Earnings Release Presentation - Third Quarter 2010 (3Q10).

Earnings Release 3Q10November 11, 2010

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Earnings Release 3Q10

Rubens Menin

Opening Comments

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Best third quarter in the Company’s history in net revenue volume, EBITDA e net income

Increase on EBITDA margin and net margin

Increase on projects size – economies of scale

Successful partnership with Caixa Econômica Federal – largest operator of the government program and largest homebuilder low income on Brazil

Increase on the operation and short cycle of incorporation

Decrease on cash burn – financial discipline

Highlights

Net Revenue (R$ million) Gross Profit (R$ million) and Gross Margin (%)

Net Income(R$ million) and Net Margin (%)

EBITDA (R$ million) and Margin EBITDA (%)

Consistency of Financial Results


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449.9

881.1

1,112.0

2,154.8

3Q09 3Q10 9M09 9M10

95.8%

93.8%

125.7

269.9 283.8

608.3

27.9%

30.6%

25.5%

28.2%

3Q09 3Q10 9M09 9M10

114.6%

114.4%

102.6

216.0 225.5

482.4 22.8%

24.5%

20.3%

22.4%

3Q09 3Q10 9M09 9M10

110.6%

113.9%

162.3

313.5

382.8

741.3 36.1%

35.6%

34.4%34.4%

33,5%

34,0%

34,5%

35,0%

35,5%

36,0%

36,5%

3Q09 3Q10 9M09 9M10

80.1%

94.0%

EarningsRelease 3Q10

Economies of scale on the operation

Average size of launched projects(units)

Average size of construction sites(units)

Increase on productivity

Costs dilution and higher bargaining power

194

243 260

318

177

275

4Q09 1Q10 2Q10 3Q10 9M09 9M10

88

128

183 209 224

418

dec/07 dec/08 dec/09 jun/10 sep/10LandbankSep/2010

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Transfers to CEF (units)

Real Estate Financing

Increasing volume of contracted units with CEF

MRV is the largest partner of CEF in the government housing program “Minha Casa, Minha Vida”

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Contracted units

1,842 2,553 3,7095,665

7,744

6972,539

5,092

8,801

4,702

10,367

18,111

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Transfers

YTD

4,719

10,403

23,575

7,016

17,756

28,159

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Contracted Units

YTD

EarningsRelease 3Q10

Land bank

Quick turnover of land bank

Operating cycle shorter than the industry average

Age of launched lands(number of projects)

60%52%

70%

10%

0%

7%

30%

48%

23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Q10 2Q10 3Q10

Up to 12 months Between 13 and 18 months Above 19 months

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100.6123.8

0.1

89.8 75.9

133.3108.6

60.0

26.1

19.4

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

MRV Engenharia Effects of CEF process MRV LOG


Cash Burn

Change in Net Debt

(R$ million)

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Constant financial discipline and

Shorter operational cycle determine decreasing cash burn

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Land Bank

Launches

Contracted Sales

Inventories at Market Value

Production

Productivity Index

Indebtedness and Net Debt

Unearned Results

Guidance

Operational and Financial Performance 3Q10

Operational and Financial Performance

... On September 30, 2010:

•127 thousand potential units

• Average price of R$97.8 thousand (focus on low income)

• 418 units per construction site (average)

•Increase on land bank to attend the strong and increasing demand

... by financing source Sep/10% swap / land cost % land cost/ PSV

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Land Bank (%MRV)

Land Bank %MRV (R$ billion)

3Q10

Swap43% FGTS

96%SBPE4%

8,991.2

10,614.1 10,923.0 11,347.3 12,422.0

dec/08 dec/09 mar/10 jun/10 sep/10

Cabral– Sep/087,009 units

Cuiabá – Apr/10912 units

Mauá – Mar/083,119 units

Campinas – Aug/094,376 units

Cost9.2%

... by price range in 3Q10


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3Q10

... by financing source in 3Q10

... in 3Q10

• Launches of 42 new projects

• PSV of R$1.033 million – 11,122 units

• 83% of the launched units are eligible to MCMV

• Launches in 8 states and 24 cities

Launches (%MRV)

Launches %MRV (in R$ million)

650.8

1,032.9

1,533.4

2,752.1

3Q09 3Q10 9M09 9M10

58.7%

79.5%

Below R$80,000

11%

R$80,001 to R$130,000

86%

Over R$130,000

3%

FGTS83%

SBPE17%

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Contracted Sales (%MRV)

... in 3Q10

• Total sales of R$889.7 million

• 8,557 sold units

• Sales over Supply of 33%

• Sales in 14 states + DF and 62 cities

Contracted Sales%MRV (em R$ milhões)

... by price range in 3Q10

... by financing source in 3Q10

789.4 889.7

2,070.9

2,604.4

3Q09 3Q10 9M09 9M10

12.7%

25.8%

FGTS71%

SBPE29%

Até R$80.000

8%

De R$80.001 a R$130.000

73%

Acima de R$130.000

19%

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Inventory distribution of units for saleper construction phase as of Sep/30/10

Inventory at Market Value 09/30/10 = R$ 1.8 billion

Inventory distribution of units for saleper financing source as of Sep/30/10


Inventory at Market Value (%MRV)

56%

43%

1%

Not iniciated

Under construction

Finished

FGTS92%

SBPE8%

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Units produced


Production

2,800

4,300 4,000 5,000

6,500 7,400

9,600

18,800

-

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

20.000

2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10

72.1%

95.8%

Work force evolution

09/30/09 09/30/10

Construction sites 201 255

Units per site 181 224

# employees for construction 12,422 23,882

Engineering Staff 480 680

Selling Expenses

(R$ million)

Selling Expenses / Contracted Sales %MRV (%)

and Selling Expenses / Net Revenue (%)

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Productivity Index

... in 3Q10

• 30% of contracted sales via internet

• The most visited website among homebuilders in Brazil – 14.7 million (9M10)

• 2,500 brokers (internal and outsourced)

25.6

40.3

73.4

110.3

3Q09 3Q10 9M09 9M10

57.5%

50.2%5.7%

4.6%

6.6%

5.1%

3.2%

4.5%3.5% 4.2%

3Q09 3Q10 9M09 9M10

% Net Revenue

% Sales

G&A Expenses

(R$ million)

G&A Expenses / Contracted Sales %MRV (%)

and G&A Expenses / Net Revenue (%)

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Productivity Index

... in 3Q10

• Continued investments in IT

• Shared Service Centre – productivity and cost reduction

BPM ECM GED

Cognos (Planning) SAP - BO (Cube) Microsoft (Report)

BI - Business Inteligence

RM - HR Management

Microsoft Dynamics

Microsoft Sharepoint

ECM - Content Management

ERP

Portal Colaboration

SAP ECC 6.0

MRV Obras

CRM

Client Relationship Management

27.2

40.7

70.3

107.3

3Q09 3Q10 9M09 9M10

49.8%

52.5%6.0%

4.6%6.3%

5.0%

3.4%

4.6%

3.4%

4.1%

3Q09 3Q10 9M09 9M10

% Net Revenue

% Sales

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Debt Maturity Schedule

Loans and Financing and Net Debt


Composition of the Indebtedness Net Debt

180.1 99.5

357.9 257.8

310.1

268.2

113.4

4.7

12 meses 13 a 24 meses 25 a 36 meses 37 meses em diante

Debenture Loans - Financing

(R$ million) set/10 jun/10 Var. %

Total debt 1,591.8 1,432.3 11.1% ↑

(-) Cash and cash equivalents (1,013.7) (982.2) 3.2% ↑

Net Debt 578.2 450.1 28.4% ↑

Shareholder's Equity 2,880.4 2,663.3 8.2% ↑

Net Debt / Shareholder's Equity 20.1% 16.9% 3.2 p.p. ↑

sep/10 jun/10

Debentures - 1st Issuance

1st series 06/15/2013 CDI + 1.5% p.a. 280.9 272.7

2nd series 06/15/2013 IPCA + 10.8% p.a. 32.7 31.9

Debentures - 2nd Issuance 05/25/2011 CDI + 3.7% p.a. 60.8 81.0

Debentures - 3rd Issuance 2/1/2014 CDI + 1.6% p.a. 526.6 538.3

Construction Finance 10/06/2011 to 11/30/2013 TR + 8% to 12% p.a. 460.6 409.4

Working capital – CDI 10/04/2010 to 08/09/2013 CDI + 1.02% to 2.18% p.a. 229.7 99.0

Others 6.2 6.3

Expenses from debenture's issuance (5.6) (6.3)

1,591.8 1,432.3

(R$ million) Maturity ChargesBalance Due

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Unearned Results


(R$ million) jun/10 mar/10 Var. %

Unearned Sales Revenues 2,809.9 3,058.2 8.1% ↓

(-) Unearned Costs of Units Sold (1,461.6) (1,590.9) 8.1% ↓

Unearned Results 1,348.3 1,467.3 8.1% ↓

Unearned Results Margin 48.0% 48.0% 0.0 p.p. ↑

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Guidance 2010


Guidance 2010 Previous Revised

Contracted Sales (%MRV) - R$ million 3,700 ~ 4,300 3,700 ~ 4,300

EBITDA Margin* 25% ~ 28% 26% ~ 29%

* according to the accounting practices of 2009

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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.

Leonardo CorrêaChief Financial Officer

Mônica SimãoChief Investor Relations Officer

Felipe GonçalvesInvestor Relations Manager

Ph.: (31) 3348-7150

E-mail: [email protected]

www.mrv.com.br/ri

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Contacts


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Earnings Release Presentation - Third Quarter 2010 (3Q10).

Investor Relations

Transcript of Earnings Release Presentation - Third Quarter 2010 (3Q10).