Javer Announces Growth in Volume and Key Financial Figures for 4Q17 and 12M17

MONTERREY, Mexico--()--Servicios Corporativos Javer S.A.B. de C.V., (BMV: JAVER) (“Javer” or “the Company”), the largest housing development company in Mexico in terms of units sold, today announced financial results for the fourth quarter (“4Q17”) and twelve-month (“12M17”) periods ended December 31, 2017. All figures presented in this report are expressed in nominal Mexican pesos (Ps.), unless otherwise specified.

4Q17 and 12M17 Highlights:

  • Units titled totaled 5,585 in 4Q17, a double-digit growth of 16.3% compared to 4,801 units in 4Q16, the highest level for a quarter since 2011. In 12M17, the Company sold 18,750 units, 2.2% above the 18,352 units titled in 12M16, which represents the highest volume in history for the Company.
  • Net Revenues increased 20.5% to Ps. 2,327.5 million in 4Q17 compared to Ps. 1,932.3 million in 4Q16, due to the enhanced sales mix, which continues with a significant trend towards the low middle-income segment and a better average sales price for each housing segment. In 12M17, net revenues rose 7.2% to Ps. 7,563.0 million from Ps. 7,051.9 million in 12M16, despite the decrease of the commercial lot sales revenues, due to the improvement of the sales mix and the overall sales prices obtained during the year.
  • EBITDA grew significantly in 42.5% to Ps. 386.3 million in 4Q17 from Ps. 271.0 million in 4Q16, boosted by the growth in volume, the sales mix improvement and a higher average sales price. The EBITDA was Ps. 956.1 million in 12M17, a 3.9% increase compared to the Ps. 920.2 million reported in 12M16, due to the same effects mentioned before.
  • Net Result was Ps. 143.8 million in 4Q17 compared to Ps. (114.9) million in 4Q16, as the FX charge of Ps. 28.8 million registered in 4Q17 was lower than the Ps. 175.9 million registered in 4Q16. In 12M17, net result was Ps. 441.6 million compared to Ps. (464.1) million in 12M16. In 12M17, the appreciation of the Mexican peso resulted in a FX gain of Ps. 243.4 million in comparison with the FX charge of Ps. 392.8 million reported in 12M16, which was also affected by the recognition of Ps. 376.8 million in incurred costs in relation to the tender offer of the 2021 Notes. Net income per share was Ps. 0.52 and Ps. 1.59 in 4Q17 and 12M17, respectively.
  • The FCF grew 78.0% from Ps. 143.3 million in 4Q16 to Ps. 255.0 million in 4Q17 due to the increase in volume and the EBITDA generated. The discipline for the maintenance of the relation of inventories to sales and the improvement in the collection process generated a positive FCF of Ps. 471.0 million in 12M17, however, a higher investment in land and greater funds for tax purposes, resulted in a 10.8% drop compared with the FCF generated in 12M16.
  • Dividends: On December 20, 2017, the third and last installment of the dividend payment was executed, which was equivalent to Ps. 0.0915 per share for a total of Ps. 25.5 million. The 2017 dividend was paid in three installments within the year and was equivalent to Ps. 0.2567 per share for a total amount of Ps. 71.5 million.

CEO STATEMENT

Mr. René Martínez, Javer’s Chief Executive Officer, commented, “We are very proud to present the fourth quarter and annual results of 2017. This year represented a historic milestone for our Company, given that we managed to not only build and sell more than 18,500 units with a record investment of over Ps. 4.3 billion in the different construction processes, moreover, we managed to improve our working capital cycle thanks to operating efficiencies, which resulted in a positive FCF generation for the sixth consecutive year.

Turning to our financial results, we are pleased to announce that the Company’s net income continued its growth trend during the quarter; this was reflected in the Company’s annual results, which were significantly higher than the previous year. In addition, the Company continued its positive trend regarding FCF generation, totaling Ps. 254 million in 4Q17 and Ps. 470 million in 12M17, including the work-in-progress investments mentioned before, land acquisitions, FX hedging fees, and higher tax payments.

It is also important to highlight our product mix optimization, as residential sales increased 10.1% during the quarter compared to the same period of 2016. Furthermore, our strategy to improve pricing paid off by increasing the housing sales gross margin compared to the same quarter of 2016. Regarding projects, in prior quarterly reports, we discussed the permitting lag in 4 of our projects; I am pleased to report that these projects are now underway and will be fully operating during 2018.

Just as we have spoken about construction and disbursement records, we could not fail to mention that 2017 was one of the most dynamic years for our Company in terms of development openings, which represented 33% of our total active developments at the year’s close. It is important to emphasize that 50% of these new projects are residential developments, which is in line with the Company’s strategy to no longer remain dependent on annual subsidy programs.

On the other hand, the management of a large number of projects dispersed in the states in which we operate forces us to have a more extensive operating control process, which leads to higher fixed costs; however, the establishment of these types of processes help us stay focused on our strategy of maximizing return on invested capital (ROIC), benefitting the generation of free cash flow and maintaining the working capital cycle below 365 days.

Regarding subsidies, during December around Ps. 470 million was distributed, which on average corresponds to 10,240 subsidies. For 2018, the subsidy budget amount did not change and approximately Ps. 6.8 billion was authorized.

Before moving on to 2018 expectations, another highlight of the year is that we obtained the Great Place to Work Award (GPTW), which fills us with pride and gives us the confidence that the more than 1,400 Company employees are satisfied and committed to continue reinforcing their loyalty for our organization.

It is also an honor for us to share that we were recently named a Socially Responsible Company (ESR for its Spanish acronym), reaffirming the effectiveness of our social responsibility model. We reiterate that we will continue to strengthen the commitment we have with our stakeholders, promoting lasting relationships and offering high quality products without compromising the resources of future generations.

Lastly, with regard to our 2018 guidance, despite the uncertainty of the local and international climates, we expect double-digit growth in revenues, between 5% to 7.5% higher EBITDA, and a slightly positive free cash flow given an expected strong land investment needed to support the Company’s strategy for 2019 and 2020.”

For a full version of this earnings release with financial statements, go to: http://www.javer.com.mx/investors.php

Servicios Corporativos Javer S.A.B. de C.V.
cordially invites you to its

Fourth Quarter 2017
Conference Call & Webcast Presentation in Spanish

Friday, February 16, 2018
11:00 a.m. New York Time
10:00 a.m. Mexico City/Monterrey Time

Presenters:
Rene Martinez Martínez, Chief Executive Officer
Felipe Loera, Chief Financial Officer
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To access the call, please dial:
1(877) 888-4291 from within the U.S.
1(785) 424-1878 from outside the U.S.
Passcode: JAVER
To access the live and archived webcast presentation, visit: https://www.webcaster4.com/Webcast/Page/1110/24248

A replay of this call will be available for 30 days.
To obtain the replay, please call:
1(844) 488-7474 from within the U.S.
1(862) 902-0129 from outside the U.S.
Passcode: 11218615

About Javer:

Servicios Corporativos Javer S.A.B. de C.V. specializes in the construction of affordable entry level, middle income and residential housing and it is the largest housing development company in Mexico in terms of units sold. The Company began operations in 1973, and it is headquartered in the city of Monterrey, Nuevo Leon. The Company operates in the states of, Aguascalientes, Jalisco, Nuevo Leon, Queretaro, Quintana Roo, State of Mexico and Tamaulipas and had operations in Mexico City with a residential project in 2016. Javer is the largest supplier of the Infonavit system in the country, holding a 5.0% market share in 2017, considering the total amount of loans granted for new and used housing; and the Company also leads with an 8.9% market share regarding Infonavit’s credits granted only for new housing. In addition, it is the largest supplier of Infonavit loans for new housing in the state of Aguascalientes, Nuevo Leon and Queretaro with a 26.5%, 20.0%, and 19.0% market share in 2017, respectively; and the second largest supplier of Infonavit loans for new housing in Jalisco, State of Mexico, and Quintana Roo with a 19.5%, 15.2%, and 10.9% market share, respectively. During 2017, the Company reported revenues of Ps. 7.6 billion and sold a total of 18,750 units.

Disclaimer:

This press release may include forward-looking statements. These forward-looking statements include, without limitation, those regarding Javer’s future financial position and results of operations, the Company’s strategy, plans, objectives, goals and targets, future developments in the markets in which Javer participates or are seeking to participate or anticipated regulatory changes in the markets in which Javer operates or intends to operate.

Javer cautions potential investors that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that Javer’s actual results of operations, including the Company’s financial condition and liquidity and the development of the Mexican mortgage finance industry, may differ materially from the forward-looking statements contained in this press release. In addition, even if Javer’s results of operations are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Important factors that could cause these differences include, but are not limited to: risks related to Javer’s competitive position; risks related to Javer’s business and Company’s strategy, Javer’s expectations about growth in demand for its products and services and to the Company’s business operations, financial condition and results of operations; access to funding sources, and the cost of the funding; changes in regulatory, administrative, political, fiscal or economic conditions, including fluctuations in interest rates and growth or diminution of the Mexican real estate and/or home mortgage market; increases in customer default rates; risks associated with market demand for and liquidity of the notes; foreign currency exchange fluctuations relative to the U.S. Dollar against the Mexican Peso; and risks related to Mexico’s social, political or economic environment.

This document is not an offer of securities for sale in Mexico or in the United States. Securities may not be offered or sold (i) in Mexico absent authorization by the CNBV in accordance with the Ley del Mercado de Valores (Mexican Securities Market Law) and all applicable regulations and the due registration of the securities in the National Registry of Securities maintained by the CNBV; or (ii) in the United States absent registration under the Securities Act of 1933, as amended, or an exemption from registration therefrom. Any public offering of securities in Mexico or in the United States must be made by means of a prospectus containing detailed information about the terms of the offering, the issuer and matters relating to its financial, administrative, and legal condition, as well as financial statements.

Contacts

Servicios Corporativos Javer S.A.B. de C.V.
Veronica Lozano, +52 (81) 1133-6699 Ext. 6515
Gerente de Relación con Inversionistas
vlozano@javer.com.mx

Contacts

Servicios Corporativos Javer S.A.B. de C.V.
Veronica Lozano, +52 (81) 1133-6699 Ext. 6515
Gerente de Relación con Inversionistas
vlozano@javer.com.mx