Earnings Release 3Q17

Transcription

1 Earnings Release 3Q17

2 VINTE REPORTS 12.7% AND 12.5% GROWTH RATES IN EBITDA AND NET INCOME DURING 3Q17 Mexico City, Mexico, October 26, Vinte Viviendas Integrales S.A.B. de C.V. (BMV: VINTE), leading home builder in the development and commercialization of middle-income and residential homes in Mexico, announced today its earnings results for the third quarter The figures presented in this report are expressed in nominal Mexican pesos, are non-audited, prepared in accordance with IFRS and current interpretations, and may include minor differences due to rounding. HIGHLIGHTS With a 10.9% increase in the average price of homes sold and a 4.4% decrease of volume displaced, Vinte posted increase growth rates of 6.5% in total revenue, 12.7% in EBITDA and 12.5% in net income, thus reflecting the Company s focus on the middle-income and residential segments, while maintaining a low-level of homes sold with subsidies, of 3.3%. Positive cash flow of Ps.133 million in 3Q17, after having applied the IPO resources in projects that have started their contribution. Indebtedness level reduction vs. 2Q16, from 1.65x to 1.58x (Net Debt/EBITDA), and from 0.46x to 0.43x in Net Debt/Equity. LTM Net Margin of 13.6%, a new record-high, boosting Net Income per home sold to Ps.87 thousand in 3Q17, vs. Ps.74 thousand in 3Q16. A 17.7% ROE, in line with our business plan, even after having increased the stockholders equity by almost 40% with the October 2016 IPO. FINANCIAL STATEMENTS SUMMARY (MXP Millions) 3Q17 3Q16 % Homes (Units) and Average Sale Price (thousands) Income Statement Margins % LTM 3Q17 LTM 3Q16 % 3Q17 3Q16 LTM 3Q17 LMT 3Q16 1,150 1,203 (4.4) 4,249 4,305 (1.3) Revenue ,837 2, Cost of Sales (non-interest bearing) ,853 1, Gross Profit SG&A and other expenses EBITDA Depreciation and amortization CFR (0.8) Interests in Joint Ventures (0) (1) (92.6) (2) (3) (53.9) (0.0) (0.2) (0.1) (0.1) Earnings Before Tax ISR (9.1) Net Income Financial Ratios Sep Sep ROE 17.7% 24.0% ROIC 20.7% 26.9% Statement of Financial Position Cash and cash equivalents Sep Sep Interest Coverage 5.75x 5.53x Gross Debt / EBITDA 1.93x 2.05x Net Debt / EBITDA 1.58x 1.73x Total Liabilities / CC 1.04x 1.50x Net Debt / CC 0.43x 0.69x Cost of Debt 8.9% 10.6% Working Capital Turnover 0.77x 0.95x EBITDA per home LTM 152k 146k Gross Debt 1,247 1,286 Net Debt 1,026 1,087 Total Liabilities 2,469 2,376 Stockholders' Equity 2,374 1,581 2

3 MESSAGE FROM THE CHAIRMAN This quarter, we celebrate our first anniversary as a publicly traded Company setting the tone for a solid second half of the year that will allow us to attain the goals of our 2017 Guidance. The solid double-digit growth recorded in EBITDA and Net Income follows our business model consolidation on sustainable profitability. Today, we get higher profits with less number of titled homes. Vinte gears towards the development of communities of higher added value, seeking to generate incremental value to its clients, communities, mortgage partners and investors who have trusted us. We possess a business model that allows a higher operational flexibility and incremental revenue, even after the significant reduction in housing subsidies: a clear reflection of our agility to swift our clients mortgage mix. Regarding our pipeline of projects, we are rapidly advancing in our middle-income and residential developments: Real Carrara and Real Vizcaya in Estado de Mexico; Real Madeira in Hidalgo; La Vista in Queretaro; as well as, Real Amalfi and Real Catania in Quintana Roo, which jointly reach an inventory of more than 4,400 middle-income and residential homes, an important piece of our Company s growth plan. Sergio Leal Aguirre, Chairman and CEO CONSOLIDATED TOTAL REVENUE OPERATING RESULTS 3Q16 5% 3Q17 6% Ps.724 million 6.5% Ps.771 million Homes 95% Homes 94% Home equipment sales, residential and commercial land plots Home equipment sales, residential and commercial land plots Consolidated Total Revenue during 3Q17 reached Ps.771 million, increasing 6.5% vs. the Ps.724 million registered in 3Q16, driven by a 10.9% growth in the average sale price, derived from a better mix and higher sales prices that allow us to safeguard margins before the rising in construction materials prices. Our consolidated revenue for the quarter also include the seizing of opportunities in the sale of commercial land plots and other services for Ps.50 million. 3

4 HOMES SOLD REVENUE BREAKDOWN By segment: 3Q16 > 1 million 3Q17 $700 to $1 million 23% 10% Ps.685 million 29% 38% $350 to $500 thousand $500 to $700 thousand 5.3% > 1 million 19% $700 to $1 million 23% Ps.721 million 23% 35% $350 to $500 thousand $500 to $700 thousand The creation of new formal jobs as well as the improvement of mortgage products allowed us to have a better mix, going from a 10% share of 3Q16 titled homes with prices above the Ps.1 million, to a 23% participation this 3Q17. On the other hand, a reduction in the availability of subsidies decreased participation of titled homes with prices below the 500 thousand pesos, which passed from 38% in 3Q16 to 23% this quarter. By market: 3Q16 8% 3% 23% 3Q17 9% 4% 5% 23% 17% 16% Ps.685 million 18% 15% 5.3% 14% 13% Ps.721 million 11% 21% North Mexico City, VIS/VIP North Mexico City, VIM Pachuca, Hgo. Playa del Carmen, Q. Roo Queretaro, Qtro. Tula, Hgo. Cancun, Q. Roo North Mexico City, VIS/VIP North Mexico City VIM Pachuca, Hgo. Playa del Carmen, Q. Roo Queretaro, Qtro. Tula, Hgo. Cancun, Q.Roo Puebla, Pue. Outstanding in 3Q17 was the contribution of Real Carrara in Tecamac, Estado de Mexico (with an average price above the Ps.2 million mark) coupled with the 5% participation of Real Segovia, in Puebla. 4

5 By financing: 3Q16 7% 12% 2% 1% 1% 13% 685 mdp 32% 3Q17 1% 1% 1% 12% 6% 35% 10% 721 mdp 11% 21% Infonavit Fovissste Banks Without Mortgage Cofinavit Misc. (CFE/Pemex/Others) Info Total Alia2 Infonavit-Fovissste 18% Infonavit Fovissste Banks Without Mortgage Cofinavit Misc. (CFE/Pemex/Others) Info Total Alia2 Infonavit-Fovissste 16% The main sources of mortgage financing for our clients were Infonavit and Fovissste, representing 35.3% and 15.9% of our clients financing this quarter, respectively, although we anticipate an even higher contribution from Infonavit s affiliates, following its credit cap increase (approved in 2Q17). Therefore, the proportion of cash payments, bank loans and miscellaneous payments represented 21.6%, showing a 2.8 pp. decrease vs. the 24.4% in the same period last year. AVERAGE CONSOLIDATED PRICE ,797 2,018 2,359 2,698 3,165 3,881 4,265 4,236 4, LTM 3Q17* Units Average Price (thousands of MXP) * With financial information from the last quarter of 2016 and the first three of 2017 (LTM) The average consolidated price in 3Q17, including revenue from equipment sales, was Ps.655 thousand, an increase of Ps.64 thousand YoY, i.e. a 10.9% growth vs. 3Q16. This indicator maintained an upward trend as a result of the passthrough of higher input prices to the final client and our strong focus on middle-income and residential segments. LTM average consolidated price reached Ps.641 thousand in 3Q17, growing by 4.7% YoY. 5

6 NON-DEPENDENCE ON SUBSIDIES 3Q16 9.7% HOMES SOLD WITH SUBSIDIES 3Q17 3.3% 6.4 % 90.3% YTD % 96.7% YTD % 11.4 % 86.0% 97.4% With subsidy Without subsidy The share of titled homes with subsidies in 3Q17 total revenue was 3.3%, from 9.7% recorded in the same quarter last year. It is important to note that our level of titled homes with subsidies is one of the healthiest in the industry, and has allowed us to maintain stability in our results even amidst the recent decrease in the federal budget for subsidies in 2016 and 2017, which represent a Ps.4,760 million drop (-43.3%) vs. the 2015 budget. 6

7 QUARTERLY REPORT 3Q17 INCOME STATEMENT Cost of Sales 9.4 % FINANCIAL PERFORMANCE The 3Q17 Cost of Sales was Ps.524 million, 5.2% above 3Q16, representing 68.0% of total revenue during the quarter, a decrease of 90 bps. vs. 3Q16. This was due to operational efficiencies and an increase in sales prices that follow the higher costs of construction materials, thus helping us to keep margins. Gross Profit (million MXP) % 641 3Q16 3Q17 YTD 16 YTD 17 Gross Profit in 3Q17 amounted to Ps.246 million, an increase of 9.4% YoY, outpacing the 6.5% growth in consolidated total revenue. Selling, General and Administrative Expenses and Other Expenses SG&A and Other Expenses reached Ps.93 million in 3Q17, an annual increase of 1.8%. This result was mainly attributed to the resources deployed for operation activities at the new developments scheduled to start commercial operations in 4Q17. This increase has been partially offset by efficiencies in corporate marketing expenditures and consolidation of economies of scale along our corporate structure. As a result, the proportion of SG&A and Other Expenses to Revenue stood at 12.1% in 3Q17. EBITDA LTM 3Q17* EBITDA (millions of MXP) Average EBITDA per titled home (thousands of MXP) * With financial information from the last quarter of 2016 and the first three quarters of 2017 EBITDA reached Ps.169 million in 3Q17, increasing 12.7% when compared to the same period last year. On the other hand, average EBITDA per titled home increased 17.9% when compared to that registered in 3Q16, and similarly, increased on a LTM basis vs. LTM at 3Q16. 7

8 9.0% QUARTERLY REPORT 3Q17 Comprehensive Financial Result (CFR): CONCEPT (MXP millions) 3Q17 3Q16 % YTD 17 YTD 16 % Capitalized interests (2.9) Interest Income (3) (2) 91.6 (11) (5) Financial Expenses Total CFR CIF to Revenues 4.4% 4.2% 0.2 pp 4.2% 4.1% 0.1 pp The Comprehensive Financial Result (CFR) reached Ps.34 million during the quarter, representing an increase of 12.6% YoY, while its proportion to revenue increased by 20 bps. Income Tax: 3Q17 Income Taxes were Ps.28 million, an increase of 12.7% vs. 3Q16. The effective tax rate for the Company at quarterend was 22.0%, which compares favorably to the 21.9% in 3Q16. Net Income: % 13.6% % % 10.1% 10.5% 10.4% 10.4% 9.9% LTM 3Q17* Net Income (thousands of MXP) Net Margin (%) * With financial information from the last quarter of 2016 and the first three quarters of 2017 (LTM) Net income reached Ps.100 million in 3Q17, an increase of 12.5% YoY, mainly attributed to the Company s focus on profitability. LTM 3Q17 Net Income totaled Ps.386 million, increasing 9.0% vs. LTM 3Q16. LTM Net Margin was 13.6%, a record-high in Vinte s history. 8

9 STATEMENT OF FINANCIAL POSITION Cash and cash equivalents: Vinte seeks to maintain 6 to 7 weeks of sales and financial expenses in cash. We consider that this amount constitutes an appropriate balance between the financial stability required to face any unpredicted contingency and the maximization of the productive use of the Company's financial resources. Cash and cash equivalents balance at the end of 3Q17 was Ps.221 million, compared to Ps.200 million in 3Q16, i.e. an increase of 10.7%. As of September 30, 2017, cash and cash equivalents balance amounted to 6 weeks of sales and financial expenses. Working Capital Turnover: Vinte's approach to closely monitor the performance of working capital has boosted continuous growth and reduced financial and operative risks. Working Capital Turnover = Revenue LTM / (accounts receivable + long and short-term inventories - accounts payable - customer advances) Working capital turnover increased in 3Q17, closing at 0.77x compared to 0.76x in 2Q17, primarily due to investments made in the second quarter of this year, with the raised proceeds from the Initial Public Offering (IPO), launched on September 28, 2016, for a total amount of Ps.1,209 million. Ps.611 million of these proceeds were primary and used in investment projects. Inventories: Q17 2Q17 3Q17 At the end of 3Q17, Total Inventory balance was Ps.3,964 million, a 33.2% increase over the Ps.2,976 million registered in 3Q16. This growth is mainly explained by the increase in land bank for the development of new projects and the completion of the construction activities at new developments initiated in previous quarters. It is important to point out that Vinte's Inventory is recorded at acquisition cost, so its market value may be substantially higher. Debt: CONCEPT (MXP millions) 3Q17 3Q16 % Gross Debt 1,247 1,287 (3.1) Net Debt 1,026 1,087 (5.6) The debt balance as of September 30, 2017 was Ps.1,278 million and, discounting the issuance costs in accordance with IFRS, reached Ps.1,247 million. Vinte s entire debt is denominated in Mexican pesos, where approximately 37% (45% of net debt) is contracted at a weighted average fixed rate of 9.1%, which compares favorably against the housing sector s. Regarding the financing profile, the average term of the debt is 5.9 years. Upcoming maturities in 2017 and 2018 are Ps.20 million and Ps.110 million, respectively. 9

10 Drawn Credit Lines Available Committed Lines QUARTERLY REPORT 3Q17 Debt Breakdown (Ps.1,278 million) Vinte Committed Financing Breakdown $2, BanBajío, Invex & Banregio Vinte $1, Maturity of Drawn Credit Lines $428 $315 $20 $110 $60 $60 $100 $185 Vinte Q17 3T The indebtedness level in 3Q17, measured as Net Debt / EBITDA, was 1.58x and Net Debt / Equity was 0.43x. It should be noted that in 3Q17 we reversed the upward trend of the indebtedness level as a result of the positive cash flow achieved from operations. This trend can be observed in the following graph: Net Debt / EBITDA Net Debt / Equity 2.67x 1.87x 0.96x 0.86x 1.58x 1.90x 1.90x 1.88x 0.69x 0.78x 0.71x 0.63x 1.65x 1.58x 1.35x 1.42x 1.18x 1.08x 0.50x 0.46x 0.29x 0.38x 0.46x 0.43x IPO LTM Mar'17 LTM Jun'17 LTM Sep'17 10

11 Free Cash Flow from Operations: At the end of 3Q17, the investments executed with the IPO proceeds, which were fully deployed during the 2Q17, started to be reflected. In 3Q17, the Company registered a positive cash flow from operations of Ps.133 million, i.e. a reversal trend after the investment period of the IPO proceeds. IFC Equity Investment IIC Equity Investment IPO IPO Ps.610 million 133 (119) (44) (41) (49) (22) (264) (105) IPO (166) 2Q16 4Q16 1Q17 2Q17 3Q17 ******************************************* 11

12 ADDITIONAL INFORMATION RECENT EVENTS On September 27, 2017, Vinte's corporate rating was ratified by S&P in mxa- with a positive outlook, and the possibility of rating upgrade within a six-month period. On October 24, 2017, HR Ratings ratified Vinte's annual corporate rating in A+, as well as these emissions: Vinte 17 and Vinte 17-2, while Vinte 14 was rated at AA+. As well, Vinte's global scale rating was published for the first time by HR Ratings at HR BB+ (G), with a stable outlook. On August 31, 2017, Vinte announced, with the unanimous approval of the Board of Directors, the appointment of Mr. Luis Octavio Nuñez Orellana as Secretary (non-member) of the Board of Directors, and Mr. Rodrigo Lopez Marquez as his alternate. The foregoing in consideration of Mr. Jesus Alfredo Nava Escarcega voluntary resignation, effective in August 31, 2017, as Investor Relations and Corporate Financing Manager, to pursue other professional projects. The responsibility of Investor Relations and Corporate Financing functions will be handled by Mr. Domingo Alberto Valdes Diaz, Vinte s CFO, head of these functions. ANALYST COVERAGE Institution Analyst P.O. Recommendation Actinver Ramon Ortiz Reyes rortiz@actinver.com.mx Ps Buy Citigroup Alejandro Lavin alejandro.lavin@citi.com Ps Neutral UBS Marimar Torreblanca marimar.torreblanca@ubs.com Ps Buy ABOUT VINTE Vinte is a vertically integrated Mexican home builder with a clear focus on profitability. For more than a decade it has been dedicated to developing residential complexes for middle-income families, focused on improving their quality of life, a commitment for which it has received multiple national and international awards. Vinte has developed more than 28 thousand homes across five states of Mexico, mainly in the center of the country, achieving a high level of loyalty amongst its clients and extensive brand recognition in the markets in which it operates. Vinte s highly-qualified management team has over 25 years of experience in the Mexican housing sector. FORWARD LOOKING STATEMENTS This document contains certain statements related to the comprehensive overview of Vinte Viviendas Integrales (VINTE) regarding its activities to the present day. The information included in this document is a summary of information regarding VINTE which is not intended to cover all related information about VINTE. The information contained in this document has not been included to provide specific advice to investors. The statements contained herein reflect the current views of VINTE with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause future results, performance or achievements of VINTE be different from those expressed or implied by such forward looking statements, including, among others, economic or political changes and global business conditions, changes in exchange rates, the overall level of the industry, changes in housing demand, prices of raw materials, etc. If one or more of these risks occur, or should the underlying assumptions prove to be incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. VINTE does not intend nor assume any obligation to update the statements presented in this document. 12

13 CONFERENCE CALL 13

14 VINTE VIVIENDAS INTEGRALES, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2017 AND 2016 (THOUSANDS OF MXP) ASSETS SEP 30, 2017 SEP 30, 2016 % CURRENT ASSETS: Cash, cash equivalents and restricted cash 221, , Accounts Receivable 281, ,775 (11.7) Accounts receivable from Mayakoba Trust No CIB/ ,667 6, Inventory 2,662,078 2,330, Prepayments and other assets 238, ,277 (29.6) TOTAL CURRENT ASSETS 3,416,601 3,194, NON-CURRENT ASSETS: Inventory 1,301, , Prepayments Property, plant and equipment 47,496 39, Investments in Trusts and Joint Ventures 54,964 56,554 (2.8) Other non-current assets 23,121 21, Long-term receivables from sale of commercial lots TOTAL NON-CURRENT ASSETS 1,427, , TOTAL ASSETS 4,843,740 3,957, LIABILITIES AND STOCKHOLDER EQUITY CURRENT LIABILITIES: Long-term bank loans 130, ,625 (53.9) Stock market debt Obligations secured by sales of future receivables contracts 40,803 73,304 (44.3) Accounts payable to land suppliers 84,066 35, Accounts payable to suppliers 169, , Dividends payable Various creditors, subcontractors and others 136, ,924 (22.6) Customer Prepayments 177,888 83, Accumulated expenses and taxes 68,674 79,939 (14.1) Income tax Profit sharing payables 8,455 11,702 (27.7) TOTAL CURRENT LIABILITIES 815, ,600 (10.1) NON-CURRENT LIABILITIES Long-term debt 429, ,291 (45.6) Long-term stock market debt 687, , Employee benefits 1,789 1, Deferred income tax 535, , TOTAL NON-CURRENT LIABILITIES 1,654,019 1,502, TOTAL LIABILITES 2,469,386 2,376, STOCKHOLDERS' EQUITY Capital stock 862, , Reserve for share repurchase 59, Retained earnings of previous years 1,191,474 1,086, Fiscal year performance 260, , TOTAL EQUITY 2,374,354 1,581, TOTAL LIABILITIES AND EQUITY 4,843,740 3,957,

15 VINTE VIVIENDAS INTEGRALES, S.A.B. DE C.V. AND SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME FOR THE THREE AND NINNE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (THOUSANDS OF MXP) 3Q17 3Q16 Ch.% YTD 17 YTD 16 Ch.% REVENUES 770, , ,039,812 1,954, Cost of Sales 524, , ,398,368 1,345, GROSS PROFIT 246, , , , SG&A 98,625 92, , , Other Expenses (Income) net 488 3,194 (84.7) (3,452) 1,935 (278.4) OPERATING INCOME 147, , , , Comprehensive Financial Result 18,386 14, ,135 36, Interests in Joint Ventures (102) (1,388) (92.6) (948) (3,157) (70.0) EARNINGS BEFORE TAX 128, , , , Income Tax 28,289 25, ,588 78,396 (1.0) CONSOLIDATED NET INCOME 100,360 89, , ,

16 VINTE VIVIENDAS INTEGRALES, S.A.B. DE C.V. Y SUBSIDIARIAS STATEMENT OF CONSOLIDATED CASH FLOW AS OF SEPTEMBER 30, 2017 AND 2016 (THOUSANDS OF MXP) YTD 17 YTD 16 % CASH FLOWS FROM OPERATING ACTIVITIES: Profit (loss) before income tax 338, , Adjusted for: Depreciation and amortization of intangible assets 13,259 10, Amortization of debt issuance costs 9,054 6, Asset retirement Interests in Joint Ventures 948 3,157 (70.0) Interest expense 126,547 74, Favorable interests (5,535) (9,280) (40.4) Sum 482, , CHANGES IN WORKING CAPITAL: Increase in accounts receivable 42,732 (78,897) (154.2) (Increase) decrease in creditors (28,996) 69,791 (141.5) Increase in inventories (502,521) (323,085) 55.5 (Increase) decrease in other current assets (69,943) (208,821) (66.5) Increase in suppliers 52,010 (18,997) (373.8) Increase (decrease) in prepayments to clients 100,114 24, Increase (decrease) in accumulated taxes and expenses (4,549) 4,064 (211.9) Employee profit sharing (7,001) (1,746) Interest received 5,535 9,280 (40.4) Employee benefits (4,845) 234 (2,170.5) CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES 65,532 (114,052) (157.5) Income tax paid (15,080) (15,080) 0 Net cash flows from (used in) operating activities 50,452 (129,132) (139.1) CASH FLOWS FOR INVESTMENT ACTIVITIES: Investment in property, plant and equipment (15,869) (18,197) (12.8) Investments in Trusts and Joint Ventures 0 1,769 (100.0) NET CASH FLOWS FROM INVESTMENT ACTIVITIES (15,869) (7,669) CASH FLOWS FOR FINANCING ACTIVITIES: Increase in Capital - - Increase in bank financing 1,844,967 1,260, Share repurchase (29,807) - - Decrease in bank financing (1,480,119) (874,363) 69.3 Obligations for sale of future collection rights contracts (53,478) (26,637) Expenses for placement of debt instruments (21,991) (6,034) Dividends paid (163,744) (145,000) 12.9 Interests paid (126,547) (74,123) 70.7 NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (30,720) 134,813 (122.8) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,862 (12,516) (130.9) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 217, , CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 221, ,