corporate presentation

CORPORATE PRESENTATION
Disclaimer
The material that follows is a presentation of general background information about MRV Engenharia e Participações S.A. and its subsidiaries (collectively, “MRV” or the “Company”) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no
reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MRV that reflect the current views and/or expectations of the Company and its
management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and may contain words like “believe,” “anticipate,” “expect,” “envisages,” “will likely result,” or any other words or phrases of similar
meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ
materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company nor any of its affiliates, directors, officers,
agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements
contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer to purchase any securities. Neither this presentation nor anything contained herein shall form the
basis of any contract or commitment whatsoever.
The market and competitive position data, including market forecasts, used throughout this presentation was obtained from internal surveys, market research, publicly available
information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not
independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MRV does not
make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MRV’s prior written consent.
2
COMPANY OVERVIEW
36 years of history
MRV in the largest residential construction company in Brasil and one of the largest in the world, and during these 36
years we have achieved important goals.
•
•
•
•
We have launched over 300 thousand
units. MRV was also considered the
company the has built the most in
2015, reaching 2.1 million sq. meters.
•
1 in each 250 Brazilians is a MRV
client.
•
More than 26 thousand employees,
that together build 1 apartment in
each 3 minutes.
•
Certified company – ISO 14001,
OHSAS 18001.
GHG Protocol, Selo Verde and Lar
Doce Lar seals.
80 thousand keys were delivered in
2014 and 2015, with an important
mark of 1 key delivered each 3
minutes.
The most valuable brand in the sector,
according to “Isto É Dinheiro”
magazine.
•
•
Present in 134 cities.
MRV grows and never forgets its
compromise with the people and
4
the environment.
36 years of history
MCMV 3
MCMV 2
IPO
Start of
Geographic
Diversification
MRV
Foundation
Private Equity
Enactment of
Foreclosure /
Deed of Trust
by Financial
Institucions
MCMV 1
Criação da
MRV LOG
Beginning of
relationship
Equity Follow-On
1st Negotiation
Correspondant
Banks Resume
Mortgage
Lending
3.000 units per year
ADRs Level1
25.000 units per year
40.000 units per year
5
Shareholder Structure
“Novo Mercado”,
the highest level of Corporate Governance
Free float represents
61% of shareholders’ equity.
Rubens Menin T.
de Souza 36%
Other
Shareholders 61%
Executives and
Board Members
3%
Treasury
Shares 1%
M&G Investment
Janus; 5% Management
Limited 4%
Orbis Investment
Management
Limited 10%
MRVE3
ADR OTCQX : MRVNY
BM&FBovespa Novo Mercado :
MRVNY
444,139,684 common shares
Cusip code
553479106
ISIN code
US5534791067
* December 31, 2015
6
Market Opportunities
&
Company’s Strategy
In Brazil there is a significant habitational deficit, with rising and strengthening of C social class.
Population per age
Mortgage
Age
(years)
Habitational investment
Annual average in R$ billion, per
income bracket, from 2008 to 2030
Real Estate Financing as % of GDP
People per
house
78
USA
60
Netherlands
53
Spain
41
France
Years
Houses (million)
Period
Habitational
Investment
(R$ billion)
31
South Africa
Habitational Investments per year
New houses
(million)
37
Germany
Population (million)
Habitational
Investment
(% GDP)
Italy
22
Chile
24
Mexico
11
Brazil
10
Source : BCB, dez/14 e Itaú Presentation, set/15
Million
Million
High potential of credit expansion
in Brazil.
8
Fonte: FGV, OCDE, IBGE, Nações Unidades, EY
Market Highlights
Competitive Advantages – Nationwide presence (134 cities)
 In the past 10 years, we have grown in a consistent and organic
way, based in solid market studies.
 We have grown without losing identity , building skilled teams
introduced in MRV culture.
 We have entered this market to stay, it has been more than 3 years
that we have presence in 114 cities out of total 134.
107
Act in strategic regions and with low competition;
56
Implementation of a standardized and industrial process;
Obtain economies of scale and cost savings;
Create entry barriers in the market we operate.
Source: *Study from Information and Statistics Center (CEI), from João Pinheiro Foundation.
63
75
118
119
2012
2013
128
134
90
28
2006
2007
2008
2009
2010
2011
2014
2015
10
Competitive Advantages – Leader in the Brazilian market
% of launches in MCMV Program (Brackets II and III) – in PSV
Launches Eligible to MCMV
(R$ billion) (Groups II and III)
10.8
10.5
8.5
7.7 7.4
7.6
6.7
6.1
5.2
4.6
3.3
2009
2010
2011
2012
MCMV (Groups 1, 2 and 3)
2013
5.1 5.1
4.0
2014
2015*
MCMV (Groups 2 and 3)
In 3Q15, MRV achieved important marks among the
listed companies:
 74% of market share of launches in bracket II and III
of MCMV Program;
 42% of total launches in the year.
11
Note: The data are estimated and based on the listed Companies’ earnings releases.
Demais empresas listadas
Competitive Advantages – Structure of Sales
Sales channels:
100%
Internal brokers
90%
80%
Third parties
75%
77%
25%
23%
81%
83%
84%
86%
83%
82%
19%
17%
16%
14%
17%
18%
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
70%
60%
50%
40%
30%
20%
10%
0%
1Q14
2Q14
 We have over 3,000 internal brokers, focused in 100% of MRV products.
 We invest in training and sales techniques to enhance the productivity and quality of the sale process.
 Management of commissioning policies of internal team and definition of sales strategy.
12
Competitive Advantages – Effective Market
Investiment in Marketing:
1
ANNUAL INVESTIMENT
R$ 100 Million
2
REACH
140 Million of Brazilian (70% of population)
3
Results from Investiments:
 R$ 2 Bi in virtual sales per year.
 130 virtual attendant focused in high quality
attendance located in Belo Horizonte.
 1.100 brokers focused in attending prospects that
have initiated contact through internet segregated in
80 virtual bases all over Brazil.
MAIN CHANNELS
TV 26%, Internet 20%, Trade MKT 19%, Newspaper 5%,
Other midias: 30%
13
Competitive Advantages – Online leadership
Corporate
website
Sources: Google Analytics, MRV website, Blog, AppFacebook, App Android, App IOS and hotsites.
14
Competitive Advantages – Client Relationship
#MeuMundoMelhor
+4.000.000
Views of the vídeos
#MeuMundoMelhor
“Conexão MRV”
+154.837
Views of the videos
“Conexão MRV”
Relationship Portal
General Acesses:
2.400.138
Client Access:
Year
62,700
Monthly Average of Single
Calls
Costumer Service
MRV in Midias
55.230
Number of
Answered
Calls
300.584 followers in Twitter
Complaints:
0,40%*
Monthly Average
580.322 followers in Google +
Year 2015
Resolved demands on 1st contact
90.34%
2,7 milhões Facebook fans
Year
15
*Number of ompalints over total clients (5 years) – Annual view
Liderança nos principais indicadores Comerciais
Pre-sales
(R$ million)
Launches
(R$ million)
16
Operational Advantages
Operacional Advantages – Landbank
COMPIANT CITY *
• Highlight to the growth of compiant cities. The purchases have been done
strategically in cities with potential demand and that will generate growth.
• New acquisitions are focused in balancing the inventories and present cost reduction
of 15% in 2015.
COMPETITIVE ADVANTAGES
•
•
•
•
Presence of a team responsible for prospection and legalization
Knowledge and assertiveness in acquisitions
Capacity of purchase in strategic locations
Speed in the legalization process
22%
9%
201.878
25%
219.061
9%
34,8
179.970
32,1
27,8
dez/14
set/15
Landbank (in units)
dez/15
dez/14
set/15
dez/15
Landbank (in R$ billion)
18
*Compiant city is a city that has a sufficient inventory to ensure the estimated sales pace for the region is attained, i.e., the estimated potential for the city;
Operacional Advantages – Experienced production team
10
Officers
21 Managers
 Approximately 24,000

people dedicated to Production
The employees holding leadership positions (officers, managers,
and coordinators) have worked, on averages, 9 years at MRV.
 Currently we have 225 works in progress, in following locations:
42 Coordinators
291 Engineers
Northeast 38 (16.9%)
316 Engineering Assistants and
Building Technicians
461 interns
24,916 other positions, including 14,654 own
and 10,262 outsourced workers.
Mid-west
15 (6.7%)
South 27 (12.0%)
Southeast 145 (64.4%)
Operacional Advantages - New Technologies
Hydraulic Kit
Concrete
Prefabricated and
standardized door
Standardization, Mechanization
and Intelligent Processes
Reduced workforce
Less generated waste
Greater production rationalization
Better site organization
Standardized projects
Aluminium Forms
Hoisted Slab
Higher speed of production
Strategic team of equipment
Simplification of projects
Economically viable
Greater environmental sustainability
Increased work security
20
Operacional Advantages - Cost Improvement
Sample
Nº dados
Average
Média
Stand.
Desvio
Deviation
Padrão
Coef. of
Coeficiente
deVariation
Variação
2012
76
30,84
5,491
17,8%
2013
117
29,26
3,918
13,4%
2014
98
29,99
4,785
16,0%
2015
66
28,19
4,083
14,5%
Sum of the value of projection
cost
Boxplot of the Sum of the projection cost
Histogram of the Sum of the projection cost
Frequency
Years
Anos
Sum of projection cost value
Year
It is possible to identify a decrease in
average cost, the lowest of the past four
years. Our change also decrease by
comparing 2012 to 2014. That is, our works
are getting more consistent, with a lower
cost.
Operacional Advantages - Execution
 Increase in production capacity, reflecting a
2013.


12.5% decrease in IP
(Productivity Index) when comparing 2015 to
29.4% increase in the VP (Production Speed), comparing the same years.
Up to Sep 2015 we built more than 3,000 units.
IP (Productivity Index): Shows how many
people are necessary to build one unit. The
guideline is the lower the indicator the
better the result.
VP (Production Speed): Shows the POC
per month of the works in progress. The
guideline is the higher the indicator the
better the result.
Operacional Advantages – Gross Margin
Highlight to the evolution of Gross Margin due to:
•
•
•
•
Renegotiation with Suppliers
Productivity Increase (PI)
Reduction of discrepancy between projects
Better conditions for land purchase.
31,0%
30,3%
29,5%
29,2%
27,8%
26,1%
28,2%
26,6%26,6%
26,2%26,4%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
23
Operacional Advantages – Delivered untis
Delivered units – 9M15
Delivered units – 2014
Note:
1 - Tecnisa and Eztec do not release the amount od delivered units.
2 – Units presented in (‘000) units.
24
Operational Advantage - Administrative Structure
Client Relationship
and Internal
Comunication
• + 4.8 million views of
#MeuMundoMelhor videos.
• + 3.6 million acesses to the
Relacionship Portal in 2015
• + 640 thousand estimated calls
Specialized Services
Lower
G&A/Net
Revenue in
the sector
• R$ 450 million collected per
month
• + 2,000 current accounts
reconciled per month
• + 3,000 new registered contracts
per month
answered in 2015
• 295 employees
• 130 employees
• 260 thousand active clients
Information of
Technology
• R$ 86 million of investiment in IT
SSC – Shared Service
Center
(5 years)
• 10,000 IT users
• R$ 4.8 Billion in payments in 2015
• 15 million of scanned documents
• 55 thousand Invoices received per
month
•
• 18 thousand Employees paid per
month
• 285 Employees
•
•
Rental in Belo Horizonteis
cheaper than other capitals
Skilled workers
Lower competition
• 99 employees
25
Operational Advantage – Efficient Administrative Structure
Due to our Strong and
efficient operation, we are
able to dilute expenses and
present the best G&A/Net
Revenue ratio in the sector.
Productivity - G&A / Net Revenue – 9M15
MRV
DIRECIONAL
HELBOR
GAFISA
5,69%
4,8%
6,75%
4,8% 5,0%
5,0%
EZTEC
ROSSI
5,9%
1.46x
8,28%
7,4%
8,70%
7,4%
1.53x
7,9%
9,40%
CYRELA
PDG
1.32x
7,50%
5,9%
EVEN
TECNISA
1.19x
4,8%
4,8%
5,0%
5,0%
5,9%
5,9%
7,4%
7,4%
7,9%
7,9%
7,9%
1.65x
8,9%11,72%
8,9%
2.06x
11,75%
2.07x
8,9%
8,9%
12,65%
2.22x
13,21%
2.32x
Average from peers
10.02%
26
Financial Advantages
Financial Advantages – “Crédito Associativo”
Average Collection Period
40%
Associativo 2015
Individual
30%
446
Associativo < 2015
442
431
416
Individual < 2015
401
20%
391
388
378
345
10%
319
292
0%
268
2012
-10%
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
-20%
1T
2T
3T
4T
5T
6T
7T
8T
9T
10T
11T
12T
13T
14T
15T
16T
17T
18T
19T
20T
21T
22T
23T
Working Capital need (in days)
Aquisição do Terreno
Land acquisition
Lançamento
Lauchi
ng
Início Obra
Project starts
Fim Obra
Project
ends
257
233
210
197
189
184
165
Since the beginning of simultaneous sales, MRV has
considerably decreased the collection period, contributing to
less working capital need per launched Project.
124
113
91
60
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
28
3Q15
Financial Advantages
Consistent Cash Generation and low leverage
Cash Generation (R$ million)
258
238
208
162
138 136
116
-70
-8
12
38
62
147 154
56
3 years of recurrent generation
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
Highlights:
Greater corporate rating in the sector (brAA-) by Fitch and Standard & Poor´s.
Enhancement of systems and processes from CEF in 2011 → benefits since 2012;
Growth of operations from BB in “Crédito Associativo” model, started in 2013.
29
Consistency and stability of the Company’s yields
Average
quarterly
growth: 8.1%
EPS Yield 12M
Average
quarterly
growth: 9,1%
Cash Yield - 12M
19,0%
25,6%
15,5%
11,0%
12,2%
11,5%
21,7%
14,4%
19,3%
12,2%
16,7%
14,0%
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
1Q14
13,6%
2Q14
3Q14
MRV
15,6%
4Q14
1Q15
2Q15
3Q15
Average
quarterly
growth: 3,2%
MRV
Average
quarterly
growth: 12,6%
Dividend Yield – 12M
5,8%
4,70%
ROE – 12M
6,0%
13,2%
13,3%
2Q15
3Q15
12,4%
5,3%
11,8%
2,62%
2,9%
2,7%
10,7%
1Q14
2Q14
3Q14
4Q14
MRV
1Q15
2Q15
3Q15
1Q14
11,0%
10,4%
2Q14
3Q14
4Q14
MRV
Nota: ROE excluindo equivalência patrimonial
1Q15
30
Indicadores Financeiros
Net Revenue
(R$ million)
Gross Margin (%)
31
Indicadores Financeiros
Income
(R$milhões)
million)
LucroNet
Líquido
(R$
EZTEC
EVEN
TECNISA
DIRECIONAL
HELBOR
TENDA
GAFISA
ROSSI
PDG
Net Margin (%)
32
-795
-307
-378
-258
35
39
-81
41
154
93
145
112
148
112
185
340
343
350
CYRELA
9M15
31
MRV
511
408
350
9M14
Debt Profile
Detalhamento da Dívida
(R$ million)
Maturity
Balance Due
set-15
jun-15
Charges
Corporate Debt – CDI
1.568
1.807
Debentures - 5th Issuance
07/2016
CDI + 1.5% p.a.
259
533
Debentures - 6th Issuance
05/2017
CDI + 1.5% p.a.
530
510
Debentures - 7th Issuance
12/2016
CDI + 1.6% p.a.
263
302
Working capital – CDI
up to 06/2018
CDI + 1.15% to 1.45% p.a.
457
462
CCB which backed the CRI transaction
03/2013 to 03/2015
CDI + 1.15% p.a.
60
-
714
747
Construction Finance - TR
Debentures - 4th Issuance
12/2017
TR + 8.25 p.a.
114
111
Construction Financing
up to 01/2020
TR + 8% to 10.5% p.a.
600
637
6
7
6
7
2.289
2.561
Others
Others
up to 04/2020
CDI + Spread and Fixed rate 4.5% and 6%
Total
(R$ million)
Total debt
(-) Cash and cash equivalents and Short-term investments
Net Debt
Total Shareholders' Equity
Net Debt / Total Shareholders' Equity
EBITDA LTM
Net Debt / EBITDA LTM
EBITDA LTM Adjusted (ex. Equity Income)
Net Debt / EBITDA LTM (ex. Equity Income)
sep/15
1.748
(1.514)
234
5.047
4,6%
637
0,37x
730
0,32x
jun/15
2.029
(1.527)
502
4.906
10,2%
627
0,80x
711
0,71x
sep/14
1.981
(1.233)
748
4.761
15,7%
853
0,88x
630
1,19x
Var. Sep/15 x Var. Sep/15 x
Jun/15
Sep/14
13,8% ↓
0,8% ↓
53,3% ↓
2,9% ↑
5,6 p.p. ↓
1,7% ↑
54,1% ↓
2,7% ↑
54,6% ↓
11,8% ↓
22,8% ↑
68,7% ↓
6,0% ↑
11,1 p.p. ↓
25,3% ↓
58,1% ↓
16,0% ↑
73,0% ↓
34
Debt details and Financial Covenants
Corporate Rating
Total Debt
(R$ million)
brAA-
CDI
TR
Others (fixed rate)
Total
AA-(br)
Receivables + Unearned Revenue + Inventories
Net Debt + Properties payable + Unearned Cost
_________________________________ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ _
Balance Due
Sep/15
1,569
714
6
2,289
Net Debt + Properties payable
Net Equity
> 1,6
Balance Due
/ Total (%)
_________________________________ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ _____ ______ ______ ______ ______ ______ ______ ______ ______ ___
68.5%
31.2%
0.3%
100.0%
Average Cost
CDI + 1.5%
TR + 8.0%
5.3%
13.82%
< 0,65
Covenant
Covenants: 1Q08 to 4Q12 – Proportional consolidation; 1Q13 to 3Q15 – CPC 19 – IFRS 11.
Note: “Net Debt” excludes SFH financing. “Properties payable” excludes land part relative to swap
35
Rating x (Net Debt/ Equity) – Fitch Ratings
Net Debt Volume
Source:
Companies released results - CVM
Equity: average from last 5 months
36
Rating x (Net Debt/ Equity) – Standard & Poor’s
Net Debt Volume
Source:
Companies released results - CVM
Equity: average from last 5 months
37
Subsidiaries
Subsidiaries
3Q15
3Q15
 Portfolio %LOG (in GLA) – 1,267,099 sqm of GLA
 Landbank with PSV of R$2.1 billion;
 Rented GLA in 9m15 – 130,000 sqm (%LOG)
 140 commercialized units in 3Q15, equivalents
 Number of projects: 39
to a PSV of R$10.7 million;
 Net Revenue 9M15: R$69 million
 SOS of 24% in 3Q15
 Adjusted Ebitda 9M15: R$54 million
 Highlight to 2Q15 for the success during the
 Equity: R$1.5 Billion
launching of “Bem Viver Campos” with 52% of
 MRV share: 38%
total units sold during the 1st month after
launch.
 Equity: R$ 24 million
 MRV share: 60%
39