Javer Announces 1Q19 Results with an Enhanced Gross Margin Despite Volume Contraction

MONTERREY, NUEVO LEON, MX / ACCESSWIRE / April 25, 2019 / 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, announces its financial results for the first quarter (“1Q19”) ended March 31, 2019. All figures presented in this report are expressed in nominal Mexican pesos (Ps.), unless otherwise stated.

  • Units sold decreased 26.3% to 3,498 units in 1Q19 compared to 4,747 units in 1Q18 due to the elimination of the subsidy program for the year 2019, since the disbursement of the funds last year was carried out during the first half of the year.

  • Net Revenues dropped 18.5% to Ps. 1,617.3 million in 1Q19 compared to Ps. 1,985.0 million in 1Q18 given the decrease in volume, however the effect was partially offset by the improvement in the sales mix.
  • EBITDA decreased 22.2% to Ps. 132.4 million in 1Q19 compared to Ps. 170.2 million in 1Q18, as a result of the decline in units sold. EBITDA margin contracted only 0.4 percentage points to 8.2% in 1Q19 compared to 8.6% in 1Q18.

  • Net Result was Ps. 16.2 million in 1Q19 compared to Ps. 58.2 million in 1Q18, derived from the same effect mentioned above. Earnings per share reached Ps. 0.06 in 1Q19 and Ps. 0.21 in 1Q18.
  • The free cash flow (FCF) was Ps. (55.4) million in 1Q19 compared to Ps. (118.2) million in 1Q18; the lower use of funds was due to a reduction in tax payments and better working capital efficiencies.

CEO STATEMENT

Mr. René Martínez, CEO of the Company commented, “It is a pleasure for us to present the financial and operating results of the first quarter of 2019, which are completely in line with the volume, revenues, margins and expected profits for the 12-month period of 2019.

“In the YoY comparison, we had a volume contraction as we had anticipated and discussed in our 4Q18 conference call, where we mentioned that the first two quarters of 2019 would be characterized by a lower volume and generation of profits since we expect the new projects that will start operations during the first semester to be fully-activated in the second half of the year.

“As we have said, the subsidy program practically disappeared for the current year, with a mere Ps. 400 million remaining, which the government will begin to disburse in the middle of April.

“Regarding the new housing policy, we are waiting for its release in the following months. One of the most important issues being discussed is that the authority is seeking to increase the amounts of credit for those workers earning at least a minimum wage. This modification will help offset the elimination of the subsidy program. Undoubtedly, the implementation of this alternative will represent an improvement for the most vulnerable sector of the Mexican population.

“In operational matters, we continued to direct our product mix to the middle-income and residential segments which represented 87.9% of the total units sold in 1Q19 versus 83.1% in 1Q18., This mix shift led to an improvement in the average sales price in the order of 10.8% compared to the same period of 2018.

“Likewise, the gross margin for the sale of homes increased given the sales mix and price improvements, as it enhanced its relation to sales by 181 basis points to 26.5% in 1Q19 from 24.6% from 1Q18.

“We continue with the market share leadership of within the INFONAVIT system, both in loans granted for new housing with 10.0% and in total of credits with 5.1%.

“Also, at the beginning of the year we earned for the second consecutive year, the recognition as one of the best places to work in Mexico ‘GPTW’ (Great Place to Work), and as a socially responsible company ‘ESR,’ which demonstrates our commitment to continue improving in both areas.

“Regarding our debt refinancing, we continue analyzing different options, and soon we expect to have more color on the selected alternative.

“In summary, we are very satisfied with the results obtained during this first quarter, which were in line with our expectation for this period of the year. This leaves us very confident in affirming our 2019 guidance of flat revenues compared to 2018, EBITDA growth between 2.5% and 5%, and positive free cash flow.”

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

CONTACT:

Veronica Lozano, Gerente de Relación con Inversionistas
Tel. +52 (81) 1133-6699 Ext. 6515
[email protected]

SOURCE: Servicios Corporativos Javer S.A.B. de C.V.

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