Gafisa Reports Second Quarter 2009 Results

- Pre-Sales Grow to R$835 million for the quarter; R$1.4 billion for the first half of 2009 - - EBITDA Increases 76% to R$138.6 million on Revenue Increase of 54% to R$706 million - - R$1.1 billion in Consolidated Cash and Equivalents -


SAO PAULO, Aug. 1  /PRNewswire-FirstCall/ -- Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), one of Brazil's leading diversified national homebuilders, today reported financial results for the second quarter ended June 30, 2009 (2Q09). The following financial and operating information, unless otherwise indicated, was prepared and presented in accordance to Brazilian GAAP (BR GAAP) and in Brazilian Reais (R$). The second quarter of 2008 has been adjusted in accordance with Law 11,638, which brings accounting standards closer to the IFRS, for comparison purposes to the second quarter of 2009.  Further details of the Company's second quarter results may be found on the Gafisa website: http://www.gafisa.com.br/ir.

Commenting on the second quarter highlights, Wilson Amaral, CEO of Gafisa, said: "We witnessed healthy demand in all segments of the Brazilian real estate market.  Historically low interest rates, inflation and unemployment levels have prevailed, and the convergence of increasing economic prosperity, strong government support of home ownership, and substantial household formation in all regions of the country contributed to Gafisa achieving strong sales of R$1.4 billion during the first half of 2009. Our diverse residential product lines, brand strength in all income segments, and a national footprint spanning twenty states positioned us very well to capture the renewed growth of the sector."

Amaral continued, "Gafisa posted solid second quarter results, with consolidated revenues of R$706 million, an increase of 54% over 2008 second quarter's result contributing to a gross profit improvement of 41% to R$191 million as compared to the same period one year ago.  We sold 5,894 units, representing R$835 million of which almost 75% was inventory launched before 2009.  While launches increased sequentially, we will continue to only launch new projects with demonstrated demand and project financing in place."

Second Quarter Results

Project launches for the quarter totaled R$626 million, a decline from the R$1,409 million recorded in the second quarter of 2008 as Gafisa continued to focus on sales from inventories and launched new projects in accordance with demonstrated demand.

Gafisa's pre-sales reached R$835 million, a 9% increase over 2Q08 sales of R$764 million, on particularly strong sales of units from inventory.  Pre-sales of $1.4 billion for the first half of 2009 were similar to the levels recorded in the first half of 2008 prior to the global economic downturn precipitated at the end of the year.

Net operating revenue for the second quarter, recognized by the Percentage of Completion ("PoC") method, rose 54% to R$705.8 million from R$458.8 million in the previous year.  Backlog of Results to be recognized under the PoC method at the end of the second quarter reached R$1.1 billion (backlog margin of 36.4%), a 69% increase from the prior year period.

Selling expenses were R$51.2 million in 2Q09 versus R$30.9 million in the second quarter of the previous year.  The increase in these expenses is primarily due to the consolidation of Tenda which has a large retail presence in high-growth metropolitan areas and dedicated sales force.

EBITDA adjusted for R$3.7 million non-cash stock option expenses was R$142.2 million (adjusted EBITDA margin 20.1%), an increase of 69% as compared to R$84.3 million in 2Q08 (margin 18.4%).  EBITDA for the second quarter was R138.6 million, a 76% increase as compared to the R$78.7 million reported in the prior year period.

Net Income before deduction of minority shareholders and non-cash stock option expenses was R$81.1 million (11.5% margin), an increase of 26% as compared to the R$64.4 million in the previous year's second quarter.  Net Income was R$57.8 million and EPS R$0.44, an increase of 35%, compared with R$42.8 million and an EPS of R$0.33 for the second quarter of 2008.

Total consolidated cash and cash equivalents at June 30, 2009 was R$1.1 billion including R$70 million from a second securitization of Gafisa receivables and Tenda's R$600 million Caixa debenture, while net debt including obligations to investors was R$1.5 billion.  As of June 30, 2009, our net debt and obligation to investors to equity and minority interests ratio was 65.6% compared to 61,9% in 1Q09 and 36.9% in 2Q08.  On July 21, 2009, 97.65% of holders of the fourth issue of debentures voted to remove a covenant restricting net debt to R$1 billion that was negotiated in 2006, when Gafisa's equity was less than half its current amount.  Cash burn this quarter was R$111 million compared to R$115 million in the first quarter of 2009, down from R$360 million in the fourth quarter of 2008.

Gafisa's consolidated land bank is R$16.0 billion of future sales, a 21.6% increase compared to the 2Q08.

Key Recent Events

During the quarter, healthy demand was witnessed in the mid/mid-high segment, with three high-ticket launches in Sao Paulo through the Gafisa and Alphaville brands: Vistta Santana, Supremo Ipiranga and Alphaville Granja Viana, in addition to the launch of Gafisa Sorocaba in Rio de Janeiro.

Tenda is successfully integrating the operations of Fit and is seeing the benefits of its unique sales platform to showcase products geared to the affordable entry-level market.  During the second quarter sales were R$367 million on 4,366 units at an average price of approximately R$84,000.  With the lowest price points in the industry, Tenda's customers are benefiting from the strong subsidies provided by the government's recently announced housing program.

During the second quarter 2009, Gafisa's mid/mid-high products represent 69.4% of launches and 56.1% of pre-sales, while Tenda's represent 30.6% of launches and 43.9% of pre-sales.  We currently have developments in 99 cities in 20 states.

Due to financial market conditions, Gafisa cancelled a previously announced equity offering on July 13, 2009.  Our expectations for achieving the consolidated sales guidance provided in 1Q09 of R$2.7 - R$3.2 billion have not changed, as proceeds from the offering were not planned as a source of funding to achieve the 2009 objectives.

Gafisa has been certified as Sarbanes-Oxley ("SOX") compliant, without any material weakness.  For 2009 the compliance effort will remain, including all new relevant affiliated companies.

Outlook

A number of recent government measures, including the R$34 billion package to foster growth in the housing industry, a federal incentive program aimed at building one million houses by 2010 and the Central Bank's recent cutting of the Selic rate to 8.75%, have resulted in increased availability of funds to support growth of the housing industry. Stability has prevailed and positive macroeconomic trends have begun to emerge.  The seasonally-adjusted unemployment rate fell to 8% in June, the lowest level since November 2008, and in July, consumer confidence reached its highest level since September 2008. Importantly, there are recent signs of strengthened demand for housing in the mid/mid-high segment that is traditionally more sensitive to economic uncertainty.  As a result, Gafisa expects launch activity at Tenda to significantly increase in the second half, while it will selectively increase launch activity at Gafisa and Alphaville and continue to focus of inventory and monitor closely the supply and demand for new housing.

As announced in 1Q09, Gafisa's consolidated sales for the full year 2009 are expected to be between R$2.7 and R$3.2 billion.  Gafisa is expected to account for between R$1.0 - 1.2 billion, Tenda for R$1.4 - R$1.6 billion and Alphaville from R$0.3 - R$0.4 billion.  Consolidated EBITDA margin is expected to be in the range of 16% - 17%, while EBITDA margin for Tenda is expected to be between 14% - 16%.

Conference Call

The management of Gafisa will host a conference call in English on August 3, 2009, at 11:30 a.m. US EDT/12:30 p.m. Brasilia time. To access the call, dial [phone] from the United States and [phone] from other countries and ask for the Gafisa conference. A replay of the conference call will be available for a week after that. To access the replay, dial [phone] from the United States and [phone] from other countries and enter the code #432459. A live webcast of the conference call will be available on the internet at http://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 970 developments and constructed over 11 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. We serve the lower income housing segments through our majority ownership stake in Construtora Tenda, S.A., a separate publicly-traded company on the Novo Mercado of the BM&FBOVESPA.

  Investor Relations:
  Julia Freitas Forbes
  Phone: [phone]
  Email: 
  Website: http://www.gafisa.com.br/ir


  Media Relations (Brazil)
  Patricia Queiroz
  Maquina da Noticia Comunica ao Integrada
  Phone: [phone]
  Fax: [phone]
  Email: 



Only financial data derived from Gafisa's accounting system were subject to review by the Gafisa's auditors. Operating and financial information not directly linked to the accounting system (i.e., launches, pre-sales, average sales price, land bank, PSV and others) or non-BR GAAP measures were not reviewed by the auditors. 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 results filed with the Brazilian Comissao de Valores Mobiliarios ("CVM"), please visit Gafisa's website http://www.gafisa.com.br/ir.

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 Gafisa'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. 

DATASOURCE: Gafisa S.A.



CONTACT:  Media, (Brazil), Patricia Queiroz, Maquina da Noticia

Comunicacao Integrada, [phone], or Fax, [phone],

; or Investor Relations, Julia Freitas Forbes

of Gafisa S.A., [phone], 



Web Site:  http://www.gafisa.com.br/ir 

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