Corporate Presentation and 1Q16 Results

Transcription

1 Corporate Presentation and 1Q16 Results

2 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 statement,. 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 Securities and Exchange Commission - SEC. 2

3 1. Industry Overview 2. Company Overview 3. Business Units 4. Financial Profile 3

4 Brazil Macro Fundamentals In R$ million The uncertainties in the economic and political environments continue to impact the markets in which we operate. The deterioration of the fiscal situation of the Government and the lack of confidence in the market resulted in the paralysis of the economy. There is a hope that the new government can carry out reforms and foster infrastructure investments. GDP Growth Inflation¹ 7,5% 10,6% 2,7% 1,0% 2,5% 0,1% 5,9% 6,5% 5,8% 5,9% 6,4% -3,8% Interest Rates² BNDES Disbursements R$ billion 8,75% 12,25% 7,25% 10,00% 11,00% 14,25% 168,4 138,9 156,0 190,4 187,8 135,9 18,1 4 Source: Brazilian Central Bank (1) IPCA end of period (2) Selic end of period

5 Brazilian Outlook " The vice president, Michel Temer (PMDB ), defined three main axes for the formation of its eventual government: economy, infrastructure and social area. 04/19/2016. Estado de São Paulo " Meirelles argued that the solution to the economic crisis facing Brazil depends on federal government investments in infrastructure and loans to private companies. O Globo. 04/29/2016 First, restore confidence in macroeconomics. In the second stage, take care of microeconomics, which are investments in infrastructure, judicial issues of companies, a broad growth agenda. O Globo. 04/29/2016 " (... ) The PMDB preaches transfer to the private sector all that is possible in the field of infrastructure. (... ) The plan also says the government needs to establish a new model of relations with the private sector, including modifying the current law on bidding. 04/29/2016 Folha de São Paulo On May the new acting President Michel Temer announced a provisory measure to create the program Programa de Parcerias de Investimento PPI (Investment Partnership Program), focused on job creations. with the goal to expand investment oportunities. employment and stimulate technological development. The program wants to ensure expansion with quality" of infrastructure, with adequate rates and prices, strengthening the regulatory role of the State and the autonomy of the regulatory agencies. 5

6 Brazil lags behind other BRIC countries in quality of infrastructure There is a significant demand for better infrastructure in Brazil, which can reduce the country s growth bottleneck. The quality of Brazil s highways, railways, ports and air transport are very poor, increasing the cost of Brazil. Infrastructure quality ranking for BRIC countries ( ) Index 1.0 (best) Highways Railways Ports Air Transport China 0,7 China 0,7 China 0,6 China 0,7 India 0,6 India 0,6 India 0,6 India 0,6 Russia 0,4 Russia 0,6 Russia 0,6 Russia 0,6 Brazil 0,4 Brazil 0,2 Brazil 0,4 Brazil 0,5 USA 0,8 USA 0,7 USA 0,8 USA 0,9 6 Source: The Global Competitiveness Report

7 Investments in infrastructure in Brazil are historically low Country growth requires more investments in infrastructure. In order for Brazil to boost its economic growth and approach in years the quality of infrastructure of advanced emerging economies, it needs to invest in infrastructure approximately 6% of its GDP. Investment in Infrastructure Brazil (% GDP) Investment in Infrastructure (% GDP) 16% Thailand (2009) = 15.6 Thailand (2003) = 15.4 China (2010) = 13.4 China (2003) = 7.3 5,4 0,5 14% 12% India ( ) = 6.0 Chile ( ) = 5.1 2,0 3,6 0,2 10% 8% India ( ) = 4.8 Chile (2001-6) = 4.6 Peru ( ) = 4.2 India ( ) = 4.1 0,8 1,5 2,3 2,3 2,1 0,2 0,2 0,2 0,4 0,6 0,6 0,9 0,7 0,7 0,5 2,1 1,5 0,8 0,6 0,7 1971/ / / / /14 Electricity Telecom Transportation Water and Sanitation Total (% GDP) 6% 4% 2% 0% Brazil ( ) = 2.3 Brazil (2007) = 1.8 Peru (2001-6) = 1.5 Level of investment necessary to maintain the capital stock per capita 4-6% Level of investment in infrastucture necessary to reach the current levels of South Korea and other industrialized countries of East Asia 5-7% Level of investment Other Contries and necessary to boost its investments its economic growth and approach in years the advanced emerging economies Source: InterB 7

8 New Logistics Investment Program (PIL) of the Federal Govt. Estimated investments in R$ billion Total length to be invested (new and existing concessions - in Km) Airports 8,5 Railroads Ports 37,4 Highways Highways 66,1 Railroads 86,4 until ,2 35% Total 198,4 After ,2 65% PIL Source:

9 1. Industry Overview 2. Company Overview 3. Business Units 4. Financial Profile 9

10 Our Company Complete in engineering products and services. in Brazil for more than 60 years. With ability to plan, integrate services and products for the construction and industry sectors. We invested in the professional qualification, together with diversified expertise, to deliver fast, smart and reliable responses that increase the productivity of the works and the results of our client. National Coverage:17 States and Federal District in 32 locations Construction: Focus on infrastructure, Industrial, residential and commercial projects. Engineering solutions, sales and rental of concreting and shoring, providing services of technical planning, project and supervision related to equipment. Rental: Rental and sale of motorized access equipment, such as aerial working platforms and telescopic handlers to lift workers and cargos, respectively. 10

11 Company History Founded on First Brazilian manufacture of formwork by license agreement with NOE- Schaltechnik from Germany Sells Events Unit Acquired Jahu Ltda Initiates its Rental Unit 50`s Catedral da Sé 90`s Ferrovia do Aço 80`s hydroelectric power plant Lajeado Paiva construction work Maracanã Stadium Joint Venture with Aluma Systems Inc. of Canada (until 2001) In two private equity funds. managed by IP, and Axxon, became our shareholders. Acquiring, each one, 10%. Mills IPO 2013 Petrobras Oil platform 2016 Cable-stayed bridge BRT Transcarioca 11 Sale of the Industrial Services business unit Capital Increase. with the issuance of 47,528,517 new common shares, in the total amount of R$ 124,999,999.71

12 What We Do? Formwork Access Shoring Special systems 12

13 Strengths and Competitive Advantages Best-in-class engineering and technical capabilities and SLA Know-how to work in complex projects, such as bridges, subways and hydroelectric power plants; Recognition of its differentiated services and reliability; Market leader in its core business units Largest footprint and fleet in Brazil in all business units High capillarity: present in 17 States and Federal District in 32 locations; 114,000 tons of equipment in the Construction business unit vs 30,000 tons of equipment of the second player; 6,100 equipment in the Rental business unit vs 2,900 equipment of the second player Diversified revenue streams Diversified revenue base serves several segments through its business units; Rental: Construction 48% and Non-construction 37% Heavy Construction: Urban Mobility 29%, Logistics 38%, Industrial 16%, Others 17% Real Estate: 57% Residential, 25% Commercial and Others 17% Strong brand name and reputation Undisputable track record, with more than 60 years of history; Strong and long-term customer base around 3,000 active contracts in all business units Corporate Governance Listed on Bovespa at the highest corporate level (Novo Mercado) since 2010; Audited by Big Four Companies and currently by KPMG; Professional Management 13

14 Lean Organizational Structure to Face Market Challenges Sérgio Kariya CEO Ricardo Gusmão Commercial Officer for Construction Avelino Garzoni Engineering and Operations Officer Marcelo Yamane Rental Executive Gustavo Zeno CFO and IRO T.B.N Human Resources Executive Construction Headcount as of December 31 Shareholder Breakdown¹ Board of Directors and Executive Officers 0,4% Shares in Treasury 1,3% Nacht Family 34,5% Free Float 63,8% (1) As of April

15 1. Industry Overview 2. Company Overview 3. Business Units 4. Financial Profile 15

16 Construction: Strategy and Growth Drivers Growth Drivers Strategy Country growth requires more investment in infrastructure Huge potential investment in infrastructure in Brazil for upcoming years Significant investment from basic industries Increasing technical expertise requirements Increasing penetration of industrialized formwork Growing demand for full service solutions as provided by Mills Underdeveloped country in infrastructure Mills equipment volume: approximately 114,000 tons Equipment volume of 2º player in Brazil: approximately 30,000 tons Mills equipment volume is enough to supply the market in Brazil and several markets in Latin America. Focus on larger. more complex projects with differentiated services For the commercial business, focus on small industries and more complex projects other than residential Enhance relationship with midsized construction companies Careful selection and substantial investments in training to maintain highly qualified staff, superior to competition Introduction of new products to ensure equipment quality in line with top international standards International Market: establishment of new distribution channels and hiring of commercial representatives Brazilian market: development of sales partners in the Real Estate market 16

17 Construction: Main Works with Mills Participation Central-west and South North and Northeast Corredor expresso Aguanambi (express roadway) Usina hidrelétrica São Manoel (hydroelectric plant) Ponte Tauape (bridge) Vale s S11D Project Transposition of São Francisco River CSN Plant Salvador BA093 and Metropolitan Papuda Penitenciary Guaíba Bridge - RS Southeast Nova Tamoios Highway Transbrasil Sorocaba and São José dos Campos Hospital Galvani Mining Company Cofins Airport Duplication Sanitation project Metropolitan Line 5 and Line 6 Monorail Linha Ouro Imigrantes Viaduct Beltway States with Mills presence 17

18 Rental: Market Perspective The market of aerial platform gained traction in 2007 with the revision of the Regulatory Safety Labor Norm 18 (NR18), which establishes that workers must be lifted with the use of motorized access equipment and economic growth. The current volume in Brazil (2015) is around 34,000 equipment, Mills owns approximately 6,100 equipment and the second player approximately 2,900. MEWP¹ Rental Fleet per inhabitants A measure of market maturity is to assess the ratio: MEWP rental fleet versus country population Volume of Equipment Purchased in Brazil Potential Market Europe US CAN CHN BRA Source: Mills MEWP¹: Mobile Elevating Work Platform

19 Rental: Strategy and Growth Drivers Growth Drivers Strategy Less than 20% of the Brazilian demand for equipment is actually rented (vis-à-vis Europe 80% and US 50%) Market penetration through substitution of less secure and efficient access methods Brazilian safety labor regulation driving demand for AWP (NR-18) Increasing client concern and demands for safety and productivity Immature market with low penetration Largest asset base and geographic presence Safest way to work on height Surpass Customer expectations (Availability + Reliability + Service Levels) Best in Class Service Level Agreement Differentiation through service Focused on growing non-construction segment Geographic expansion in the medium term Sinergy with the Construction business unit 19

20 1. Industry Overview 2. Company Overview 3. Business Units 4. Financial Profile 20

21 Summary Financials In R$ million Net Revenue ¹ 2011¹ 2012¹ 2013¹ LTM 1Q16 Rental Sales Technical assistance and others 1000,0 900,0 800,0 700,0 600,0 500,0 400,0 300,0 200,0 100,0 0,0 Costs and Expenses 42,3 16,2 38,2 11,3 31,5 231,5 163,9 209,1 202,6 1,5 13,9 108,3 125,4 171,6 275,5 340,4 334,9 347,9 343,8 360,3 238,2 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM1Q16³ COGS SG&A ADD Ebitda and Ebitda Margin Net profit 450,0 400,0 350,0 300,0 250,0 200,0 150,0 47,5% 47,0% 168,4 217,4 50,9% 339,0 419,3 50,4% 340,7 42,9% 28,0% 161,2 26,3% 142,8 60,0% 50,0% 40,0% 30,0% 20,0% 103,3 92,2 151,5 166,8 75,7 100,0 50,0 10,0% 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM 1Q16³ 0,0 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM1Q16³ 0,0% -60,1-63,4 21 Ebitda Ebitda Margin (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 Rorh impairment of R$26.2 million in 2015

22 Utilization Rate and Net Revenue In R$ million 100% 90% Volume Utilization Rate Construction Net Revenue 80% 70% 60% 50,3 4,2 6,3 39,7 50% 40% Average LTM 1Q16 = 47.9% 30% 20% 10% 0% 1Q10 1T10 3T10 3Q10 1T11 1Q113T11 3Q111T12 1Q123T12 3Q121T13 1Q13T13 3Q13 1T14 1Q14 3T14 3Q14 1T151Q15 3T153Q15 1T161Q16 100% 90% 80% 70% Rental 4Q15 4T15 Volume Price Preço and e Mix Mix 1T16 1Q16 59,7 5,8 4,0 49,9 60% 50% Average LTM 1Q16 = 6..6% 40% 30% 20% 10% 0% 1Q10 1T10 3T10 3Q10 1T11 1Q11 3T11 3Q111T12 1Q123T12 3Q121T13 1Q13T13 3Q13 1T14 1Q14 3T14 3Q14 1T151Q15 3T153Q15 1T161Q16 4Q15 4T15 Volume Price Preço and e Mix 1Q16 1T16 (*) Non segmentation of the utilization rate in the business unit Construction because the inventory of the equipment used in real estate and Infrastructure are shared Volume: variation of the revenue due to the rented volume in tons (Construction) and quantity of machines(rental) Price and Mix: variation of the revenue due to the variation of prices and products mix. 22

23 Free Cash Flow In R$ million Even on an adverse scenario. the Company remains generating free cash flow Cash Flow 295,5 383,7 372,7 288,3 281,9 158,9 198,9 116,1 80,8 79, ,2-208,9-154,3-356,5 Adjusted Adjusted Operating Operating Cash Cash Flow¹ Flow¹ Adjusted Free Free Cash Cash Flow² 2 23 ¹Before interests paid referring to debentures and investment in rental. ² Before interests paid referring to debentures

24 Business Unit - Construction Heavy Construction: Rental Revenue Breakdown In R$ million Per Source of Resources R$ 23.9 million Per sector R$ 23.9 million Power 4.6% Others 7.0% Railways 12.7% PPP 13.0% Public 39.7% Industrial 16.2% Airports and ports 4.6% Private 47.3% Sanitation 5.1% Highways 21.1% Urban Mobility 28.8% 24 Public: resources from the government Private: resources from the private sector. PPP (public private partnership) : resources from the government and the private sector

25 Business Unit - Construction Real Estate: Rental Revenue Breakdown In R$ million Rental Revenue Breakdown R$ 15.8 million Others 17% Commercial 25% Residential 57% 25

26 Rental: Net Revenue Breakdown In R$ million Net Revenue per Type of Service R$ 76.4 million Net Rental Revenue per Use R$ 49.9 million Sales 2% Others 2% Technical Assistance 1% Spot 15% used equip. sales 30% Non- Construction 37% Construction 48% Rental 65% 26

27 Consolidated: Financial Performance In R$ million Due to the reduction of the investments and assets sales. the average capital invested tends to fall. since it illustrates the average in the period. ROIC (LTM) 1.900, , , , ,0 900,0 700,0 500,0 300, ,8 4,0% 1.617,7 2,0% 517,8 507, , , , ,8 496,1 485,1 0,8% -2,9% 1.066, , ,5 466,6-3,8% 972,9 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% -6,0% -8,0% 100,0-10,0% -100,0 1Q15 1T15 2Q15 2T15 3Q15 3T15 4Q15 4T15 1T16 1Q16-12,0% Capital Average investido invested médio Capital - imobilizado Net Rental de PP&E locação líquido Capital Average investido Invested médio Capital - outros - others ROIC Invested Capital: is defined as the sum of the equity plus third parties capital (including all onerous. bank and nonbank debts) being both the average amounts in the last thirteen months. 27

28 Main Initiatives In R$ million ROIC Decomposition Initiatives Net Revenue Efforts to increase presence in the international market COGS (199.2) Sales of assets aiming at to real estate market NOPAT (55.2) (15.3) SG&A² (257.4) (200.3) Strengthen relationships with mid-sized Depreciation: (166.8) construction companies ROIC LTM -3.8% Adjusted ¹-1.0% Construction: -5.3% Rental: 5.1% Invested Capital 1,439.5 TI (rate of 30%) Rohr Dividends 1.5 Net Rental PP&E Others Focus on non-construction markets for the Rental unit Continuous search for operational efficiency and cost reduction Closing of five branches of the Construction unit in progress 28 ROIC = NOPLAT/Average Invested Capital ¹ Excluding impairment (R$57.1 million) from NOPAT ² including ADD in the amount of R$ 26.3 million

29 Summary Financials In R$ million 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM 1Q16³ Net Revenues Mills Construction Rental Ebitda Mills Construction Rental Others Ebitda Margin Mills 47.5% 47.0% 50.9% 50.4% 42.9% 28.0% 26.3% Construction 45.3% 43.1% 48.0% 44.7% 36.3% 11.4% 9.3% Rental 53.6% 53.4% 55.7% 57.9% 53.0% 45.2% 43.1% Equipment Rental CAPEX Mills Construction Rental Covenants EBITDA*/Net financial results >= 2.0 Net Debt/EBITDA* <= 3.0 7,5 9,1 9,0 5,4 3, (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 Rorh impairment of R$26.2 million in 2015

30 Indebtedness In R$ million Gross Debt Profile Principal Amortization Schedule 31,2% 17.1% 31.0% 21.9% 21.9% 8.0% 68,8% 424 R$ 90 million already paid in April/16 Short Term Long Term We do not have foreign currency exposure Cash position Participation of the balance due (principal) excluding payment made in April/16 2.3% Indebtedness on 03/31/ ,4% ,3% IPCA CDI TJLP Principal Interests Gross Debt Cash Net Debt 30

31 Mills Investors Relation Phone: +55 (21)