3Q16 EARNINGS RELEASE. Viver Announces its Results for the Third Quarter of Highlights

Transcription

1 3Q16 EARNINGS RELEASE Conference Call Wednesday, Nov 16, 2016 Portuguese (With simultaneous translation into English) 10:00 a.m. (Brasilia) 09:00 a.m. (New York) Phone: +55 (11) (11) Access code: Viver Replay: +55 (11) Password: English Phone: +1 (516) Access code: Viver Replay: +55 (11) Password: Viver Announces its Results for the Third Quarter of 2016 São Paulo, November 14, 2016 Viver Incorporadora e Construtora S.A. Under Judicial Reorganization (VIVR3) announces today its operating and financial results related to the Third quarter (3Q16). Highlights Request for Judicial Reorganization, given the deterioration of Real Estate industry, associated with the difficulty that the company faced honoring its obligations to Banks and to preserve the continuity of its activities, the Group understood to be the best alternative. Approval of the Judicial Reorganization, on September 29, 2016, the Judge of the 2nd Court of Bankruptcies and Judicial Recoveries of the District of São Paulo State Capital granted the application of Viver Group for judicial reorganization. The approval was published in the DOU on October, Gross Sales amounted to R$ 18.8 million in 3Q16, a decrease of 31% compared to 2Q16. Sales cancellations amounted to R$ 98.8 million in 3Q16, mainly due to the reduction by in 88 units of the project Residencial Belvedere, as well as the effects of the loss of customer credit capacity due to the economic crisis experienced in the country. Repasse (mortgage delivery) amounted to R$ 80.0 million The Company s operating and financial information, except when otherwise indicated, is presented on a consolidated basis and in Brazilian Reais (R$) and in accordance with those international financial reporting standards (IFRS) applicable to Brazilian real estate companies, as approved by the Accounting Pronouncements Committee (CPC), the Brazilian Securities and Exchange Commission (CVM) and the Federal Accounting Council (CFC). in 3Q16, an increase of 89% compared to the 2Q16. General and administrative expenses, ex-severance and restructuring costs, at the end of 3Q16 amounted to R$ 3.7 million, an annualized level of R$ 14.8 million. 1

2 List of Contents Operating and Financial Indicators... 3 Operating Performance... 4 Financial Performance... 6 Balance Sheet... 8 Appendix

3 Operating and Financial Indicators Operating Highlights (BRL million) 3Q16 3Q15 Var% 9M16 9M15 Var% Launches (100%) - - n.a. - - n.a. Launches (% Viver) - - n.a. - - n.a. Launches (Units) - - n.a. - - n.a. Average Unit Launch Price (000) - - n.a. - - n.a. Pre-Sales (100%) (82,4) (4,3) 1816,3% (55,8) 26,1-314,1% Pre-Sales (% Viver) (80,0) (5,0) 1500,0% (56,3) 16,9-432,5% Pre-Sales (Units) (336) (25) 1244,0% (214) ,8% Average Unit Sales Price (000) ,4% ,2% Financial Highlights (BRL million) 3Q16 3Q15 Var% 9M16 9M15 Var% Average Unit Sales Price (000) (54,1) 45,7-218,2% (13,7) 101,5-113,5% Gross Profit (26,4) (10,7) 146,3% (63,7) (48,7) 30,7% Gross Margin 48,9% -23,5% 7238 bps 464,3% -48,0% bps Adjusted Gross Profit¹ (23,9) 13,7-274,2% (32,1) 19,1-267,7% Adjusted Gross Margin¹ 44,2% 30,0% 1420 bps 234,0% 18,9% bps Adjusted EBITDA² (44,8) (12,7) 253,5% (105,6) (45,4) 132,8% EBITDA Margin 82,8% -27,7% bps 769,8% -44,7% bps Net Income (Loss) (81,3) (57,8) 40,6% (244,9) (169,2) 44,8% Net Margin 150,4% -126,4% bps 1785,7% -166,7% bps Backlog of Revenues 80,0 153,9-48,0% 80,0 153,9-48,0% Backlog of Results 17,0 52,2-67,4% 17,0 52,2-67,4% Backlog Margin 21,3% 33,9% bps 21,3% 33,9% bps Selling Expenses (1,2) (2,2) -44,6% (4,4) (7,1) -38,0% G&A³ (4,4) (6,2) -30,3% (14,5) (21,5) -32,2% ¹ Excluding capitalized interest. ² Excluding non recurring itens. ³ Excluding ex-severance and restructuring cost the G&A closed with R$ 3,7, a decrease of 40,3% compared to 3Q15. 3

4 Operating Performance Launches The Company did not launch any projects in 2016, due to it ss strategy of cash preservation and its focus on the monetization of receivables and sale of current inventories. However today we have in our Landbank R$ 406 million of potential PSV, representing units approved for potential launch. Pre-sales and Cancellations Gross pre-sales totaled R$ 18.8 million in the third quarter of 2016, decrease of 31% compared 2Q16. Sales Cancellations amounted to R$ 98.8 million in 3Q16, mainly due to the 88 unit reduction in the Project Residencial Belvedere, as well as the effects from the loss of customer credit capacity due to the economic crisis experienced in the country. The third quarter closed with negative sales of R$ 80.0 million. The tables below show details of pre-sales (net of cancellations) in the third quarter and nine months of 2016 compared to the same periods in 2015: Sales 3Q16 Pre Sales % Viver (R$ million) # of units Average unit price (R$000) Segment 3Q16 3Q15 3Q16 x 3Q15 3Q16 3Q15 3Q16 x 3Q15 3Q16 3Q15 3Q16 x 3Q15 Super Low Income (25,4) (0,8) 3040,5% (180) (5) 3500,0% ,9% Low Income (10,9) (7,5) 46,1% (49) (38) 28,9% ,1% Mid Income (22,5) 1,8-1363,2% (75) ,9% ,8% Mid High (21,2) 1,9-1200,4% (32) 4-900,0% ,2% High - - n.a. - - n.a. - - n.a. Tourism and Commercial - (0,4) -100,0% - 1 n.a. - ( ) n.a. TOTAL (80,0) (5,0) 1500,1% (336) (25) 1244,0% ,4% Region 3Q16 3Q15 3Q16 x 3Q15 3Q16 3Q15 3Q16 x 3Q15 3Q16 3Q15 3Q16 x 3Q15 São Paulo (10,9) (1,4) 703,2% (105) (10) 950,0% ,9% Southest (ex SP) (38,1) 0, ,8% (57) ,0% ,7% South (6,4) (6,9) -6,2% (39) (29) 34,5% ,2% Mid West (8,1) (0,4) 1898,8% (42) (2) 2000,0% ,8% North (16,4) 4,6-459,2% (95) ,0% ,1% Northeast 0,0 (1,2) -103,0% 2 (9) -122,2% ,0% TOTAL (80,0) (5,0) 1500,1% (336) (25) 1244,0% ,4% Launch Year 3Q16 3Q15 3Q16 x 3Q15 3Q16 3Q15 3Q16 x 3Q15 3Q16 3Q15 3Q16 x 3Q15 Launches from n.a. - - n.a. - - n.a. Launches from ,2 0,1 66,6% 2 2 0,0% ,6% Launches from 2012 (0,2) 0,5-144,5% ,0% ,0% Launches from 2011 (8,2) (1,8) 365,1% (63) (17) 270,6% ,4% Launches from 2010 (36,5) (3,6) 902,6% (179) (9) 1888,9% ,2% Launches up to 2010 (35,3) (0,2) 16572,2% (96) (4) 2300,0% ,9% TOTAL (80,0) (5,0) 1500,1% (336) (25) 1244,0% ,4% ¹ Excluding commercial projects 4

5 Sales 9M16 Pre Sales % Viver (R$ million) # of units Average unit price (R$000) Segment 9M16 9M15 9M16 x 9M15 9M16 9M15 9M16 x 9M15 9M16 9M15 9M16 x 9M15 Super Low Income (26,1) 8,7-400,2% (175) ,3% ,8% Low Income 0,9 (10,6) -108,3% 18 (54) -133,3% ,8% Mid Income (15,4) 13,7-211,9% (35) ,8% ,2% Mid High (17,0) 6,3-367,2% (27) 9-400,0% ,6% High - - n.a. - - n.a. - - n.a. Tourism and Commercial 1,3 (1,3) -199,8% 5 - n.a n.a. TOTAL (56,3) 16,9-433,1% (214) ,8% ,6% Region 9M16 9M15 9M16 x 9M15 9M16 9M15 9M16 x 9M15 9M16 9M15 9M16 x 9M15 São Paulo (7,1) 2,1-436,7% (77) ,5% ,0% Southest (ex SP) (33,5) 6,5-611,0% (23) ,9% ,7% South (0,3) 1,2-125,5% (22) (8) 175,0% ( ) -109,3% Mid West (2,0) (1,5) 38,4% (3) (6) -50,0% ,9% North (17,6) 11,9-247,6% (109) ,2% ,8% Northeast 4,2 (3,4) -222,9% 20 (22) -190,9% ,7% TOTAL (56,3) 16,9-433,1% (214) ,8% ,6% Launch Year 9M16 9M15 9M16 x 9M15 9M16 9M15 9M16 x 9M15 9M16 9M15 9M16 x 9M15 Launches from n.a. - - n.a. - - n.a. Launches from ,2 0,7-70,4% ,4% ,7% Launches from ,6 8,2-43,9% ,8% ,6% Launches from 2011 (6,2) (1,6) 297,0% (48) (17) 182,4% ( ) -203,4% Launches from 2010 (34,7) 2,4-1517,1% (171) ,7% ,9% Launches up to 2010 (20,1) 7,2-379,6% (31) ,3% ,9% TOTAL (56,3) 16,9-433,1% (214) ,8% ,6% ¹ Excluding commercial projects Projects under Construction and Completed Projects On September 30, 2016 the Company had 5 projects under construction, considering that 2 of them have the partial permits. Three of this projects require environmental re-licensing to be restarted. The Company will present alternatives to finish these projects in thethe Judicial Reorganization Plan, which is yet to be approved The table below shows the detail of delivered projects and projects to be delivered with expected receivables and inventory at market value:.r$ (000) Delivered To be Delivered Total Sites n.a. 5 5 Receivables Schedule 315, , ,055 Inventory 296, , ,666 Land Bank On September 30, 2016, Viver s land bank represented an estimated PSV of R$ 1.8 billion and units. It s important to mention that R$ 406 million of PSV are approved for potential launches, representing units. The table below shows the composition of the Company s current land bank projects: 5

6 PSV Viver's share (R$ million) Super Low IncomeLow Income Mid Mid High High Commercial Total São Paulo (estado) ,6 166,2 450,0 136, ,2 Sudeste (ex SP) 34,3-256, ,5 330,5 Sul 186,0 84,6 62, ,0 Centro-Oeste Norte - 136, ,0 Nordeste Total of PSV (% Viver) 220,3 220,6 628,6 166,2 450,0 175, ,5 % do Total 11,8% 11,8% 33,8% 8,9% 24,2% 9,4% 100,0% # de units Financial Performance Results are shown in accordance with the accounting practices adopted in Brazil, in Brazilian Reais (R$), complying with Brazilian corporate law. Net Revenue Net operating revenue was negative in R$ 54.0 million in 3Q16, due to the sales cancellations in the period and also by the 88 unit reduction and thus the loss of approximately R$ 88 million PSV of the project Residencial Belvedere, that is still in environmental re-licensing. Property Costs Property costs totaled R$27.6 million in 3Q16, mainly due to the volume of sales cancellations occurred in this period. Amortization of capitalized financial charges amounted to R$ 2.6 million in the third quarter. The table below shows a breakdown of property costs: Operating Costs (R$ 000) 3Q16 2Q16 3Q15 3Q16x2Q16 3Q16x3Q15 Total Operating Costs (27,625) 37,986 56, % % Cost of land, development construction (30,181) 18,890 32, % % Financial Charges 2,556 19,096 24, % -89.5% Gross Profit and Backlog of Revenues and Results The Company posted a gross loss of R$ 26.4 million in 3Q16 mainly impacted by sales cancellations, impairment recorded in inventory of completed units and corporate financial expenses. Gross Profit (R$ 000) 3Q16 2Q16 3Q15 3Q16x2Q16 3Q16x3Q15 Gross Profit (26,440) (14,713) (10,737) 79.7% 146.3% Gross Margin 48.9% -63.2% -23.5% bps 7238 bps Adjusted Gross Margin¹ 44.2% 18.8% 30.0% 2534 bps 1420 bps ¹ Excluding capitalized interest. 6

7 In 3Q16, the revenue backlog totaled R$ 80.0 million, while the backlog of results to be recognized reached R$ 17.0 million. The backlog margin for the quarter was 21.3%, 1264 bps below the 3Q15 margin, due to the reduction of units in the project Residencial Belvedere. Costs to be recognized do not include financial charges and guarantee provisions, which are recognized as operating costs in proportion to the units sold, when incurred. Revenues and results to be recognized (R$ 000) (for the period end) 3Q16 2Q16 3Q15 3Q16x2Q16 3Q16x3Q15 Revenues to be recognized 79,992 79, , % -48.0% Cost to be recognized (62,989) (50,003) (101,702) 26.0% -38.1% Backlog of Results to be recognized 17,003 29,032 52, % -67.4% Backlog Margin 21.3% 36.7% 33.9% bps bps Selling, General and Administrative Expenses In 3Q16, selling expenses totaled R$ 1.2 million, showing a decrease of 44.6% compared to same period of General and administrative expenses, net of depreciation and amortization, severance and restructuring costs, totaled R$ 3.7 million in 3Q16, a decrease of 40.3% compared to 3Q15, resulting in an annualized amount of R$ 14.8 million. EBITDA EBITDA was negative R$ 44.8 million in 3Q16, impacted as already highlighted by the negative gross profit due to the lack of launches in the last few years, sales cancellations and provisions for the high volume of customer claims and litigation. The table below shows EBIT, EBITDA and EBITDA margin trends in recent quarters. EBITDA (R$ 000) 3Q16 2Q16 3Q15 EBT (83,517) (73,761) (56,852) (+) Financial Result Net Financial Expenses (Income) 35,201 36,712 18,712 SFH interest on Cost 5,718 8,940 9,160 Corporate Interest on Cost (3,161) 10,156 15,290 EBIT (45,759) (17,953) (13,690) Depreciation ,026 Amortization EBITDA (44,765) (16,958) (12,664) EBITDA margin 82.8% -72.9% -27.7% 7

8 Financial Result Net financial expenses totaled R$ 35.2 million in 3Q16, presenting an increase as compared with 3Q15 and impacted by the expensing (non-capitalization) of corporate financial expenses in projects under construction. Net Loss In 3Q16, Viver posted a net loss of R$ 81.3 million, due mainly to the lack of launches in the last years plus high financial leverage, provision for customer claims, reduction of unit in the of the project Residencial Belvedere and the current recession. Balance Sheet Cash and Cash Equivalents and Securities On September 30, 2016, cash, cash equivalents and securities totaled R$ 24.6 million, compared to R$ 25.5 million on June 30, It is important to mention that only 15% of the cash is available for the Company operations due to lender restrictions. Portfolio Management and Client Mortgage Transfers ( Repasse ) The Company ended the third quarter of 2016 with a total receivables portfolio of R$ million, of which R$ million came from completed projects and R$ million from projects to be delivered, as shown in the chart below. Accounts receivables (R$000) 3Q16 2Q16 3Q15 3Q16x2Q16 3Q16x3Q15 Current 396, , , % -34.7% Long-Term 21,980 25,769 32, % -32.7% Total on balance 418, , , % -34.6% Total "off balance 79,992 79,035 95, % -15.9% Total Account Receivables 498, , , % -32.2% R$ 498 million of receivables Delivered To be delivered 8

9 The funds generated by Repasse and client receivables amounted to R$ 80.0 million in 3Q Receivables Jun/2016 Inflation adjustment Repasse/Receivables Net Pre-Sales 3Q16 3Q16 Receivables Sep/2016 Pro-forma (Ex-IFRS 10) Inventory (properties for development and sale) Viver s inventory balance on September 30, 2016 stood at R$ million. The Company s inventory includes sites acquired for cash and through swaps, construction in progress, advances to suppliers and completed units, as detailed below. Inventory (R$ mil) 3Q16 2Q16 3Q15 3Q16x2Q16 3Q16x3Q15 Land 223, , , % 10.6% Properties under construction 54,763 73, , % -56.1% Units completed 249, , , % 8.2% Advances to Suppliers , % -97.2% Total 528, , , % -6.4% 9

10 Inventory at Market Value The table below provides a breakdown of the inventory PSV at market value by project delivery schedule: R$ 411 million of inventory Delivered To be delivered On September 30, 2016, the market value of the completed unit inventory represented a PSV of R$296.7 million. Inventory at market value (R$ 000) Segment Units completed To be Delivered Total High Mid High 89,039 43, ,963 Mid Income 88,742 70, ,812 Low and Super Low Income 66,436-66,436 Tourism e Commercial 52,455-52,455 TOTAL 296, , ,666 % 72.2% 27.8% 100.0% Indebtedness On September 30, 2016, Viver s total debt was R$ 1.19 billion (including related-party transactions and convertible debentures), as detailed on the table below. As already reported in previous quarters, the reduction in the sales velocities coupled with the high volume of sales cancelation rate and high interest on our debt significantly impacted the Company's financial stabilization and ultimately contributed relevantly to the decision on the request for Judicial Reorganization. 10

11 Indebtedness Evolution (R$ million) 3T16 2T16 1T16 4T15 3T15 Debt Corporate Debt SFH / Project Debt Securitization Co-obligation CRI Sub-total Indebtedness Related-Party Transactions + Convertible Related-Party Transactions Debentures Convertible Indebtedness Total 1, , , , ,172.7 Availability About Viver Incorporadora e Construtora S.A. Viver is a real estate developer and builder established over 20 years ago and renowned for its high quality developments and pioneering role in construction technology. It focuses on the middle and upper-middle segments of the residential market, especially in the area of Greater Porto Alegre and the state of São Paulo. The Company adopts a management model based on strict standards of corporate governance and close alignment between the executive officers, Board of Directors and shareholders. Viver s stock is listed on the BM&FBOVESPA s Novo Mercado trading segment under the ticker VIVR3. Investor Relations Phone: (55 11) ri.viver@viverinc.com.br 11

12 Appendix Consolidated Income Statement R$ (000) 3Q16 3Q15 3Q16 x 3Q15 2Q16 3Q16 x 2Q16 Gross operating revenue (55,627) 47, % 24, % taxes 1,562 (1,522) % (784) % Net operating revenue (54,065) 45, % 23, % Operating costs 27,625 (56,478) % (37,986) % Gross profit (26,440) (10,737) 146.3% (14,713) 79.7% Operating (expenses) income (21,876) (27,403) -20.2% (22,336) -2.1% Selling expenses (1,232) (2,224) -44.6% (1,387) -11.2% General and Administrative expenses (4,357) (6,248) -30.3% (5,429) -19.7% Depreciation and Amortization (983) (1,015) -3.2% (985) -0.2% Other Operating (expenses) income (15,475) (18,118) -14.6% (17,697) -12.6% Equity Income % 3, % Income before financial results (48,316) (38,140) 26.7% (37,049) 30.4% Financial results (35,201) (18,712) 88.1% (36,712) -4.1% Financial expenses (36,265) (25,764) 40.8% (41,067) -11.7% Financial income 1,064 7, % 4, % Loss before taxes on income (83,517) (56,852) 46.9% (73,761) 13.2% Income tax and social contribution 1,958 (1,253) % (413) % Net loss from continued operations (81,559) (58,105) 40.4% (74,174) 10.0% Non-controlling % % Discontinued Operations (81,306) (57,818) 40.6% (74,038) 9.8% Consolidated Income Statement R$ (000) 9M16 9M15 9M16 x 9M15 Gross operating revenue (13,776) 105, % taxes 59 (3,806) % Net operating revenue (13,717) 101, % Operating costs (49,965) (150,198) -66.7% Gross profit (63,682) (48,688) 30.8% Operating (expenses) income (76,529) (67,482) 13.4% Selling expenses (4,406) (7,090) -37.9% General and Administrative expenses (14,544) (21,478) -32.3% Depreciation and Amortization (2,956) (3,015) -2.0% Other Operating (expenses) income (54,562) (41,161) 32.6% Equity Income (61) 5, % Income before financial results (140,211) (116,170) 20.7% Financial results (106,557) (50,746) 110.0% Financial expenses (118,038) (67,829) 74.0% Financial income 11,481 17, % Loss before taxes on income (246,768) (166,916) 47.8% Income tax and social contribution 1,162 (2,610) % Net loss from continued operations (245,606) (169,526) 44.9% Non-controlling % Discontinued Operations (244,945) (169,173) 44.8% 12

13 Balance Sheet - R$ (000) Sep 16 Jun 16 Sep 2016 x Jun 16 Sep 15 Sep 2016 x Sep 15 Assets Current Assets 808, , % 1,068, % Cash and Cash Equivalents 24,601 25, % 49, % Receivables from clients 402, , % 628, % Properties for development and sale 361, , % 370, % Other credits 9,045 8, % 9, % Taxes to be recognized 10,734 10, % 9, % Selling expenses to be recognized % % Non-Current Assets 276, , % 367, % Long-term assets 225, , % 297, % Receivables from clients 21,980 25, % 32, % Properties for development and sale 167, , % 193, % Partnership current accounts 29,782 32, % 56, % Related parties 5,179 4, % 11, % Taxes to be recognized % 2, % Selling expenses to be recognized % % 50,564 56, % 70, % Investments 32,539 37, % 45, % Properties and equipment 8,282 8, % 12, % Intangible Assets 9,743 10, % 11, % Total Assets 1,085,060 1,177, % 1,436, % Liabilities and Shareholders' Equity Current Liabilities 1,261,918 1,251, % 1,229, % Loans and Financings 543, , % 434, % Debentures 451, , % 465, % Co-obligation in assignment of receivables 7,843 7, % 9, % Securitization of Real Estate Receivables (CRI) 15,934 15, % 34, % Investor obligations 1,690 1, % 36, % Suppliers 20,182 26, % 23, % Taxes and contributions 55,217 57, % 53, % Accounts payable 43,478 30, % 19, % Obligations for purchase of land 9,861 9, % 9, % Advances from clients 7,695 40, % 54, % Relates parties 102,577 98, % 83, % Provisions 2,700 2, % 3, % Provisions for losses on investments 181 1, % 1, % Non-Current Liabilities 251, , % 294, % Loans and Financings 69,234 95, % 130, % Co-obligation in assignment of receivables 6,347 6, % 9, % Securitization of Real Estate Receivables (CRI) - - nc 4, % Investor obligations % 2, % Taxes and contributions 70,201 76, % 81, % Accounts payable 1,637 1, % 3, % Advances from clients 8,347 8, % 6, % Provisions 95,707 84, % 54, % Non-controlling interests - - nc 6, % Shareholders' Equity (428,732) (348,091) 23.2% (93,305) 359.5% Capital 1,260,215 1,259, % 1,259, % Accumulated loss (1,688,947) (1,607,641) 5.1% (1,352,322) 24.9% Total Liabilities and Shareholders' Equity 1,085,060 1,177, % 1,436, % 13