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2nd Quarter of 2007Earnings Conference Call Presentation
Slide PresentationPortugueseMarcos Lopes CEO - Roberto Amatuzzi CFO EnglishFrancisco Lopes COO - Roberto Amatuzzi CFO
Lopes – LPS Brasil
Forward-looking Statements
This presentation does not constitute an offer, or invitation, or solicitation of an offer to subscribe for or purchase any securities neither does this presentation nor anything contained herein form the basis to any contract or commitment whatsoever.
The material that follows contains general business information about Lopes – LPS Brasil – Consultoria de Imóveis S.A
related to the quarter ended on June 30, 2007. It is not intended to be relied upon as advice to potential investors. The
information does not purport to be complete and is in summary form. No reliance should be placed on the accuracy,
fairness, or completeness of the information presented herein and no representation or warranty, express or implied, is
made concerning the accuracy, fairness, or completeness of the information presented herein.
This presentation contains statements that are forward-looking and are only predictions, not guarantees of future
performance. Investors are warned that these forward-looking statements are and will be subject to many risks,
uncertainties, and factors related to the operations and business environments of Lopes – LPS Brasil – Consultoria de
Imóveis S.A and its subsidiaries such as competitive pressures, the performance of the Brazilian economy and the industry,
changes on market conditions, among other factors disclosed in Lopes – LPS Brasil – Consultoria de Imóveis S.A filed
disclosure documents. Such risks may cause the actual results of the companies to be materially different from any future
results expressed or implied in such forward-looking statements.
Lopes – LPS Brasil – Consultoria de Imóveis S.A believes that based on information currently available to Lopes – LPS Brasil -
Consultoria de Imóveis S.A management, the expectations and assumptions reflected in the forward-looking statements
are reasonable. Lastly, Lopes – LPS Brasil – expressly refuses any duty to update any of the forward-looking statements
contained herein.
Agenda
I. Operating Highlights
II. Geographic Expansion
III. Real Estate Market
IV. 2Q07 Financial Performance
Operating Highlights
Operating Highlights
Net Revenue grew by 54% over the 2Q06, reaching R$32.1 million.
Record Sales Contracted of Launches for a first half-yearly period – R$1.7 billion – 43% growth over the 2Q06
Net Income of R$14.1 million in the 2Q06, representing a 37%-growth when compared to the same period 2006.
Rio de Janeiro operations in accelerated pace, reaching R$145 million in Sales Contracted, a 332%-growth over the 1Q07, with net income of R$1.1 million yet in the fourth quarter of operation.
Operations in Salvador started on July 24, with a significant pipeline of future launches of R$1.0 billion and sales force of 120 brokers.
Lopes acquires the largest sales company in the state of Espírito Santo through a very accretive transaction to the Company, progressing in its geographic expansion strategy.
Lopes strengths its nationalization plan, becoming a benchmark as provider of real-estate brokerage and property launch consultancy services with single scale – offering a higher added-value to clients – developers and buyers – in the states of São Paulo, Rio de Janeiro, Rio Grande do Sul, Paraná and Bahia.
Sales Contracted* – Total Volume
38%
1H06 1H07Secondary MarketLaunches
1,338
1,847
Total contracted GSV (R$ MM)
* Unaudited and managerial information.
Contracted GSV of Launches (R$ MM)
1,253
1,556
2003 2004 2005
CAGR: 28 %
CAGR: 28 %
1,853
850
591
1,166
20022000 2001 2006
2,545
1H06 1H07
1,186
1,699
43%152
148
1,699
1,186
Sales Contracted of Launches*
42%
2Q06 2Q07
743
1,058
R$ million
Quarterly
43%
1H06 1H07
1,186
1,699R$ million
Half-yearly
* Unaudited and managerial information.
Units Sold by Income Segment (R$) 2Q07 in São Paulo
0-150k
150k-350k
350k-600k
> 600k
41%
31%
16%
11%
Sales Contracted by Income – Launches*
Total Units Sold in São Paulo: 3,142
*Does not include LCI-RJ. Does not include parking slots; includes sales of residential land.
1.301 Units
978 Units
509 Units
354 Units
Geographic Expansion
Lopes Nordeste:BAHIA – Greenfield operation in Salvador (July 07), to explore the market potential of the Northeast market from this platform.
Lopes Sul:SOUTH REGION – After the acquisition of Dirani (May 07), the Company is benefiting from operating synergies aggregating its relationship with national developers, offering a solid local base.
Southeast Region:SAO PAULO – incontestable leader in the largest Brazilian market.RIO DE JANEIRO – LCI continuously progresses since its opening in July 2006, acquiring market shareESPÍRITO SANTO – Entry in this market through the acquisition of Actual (July 2007), the largest player in that state
Lopes is growing nationwide
Lopes has been following the regional movement of developers, consolidating itself as the distribution channel of choice with higher scale
and sales force pulverization capacity
Southeast Region
South Region
PRPRRJRJ
BABA
SPSP
RSRS
ESES
Northeast Region
LCI- Rio de Janeiro - Update
Significant growth in sales contracted in Rio de Janeiro, reaching R$145 million in 2Q07 – a 332% increase over 1Q07
Apr/07
629
Sales InventoriesSales InventoriesR$ million
Dec/06 Apr/07
1,400
1,976
Sep/06
731
CAGR: 322 %
CAGR: 322 %
Launches PipelineLaunches Pipeline
R$ million
Sales ForceSales Force
250
Number of Brokers
Apr/07Dec/06
146
Dec/06
463313
Jun/07Jul/07
586
2,425
Jul/07
Lopes Salvador (Bahia) : Opening and Operations Startup
Lopes in Salvador (Bahia)
Opening date: July 24, 2007
R$1,4 million in pre-operational investments
Main numbers:
– 120 independent brokers
– R$ 1.0 in future launches pipeline
Reception Desk of Lopes Reception Desk of Lopes NordesteNordeste located in Salvadorlocated in Salvador
Vitória (Espírito Santo): Acquisition of the leading company in the state
LOPES acquires 60% of the leading company in real estate brokerage in the state of EspíritoSanto (Actual).
Acquisition model very attractive in relation to Lopes’ P/E multiple.
Possibility of acquiring remaining 40% through the use of a call/put option mechanism
Maintenance of the management and a 8-year non-competition agreement in case Lopes acquires 100%
Opportunity that allows LOPES to start operations in a consolidated way in a state which is considered a promising growth alternative in the South Region market.
Lopes consolidates itself as the largest real-estate brokerage and property launch consultancy player in Brazil, operating now in 6 States, going forward with its geographic expansion strategy started in July 2006.
Real Estate Market
Volume of new units launched in the last 12 months is less than 10% higher than the average of past 10 years
São Paulo Market – Launched Units
Source: Secovi
Units
Sol
d: 3
0 k
64%
Launched Units M
ay 2
007
Tota
l O
fferin
g47
k
Mar
ket
Abs
orpt
ion
May
200
7 LT
M
May 2007 OutlookSão Paulo – Market Absorption
Initial Offering
18 k
29 k
Total Market Absorption
Current real estate market scenario in São Paulo
Thousand of units
Average:: 26.9
05
1015202530354045
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
May 2007
LTM
33%46%
60% 64%51%
0%
10%
20%
30%
40%
50%
60%
70%
2003 2004 2005 2006 May/07 LTM
2Q07 Financial Performance
Income Statement
(R$ 000)
Gross Revenue of Services
Gross Revenues Deductions
Net Income
Operating Expenses
Depreciation and Amortization
Financial Revenues, Net
Operating Income
Non-operating Income
Income Tax and Social Contributions
Minority Interests
Net Income
2Q07
35,529
(3,460)
32,069
(13,867)
(693)
(92)
17,415
-
(3,291)
(4)
14,120
Financial Highlights
54%
20,770
32,069
2Q06 2Q07
Net Revenue
(R$ 000)
34%
2Q06 2Q07
837
1.128
Total Contracted GSV* (R$ MM)
*Valor Gerencial
Financial Highlights – Cont’d
56%
11,687
18,200
37%10,297
14,120
2Q06 2Q07 2Q06 2Q07
Net Income Adjusted EBITDA*
(R$ 000)
Adjusted EBITDA is a non-accounting measure created by Lopes, consisting of net profit before minority interests, income tax and social contribution tax, net financial result (financial income and expenses), depreciation, amortization and non-operating income. The calculation of Adjusted EBITDA does not correspond to any accounting practice adopted in Brazil, does not represent cash flow for the periods presented, and should not be considered a substitute for net income as an indicator for operating performance or a substitute of cash flow as an indicator of liquidity. Adjusted EBITDA does not have a standardized meaning and the definition of Adjusted EBITDA adopted by Lopes may not be equivalent or comparable to the definitions of EBITDA or Adjusted EBITDA adopted by other companies.
New level of costs to the Company 2Q07 vs. 1Q07:
13,660
1,600
378122 (503)
(394)
14,651
1Q07 2Q07
Provision for Variable
Compensation
Sales Commission to Corporations
and Independent Contractors
Telecommunication Expenses
Advertising (LCI-RJ, LPS and EBC)
G&A Variation
(212)
Advisory andConsultancy
2Q07 Cost Analysis