Corporate Presentation and 3Q17 Results

Transcription

1 Corporate Presentation and 3Q17 Results

2 1 Company Overview 2 Market Outlook 3 Financial Profile 2

3 Overview of Mills Complete in engineering products and services, in Brazil for more than 65 years. Company Overview Geographic Footprint Mills is one of Brazil's largest specialty engineering services company and the largest provider of concrete formwork and tubular structures and motorized access equipment for the Brazilian market It customizes engineering solutions, such as planning, design, technical supervision and providing temporary structures for civil construction, such as formwork, shoring and scaffolding It also rents and sells motorized access equipment, such as aerial work platforms and telescopic handlers, which are used to lift workers and cargo to considerable heights, respectively, in various sectors including civil constructions, industry, retail and logistics National Coverage: 19 States and Federal District in 30 locations Highlights Shareholders Structure # of Units Rental: 30 Construction: 7+1 ¹All the branches of the Construction business unit share location with the Rental business unit. Approximately 1,300 employees Capillary attendance to the whole country Nacht Family Board of Directors and Executive Officers Shares held in Treasury Free Float 34.5% 0.4% 1.3% 63.8% Portfolio with more than 90 solutions 2 business segments: Construction and Rental 3

4 Business Units Construction Focus on Infrastructure, Industrial, Residential and Commercial projects. Sales and rental of concreting and shoring, providing engineering solutions, services of technical planning, project and supervision related to equipment. 3Q17: Equipment volume: approximately 90,000 tons Average duration of contracts: 18 months for infrastructure projects and 8 months for real estate projects Number of active contracts: 135 for infrastructure and 410 for real estate Rental Focus Civil Construction, Industry, Retail and Others. Rental and sale of motorized access equipment, such as aerial work platforms and telescopic handlers. 3Q17: Equipment volume: approximately 5,900 equipment Average duration of contracts: 7 months for long term contracts and 1 months for spot contracts Number of active contracts: 2,191 4 Source: Serasa and Company s reports

5 Organizational Structure Sergio Kariya Chief Executive Officer Ricardo Gusmão Strategic Clients Daniel Brugioni Commercial and Marketing Sergio Kariya Operations (Interim) Avelino Garzoni Engineering and New Technologies Gustavo Zeno Administrative Financial and IR Headcount as of December Shared Services Rental Construction ¹ 2011¹ 2012¹ (1) Excludes Industrial Services, sold in 2013

6 Construction: Business Unit at a Glance Best-in-class engineering and technical capabilities and SLA Largest footprint and fleet in Brazil in all business units - High capillarity: present in 19 States and Federal District in 32 locations Diversified revenue streams - serves several segments through its business units Strong brand name and reputation - Undisputable track record, with more than 65 years of history Corporate Governance - Listed on BM&FBOVESPA at the highest corporate level (Novo Mercado) since

7 Mills Strategies SHORT / MEDIUM TERM MEDIUM / LONG TERM Cash flow discipline Focus on delinquency reduction Costs reduction in the Construction business unit Price increase in the Rental business unit Exploration of new regions in Brazil Capex with attractive IRR restored Potential asset reduction in the Construction business unit Resizing of SG&A expenditures Capex optimization Gradual increase of prices in the Rental business unit Increase of fleet availability in the Rental business unit Opportunity analysis in complementary businesses or with synergies 7

8 1 Company Overview 2 Market Outlook 3 Financial Profile 8

9 Better Recent economic indicators shows that the worst may have passed for the Rental business unit GDP Growth In % per year Inflation rate (IPCA) In % Total GDP 2018 (Estimated): 2% Q Total Civil Construction Better SELIC (Basic interest rate) In % 11.7 Unemployment Rate ¹ 2018 Source: Banco Central ¹Until November (per year) Better Better 12.0% 12.4% % 6.2% 6.5% 9.0% LTM3Q17 Estimated

10 From the beginning of the crisis in 2014, the Rental capacity market size hasn t changed much what can signaled opportunities for the recovery of utilization rates and price Market of Aerial Platforms and Handlers in Brazil Comments/Assumptions Imports YTD Sep17: 363 equipment Exports YTD Sep17: 270 equipment Manufacturers stock: 370 equipment In the rental business, Mills remains the largest company in Brazil, in terms of size of fleet, in a market extremely pulverized Equipment in the possession of the final customer: (or 7% of the fleet) Unavailable Equipment: Number of equipment with rental Companies: For the estimate of the market, were considered data of exports, imports, sales in internal market and scrapping of equipment Sources: Mills estimates, Receita Federal, AEM, MDIC, RFB

11 Heavy Construction Continues the Downward Trend Investment Perspective - Projects compiled by BNDES in R$ billion Forecast - per Realized year Electrical Energy Telecommunications Highways Railways Ports Airports Sanitation Solid Waste Urban Mobility Heavy Construction (total) Mineral Extractive Oil and Gas Food Beverages Paper and Cellulose Sugar-energy Industry Chemical Industry Steel Industry Electronics Health Automotive Aerial Industry (total) Total Source of most relevant revenues 11 Source: Banco Nacional de Desenvolvimento Econômico e Social (BNDES). Valor Econômico newspaper 10/30/2017 Source: Sinicon/LCA Advisers/IBGE. Infographic made on 9/22/2017

12 1 Company Overview 2 Market Outlook 3 Financial Profile 12

13 Financial Context Impact Actions to Recovery Recovery driven by Rental business unit 1100,0 1000,0 900,0 800,0 700,0 600,0 500,0 400,0 300,0 200,0 100,0 0,0 Net Revenue (1) Decrease of 75% Resizing of the company New comercial strategy on rental focus on non-construction segment Closing of 14 branches: 9 construction 5 rental EBITDA - Construction Utilization Rate Efficiency gains (2) EBITDA - Rental 75.7% 70.6% 54.0% 37.7% Decrease of 28% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Construction Rental 750,0 COGS SG&A Decrease of 21% ADD Balance 650,0 550,0 Capex Adj. Operating Cash flow (3) 450,0 350,0 250,0 Rental Construction 150,0 50,0-50,0 13 (1) Excluding Non-recurring (2) Excluding non-recurring items, depreciation and ADD (3) The interest paid and the net monetary and asset variations are excluded * Accumulated inflation on the period ( ) was of 29,5%

14 Summary Financials In R$ million Net Revenue per Type Net Revenue per Segment 900,0 800,0 700,0 600,0 500,0 400,0 300,0 200,0 100,0 0, ¹ 2011¹ 2012¹ 2013¹ Q17LTM ¹ 2011¹ 2012¹ 2013¹ Q17LTM Equipment Rental Sales Technical assistance and others Rental Heavy Construction Real Estate The increase of the portion of the non-construction revenue in total amount is due to the strategy of the Rental business unit, but accentuated by the reduction of the Construction revenue. 78% 81% 80% 75% 65% 59% 56% 41% 35% 44% 22% 19% 20% 25% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Revenue of Construction segment Revenue of Non-Construction segment 14 (1) Excluding Industrial Services business unit. sold in (2) Excluding easy set formwork cost adjustments of R$ 14.6 million in 2014 (3) Excluding Construction impairment of R$ 30.9 million and Rohr impairment of R$26.2 million in 2015

15 Utilization Rate and Main works Construction Utilization Rate Main works in the 3Q17 100% 90% 80% 70% 60% 50% 40% Average LTM 3Q17 = 37.7% 30% 20% 10% 0% 1Q10 3Q10 1Q113Q11 1Q12 3Q121Q13 3Q13 1Q143Q14 1Q15 3Q151Q16 3Q16 1Q173Q17 North and Northeast Salvador s Subway BA Transoceanic BA BR-101 AL Carajás Railroad Expansion - PA Rental Utilization Rate 100% 90% 80% 70% 60% 50% 40% 30% 20% Average LTM 3Q17 = 54.0% Central-West and South North-South Railway GO Bridge of Araguaia s River GO Southeast Rock in Rio RJ BR-493 Duplication RJ Rodoanel North SP Viracopos Airport SP Subway Line 4 SP Subway Line 5 SP Subway Line - SP Monorail Silver Line SP BR-381 Duplication BH 10% 0% 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 Mills has national presence. 15

16 Summary Financials In R$ million EBITDA¹ - Mills 47.5% 47.0% 51.4% % % % % -0.6% 45.7 (1.5) LTM3Q17 LTM3T17 EBITDA¹ - Construction Business Unit 45.3% 43.1% 47.2% 41.3% % % -6.8% 26.5 (11.3) (38.8) -36.5% LTM3T17 LTM3Q17 EBITDA¹ - Rental Business Unit 58.3% 58.3% 53.6% 53.4% 53.7% % % % LTM3Q17 LTM3T17 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 16 (1) Excluding Industrial Services business unit, non-recurring items, result of sale of semi new equipment and provision for reduction to realizable value.

17 Non-recurring items Non-recurring items = Restructuring Expenses Evolution of scrap sale in R$ million M17 Revenue of scrap sale Assets Write-off Result of scrap sale Balance of scrapped in tons 5,668 11, Expenses related to Mills Industrial Services¹ business unit Expenses with closing and demobilization of branches. Resizing of equipment focused on the light real estate market (scrap result). Organizational changes. In R$ million M17 Non-recurring items (82.7) (16.9) (29.4) Closing of branches and organizational changes (9.0) (10.1) (11.5) Result of scrap sale - (3.7) (17.6) Restructuring expenses (9.0) (13.8) (29.2) Cash Effect (9.0) (4.3) (2.3) Non Cash Effect - (9.6) (26.9) Other non-recurring expenses (73.7) (3.1) (0.2) Impairment (57.1) - - Clients credit reclassification for ADD Expenses Industrial Services Business Unit (12.9) - - (3.7) (3.1) (0.2) Number of branches evolution: Rental Construction Branches South Region Curitiba Porto Alegre Itajaí Rio Grande Southeast Region Bauru Belo Horizonte Campinas Cubatão Guarulhos 2 Itaborai Juiz de Fora Macaé Pouso Alegre Ribeirão Preto Rio de Janeiro São José dos Campos São Paulo Sorocaba Sul Fluminense Uberlandia Vitória Central-West Region Brasília Cuiabá Goiânia Três Lagoas Northeast Region Aracaju Camaçari Fortaleza Maceió Natal Recife São Luis North Region Belém Manaus Parauapebas

18 Summary Financials In R$ million Costs and Expenses Net Profit (Loss) ¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ Q17LTM COGS SG&A ADD Q17LTM CAPEX Equipment Rental Cash Flow 750,0 650,0 550,0 450,0 350,0 250,0 150,0 50,0-50, ¹ 2011¹ 2012¹ 2013¹ Q17LTM Rental Construction Q17LTM Adjusted operating cash flow Adjusted free cash flow to the firm 18 For the adjusted operating cash flow, interest related to debentures and finame and investment in rental equipment and interest and net monetary and asset variations are not considered. For the free cash flow to the firm the interest paid is and the net monetary and asset variations are not considered. (1) Excluding Industrial Services business unit. sold in (2) Excluding easy set formwork cost adjustments of R$ 14.6 million in (3) Excluding Construction impairment of R$ 30.9 million and Rohr impairment of R$26.2 million in 2015.

19 We remain vulnerable to the macroeconomic scenario and to the financial situation of our clients Allowance for Doubtful Debts (ADD) Evolution In % of total net revenue Delinquency Evolution 5.3% 6.6% Affected by signed and not honored confession of indebtedness. 5.3% 7.3% 72.0% 63.2% 75.2% 76.4% 70.0% 73.1% 74.1% 73.9% 69.1% 73.6% 70.5% 67.3% 1.7% 2.1% 2.0% Average: 2.3% 0.5% Q17 2Q17 3Q17 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Total Past Due/Gross Receivables ADD Balance/Gross Receivables -4.3% in R$ million 3Q16 2Q17 3Q17 (A) (B) (C) (C)/(A) (C)/(B) Gross Receivables % 4.7% ADD Balance (136.1) (132.6) (129.4) -4.9% -2.4% Net Receivables % 20.7% Total delinquency Total Past Due % -4.6% Past due between 1 and 60 days % -26.7% Past due between 61 and 120 days % -50.8% Past due over 120 days % 0.9% Write-off (10.2) (8.2) (11.8) 15.8% 43.5% Total Past Due Balance Construction 57% Rental: 43% 10 biggest clients: 37% 10 biggest clients: 22% 85% already in ADD 97% already in ADD 19

20 Indebtedness In R$ million The weighted average maturity of our debt is 2.3 years at a cost of CDI+1.99% on September 30, Gross Debt Profile Principal Amortization Schedule % % Cash/Restricted bank deposits Short Term Long Term We do not have foreign currency exposure. 2nd issue of debentures - CDI % 2nd issue of debentures - IPCA +7.0% 3rd issue of debentures % CDI Finame Indebtedness on 09/30/ % % 46.0% 90.4 TJLP CDI IPCA Principal Interests Gross Debt Cash/Restricted bank deposits Net Debt 20

21 Debt Indicators In R$ million Adjusted Operating Cash Flow* / Financial Result Net Debt / Adjusted Operating Cash Flow* Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Debentures Covenants: (1) LTM Adjusted Operating Cash Flow*/Financial result >= 2.0; and (2) Net Debt/LTM Adjusted Operating Cash Flow* <= 3.0. * For the adjusted operating cash flow, interest related to debentures and finame and investment in rental equipment and interest and net monetary and asset variations are excluded. For the free cash flow to the firm the interest paid is disregarded and the net monetary and asset variations are excluded. 21

22 Financial Summary In R$ million 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ 2016 LTM3Q17 % Part Net Revenue Consolidated % Construction % Rental % Adjusted Ebitda Ebitda % Construction % Rental % Others % Ebitda Margin Consolidated 47.5% 47.0% 50.9% 50.4% 42.9% 28.0% 10.3% -12.2% Construction 45.3% 43.1% 48.0% 44.7% 36.3% 11.4% -8.7% -55.6% Rental 53.6% 53.4% 55.7% 57.9% 53.0% 45.2% 27.9% 19.0% Capex (accrual basis) Consolidated % Rental Construction business unit % Rental Rental business unit % Own use and intangible assets % Utilization Rate (Volume) Construction 76.5% 73.6% 75.4% 72.3% 63.0% 49.9% 41.5% 37.7% Rental 77.9% 77.8% 72.5% 73.0% 63.2% 61.9% 55.1% 54.0% Cash Flow Adjusted Operating Cash Flow Adjusted Free Cash Flow to the Firm (1) Excluding Industrial Services business unit, sold in 2013 (2) Excluding easy set formwork cost adjustments of R$14.6 million in 2014 (3) Excluding Construction impairment of R$30.9 million and Rohr impairment of R$26.2 million in 2015 For the adjusted operating cash flow, interest related to debentures and finame and investment in rental equipment and Interest and monetary exchange gains and losses, net are excluded. For the free cash flow to the firm the interest paid Interest and monetary exchange gains and losses, net are excluded.

23 Disclaimer This presentation may contain statements that present expectations of the Management of Mills Estruturas e Serviços de Engenharia S/A ( Mills ) about future events or results. Such statements are based on beliefs and assumptions of our Management taken with our best knowledge and information to which Mills currently has access. All statements, when based on future expectations, and not on historical facts, involve various risks and uncertainties, and are not performance guarantees. Mills and employees cannot guarantee that such statements will prove to be correct. Such risks and uncertainties include factors relating to the Brazilian economy, the capital markets, the infrastructure, real estate, and oil and gas sectors, competitive pressures, among others, and governmental rules that are subject to change without notice. For additional information on the factors that may give rise to results different from those estimated by Mills, please consult the reports filed with the Comissão de Valores Mobiliários CVM. Mills Investor Relations Phone: +55 (21) ri@mills.com.br