Gafisa S.A.

Ana Recart - CEO, Interim CFO, Interim IR Officer & Director

Gabriel Simoes - Itaú BBA Roberto Waissmann - Bradesco Bank

Good morning, everyone. I would like to start this presentation by talking about our business vision.

We took office in the end of September. For the next quarter and 2019, we are [indiscernible] for cost reduction, asset monetization, innovation and funding.

Regarding cost reduction, we took some immediate action, like the reduction and the adjustment of the company's structure, and we changed our headquarters location resulting in a saving of BRL4.7 million. Then in the second stage, we're now focusing on reviewing our processes, which will allow us to optimize our costs.

Regarding the second pillar, asset monetization, we are focusing on selling inventories, especially finished units and also the sale of noncore assets. Innovation is the point that we consider very relevant and an opportunity in terms of business model.

So we created an Innovation Committee to support us in the execution of some projects that we have in mind and to generate new work firms. The first project is the creation of Gafisa Serviços or Gafisa Services, including post-guarantee services, customization of units for customers and rental of our own and third-party units.

We believe that this business unit will create value to the customers and to the company and is also an additional source of revenue. The fourth and last pillar, to support our growth in the coming year, we are already evaluating some funding alternatives.

Now after explaining the pillars of the new management and our new plans, we're going to talk about the quarter 3 results. In the next slide, we're going to talk about our launches.

Over the year, we launched 5 projects with a total PSV of BRL610 million. In quarter 3, we launched one project in the district of Pinheiros.

For the quarter, we are reviewing our pipeline, looking for more profitable projects. In the next slide, we will show the evolution of our sales and cancellations.

In quarter 3, net sales were BRL136 million, a lower volume quarter-over-quarter due to fewer launches in this quarter and the uncertainties in the political and economic scenario in the country. Here, we have the historical picture of our cancellations.

The average was BRL35 million in the same period for last year. In the same period in '18, it dropped to BRL18 million.

In the next slide, we're going to talk about our inventory. It was BRL1.3 billion for the quarter.

The inventory of finished units was 33% of this amount, BRL434 million. When we compare the PSV of finished inventories with the previous quarter, there was a 14% reduction.

In the coming quarters, we will focus our work to try to reduce this percentage even further. In the next slide, we have our delivered projects.

In the quarter, we delivered 3 projects in São Paulo with a total PSV of BRL346 million. Here, we have Vision Capote Valente, which is 94% sold.

In the last slide, we represent our capital structure. In the first nine months of 2018, we had a net revenue of BRL78 million, which was 73% more than the same period last year.

We sold BRL53 million versus a negative EBITDA last year. In terms of income, we reduced from 500 -- BRL485 million to a loss of BRL122 million in the accumulated for 2018.

This is the end of the presentation. We are now available for questions.

Thank you.

You talked about inventories, that you're going to focus on selling inventories. We saw a reduction in the inventory of finished units of the company.

What is the time frame for a significant reduction and significant sales of the current inventory?

What I can tell you is that we are working very hard, very focused with our sales team to sell the inventory because they generate a lot of liquidity for the company. Since this is one of our pillars, we will be reporting this to the market on a constant basis, and this is what I can tell you for now.

My first question is not a question, it's a comment. I'd like to know a little more about the strategy of the Gafisa Services division that you just announced.

I'd like to know what will be the focus of this division or department. I heard that it's going to work in 3 firms, so I want to know which one will be the top priority.

And the second question, considering the change in the management, can you tell us anything about the strategy for Alphaville?

Thank you, Roberto. Thank you for participating.

Regarding Gafisa Services, we see it as an opportunity for the market, which represents actually a trend and an evolution of the real estate market. So we created an Innovation Committee chaired by one of the members of our administration board, Mr.

Pedro. And the purpose of Gafisa Services is actually three purposes: the first is the allocation of units.

We understand that in order to sell better to our customers and to define a better direction for our inventories and even for our investors, we need to allocate -- we need to rent some of the units that we have, both in home and commercial buildings. We created a center here in the company that has all the expertise that we need to work in rental.

The other two services are post-warranty services. Today, we have feel and database of all our customers.

And in order to better serve them when the warranty expires, we can offer them post-warranty services, not with our own team but with a third-party team. And we want to increase the level of reception with our services.

And the third offer is customization. We already do this in-house.

We call it house up but I think we need to boost this customization of units for customers because Gafisa holds the key of the unit until it's delivered to the customer. And we can customize the unit in terms of construction and the floor plan, adding extra services, adding extra value to the product.

This will be extra revenue. Today, when they receive the key, they want to have the unit ready either to move in or to start their own decoration works.

For Alphaville, we've been here for 40 days, the new management has been here for 40 days. We will participate in the administrative board's meetings, so this is something that we still have not defined.

We are still -- we will discuss Alphaville in the short future, so I don't have an answer for you now. But of course, Alphaville is a very relevant asset, and we're going to look at it very carefully.

I'd like to know more about the share buyback program. We saw that in a very short term, you basically bought the total shares that had been authorized by the board.

And I'd like to know if the company has any intention of creating a new program or you're just maintaining the current one.

First, it's important to explain the objective of this program is to create value for the shareholders in the long term. So this is another pillar.

I didn't list it but it's another pillar. What we need to know in the company is create value to our shareholders in the long term.

What happened is that we had this exit movement in the market, the buyback was approved by the administration board, and this asset movement gave us an opportunity. So to answer your question about the absorption of these shares, this is why it happened.

I have a question, Ana, about the reduction of 50% in your staff that will generate a savings of BRL36 million per year. Could you tell us a little more when we're going to see this happening?

Is this going to start in the next quarter or do we have to wait and still bear these costs for a longer period until you can effectively reduce the staff? When are we going to start seeing the cost reductions?

Roberto, this is Fernanda [ph]. In the next quarter, we still have a nonrecurring effect of the dismissals because we dismissed the employees in quarter 4.

So we will start seeing the gains, the efficiency gains as of the first quarter of 2019.

Okay. So this BRL36 million are for '19?

Yes, that's right.

And also, you said that you're also changing the location of your headquarters, that you're moving to São Caetano. Do you have any other measures planned to reduce costs?

This is Ana. Yes, as I said, we took office 40 days ago.

So these were the immediate measures, the reduction in the staff and the change of the headquarters location. We are now starting to focus on other cost-cutting actions to streamline our processes and make them more efficient.

It's important to note that we did a benchmark with all the other companies -- the competitors in the country. And all of them took similar measures.

So this was the perfect time for Gafisa to take on these challenges. So we will have more cost cuts and more increased efficiency in the short future through other measures to create value to our shareholders.

Thank you all for participating in this call, and I want to say clear that we are at your service at all times. And we will follow through with our plans, and our company will go back to what it was in the past.