- Net income Rose 103% on 63% Increase in Gross Profits - SAO PAULO, Brazil, May 5 /PRNewswire-FirstCall/ -- Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), one of Brazil's leading diversified national homebuilders, today reported its financial results for the first quarter ended March 31, 2008. The following financial and operating information, unless otherwise indicated, was prepared and presented in accordance with Brazilian GAAP (BR GAAP) and in Brazilian Reais (R$). Additionally, financial statements and operating information consolidate the numbers for Gafisa and its subsidiaries, and refer to Gafisa's stake (or participation) in its developments. To view a more detailed review of first quarter results filed with the Brazilian Comissao de Valores Mobiliarios ("CVM"), please visit Gafisa's website http://www.gafisa.com.br/ir . First Quarter Results Net operating revenue for the first quarter of 2008, recognized by the Percentage of Completion ("PoC") method, rose 42% to R$319.5 million from R$224.3 million over the first quarter of 2007. Pre-sales including current project launches and inventory for the quarter were strong, growing by 97% to R$502.3 million from R$254.5 million in the first quarter of 2007. The share of pre-sales from current project launches grew 171% to R$203.6 million from R$75.1 million in 1Q07. Indicative of unmet demand for the high-end traditional Gafisa product, a development in Salvador, Bahia, launched in January was 98% pre-sold by the end of the quarter. Project launches for the quarter totaled R$577.9 million, an increase of 91% from R$303.1 million in the first quarter of 2007. Reflecting the Company's strategy to continue expanding its geographic reach, in the first quarter of 2008, 38% of total launches were outside of Sao Paulo and Rio de Janeiro, a 266% increase over the same quarter in the prior year. Gafisa's land bank totaled R$11.1 billion at 1Q08, representing a 94% increase over 1Q07 and a 9% increase over the previous quarter. Supporting the Company's diversification strategy to service all segments and geographies of the homebuyer market, 42% of the consolidated land bank was in new markets. The Company's land bank currently is composed of 144 different sites. EBITDA increased 51% to R$50.8 million from R$33.8 million over the same quarter in 2007 and EBITDA margin improved to 15.9% from 15.1% over the prior year. For the quarter, net income was R$41.6 million, an increase of 103% compared to net income adjusted for offering expenses of R$20.5 million in the first quarter of 2007, and net margin was 13.0%. EPS were R$0.32 for the quarter, an increase of 88% compared to adjusted 1Q07. During the fourth quarter of 2007, the Company began to capitalize interest cost from corporate debt and recognize it on a percentage of completion basis. Interest expense is now included on the COGS line of the income statement. In the 4Q07 earnings release, the Company adjusted capitalized interest for the whole year 2007 in the fourth quarter. Capitalized interest for 2007 has been allocated among the four quarters of 2007 to make 1Q08 more comparable to 1Q07 and 4Q07. The backlog of results to be recognized under the PoC method reached R$665.2 million in 1Q08, from R$371.9 million in 1Q07 and R$583.4 million in 4Q07. The backlog margin to be recognized reached 38.5%. Selling, general and administrative (SG&A) expenses were R$56.2 million in 1Q08 versus R$31.5 million in 1Q07. G&A represented R$32.2 million of the total amount, up from R$19.5 million in 2007. This increase in G&A primarily reflects the Company's consolidation of AlphaVille and the ramp-up of operations at Fit and Bairro Novo. Reflecting one of the most conservative stances in accounting practices in the industry, the Company now defers only the selling expenses associated with showrooms. Fitch upgraded our corporate rating to A bra (stable outlook) from A- (A minus) bra. Commenting on results, Wilson Amaral, Chief Executive Officer of Gafisa S.A., said, "As you can imagine, we are all pleased with last week's upgrade by S&P of Brazil's sovereign credit to investment grade. This will have important positive implications on the overall health of the Brazilian economy and liquidity within our debt and equity markets as more investors will now be able to participate in the strong growth potential of Brazil. We are off to a strong start in 2008 and remain optimistic about the prospects for our sector. Traditionally, this is a slower quarter for the industry and we were pleased by the launches achieved during this period, as well as the velocity of pre-sales. Gafisa has now launched and developed products in each of our newly targeted demographic segments through AlphaVille, addressing the mid-high and high income markets, and Fit Residencial and Bairro Novo, targeting the lower income segments of the population." Amaral continued, "We are well-positioned to continue our strong pace of growth throughout the year with a strong balance sheet and over R$722 million in cash, as well as a highly-skilled management team with a proven track record in on-time delivery of developments while operating within budget. Our land bank has reached R$11.1 billion and represents almost 59,000 units. Pre- sales, a strong indicator of Gafisa's ability to meet consumer demand, grew nearly 100% over the prior year's quarter, while launches increased 91% compared to the same quarter in 2007." "Looking ahead, we believe that the outlook for continued growth in the Brazilian residential housing industry remains strong. We remain confident that the banking system will not change course and will continue to accelerate the rate of access to mortgages, thus continuing to fuel our industry. There are several reasons that support this perspective: savings account balances are expected to continue to grow and regulation requires that 65% of those balances be used toward financing mortgages; even with potential increases in rates, the improved terms and tenors of loans will continue to make monthly payments affordable; and, the Selic rate does not necessarily have a direct correlation to the consumer's mortgage rate. In fact, mortgages funded from savings accounts increased by 88% in this quarter compared to the previous year. Finally, the Central Bank's decision to control inflation, resulting from stronger-than-anticipated economic activity, and the overall health of the economy will have a long-term positive impact on all consumers and their ability to continue to afford new housing." "Gafisa is going into 2008 with both a strong cash position and a healthy balance sheet. Based on our current outlook and performance, we are reaffirming our full-year launch guidance of R$3 Billion. We also continue to expect to achieve an EBITDA margin of between 16% and 17% for the full year. We established a strong platform for growth in 2007 and will work hard throughout 2008 to execute successfully against this plan." Conference Call The management of Gafisa will host a conference call in English on Tuesday, May 6, 2008, at 11:00 a.m. EST/12:00 p.m. Brasilia time. To access the call, dial +1 (973) 935-8893 and enter the code # 43201887. A replay of the conference call will be available for seven days. To access the replay, dial +1 (706) 645-9291 and enter the code # 43201887. A live webcast of the conference call will be available on the internet at http://www.gafisa.com.br/ir . About Gafisa We are one of Brazil's leading diversified national homebuilders. Over the last 50 years, we have been recognized as one of the foremost professionally- managed homebuilders, having completed and sold more than 900 developments and constructed over 37 million square meters of housing, which we believe is more than any other residential development company in Brazil. We believe "Gafisa" is one of the best-known brands in the real estate development market, enjoying a reputation among potential homebuyers, brokers, lenders, landowners, and competitors for quality, consistency, and professionalism. Glossary PoC Method -- Under Brazilian GAAP, real estate development revenues, costs and expenses are accounted using the percentage-of-completion ("PoC") method, which measures progress towards completion in terms of actual costs incurred versus total budgeted expenditures for each stage of a development. Backlog of Results/Revenues/Expenses -- As a result of the Percentage of Completion Method, we recognize revenues and expenses over a multi-year period for each unit we sell. For example, our backlog of results represents revenues minus costs that will be incurred in future periods from past sales. Backlog Margin -- Equals "Backlog of results" divided by "Backlog of Revenues". Land Bank -- Land that Gafisa holds for future development paid either in Cash or through swap agreements. Investor Relations: Julia Freitas Forbes Phone: +55 11 3025-9297 Fax: +55 11 3025-9348 Email: Website: http://www.gafisa.com.br/ir Media Relations (Outside Brazil) Eileen Boyce Reputation Partners Phone: +1 312 222 9126 Fax: +1 312 222 9755 E-mail: Media Relations (Brazil) Patricia Queiroz Maquina da Noticia Comunicacao Integrada Phone: +55 11 3147-7409 Fax: +55 11 3147-7900 Email: This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Gafisa. These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the business and its continued access to capital to fund the Company's business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors; therefore, they are subject to change without prior notice. http://www.gafisa.com.br/irDATASOURCE: Gafisa S.A. CONTACT: Investors, Julia Freitas Forbes, Gafisa, +011-55-11-3025-9297, Fax, +011-55-11-3025-9348, ; Media (Outside Brazil), Eileen Boyce, Reputation Partners, +1-312-222-9126, fax, +1-312-222-9755, , or Media (Brazil), Patricia Queiroz, Maquina da Noticia Comunicacao Integrada, +011-55-11-3147-7409, +011-55-11-3147-7900, , both for Gafisa Web site: http://www.gafisa.com.br/

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