Corporate Presentation

Transcription

1 Corporate Presentation June 2015

2 Executive Summary

3 Heavy Construction Real Estate Rental Mills - Business Units Market leader. extensive track record, with more than 60 years of experience Focus on: large and complex infrastructure projects Products: engineering solutions and rental of formwork and shoring Services: planning, design, technical supervision, equipment and related services Main clients: Market leader; acquired in 2008 Focus on: residential and commercial constructions Products: engineering solutions and rental of formwork, shoring and suspended access Services: planning, design, technical supervision, equipment and related services Clients: real estate companies, such as: Market leader; started in 2008 Focus on: civil construction, Industry, retail e others Products: rental and sale of motorized access equipment, such as aerial work platforms and telescopic handlers Cross-selling with all other Mills business units Elected "Best Company for Access of the Year" by the International Awards for Powered Access (IAPA Awards) for the year of

4 Mills 2014 Financial highlights per business unit In R$ million EBITDA margin ROIC Heavy Construction 36.1% 7.0% Real Estate 14.3% -3.3% Rental 48.9% 8.8% % 4.0% Net Revenue EBITDA 3

5 Geographic Presence Branches location Estamos presentes em 16 estados no Brasil As of March com 31, unidades Roraima Amapá Amazonas Pará Maranhão Ceará Rio Grande do Norte Acre Rondônia Mato Grosso Tocantins Distrito Federal Piaui Bahia Paraiba Pernambuco Alagoas Sergipe Heavy Construction Goias Minas Gerais Real Estate Rental Mato Grosso do Sul São Paulo Espirito Santo States with Mills' presence Parana Rio de Janeiro (headquarters) Santa Catarina Rio Grande do Sul 4

6 Financial Performance 1 In R$ million % 49.7% % % % % 44.1% % 34.8% % % 9.9% % % 28.9% % % 14.1% % 6.6% % Q14 2Q14 3Q14 3Q14³ 4Q14 1Q ³ LTM1Q15-6,2-14,5 Net revenue EBITDA Net earnings EBITDA margin (%) ROIC² 1Q15/1Q14 1Q15/4Q14 LTM1Q15/2014³ CAGR 11-14³ Net revenue -21% -10% -6% 20% EBITDA -56% -15% -21% 17% Net earnings -143% 133% -72% -4% ¹ Reclassified excluding the Industrial Services business unit, for comparison ² ROIC: Return on Invested Capital. ³ Excluding non-recurring items of R$ 21.7 million of net earnings and R$ 14.5 million of EBITDA in 2014, of which R$ 12.3 million in 3Q14 5

7 Positive cash flow of R$ 70 million in 1Q15, reaching R$ 200 million in the last twelve months (100) (31) Free cash flow Q14 2Q14 3Q14 4Q14 1Q15 (13) (200) (300) (219) (154) (400) (340) 1 Net cash generated by the operating activities minus net cash applied in investment activities 6

8 Debt profile 712 Debt, as of March 31, 2015 in R$ million Debt amortization schedule 1 in R$ million Gross debt Cash position Net debt Cash position Interest Principal Credit lines available¹.2 Used Not used R$ 64.5 million R$ million 7 ¹As of December 31st, Unsecured overdraft account+ Secured bank credit lines

9 Debt indicators 8.0x EBITDA/Net financial results Net Debt/EBITDA 7.1x 6.1x 1.5x 1.5x 1.5x 1.6x 1.8x 1.6x 5.2x 4.5x 4.0x 1Q14 2Q14 3Q14 4Q14 1Q15 1Q Q14 2Q14 3Q14 4Q14 1Q15 1Q15 Debentures Covenants : (1) EBITDA/net financial results higher than or equal to two; and (2) Net Debt/EBITDA less than or equal to three. 8 1 Excludind R$ 40.1 million of non-recurring items from LTM EBITDA.

10 The new organizational structure aims to improve operational efficiency and synergy from the Heavy Construction and Real Estate business units Old Organizational Structure New Organizational Structure CEO CEO Heavy construction Real estate Rental Commercial Heavy Construction Commercial Real Estate Operations Engineering Rental Maintenance Projects Commercial Commercial Maintenance Maintenance Inventory handling and control Field service Projects Projects Field service Field service 9

11 We have a broad client base Indicators Heavy Construction Real Estate Rental Mills % 2014 Revenue 29% 25% 46% 100% # Clients 377 2,065 4,083 5,798 Top 10 Clients (% revenue) 38% 20% 12% 16% 10

12 Brazil presents a low level of productivity compared to other developing countries Our services enable productivity growth, which is essential for higher sustainable GDP growth GDP per person employed, % of U.S % 28.2% 34.5% 31.4% 17.2% 17.1% 8.1% Brazil Russia India China South Africa Chile Mexico 11 Source: The Conference Board Total Economy Database, January 2014

13 Business Units

14 Rental Aerial work platforms

15 Growth drivers in the motorized access equipment market: safety and productivity Recent safety standards (NR-18 and NR-35) oblige the use of aerial platforms to lift people, increasing safety and productivity in the work site Market penetration through substitution of less secure and efficient access methods 14 Source: Mills

16 Safety - Growth driver in the motorized access equipment market Leading causes of fatal accidents in construction work Falls 19% 35% Electric shock Collision 12% 10% 5% 8% Brazil USA Crushing 4% 8% 15 Source: (1) EUA: Osha data of 2010 and (2) Brazil : BOLETIM SIRENA Accidents in work analysis -N 2 - January to December, 2010, data of 2010

17 Safety - Growth driver in the motorized access equipment market Number of accidents by type of access equipment EUA , Mobile ladders Vehicles with lift tables, dock levellers, ramps and flying tables Fixed scaffolding Mobile scaffolding Aerial platform Source: HSE HandS-On Statistics Data Tool

18 Productivity - Growth driver in the motorized access equipment market Preparation: scaffolding assembly last 2 days with 8 people Operation: fixed structure makes it difficult to access certain points Preparation: it reaches working heights in one and half minutes Operation: flexible, easy to operate and maneuver 17

19 Geographic expansion - Growth driver in the motorized access equipment market Evolution in Rental s number of units

20 Construction sector is the major user of motorized access in Brazil Revenues per type of use 17% 17% 19% 16% 11% 16% 4% 20% 51% 17% Others Spot 64% 67% 73% 45% 63% Industry Construction Brazilian market Mills United Rentals (pre-merger RSC) United Rentals (post-merger RSC) Ramirent 19 Source: Brazilian Market 2014, estimated by Mills Mills 2014, United Rental and Ramirent

21 Rental Financial Performance In R$ million 60.1% % 54.9% % % 55.7% 56.3% % % % % % 11.5% % % 18.2% 11.5% % 1Q14 2Q14 3Q14 4Q14 1Q LTM1Q15 Net revenue EBITDA EBITDA margin (%) ROIC¹ 1Q15/1Q14 1Q15/4Q14 LTM1Q15/2014 CAGR Net revenue -18% -5% -5% 28% EBITDA -41% 4% -12% 28% 1 ROIC: Return on Invested Capital. 20

22 Heavy Construction Laguna bridge Santa Catarina

23 Brazil is behind other BRIC countries quality of infrastructure Infrastructure quality ranking for BRIC countries ( ) Index EUA = 1.0 Highways Railways Ports Infrastructure China 0.81 China 0.98 China 0.81 China 0.76 India 0.67 India 0.86 India 0.70 India 0.64 Russia 0.47 Russia 0.88 Russia 0.68 Russia 0.71 Brazil 0.49 Brazil 0.35 Brazil 0.47 Brazil 0.53 USA 1.00 USA 1.00 USA 1.00 USA ,50 1, ,50 1, , , , ,00 22 Source: World Economic Forum, The Global Competitiveness Report

24 Infrastructure investments are priority in Brazil. However, there are major uncertainties regarding its execution. Expected investments in Brazil in R$ billion Exame - Balance 2014/ ,013 Infrastructure Total Sobratema ,772 BNDES , Source: BNDES December Sobratema 5ª Edição Anuário Exame , data from 1,565 construction works.

25 Characteristics of 2015 backlog 1 Source of funds Per sector PPP 13% Other 13% Public 40% Industry 32% Private 46% Infrastructure 55% 24 1 Revenues expected in 2015 for signed contracts of December 31 st, 2014

26 Heavy Construction Financial Performance In R$ million % % % % % % 31.0% 36.1% % 16.3% % % 25.3% % % % 9.9% % 1Q14 2Q14 3Q14 4Q14 1Q LTM1Q15 Net revenue EBITDA EBITDA margin (%) ROIC¹ 1Q15/1Q14 1Q15/4Q14 LTM1Q15/2014 CAGR Net revenue 0% -3% 0% 17% EBITDA -50% -21% -14% 15% 1 ROIC: Return on Invested Capital. 25

27 Real Estate Flying table

28 Growth drivers of the residential market: housing financing Housing financing relative to GDP (%) Housing financing relative to GDP (%) in Brazil 9.3% Reino Unido USA Germany South Africa Chile China Brazil India Russia % 24.0% 18.9% 14.5% 9.3% 3.5% 3.2% 68.8% 81.0% 7.4% 6.8% 5.4% 4.1% 3.1% ¹ In 2011; ² In 2012; ³ In 2013; 4 In Source: Valor Econômico Newspaper, with data from Abecip and Secovi

29 Growth drivers of the residential market: higher purchasing power % of families per social class Number of families per income range In million families Class A Class B million families with income between R$ 1,000 to 8,000 < R$ 1,000 Growth rate (%. p.a.) -0.4% 58.4 Class C Class D >= R$ 1,000 and <= R$ 8, % Class E > R$ 8, % E E 28 Source: IBGE and FGV

30 The major challenge for the sector: labor 89% of companies from the construction industry stated that lack of qualified labor is a problem for the company 94% of companies from the construction industry facing shortages of skilled manpower have difficulty finding workers for basic construction activities, such as bricklayers and laborers Solution: Industrialization of the construction process Only 7% of companies from the construction industry plan to deal with the shortage of skilled labor by changing the building process to an industrial assembly model 29 Source: Sondagem Especial Construção Civil, April 2011, CBIC, CNI and Mills

31 Stages of industrialization of the construction process System Traditional with wood Traditional with steel Deck type Flying table Cycle between concreting activities 15 days 7-10 days 6-8 days 4-7 days Labor required 1 30 people 20 people 12 people 10 people 30 1 Approximately 800 m 2 Source: Téchne Magazine, June 2012 and Mills

32 Var. (%) Launches (in R$ million) Var. (%) Launches and sales declined in 2014, with possible negative impact on 2015 construction activities Total launches 1 in R$ billion Total sales 1 in R$ billion 100% 80% 60% 40% 20% 0% -20% % % % % 80% 60% 40% 20% 0% -20% % % % % Sales (in R$ million) -40% -33.7% 5-40% 5-60% % Cyrela. Direcional, Even. Eztech, Gafisa, Helbor, MRV, Tecnisa, Rodobens, and PDG 31 Source: Operational reports from companies and Mills

33 In 2015, civil construction GDP should present larger reduction than the previous year 15% GDP Yoy variation (%) 10% 5% 0% * -5% -10% Total GDP Civil construction GDP 32 Source: Bacen ( ), IBGE (2014) and estimative from Ibre-FGV (2015)

34 Real Estate Financial Performance In R$ million % % % % 39.4% % 6.5% 15.7% 7,7 6,1 2,1% 3.8% 13.5% 0.4% 0,1-3.3% 1Q14 2Q14 3Q14 3Q14¹ 4Q14 1Q15 0,2% % 23.6% 22.1% % % % 0.4% ,2-3.3% ¹ LTM1Q15¹ Net revenue EBITDA EBITDA margin (%) ROIC² 1Q15/1Q14 1Q15/4Q14 LTM1Q15/2014 CAGR Net revenue -44% -27% -12% 11% EBITDA -100% -99% -18% -9% ¹ Excluding non-recurring effects of R$ 14.5 million in 2014, of which R$ 12.3 million was in 3Q14. ² ROIC: Return on Invested Capital 33

35 Mills Investor Relations Tel.: