in current assets and R$208 million in non-current assets, as shown in the following table. Credits not yet recorded on the balance sheet and whose revenue has not yet been recognized in the income statement using the percentage of completion (PoC) method amounted to R$175 million on June 30, The difference between the R$229 million recognized under Backlog and the amount of R$175 million refers to advances from clients, which amounted to R$54 million at the end of 2Q16. The performed receivables portfolio amounted to R$242 million on June 30, The following table provides a breakdown and the status of performed receivables classified by phase and order of monetization: The following table shows the changes in the performed receivables portfolio: Page 19 of 26

20 Borrowings An analysis follows of the Company's debt position in relation to its Cash Balance and Shareholders' Equity. In 2Q16, we amortized R$104 million of the balance of corporate debt, with R$45 million from the balance of Real Estate Credit Notes and R$59 million from the payment of debentures. On June 30, 2016, the Net Debt/Equity ratio (excluding SFH/SFI) stood at -3.3%, compared to -4.7% on March 31, Net debt increased from R$333 million in 1Q16 to R$355 million in 2Q16, due to the increase of R$10 million in the balance of Construction Financing and the payment of dividends of R$10 million. The cash position of R$224 million plus the R$207 million in performed receivables not linked to any construction financing corresponds to 2.19 times the Company's total corporate debt and to 0.74 times its total debt. Our debt maturity schedule is shown below: Page 20 of 26

21 The Company's debt is divided into three types of credit facilities, as follows: The following chart shows the evolution of construction debt and the average interest rate weighted by the share of the outstanding balance of each project in the total. Page 21 of 26

22 RDNI3 Stock Performance The following chart shows the performance of RDNI3 stock in the last 12 months, in terms of price and trading volume. The stock's closing quote on June 30, 2016 was R$7.00. *Index composed of the stocks CYRE3, DIRR3, EVEN3, EZTC3, GFSA3, HBOR3, JHSF3, MRVE3, PDGR3, RDNI3, RSID3, TCSA3, TRIS3 and VIVR3 weighted by market capitalization. Base /30/2016 Source: Bloomberg DISCLAIMER The statements contained herein regarding the business prospects, projections of financial and operating results and growth prospects that affect the operations of RODOBENS, as well as any other forward-looking statements regarding the Company s business are merely estimates and as such are subject to risks and uncertainties and therefore are not guarantees of future results. These forward-looking statements depend substantially on market conditions, government regulations, competitive pressures, performance of the industry and the Brazilian economy and other factors, and therefore are subject to change without prior notice. Page 22 of 26

23 Consolidated Balance Sheet Page 23 of 26

24 Consolidated Statement of Income Page 24 of 26

25 Consolidated Cash Flow Page 25 of 26

26 APPENDIX A: Supplementary Operating Data Launches Page 26 of 26