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Gafisa S.A. (NYSE:GFA)

Q4 2012 Earnings Call

March 12, 2013 10:00 am ET

Executives

Alceu Duilio Calciolari - Chief Executive Officer, Member of Executive Board, Coordinator of Finance executive Committee and Coordinator of Investment Executive Committee

Andre Bergstein - Chief Financial Officer, Investor Relations Officer, Member of Finance Execuive Committee and Member of Investment Executive Committee

Sérgio Goldman

Analysts

Marcelo Garaldi Motta - JP Morgan Chase & Co, Research Division

Luiz Mauricio Garcia - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

Eduardo Silveira - Espirito Santo Investment Bank, Research Division

Rene Brandt - Fator Corretora, Research Division

Operator

Good morning, and welcome to Gafisa's Fourth Quarter and Full Year Earnings Presentation. At our conference call today, we'll have Duilio Calciolari, CEO of Gafisa; Andre Bergstein, CFO and IR Officer. And we would like to inform you that this presentation is being recorded. [Operator Instructions]

Before we start, I would like to inform you that this conference call refers to Gafisa's financial results of the fourth quarter 2012 and information currently available. The management's statements involve risks, uncertainties and can refer to future events. Any changes in macroeconomic or legislative policies or operating changes in macroeconomic or legislative policies may affect Gafisa's performance. You may proceed, sir.

Alceu Duilio Calciolari

Good morning. Thank you for being with us today. In 2012, we carried out the testaments -- we carried out the targets defined in the deficit turnaround: cash generation; deleverage; the delivery of units; Tenda's operating adjustments; and Gafisa's focus on the strategic markets in São Paulo and Rio; besides continued growth of Alphaville, which were our main targets for the year. And I am delighted to report that we delivered on these targets. Our brands, now headed each by its own exclusive officer with its own operating structure, are focused on increasing the profitability of our activity segment.

We have reduced, in Gafisa, our geographic coverage to focus on São Paulo and Rio, our more profitable markets and are finishing up the lower-margin markets. We are maximizing the gains potential of the group, increasing Alphaville contribution for the products mix. And we are trying to regain the control of financial cycles and the construction -- and Tenda, after having frozen the launches since the middle of 2011. The successful execution of structural changes and operating changes means that we are at a turnaround moment in our company.

In 2013, we started off in a more comfortable liquidity and capital structure position on a 2012 strong cash generation position. In 2013, we'll try to maximize Gafisa's potential, increasing investments in the business through land acquisitions through the Gafisa brand and increased number of launches in the next years. This includes the regaining of Tenda's launches and profitable business and continuous expansion of Alphaville.

This more productive focus on reinvestment will lead to lower cash generation and stability in leverage throughout 2013. This is an important step to capture the group's potential in this new structure. Having developed and executed the restructuring plan of Gafisa in 2012, we are confident that we will achieve established targets for 2013 and successfully carry out the next phase of our growth strategy.

On Slide 3, we would like to discuss the highlights of the fourth quarter in the year 2012. As I have just said, one of our main targets for the year was the generation of operating cash. In 2012, the operating cash flow achieved BRL 1 billion, well above the revised guidance, which was BRL 600 million to BRL 800 million. This result was possible, thanks to the record unit delivery throughout the year, 20% above the delivery of 2011, totaling 27,107 units, exceeding the top of the guidance for 26,000 units. Tenda's contribution in the total of deliveries was relevant, a total of 16,889 units. We also generated cash through transferring the remainder of our client -- with the balance of our client's debts to financial institutions.

Launches during the year were BRL 3 billion, in line with the maximum of the guidance of BRL 2.4 billion to BRL 3 billion. In the fourth quarter, where the volume of launches is typically stronger, we achieved about BRL 1.5 billion, with sales of BRL 905 million in the fourth quarter. As planned, the participation of Alphaville increased to 46% in 2012 compared to 28% in 2011. All the projects were launched according to the profitability parameters established by the company and showed [indiscernible] moment high sales level, with speed of sales in the fourth quarter totaled 20% or 25% x Tenda.

Although we have achieved the operating metrics established for our plan in 2012, the financial results in Gafisa and Tenda were still substantially impacted by the projects -- the margins developed in the nonstrategic markets and by Gafisa's high leverage and by Tenda's legacy management. Now Alphaville, which had an excellent financial performance managed to partially offset the poor results in Gafisa and Tenda.

And the focus on the positive generation of cash was the most important thing this year. The record on units delivery benefited the cash generation, as we can see on the left-hand side of this slide. This chart shows the consistent improvement in our cash position throughout the last 2 years, with a turnaround of the second quarter of this year when the generation of cash became positive. This positive generation has been constant for these last 3 quarters, achieving in the fourth quarter a generation of BRL 381 million, a total of BRL 685 million in the year.

On the chart to the right, you can see inflows and outflows of cash and contributions by each account. We must highlight the contribution of transfers during the year, which generated more than BRL 2 billion entries into the company.

Slide 6, the sales over supply, which improved in both the quarter-to-quarter and year-to-year. Next, Tenda's speed of sales for the fourth quarter was 25% compared to 23% in the third quarter and 18% in the same period last year. Including Tenda and in spite of the impact of contracted solutions, the speed of sales was still very strong in the quarterly comparisons and annual.

Sales, as a percentage of launches, increased year-to-year 67%, while inventories at market value increased 21% referring to the -- and reaching BRL 3.6 billion with the contribution of high volume of launches occurring in the last quarter of the year.

Slide 7. 27,000 units were delivered, 20% more than the previous year, above the guidance. The highlight was Tenda, where we delivered 16 -- almost 17,000 units, a PSV of BRL 1.76 billion. The delivery of Tenda projects is essential in the further process of reducing complexity of the business, so that we can make the operation likely [ph] for the execution of launches for the new fundamentals.

In Gafisa, the delivery of 7,505 or 44 projects was essential to the generation of cash this year. We have improved our transfer focus, anticipating the post-delivery transfer curve.

On Slide 8, we have our landbank. In 2012, we have realigned the profile of our landbank through our strategy expansion. On a consolidated basis, our PSV totaled BRL 18.7 billion or 87.7042 units. Of our land bank, we have acquired to swap 35% of the Gafisa brand, 99% in Alphaville and 23% in Tenda. Throughout 2012, we had a strong increase of the landbank of Alphaville with a growth of 48%. In 2013, we plan to accelerate the investments through the acquisition of land through growth for [ph] Gafisa and Tenda brands.

Slide 9. In 2012, Gafisa segment totaled BRL 1.6 billion in launches, almost the top of the guidance. All launches occurred in São Paulo and Rio, keeping a focus on the higher-margin markets. The speed of the Gafisa product sales in the quarter was very healthy. We totaled 20% of SOS and 48% of sales on launches. The delivery of lower-margin projects outside our strategic markets should be concluded in 2013, which should result in better future margins. Whilst we had an improvement in the performance of sales in inventory, the speed of sales outside our markets -- our key markets was still low. Although, we have delivered these projects -- this will close in 2013, the sale of the inventory should be finished early in 2014.

Slide 10. We have increased intentionally the participation of Alphaville in the mix of business of the company and growing from the volume of launches of the total of group from 28% in 2011 to 46% in 2012. With this and keeping Alphaville client profitability, we'll maximize even more our land development and its contribution for the consolidated results. This was possible, thanks to the priority reallocation of capital to the brand focusing on continued growth.

The launches of Alphaville in the year totaled BRL 1.3 billion, a growth of 38% in the year, in line with the top of the guidance. Launches were distributed between the Alphaville projects and the phases of [ph] Alphaville. The sales of launches accounted for 81% of the total of sales for the year, while 19% came from inventory. The speed of sales of Alphaville in the quarter was stable, 35%. Now sales over launches were 73%, much higher than the 55% registered in the former quarter. 2,713 units in 2012 were delivered.

And Slide 11. During this year, Tenda's management implemented many corrective measures going to -- on the execution of delivery of projects. During this period, the launch of units -- new units was suspended to reestablish the control of financial cycles, operating and building, targeting a sustainable growth for -- regrowth after the slowdown.

Our results of 2012, while in line with the guidance and our portfolio of receivables is improving and our exposure to credits. We are practically delivering all the tenders, and our expectation is that we should be finishing in 2013 and the rest in the beginning of 2014, having delivered 17,000. Approximately 13,000 units or 25 projects are still under building. This was a substantial reduction, as we had 84 projects ongoing at the end of 2011.

Evident at the beginning of 2012, the recognition of presales and the compensation of Tenda's sales force are directly related to the capacity of transferring real estate financings to financial institutions. The Tenda brand shows a healthy sales speed in 2012 and had a receivables portfolio of the best quality. Of the 9,200 units that came back to stock, 68% were already resold. After coming back to the control of financial and operating cycles of the company in 2012, we were ready to launch in the first quarter 2013. The first projects will be launched in São Paulo, the Northeast where the performance is better.

Now let's go to the financial data. And I would like to ask André to take the floor. Thank you.

Andre Bergstein

Good morning, and thank you for being here. As you may see on Slide 13, the Gafisa Group has reported today a loss of BRL 125 million. This loss is due to the impact to the low margins of Tenda and Gafisa's projects to nonstrategic markets and also the effect of the held financial expenses on our financial statement. The net income of 2012 was BRL 3,900,000,000, an increase of 34% in relation to 2011. The gross income of the year is BRL 1 billion, and the gross margin improved in the annual comparison, 26% in 2012. Excluding the impact of Tenda, the margin could have been 31%.

The EBITDA was BRL 479 million, a margin of 12%. This result is made up particularly by the contributions of Gafisa and Alphaville. Tenda's contribution for the EBITDA of the year was still negative, impacting the consolidated results.

Excluding Tenda's operations, our EBITDA -- adjusted EBITDA margin would have been 18%. In 2013, we will be delivering a relevant part of the last project for Tenda, where we will find lower gross margins. And due to this, as we'll see in the next slide, we have managed to identify the improvements of the gross margin. And in Gafisa, the margins continue to -- very high, contributing positively to the consolidated results.

As we may see on Slide 14, as we break down the margins according to market, we may identify the difference in the performance of Gafisa brand in the strategic markets of São Paulo, Rio de Janeiro and other markets. The gross margin of 2012 in the projects in strategic markets were 29%, whilst that of in other markets was negative 1.1%. And based on these numbers, it seems that the strategy adopted was correct. Throughout the quarters in 2013, we will see this trend becoming real.

And as from 2012, we can highlight the effects of land sales and on the results of the company, if on the one hand the sales was positive for the main objective of 2012, that is cash generation; on the other, the gross margin of 13.9% negatively impacted the result, but -- so as I have said, we -- negative margin of 13.9%. In fact, it's negatively the consolidated margin.

Slide 15. The fourth quarter of 2012, we had a loss of BRL 98 million. We had BRL 920 million and a drop of 13% vis-à-vis the BRL 1.064 billion [ph] registered in the third quarter. And what lead the mixed revenue was because of the less sold of inventory, less monetary correction of the portfolios and assets BRL 60 million and receivables, BRL 39 million.

The gross income, BRL 223 million compared to BRL 388 million in the third quarter. The gross margin was 24.2% compared to 29% of the former quarter. The gross margin in the fourth quarter would be 29.3%. And the company had an increase because of the concentration of volume of launches in the fourth quarter 2012, which represented 50% of the launches of 2012.

What my sources say regarding operating expenses, this company had a negative impact of BRL 27 million regarding depreciation and amortization because of the criteria used for the recognition of certain expenses.

Slide 16. We have the general admin expenses, which were BRL 346 million in 2012, accounting for an increase of 38% vis-à-vis 2011. This annual variation is distributed basically throughout 4 main variables: Expansion of Alphaville operations. Because of its growth, Alphaville increased its headcount to make its structure more adequate to execution. Provision of the bonus. In 2011, with exception of Alphaville's provisions for bonuses, payout for services, for auditing services and an increase of the stock option plan.

Slide 17. We have sales and revenues of the group brands according to the launches. Throughout 2012, the Gafisa brand accounted for 51% of the revenues; Alphaville, 21%; and Tenda the 28% remaining. Regarding the sales, Gafisa represented 61%; Alphaville, 42%; and Tenda, minus 3%.

The contribution of revenue per date of launch depends on the financial cycle of each one of the brands. You may notice that Gafisa, as it has a longer cycle, had a more concentrated revenue contribution from the launches of 2010 and 2009. Now Alphaville, which has a shorter financial cycle, had a greater contribution over -- of launches in 2011 and 2010.

On Slide 18, you may see how Gafisa and Alphaville margins contribute positively for the balance -- the backlog results to be recognized. The total of BRL 1.5 billion in the fourth quarter, with the margin to be recognized at 39%. Less of Tenda, the margin to be recognized would be 42%.

Although the revenue volume to be recognized in the annual comparison had dropped, the margin showed an improvement, reflecting the corrective steps that were taken at the end of 2011. In the quarter-to-quarter, the margin to be recognized went from 35.4% to 39%. This improvement is explained due to -- because of relaunches carried out in the last quarter of 2012 and also, these launches had higher margins.

Slide 19. We have the net debt over EBITDA. In view of the focus on cash generation, our cash position increased during the year, going from BRL 984 million at the end of 2011 to BRL 1,681,000,000 at the end of 2012, an increase of BRL 700 million. The generation of consolidated cash in the fourth quarter was BRL 381 million, which led to the generation of free cash of 2012 to BRL 685 million, a significant reduction of leverage.

The net debt equity ratio went from 106% in the third quarter to 95% in the fourth quarter 2012. In the fourth quarter 2011, this ratio was 118%. Excluding project financing, this number is 15% compared to 28% 1 year ago. At the end of 2012, the corporate debt accounted for 49% of the total debt. Now the debt regarding project financing accounted for 51% of the total debt. We believe, with this liquidity position, we are in a comfortable position to execute our business plan.

And now let's go to Slide 20. This table shows a summary of the debt profile and maturity. In the fourth quarter, our total debt was BRL 4.2 billion. Throughout 2012, we worked together with our creditors to negotiate part of our debt. So to better structure our maturity profile and make it more adequate to Gafisa's operating cash flow and thus, we will manage to renegotiate BRL 700 million with a maturity between June 2012 and December 2013. Today, 31% of our debt will come due in 12 months. In September 2012, the 8% of the due was short term. Of the short term, 54% has to do with projects debt and 46% corporate debt. In view of this unique rate, which has dropped, our average nominal cost has dropped to 9.28% in the year. Gafisa today is in compliance with all its debt covenants.

Slide 21, we have the position of our receivables and inventory. You may note that our obligation with our construction costs to be incurred were BRL 12 billion in December 2012. Regarding the same project, we had a portfolio of BRL 7.9 billion in receivables, which refer to already sold units. The total of receivables plus the stocks, BRL 11,600,000,000, which leaves us in a very sound liquidity position to execute future projects.

Now Slide 22. Gafisa, because of its policy in 2012, is now in a comfortable position to finance its operations and honor its debt position in 2013. We will have a better balance this year with our investment and because of less leverage. We are better positioned to increase, although in a conservative manner, our launches and come back to the Tenda brand and once again, invest through land acquisitions which are compatible to our organization.

Plus we will have a new launch guidance for 2013 with a maximum of BRL 3 million to continue with our regional focus for Gafisa and strategic markets for Alphaville. They should account for about 88% of the launches and 40% for Gafisa and 46% for Alphaville; and for Tenda, about 12% of the year's launches.

And the debt equity was 9% (sic) [95%]. We estimate the -- this to continue. And the EBITDA will be 12% and 14% in 2013. And the margins will continue to be impacted by the evolution of Tenda's projects, including the delivery of the 7,000 units in 2013 and the delivery of the projects with lesser margins and outside key margins, which will be concluded in 2013. And finally, Gafisa will be delivered between 13,500 and 16,000 (sic)[17,500] units in 2013, of which 27% will be delivered by Gafisa, 43% (sic) [45%] by Tenda and 27% by Alphaville.

Thank you very much for your attention. And now let us go on to the Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Mr. Marcelo Motta from Chase Morgan.

Marcelo Garaldi Motta - JP Morgan Chase & Co, Research Division

I have 2 questions. First, I'd like to understand the target for the next year. Now in 2012, cash generation and the deleverage, I'd like to understand what are your plans for next -- for this year? And with the landbank, I understand that with less cash generation in 2013, what about the investments in land? When you look at the landbank, you have BRL 18 billion under your landbank. So I'd like to understand that this -- are you going to sell off some land or what's going to happen? I'd like to know what the breakdown would be for next -- for this year.

Alceu Duilio Calciolari

Marcelo, this is Duilio. Well, regarding our plans for next year, you are probably referring to 2013, right, this year? Well, it's true, if you take -- well, we have gone into some details in the material. In 2012, the organization was focused on generating cash. This was our main target and deleverage. So our model determine its targets, elimanating some points and we had 50% cash generation and 50% leverage. Obviously, these 2 targets cover loss in common because when you generate cash, you deleverage. So this is what we did in 2012. In 2013, we are changing a little, and we are balancing the targets between deleverage and cash generation and investments. So half of the eliminated targets, 50% will be focused on results generation, and the other half, deleverage and debt. So what we are doing is adjusting the management of the company towards a moment of generating value. This has already been done. The whole organization already has the target in hand. This is what all the brands will be doing. So when we take and observe the list of brands, we put in some balance between cash generation and deleverage. But all the brands will have these targets. When you talk about the landbank, when you mentioned BRL 18 billion, of the BRL 18 billion, BRL 11 billion is Alphaville; and we have Gafisa about BRL 5 billion; and Tenda, say it's 7 -- BRL 5 billion; BRL 11 billion Alphaville and BRL 2 billion Tenda. The investment question is much more focused on Gafisa and Tenda. Those BRL 5 billion that you'll see in Gafisa is sufficient to deal -- to cover what we are preparing for 2013. In other words, land, which is ready to be launched in 2013, either through approval or for the market, these are the minimum conditions that we need. The approval in the market, which is not enough for the plans for '14 and onwards. Largely, in Gafisa, we bought 1 plot. The company did not resist. And consequently, if you take the business part of Gafisa last year, it was reduced because the landbank was not mature for this year. We are talking about approval market. And the thing is, usually when this occurs, things take longer to mature. In the case of Tenda's sequential geographic coverage, we have to grow, adding to Tenda's landbank in the region which we have decided is strategic, a landbank that leans to the fact that the operation will continue on throughout the years, throughout the quarters so as not to interrupt or rupture with Tenda's productive focus. You know very well that we have a production technology based on aluminum, and production continuity is important. So we are preparing the landbank for continuity and growth.

Operator

Our next question comes from Mr. Luiz Mauricio Garcia from Bradesco.

Luiz Mauricio Garcia - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

There are 3 questions. First one, securitization that you had during the quarter, BRL 170 million. My first question, if a lot of this is coming from Alphaville, the receivables with a due [ph] of GPM plus 12, I'd like to know why there is such a big discount of 17%? Alphaville, I think, was 18% net of BRL 110 million. And why is it not securitized, as this is still being adjusted? We see that the securitization led to a net value of BRL 110 million. And on 31st of December, I think it was already BRL 113.5 million, an increase of 2.5% in a period of 1.5 months. BRL 110 million resulted. So I'd like to know why this correction or adjustment was continued. I'd like to understand the dynamics of this operation. And the second question, the G&A. Can we expect any cuts after the delivery of the Tenda -- the legacy in '13 and '14, or is all the platform that we have in the company today, will it be maintained fully for the new volumes and the new launches? And my third question was about Tenda. We see that there are some units, Tenda units, that have not yet been started. Their construction is just beginning, and the last launch of Tenda was 2011. So this is already quite a long time. So Tenda has 20 million in stocks still. So a large number of units still, so I'd like to know why this has happened, and perhaps, this new construction is already late.

Sérgio Goldman

Just a minute please, Luiz. Just to clarify what I said to Marcelo. When I said our targets were debt and results, Marcelo, the results that mean net income, the mandatory target for the company. And also, it is important to comment that our targets have become annual. In other words, the company is structuring the targets. For '13 and '14, the management of the targets for the people, it has to be within the business cycle of our activity. Just to clarify that to you, Marcelo.

Andre Bergstein

Well, Mauricio, this is Andre speaking. Regarding the securitization in the last quarter, we had 2 operations. One was the AlphaVille receivables. One that is due, one other that is not. The total would be BRL 150 million, but referred to the partner participation and BRL 110 million AlphaVille. And the second operation of credits of Gafisa of 2 projects, which will be delivered, BRL 60-odd million, where -- and with the 2 together, about BRL 170 million. So I want to understand exactly your question regarding the securitization operation.

Luiz Mauricio Garcia - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

My question, Andre, in Note 5, Alphaville securitizations from November 14 has a net of BRL 110 million and face value of the same was 134. There was a discount on the face value of 200%. If the receivables or a majority of them are recognized, GPM plus 12, it seems that they should not have had such a large discount of 200%, maybe, GPM plus 10. I would like to know why there was such a high discount.

Andre Bergstein

Well, the AlphaVille receivables has the GPM correction. So you have the discount and that has a greater impact. So you're comparing your BRL 135 million nominal value with BRL 113 million discounted value and built in, not only inflation, but the total discount of interest, another in the [ph] spread. So this is what happened, that's why you get the difference.

Luiz Mauricio Garcia - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

So this would be in a range above the GPM plus 12?

Andre Bergstein

No, in fact, the receivables had a nominal value of 135. You have the correction, BRL 135 million is the nominal flow throughout time. So when you discount that, the range that we discount during operations, you'll have the discount of this range.

Luiz Mauricio Garcia - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

In fact, you went up to 12 and then, came back to the range of the operations. So the 135 already has the 12. And once it's securitized, why does it continue to be adjusted or restated on your balance sheet? On the 31st of December, you had BRL 113 million. The difference between BRL 113 million and BRL 110 million. BRL 110 million, I rounded it -- I just rounded it up. That's all.

Andre Bergstein

No, on the note, on your note... Well, we can talk about that later, if you like.

Luiz Mauricio Garcia - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division

Does it continue to be restated or adjusted even after the securitization?

Andre Bergstein

Well, the assets and liability continue on the balance sheet. In this operation, we had a subordination of 4%. So although there's a low subordination, we don't have the obligations but the assets and liabilities continue on the balance sheet. That's why you have this correction. Your second question on what we are we going to have from now on? We have a structure today, especially in Tenda, where we are taking care of the legacy, completing the delivery of the project and performing or we'll launch the projects today, Tenda's projects today. So this is a structure which we are managing the past legacy, delivering the past project, very complex. The complexity has been reduced compared to the past. And now we will regain the management. From now on, in Tenda, as you have seen, we will have a better balance. Regarding the reduction of the amount of work that has been reduced over the years and we will have new launches. So what we see from now on is stability. There will not be too much reduction because business is now being regained. And specifically, the last point which you mentioned regarding the inventory which exists in Tenda project, there is a project in Minas, which was not allowed to go on. So that was stopped for a while. And now we may continue, we have been allowed to continue. And to conclude on the securitization, the rate is not 18%. It's about 8.5% inflation.

Operator

Our next question, Eduardo Silveira.

Eduardo Silveira - Espirito Santo Investment Bank, Research Division

I have a question about gross margin. Looking at 2012, the total operating expense was 21% of the revenue. With this level of 22% of expenses, the gross margin would be 33%. So how does the company see the gross margins from now on? We have Gafisa's margin and the effects of the state of land, et cetera, at 28% and the gross margins of Tenda being pressured. So I don't think that there is a formal guidance for these gross margins. But how does the company consider the gross margin of the company, including, perhaps, to improve the reform?

Alceu Duilio Calciolari

This is a Duilio speaking. Well, if you analyze Slide 14, we tried through this slide to show what is the direction of the gross margin when we would have finished our focus of concentration in Rio-São Paulo. We are talking about 34%. I think and we hope that this number will be around that when we talk about Gafisa. We do not see a number very different than 34%, 35% as our gross margin, as we eliminate projects outside São Paulo and Rio de Janeiro. In the case of Alphaville, we expect this margin to be maintained about 50%. We think that margin is -- will be maintained for the volume. But in Gafisa, there is still a growth capacity and this is what guidance points to. It's conservative, but speaking to maintain the margins, we still have a growth of about 10% in Alphaville. In the case of Tenda, which is more difficult to talk about, but we have a target of gross margin. We don't think that it should exceed 30%. We are talking 28% to 30%. And Tenda is more of a turnover with the margin, that's the game. We have 3 different businesses: Tenda, which is more turnover, lower margins; Alphaville, higher margin, higher turnover, the 45% margin; and Gafisa, in between. So this is the dynamic that we expect. And still, in the process of tidying up the house to include Tenda because the impact was so irrelevant, we already have an EBITDA margin of 19% and gross margin of about 30%. So that's what the company thinks.

Eduardo Silveira - Espirito Santo Investment Bank, Research Division

Well, Duilio, going back to the numbers. At Tenda, you said BRL 500 million and also inventory, what gross margin, with some respect, with this legacy of Tenda of BRL 1 billion?

Alceu Duilio Calciolari

Well, in Tenda, we had 25%, and it will exceed the results. It will be less than that. We cannot accept just expenses of operations that -- meaning, that expenses of technical assistance; some expenses with integration. These expenses are not captured in the gross margin. That's why Tenda is Tenda. It has the gross margin which is lower, and this will continue. But as long as we do not deliver and conclude the units, we will see the impact of this margin of Tenda. This will occur during 2013 as well because they have about 13,000 units still to be delivered.

Operator

[Operator Instructions] Our next question comes from Mr. Rodrigo Caparelli [ph] with Citibank [ph] Management.

Unknown Analyst

Although the liquidity guidance was informed, there was no guidance for the operating cash generation. So what would be the generation of operating guidance for 2013?

Andre Bergstein

We did not disclose the operating cash guidance for 2013. What we disclosed was the stability regarding our guidance, net liquidity over equity, net debt over equity of the year that just had come to an end, 2012.

Operator

[Operator Instructions] Our next question comes from Dany Capadeni [ph] from Citibank.

Unknown Analyst

I have 2 questions. Is there any level regarding your net revenue that you're estimating from now on? And second, regarding cash, what is the minimum cash level that you wish to keep at the company especially with this debt amortization schedule that you have for 2013?

Andre Bergstein

G&A for the company on the average should stabilize regarding this company -- or all the companies that are in the turnaround process. So we think we'll have a healthy G&A, for a company like ours. Regarding the stabilization of launches of normal flat levels, we shouldn't have more than 12%, an average of 12%, which is the ideal or a healthy level to operate a company like ours. Like, as far as cash flow, I think we have a liquidity level today which is adequate to honor financial commitments and cover this company's plans for 2013. Our maturities are well distributed. Many of them have to do with project financing, which will be honored. Some of them are finished and others about half, 50%. Corporate debt, we have liquidity and cash. So we have today cash. We had almost BRL 1.7 million in cash at the end of the year, which we think is more than sufficient. Between 10% and 15% would not -- it will reduce at 7% [ph] and so it would not affect things too much to honor our commitments with our due debt.

Operator

[Operator Instructions] We have one more question from the webcast. [indiscernible] from HSB [ph] .

Unknown Analyst

What about the stock buybacks? How much has already been bought?

Andre Bergstein

In the buyback plan, which was on the slide here, we have bought back stocks, a lesser part of the program. And we understand that it's mixed. Then, we will continue with buying back up to 10 million shares as an investment in the company.

Operator

Next question, Rene Brandt from Fator Corretora.

Rene Brandt - Fator Corretora, Research Division

A basic question. What about the accounting adjustments?

Andre Bergstein

We had some impact on our balance sheet. We had a lower sale of the remaining of variations and impairment of assets. We had the writeoff of some assets to try to free some land and some assets with control to the program, nonrecoverable, and some loan losses. And then continuing, we had some expenses with sales because of the strong launches that we had in these last quarters. And also, some questions regarding the accounting criteria of which they -- the company understands and investments going from CapEx to OpEx. So in summary, that was what happened.

Rene Brandt - Fator Corretora, Research Division

So the loss loan [ph] , is this receivable at a client level or from partners, or is it a mix?

Alceu Duilio Calciolari

This is the difference between clients, partners, services -- a mix.

Rene Brandt - Fator Corretora, Research Division

But the clients should have a guarantee, right?

Alceu Duilio Calciolari

Well, in some cases, yes, we do have a guarantee. If we cannot proceed with this, sometimes they did not.

Operator

[Operator Instructions] So we would now like to close our Q&A session. And I would like to ask our CEO to make his final remarks. You may proceed, sir.

Alceu Duilio Calciolari

I would like to thank you, all, on behalf of the management of Gafisa. And I hope you'll be back at our next call. And we are actually at your disposal for any details or any other questions. So please get in touch with our Investor Relations department. Thank you very much. We'll see you again soon.

Operator

Gafisa's conference call is now closed. Thank you very much for your participation, and have a good afternoon.

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Source: Gafisa S.A. Management Discusses Q4 2012 Results - Earnings Call Transcript

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