corporate profile competitive advantages strategy financial

CORPORATE PROFILE
EZTEC Empreendimentos e Participações S.A. (Bovespa: EZTC3) is
one of the most profitable companies among all publicly traded
companies within the Brazilian Real Estate Industry.
EZTEC is a 30-year old fully integrated company focused on land
prospecting, product development, engineering & construction,
sales and direct client financing.
In 2006 the Company launched 5 projects totaling R$230 million
of potential sales value (PSV). In the first half of 2007, its PSV
was R$252 million and its landbank reached R$2.4 billion of
potential sales value.
Development
Total
Units
Location
EZTEC’s
Stake
Total PSV
(R$ million)
EZTEC’s PSV
(R$ million)
Usable Area
(in sq.m )
1Q07
Clima Bothanico
Evidence
Vert
Jabaquara, São Paulo
388
Tatuapé, São Paulo
Ibirapuera, São Paulo
total
100%
121,906
121,906
43.0
144
50%
63,315
31,658
23.5
6
100%
36,300
36,300
6.1
221,521
189,864
72.5
538
COMPETITIVE ADVANTAGES
Proved Experience delivering products for all Market
Segments: With 37 projects launched totaling 1 million square
meters or 5,514 units delivered throughout its history, EZTEC
has been present in the low-end as well as the mid and highend segments of the residential real estate business in Brazil.
High Profitability and Solid Balance Sheet: The Company
constantly focus on maximizing results, having posted from
2004 to 2Q07 an average net margin of 39% as well as
EBITDA margins of 39% within the same period. Its ROE and
ROIC was respectively 34% and 30% in 2006.
Fully Integrated Real Estate Player: The Company
is comprised of 3 business units divided as Engineering &
Construction; Brokerage; and Development that operates
in an integrated manner, which allows us to manage and
control all stages.
2Q07
Clima do Bosque
Vila Prudente, São Paulo
208
100%
62,408
62,408
23.1
Jabaquara, São Paulo
336
100%
86,125
86,125
37.3
Lapa, São Paulo
282
100%
71,126
71,126
24.7
276
100%
3Q07
Imigrantes 2
Lapa
Ipiranga GH
Ipiranga, São Paulo
total
894
62,996
62,996
24.2
220,247
220,247
86.2
56,576
56,576
17.7
4Q07
Tebas
Vila Mascote, São Paulo
Praia De Guaratuba
total
Total
Guaratuba, Bertioga
104
100%
320
45%
250,000
112,500
70.0
424
306,576
169,076
87.7
2,064
810,752
641,595
269.5
FINANCIAL INFORMATION
Contracted Sales (R$ ‘000)
EBITDA (R$ ‘000) and EBITDA
Margin (%)
CAGR: 124%
46
220
32
196
120
STRATEGY
Enhance its presence within the residential middle
income segment that comprises of houses ranging
from R$2,500/sq.m to R$3,000/sq.m. That segment
should represent approximately 50% of EZTEC’s total
business.
26
44
39.7%
38.5%
39.4%
43.5%
2004
2005
2006
1H06
27
19
103
1H07
2004
2005
2006
EBIDTA (R$ ‘000)
and EBIDTA Margin %
1H06
36.4%
1H07
EBIDTA Margin
*Excluding IPO expenses
Focus on the low income segment by introducing the
“club condo” concept to a client base eager to acquire
better quality housing with amenities for an affordable
price.
Net Revenue (R$ ‘000)
Net Income (R$ ‘000)
and Net Margin (%)
CAGR: 58%
118
Develop new regions within a 500 km radius from the City
of São Paulo for both middle and low income housing.
Capture high margins opportunities on commercial
development projects (i.e shopping malls, corporate
offices).
50
82
74
33
60
29
47
40.2%
46.3%
35.2%
35.2%
39.2%
Capture high margins opportunities on commercial projects
development (i.e shopping malls, corporate offices).
2004
2005 2006
1H06
1H07
2004
26
42.7%
18
2005
2006
1H06
1H07
OPERATING PERFORMANCE
Since July 2006, EZTEC senior management has been working
intensively to prepare the company to new and vibrant phase. As
a result of this effort, the launching volume increased 110% in
relation to the prior period (Jul-05 to Jun-06) to reach R$390.0
million of potential sales value (PSV) in June 2007, sales
velocity kept a strong pace registering an average of 78.0% of
contracted sales within the first 90 days after launching and the
average net margin was kept above industry levels at 36.2%
(Ex-IPO expenses) for the 12-month period.
Since the beginning of 2006, the company has been investing
heavily on its in-house sales force and by the end of the 2nd
quarter of 2007, EZTEC had a total of 50 exclusive brokers that
sold approximately 36% of all contracted sales reported in the
first half of 2007 (R$196.3 million).
Having listed its shares at the Bovespa Novo Mercado through its
initial public offering of 33% of the total capital in June 2007, EZTEC
initiated a new cycle and is now focused on expanding its operating
volume on the most lucrative segments of the Brazilian Real Estate
market, prioritizing high sales velocity and above industry returns.
EZTEC strong brand awareness, built throughout its 29 years of
existence, brings an important competitive advantage.
At the end of the first half of 2007, 4 projects totaling 746 units
were launched with a total PSV of R$283.9 million and total
usable area of 95,600 sq.m out of which EZTEC’s portion of the
PSV was R$252.3 million.
Launches (R$ MM)
236
Landbank (R$ MM)
252
1012
LANDBANK
1000
390
Also remarkable was EZTEC’s performance regarding the
formation of landbank, where in the last 12-month period was
acquired R$134.7 million worth of land that as of June 2007 it
was equal to R$2.4 billion of PSV at a cost of acquisition close
to 5.2%¹ of the PSV.
110
87
2007
2004
2005
2006
1H07
2008
The high selling potential of this landbank allied to the Company’s
strategy of operating in the middle-income segment (between
R$2,500 and R$3,000/sq.m) and the economic segment (between
R$2,000 sq.m and R$2,500 sq.m) in a radius of approximately 500
km from São Paulo city, are important factors for creating value
for shareholders and preserving EZTEC’s net margin at above
market-average levels. EZTEC plans to continue expanding its
landbank position.
2009 on
Landbank Breakdown
Economic
8%
Historical Launches
Commercial
20%
Economic
14%
High
6%
¹This cost of acquisition did not include expenses relating to the expansion of the floor-area ratio of the
areas. If we choose to use the ratio to the maximum, it will be necessary to acquire CEPACs (Certificate
of Additional Construction Potential) at official auctions or pay the taxes to the city administration and the
average cost of acquisition may reach up to 8% of the PSV.
Medium-High
15%
Medium
57%
Medium
80%
Land
Location
Usable
Area (in
sq.m)
Total Land
Area (sq.m)
Potential
PSV *
(in R$ '000)
%
EZTEC
Potential PGV
EZTEC *
(R$ '000)
Launch
Estimate
Segment
Jabaquara
Comercial
Guarda de
Honra
Canário
Lapa
Jabaquara, São Paulo
6,642
15,000
52,500
100%
52,500
2008
Commercial
Ipiranga, São Paulo
6,108
24,130
64,095
100%
64,095
2007
Residential middle
income
Moema, São Paulo
200
-
-
100%
-
Lapa, São Paulo
5,621
25,238
70,668
100%
70,668
2007
Residential middle
income
Imigrantes 2
Jabaquara, São Paulo
16,933
37,296
98,834
100%
98,834
2007
Residential middle
income
Tebas
Vila Mascote, São Paulo
4,080
17,544
56,576
100%
56,576
2007
Residential middle
income
Berrini
Chacara Sto. Antonio,
São Paulo
35,227
131,790
547,170
97%
531,193
2008
Residential middlehigh income
Gualacho
Guaratuba 1
Aclimação, São Paulo
848
-
-
100%
-
Guaratuba, Bertioga
40,371
70,000
250,000
45%
112,500
2007
Seaside leisure
middle income
Guaratuba 2 **
Guaratuba, Bertioga
481,000
300,000
862,470
80%
689,976
2009 a
2012
Seaside leisure
middle income
Bandeirantes ** Pirituba, São Paulo
176,607
380,536
1,416,028
35%
495,610
2008 a
2009
Mixed middle
income
Long Beach
Praia Grande
42,985
102,698
230,087
100%
230,087
2008
Seaside leisure
low income
Cursino
Jabaquara, São Paulo
40,000
-
-
100%
-
N.A.
Residential low
income
856,622
1,104,232
3,648,427
65.8%
2,402,038
Total
N.A.
N.A.
Residential
N.A.
* Potential PSV and Units launches are a Company's estimates and may be chaned until the launching period
** Guaratuba 2 and Bandeirantes Projects will be developed in many phases
For additional information, please contact:
Gustavo Junqueira - CFO and Investor Relations Officer
João Pessoa de Andrade - IR Manager
[email protected]
Phone: +55 11 5056 8300 Fax: +55 11 5056 8301
Visit EZTEC’S website
www.eztec.com.br/ri