1Q10 ResultsConference Call
Tenda
Alphaville
Investor Relations Contact
Luiz Mauricio de Garcia Paula
1
Gafisa
Safe-Harbor Statement
We make forward-looking statements that are subject to risks and uncertainties. These statementsare based on the beliefs and assumptions of our management, and on information currently availableto us. Forward-looking statements include statements regarding our intent, belief or currentexpectations or that of our directors or executive officers.
Forward-looking statements also include information concerning our possible or assumed futureresults of operations, as well as statements preceded by, followed by, or that include the words''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' orsimilar expressions. Forward-looking statements are not guarantees of performance. They involverisks, uncertainties and assumptions because they relate to future events and therefore depend oncircumstances that may or may not occur. Our future results and shareholder values may differmaterially from those expressed in or suggested by these forward-looking statements. Many of thematerially from those expressed in or suggested by these forward-looking statements. Many of thefactors that will determine these results and values are beyond our ability to control or predict.
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Financial and Operational Performance – Wilson Amaral, CEO
Overview of 1Q10 Results
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Financial and Operational Performance – Wilson Amaral, CEO
Operating and Financial Highlights (R$ 000) 1Q10 1Q09 Var. (%) 4Q09
Launches 703,209 160,243 339% 1,000,353
Launches , units - '000 3,871 651 495% 4,258
Contracted sales 857,321 558,565 53% 1,053,810
Contracted sales , units - '000 5,253 4,100 28% 6,413
Net revenues 907,585 541,887 67% 897,540
Gross profit 252,656 154,639 63% 277,418
Adjus ted Gross m argin (w/o capitalized interest) 30.4% 31.8% -140 bps 34.7%
Adjus ted EBITDA (1) 168,459 76,644 120% 167,825
Adjus ted EBITDA m argin (1) 18.6% 14.1% 442 bps 18.7%
HighlightsStrong Top Line Growth, Operating Margin Improvement and Comfortable Liquidity
Adjus ted EBITDA m argin 18.6% 14.1% 442 bps 18.7%
Adjus ted Net profit (2) 79,624 57,055 40% 86,074
Adjus ted Net m argin (2) 8.8% 10.5% -170 bps 9.6%
Net profit 64,819 36,733 76% 55,321
EPS (R$/share) 0.1548 0.1413 10% 0.1659
Results to be recognized (3) 1,030,075 1,003,075 3% 1,065,777
REF m argin (3) 35.1% 34.6% 50 bps 35.2%
Net debt and Inves tor obligations 1,207,988 1,361,909 -11% 1,998,079
Cash and availabilities 2,125,613 500,778 324% 1,424,053
(Net debt + Obligations ) / (Equity + Minorities ) 34.6% 61.9% -2700 bps 83.8%
(1) Adjusted for expenses w ith stock options plans (non-cash) and Tenda goodw ill net of provisions.(2) Adjusted for expenses w ith stock options plans (non-cash), minority shareholders and non recurring expenses(3) Results to be recognized net f rom PIS/Cof ins - 3.65%; excludes the AVP method introduced by law 11638
4
Recent Developments
Follow-on Share Offering: R$ 1.02 billion of net proceeds will allow the company to acquire land,
increase launch activity and pursue strategic acquicitions;
Acquired additional 20% of AlphaVille: Gafisa now owns 80% of Alphaville; will own 100% in 2012;
Increased Launches, Strong Sales Velocity at Tenda: Tenda, continued to ramp up its launches of
new developments in the entry level and affordable market segment, achieving sales velocity of more
than 32%;
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Tenda’s Operational Improvement: The first quarter of 2010 was the first full quarter that Tenda
has been operated as a wholly-owned subsidiary of Gafisa. The results of the work that was begun last
year with Tenda and this past quarter are now bearing fruit;
Minha Casa Minha Vida: CEF contracted volumes reached 417,814 units through April 26th, showing
a improved pace of execution and appears to be on track to reach 1 million by the end of the year;
Minha Casa, Minha Vida 2: Government announced an extension of MCMV through 2014, and a
total investment of R$ 72 billion, more than double the R$ 34 billion allocated to the initial program.
Efficiency Gains under “Minha Casa, Minha Vida” ProgramTenda contracted 11,210 units through April and has close to 22,000 units under CEF analysis
Caixa’s efficiency continue to improve.
In April, Tenda contracted 2,320 units, the highest monthly amount since the beginning of MCMV.
Minimum Wages Caixa Econômica Fereral(1)
Tenda Share %
0 - 3 MW 208,559 - -
3- 10 MW 209,255 11,210 5.4%
TOTAL 417,814 11,210 2.7%
(1) Until April 26th, 2010 for CEF and April 30th for Tenda. Breakdow between 0-3 and 3-10 based on the % from April 13th.
Contracted Units in the "MCMV" I
Pipeline
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Period To be contracted(2)
Contracted TOTAL
2009 - 6,102 6,102
1Q10 - 2,788 2,788
April 2010 21,831 2,320 24,151
TOTAL 21,831 11,210 33,041
(2) Units being contracted and already filed with CEF untill April 2010
Transferred Units
2009 5,114
1Q10 1,898
April 2010 724
TOTAL 7,736
Transferred
Concluded Projects
Gafisa completed 27 developments or phases during 1Q10, representing R$ 338 million of PSV.
Gafisa: 3 projects/phases, 325 units, R$ 105 million
Tenda: 24 projects/phases, 3,040 units, R$ 233 million
Tenda: Valle Verde Cotia, SP
Gafisa: Isla
Tenda: Valle Verde Cotia, SP
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Gafisa Acácia II
Diversified, High-Quality Land Bank Provides Strong Platform for Growth
418 different projects or phases in 22 states
/ ‘000 units
PSV - R$ million
(%Gafisa)
%Swap
Total
%Swap
Units
%Swap
Financial
Potential units
(%Gafisa)
Gafisa ≤ R$500K 4,269 52.5% 44.8% 7.7% 14,110
> R$500K 3,338 31.2% 29.1% 2.0% 4,137
Total 7,606 40.8% 36.2% 4.6% 18,247
Alphaville ≤ R$100K; 2,129 98.1% 0.0% 98.1% 19,137
> R$100K; ≤ R$500K 874 94.9% 0.0% 94.9% 3,534
> R$500K 949 96.8% 0.0% 96.8% 140
Total 3,952 96.8% 0.0% 96.8% 22,811
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� 39.4% acquired by swap agreements.
� Affordable entry-level segment represents 53% of potential units in land bank.
Tenda ≤ R$130K 3,677 35.1% 35.1% 0.0% 43,055
> R$130K 411 24.6% 24.6% 0.0% 2,579
Total 4,089 33.7% 33.7% 0.0% 45,634
Consolidated 15,647 39.4% 35.6% 3.8% 86,692
1Q10 Launches by unit price 1Q10 Pre-sales by unit price
Strong Launches and Sales Performance
1Q10 1Q09
Gafisa ≤ R$500 k 142,816 78,559
> R$500 k 166,481 59,803
Total 309,298 138,362
Units 743 478
Alphaville ≤ R$100K; - -
> R$100K; ≤ R$500K 97,269 21,881
> R$500K - -
Total 97,269 21,881
Units 340 172
Tenda 1)
≤ R$130 k 219,849 -
> R$130 k 76,794 -
(%Gafisa) - R$ 000 1Q10 1Q09
Gafisa ≤ R$500 k 322,697 180,287
> R$500 k 53,182 89,845
Total 375,879 270,132
Units 950 727
Alphaville ≤ R$100K; 27,450 19,569
> R$100K; ≤ R$500K 85,431 13,282
> R$500K 3,762 2,529
Total 116,643 35,379
Units 573 216
Tenda 1)
≤ R$130 k 262,473 219,106
> R$130 k 102,326 33,948
(%Gafisa) - R$ million
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> R$130 k 76,794 -
Total 296,643 -
Units 2,788 -
Consolidated Total 703,209 160,243
Units 3,871 651
> R$130 k 102,326 33,948
Total 364,799 253,054
Units 3,729 3,157
Consolidated Total 857,321 558,565
Units 5,253 4,100
São Paulo
42.5%
Rio de
Janeiro
17.1%
Other
40.5%
São Paulo
44.5%
Rio de
Janeiro
14.1%
Other
41.4%
R$ millionInventories beginning
of period Launches Sales
Price Increase +
Other
Inventories end
of periodSales velocity
Gafisa 1,570.4 309.3 375.9 26.7 1,530.5 19.7%
AlphaVille 263.5 97.3 116.6 6.1 250.3 31.8%
Tenda 796.6 296.6 364.8 36.8 765.2 32.3%
Total 2,630.5 703.2 857.3 69.6 2,546.0 25.2%
Inventories and Sales Velocity - 1Q10Sales Velocity in 1Q10 Contributed to Substantial Inventory Reduction
1Q10 Inventory
Inventory reduction (R$ million)
1,581 1,570 1,531
199 264 250
1,149797 765
1Q09 4Q09 1Q10
Gafisa Alphaville Tenda 10
2,929
2,631 2,546
16,099
33,586
49,423 50,494
2007 2008 2009 1Q10
Proven of ExecutionOn track to deliver consistent growth
Units Under Construction Projects under Construction
63
85
188 194
2007 2008 2009 1Q102007 2008 2009 1Q10
242 386
513 484 31
47
58 67
186
241
309 356
459
674
880 907
2007 2008 2009 1Q10
Intern Enginners Construction Architects On the Job11
Units Completed Number of Engineers
Source: Gafisa
2007 2008 2009 1Q10
3,108
8,206
10,831
3,365
E: 25,000
2007 2008 2009 1Q10/2010E
Financial Performance – Duilio Calciolari, CFO and IR Officer
Overview of 1Q10 Results
Financial Performance – Duilio Calciolari, CFO and IR Officer
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Strong Pre-Sales Positively Impact Backlog of Revenues to be
Recognized
(R$ million) 1Q10 1Q09 4Q09 1Q10 x 1Q09 1Q10 x 4Q09
Consolidated Revenues to be recognized 2,934 2,901 3,025 1.1% -3.0%
Costs to be recognized (1,904) (1,898) (1,959) 0.3% -2.8%
Results to be recognized (REF) 1,030 1,003 1,066 2.7% -3.3%
REF margin 35.1% 34.6% 35.2% 54 bps -12 bps
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Note: Revenues to be recognized are net of PIS/Cofins (3.65%). Backlog of Revenues not adjusted to present value.
REF margin 35.1% 34.6% 35.2% 54 bps -12 bps
1Q10 1Q09 4Q09 1Q10 x 1Q09
Consolidated Selling expenses 51,294 46,606 73,277 10%
G&A expenses 57,418 55,918 60,298 3%
SG&A 108,712 102,524 133,575 6%
Selling expenses / Sales 6.0% 8.3% 7.0% -236 bps
G&A expenses / Sales 6.7% 10.0% 5.7% -331 bps
SG&A / Sales 12.7% 18.4% 12.7% -567 bps
Selling expenses / Net revenues 5.7% 8.6% 8.2% -295 bps
G&A expenses / Net revenues 6.3% 10.3% 6.7% -399 bps
SG&A / Net revenues 12.0% 18.9% 14.9% -694 bps
Company (R$000)
SG&AImprovement over 1Q09 with Better SG&A Ratios Over Top Lines
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� All ratios improved when compared to the 1Q09, mainly due to the continued improvement at Tenda and
synergies related to the merger of Tenda into Gafisa.
� We continue to expect synergies to be achieved through shared back office functions, leveraging office
infrastructure, and the implementation of systems such as SAP across Tenda’s operations (expected in the
3Q10).
R$ million 1Q10 4Q09
Total Debt 3,034 3,122
Total Cash 2,126 1,424
Investor Obligations 300 300
Net debt and investor obligations 1,208 1,998-
34.6% 83.8%-
(Net debt + Ob.) / (Eq + Min.) - Exc. Project
Net debt and investor obligations / (Equity
+Minorities)
Net Debt/Equity (Excluding Project Finance): (13.8%)
71% of the Consolidated Debt is Long-Term
Strong Cash Position: R$2.1 billionDebt Maturity
Short Term
29%
Long Term
71%
-13.8% 13.3%-
Cash Burn Rate 1) 233 348
1) Already adjusted for the R$ 1.02 billion Equity Offering
(Net debt + Ob.) / (Eq + Min.) - Exc. Project
Finance (SFH + FGTS Deb.)
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(R$ million) Total Until March/2010 Until March/2011 Until March/2012 Until March/2013 After March/2014
Debentures - FGTS (project finance) 1,231.6 31.6 150.0 300.0 450.0 300.0
Debentures - Working Capital 656.2 108.2 298.0 125.0 125.0 -
Project financing (SFH) 458.0 301.1 99.9 54.2 2.8 -
Working capital 687.8 430.8 181.3 43.2 32.5 -
Total consolidated debt 3,033.6 871.7 729.2 522.4 610.3 300.0
% Total 29% 24% 17% 20% 10%
Growing Credit Availability Despite Recent Selic Increase
Interest Rates vs. Housing Financing
0%
5%
10%
15%
20%
25%
30%
Dec-02 Jul-04 Feb-06 Sep-07 Nov-08 Dec-09
0
10
20
30
40
50
60
70
80
90
100
Selic (%a.a.) Real State Financing (R$ bn)
The availability of credit started a favorable growth trend in
2005, when the annual Selic was close to 20%;
In 2008 the Central Bank increased the Selic from 11.25%
to 13.75% without any impact on home financing;
According to the Central Bank, the market is expecting a
Selic of 11.75% by the end of 2010, followed by a reduction in
2011.
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101%
83%
18% 13%3%
Denmark UK Chile Mexico Brazil
Real Estate Financing – Amount Funded (R$ bn) Home Financing vs. GDP1
Source: Central Bank, IBGE and ABECIP1. Data from 2006 but for Brazil, its from 2009
3 6 918
30 3445
3 46
7
1016
23
610
15
25
4050
68
2004 2005 2006 2007 2008 2009 2010E
SBPE FGTS
Brazil: low mortgage penetration and high growth potential for home financing
Follow-on Share Offering – Full Primary
By the end of March we concluded the primary follow on share offering;
Net proceeds was equivalent to R$ 1.02 billion;
Intended Use of Proceeds continuous to be as follows:
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Use of Proceeds %
Land Acquisition 35
Working Capital 25
Launches 20
M&A 20
TOTAL 100
2010 Outlook
Gafisa continues to expect launches in the range of R$ 4 billion to R$ 5 billion
during 2010, of which 40-45% will be dedicated to the affordable entry-level segment
through Tenda.
We expect full year 2010 EBITDA margin to reach between 18.5% - 20.5%.
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Gafisa: The Most Liquid Brazilian Real Estate Company and the Only
One Listed on NYSE
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8
10
12
14
16
18
100
150
200
250
300
ADTV (R$ MM) Price GFSA3 (R$ / share)
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Gafisa’s average daily trading volume: R$98.6 million (Jan 1st, 2010 – Apr 30th, 2010)
Average Daily Turnover in the last 120 days over free float: 2.0%
(1)ADTV = Average Daily Trade Volume
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