Corporate Presentation and 4Q16 Results

Transcription

1 Corporate Presentation and 4Q16 Results

2 1. Company Overview 2. Revenue Drivers 3. Financial Profile 2

3 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 invest in the expertise of our team of professionals, which, allied to our diversified experience, allows us to deliver prompt, clever and reliable solutions that increase our clients results and productivity in construction works. National Coverage:19 States and Federal District in 32 locations Highlights & Shareholder Structure¹ Approximately 1,300 employees Capillary coverage to the whole country 2 business units: Construction and Rental Portfolio with more than 90 solutions Board of Directors and Executive Officers 0.4% Shares in Treasury 1.3% Nacht Family 34.5% Free Float 63.8% 3 (1) As of December 31, 2016

4 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 4 Sale of the Industrial Services business unit Capital Increase. with the issuance of 47 million new common shares, in the total amount of R$ 125 million

5 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. 4Q16: Equipment volume: approximately 110,000 tons Average duration of contracts: 18 months for infrastructure projects and 8 months for real estate projects Number of active contracts: 179 for infrastructure and 583 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. 4Q16: Equipment volume: approximately 6,000 equipment Average duration of contracts: 7 months for long term contracts and 1 months for spot contracts Number of active contracts: 2,002 5 Source: Mills, Serasa, Company s reports

6 Not listed Not listed Business Units Mills is the national market leader in equipment rental for both business Units. Construction equipment¹²: 2015 Net Revenues (R$ million) Arial work platforms³: 2015 Net Revenues (R$ million) Mills 283 Mills 293 SH Solaris Ulma Locar Rohr Trimak Metax Degraus Pashal 23 Grupo Orguel 46 ¹ Considers the competitor s total revenue and the revenue related to Mills s similar products are estimated. ² Doka and Peri are big competitors in the construction segment in Brazil but financial information are not available. ³2014 data for Metax and Pashal. Metax has a Rental business unit only in Ribeirão Preto and was not considered in the estimated value. Revenue from other products 6 Source: Mills, Serasa, Company s reports

7 What We Do? Access Formwork and Shoring Special systems We are present on all construction phases. Our work starts on the preliminary economic and technical viability studies and goes until the end of the projects. Thus, we ensure the use of the best engeneering solutions. Viability Studies Executive Projects Implementation (Construction Site) Foundation Structure Finishing The knowledge and strategic partnerships allow us to provide the BEST solution in terms of quality, costs, risks, deadlines and interferences. Our product mix enables the execution of the best solutions. Supply of scaffolding, aerial work platforms, water tank shoring etc. Supply of scaffolding, forms and shoring. Supply of shoring systems, formwork, scaffolding, aerial work platforms and telehandlers. Supply of aerial work platforms, mast climbing work platform, liftpod and scaffolding. 7

8 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 19 States and Federal District in 32 locations; 110,000 tons of equipment in the Construction business unit vs 60,000 tons of equipment of the second player; 6,000 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 51.1%, Non-construction 35.4% and Spot 13.5% in 2016; Heavy Construction: Subway and trains 42.5%, Highways 18.6%, Sanitation 13.9%, Industrial 8.3%, Airports 7.5% and Others 9.2% in 2016; Real Estate: 48.5% Residential, 31.5% Commercial and Others 20.0% in 2016 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 BM&FBOVESPA at the highest corporate level (Novo Mercado) since 2010; Audited by Big Four Companies and currently by KPMG; Professional Management 8

9 Main iniciatives and events held by the Company Sergio Kariya took the position as CEO. Revisited its organizational structure. Focus on cash generation. Closed Guarulhos branch. Moved head office to our ware house. Capital increase, in April, of R$125 million. Hiring of Gustavo Zeno as CFO and IRO and Fernanda Copeman as People and Management Executive. Focused on improving our productivity in operations and equipment maintenance. Better allocation of invested capital, through the reduction of our PP&E. A new credit and collection policy was approved. Development our multi annual strategic planning Optimization of the number of branches and equipment, specially for the light real estate market. Change of organizational structure focusing on the commercial strategy. 9

10 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 Fernanda Copeman People and Management Headcount as of December 31 2,054 2, ,347 1,706 1,795 1,558 1, Shared Services Rental Construction ¹ 2011¹ 2012¹ (1) Excludes Industrial Services, sold in 2013

11 1. Company Overview 2. Revenue Drivers 3. Financial Profile 11

12 Heavy Construction: Market Perspective It is known that investment in infrastructure is historically low in Brazil and still far from the levels seen in developing countries. China (2010) Investment in Infrastructure (% GDP) Index 1.0 (best) Índia Costa Rica ( ) (2013) Chile Uruguai 13.4 ( ) (2013) Nicaragua (2013) Bolívia (2013) Brazil ( ) EUA (2013) Peru ( ) Investment in Infrastructure in Brazil (% GDP) / / / / /14 Electricity Telecom Transportation Water and Sanitation Total (% GDP) 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. 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 Source: Cepal, CNI (Confederação Nacional da Indústria); US Senate; press clipping; The Global Competitiveness Report

13 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 is around 34,000 equipment, Mills owns approximately 6,000 equipment and the second player approximately 2,900. In addition to the recovery in the cycle, leasing platforms in Brazil has significant potential to increase penetration Volume of Equipment Purchased in Brazil Use of aerial platforms in Brazil In Brazil, platforms are mainly used in construction - works and buildings - and industrial maintenance. However, they can be used for any work that needs to be done in time. Construction: platforms are used during construction for electrical, hydraulic and infrastructure projects. Industrial Maintenance: Maintenance and services in production environments. For example in automotive industries. Logistics: Transportation of goods and inventories. Source: Mills

14 Revenue Drivers for Construction Jobs and its Relevance Backlog Continuity of works in progress onwards - Resumption of suspended works Delays on works - - Pipeline New construction works Renewal of existing concessions Crescer Program Less relevant Relevant Very relevant The Rental business unit is also exposed to the non construction market, therefore will recover in a faster pace 14

15 1. Company Overview 2. Revenue Drivers 3. Financial Profile 15

16 Utilization Rate and Main works Construction Utilization Rate Main works in the 4Q16 100% 90% 80% 70% 60% 50% Average LTM: 41.5% 40% 30% 20% 10% 0% 1Q103Q101Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q16 Rental Utilization Rate 100% 90% 80% 70% 60% 50% Average LTM: 55.1% 40% 30% 20% 10% 0% 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 Central-west and South Papuda Penitenciary DF Mill Isabela RS Guaíba Bridge RS Powerplant São Manoel - MT States with Mills presence North and Northeast VLT Fortaleza CE Ilhéus Bridge BA Salvador`s Subway - BA Canal Alagoano - AL Olinda`s Shopping - PE Southeast Confins airport expansion MG Complexo Jundiaí SP Duplication BR-381 MG Subway line 4 and 5 - SP Porto do Açu RJ Contagem Viaduct MG Rodoanel Norte SP Confins airport expansion MG Complexo Jundiaí SP Duplication BR-381 MG Subway line 4 and 5 - SP Porto do Açu RJ Contagem Viaduct MG Rodoanel Norte SP 16

17 Summary Financials In R$ million Net Revenue Costs and Expenses ¹ 2011¹ 2012¹ 2013¹ ¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ 2016 Equipment Rental Sales Technical assistance and others COGS SG&A ADD Ebitda and Ebitda Margin Net Profit (Loss) % 47.0% 50.9% 50.4% 42.9% % 60.0% 50.0% 40.0% 30.0% % ¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ 2016 Result/provision of sales of semi new equipment Ebitda Ebitda Margin 20.0% 10.0% 0.0% (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

18 6.6% 7.0% 6.0% ADD Percentage Equal to 4.1% of Net Revenue in 4Q16 Allowance for Doubtful Debts (ADD) Evolution In % of net revenue Delinquency Evolution 5.30% 68.2% 72.9% 72.0% 75.2% 76.4% 3.2% 4.1% 56.9% 60.1% 63.2% 70.0% 73.1% 2.10% 2.0% 0.30% 1.70% Average: 2.3% Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 Total Past Due/Total Trade Receivables ADD Balance/Total Trade Receivables 4Q15 3Q16 4Q in R$ million (A) (B) (C) (D) (E) (C)/(A) (C)/(B) (E)/(D) Total Past Due % -0.6% 0.5% Past due between 1 and 60 days % -21.3% -40.9% Past due between 61 and 120 days % 8.4% -9.1% Past due above 120 days % 2.2% 11.9% Write-off % -90.3% 627.2% 18

19 Ebitda CVM Provision for tax, civil and labor risks Accrued expenses on stock options Profit sharing payable Gain on sale of property, plant and equipment Allowance for doubtful debts Other non cash items Interest and monetary and exchange gains and losses (cash) Other cash items Interest Paid Fluxo de Caixa Operacional conforme normas contábeis Interest and monetary and exchange gains and losses (cash) Gain on sale of property, plant and equipment Interest Paid Adjusted Operational Cash Flow Free Cash Flow¹ In R$ million Even on na adverse macroeconomic scenario, the Company remains generating free cash flow. EBITDA Reconciliation with Operational Cash Flow Cash Flow Q16 2Q16 3Q16 4Q Adjusted Operational Cash Flow Adjusted Free Cash Flow to the Firm 19 ¹ 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 discounted. For the free cash flow to the firm the interest paid is disregarded and the net monetary and asset variations are discounted.

20 Indebtedness on 12/31/2016¹ In R$ million The weighted average maturity of our debt 2,5 years at a cost of CDI+0,28%. Gross Debt Profile Principal Amortization Schedule % 64.5% Short Term Long Term We do not have foreign currency exposure. Cash nd Emission of Debentures - CDI % 2nd Emission of Debentures - IPCA +5.5% 3rd Emission of Debentures % CDI Finame Indebtedness -2.7% % -63.7% Principal Interests Gross Debt Cash Net Debt 20 TJLP CDI IPCA ¹ On March 22, 2017 was approved at the Debenture Holders Meeting by holders of its 2nd and 3rd issuance the amendment to the terms and conditions of the respective indentures, including (i) financial covenants, (ii) additional collateral, (iii) changes to certain early-termination events, and (iv) increase the remuneration of the debentures. The complete minutes of the meeting of the debenture holders can be obtained in the website ir.mills.com.br

21 Summary Financials In R$ million 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ 2016 % Part Net Revenues Consolidated % Construction % Rental % Ebitda Consolidated % Construction % Rental % Others % Ebitda Margin Consolidated 47.5% 47.0% 50.9% 50.4% 42.9% 28.0% 10.3% Construction 45.3% 43.1% 48.0% 44.7% 36.3% 11.4% -8.7% Rental 53.6% 53.4% 55.7% 57.9% 53.0% 45.2% 27.9% Gross Capex (accrual basis) Consolidated % Construction % Rental % Own Use and intangible assets % Utilization rate (volume) Construction 76.5% 73.6% 75.4% 72.3% 63.0% 49.9% 41.5% Rental 77.9% 77.8% 72.5% 73.0% 63.2% 61.9% 55.1% Cash Flow Adjusted Operational Cash Flow Adjusted Free Cash Flow to the Firm Covenants EBITDA*/Net financial results >= Net Debt/EBITDA* <= (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 * LTM Ebitda excluding non-recurring items. 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 discounted. For the free cash flow to the firm the interest paid is disregarded and the net monetary and asset variations are discounted.

22 Key Takeaways 2017 : Actions Planning and structural actions for EBITDA recovery and cash preservation Company s sizing Adequacy of equipment mix in Rental Commercial strategy Construction: medium size constructors and entrants Rental: focus on continuation of non-construction sector Continuous search for operational efficiency Strengthening of Management Model for results (unfolding of KPIs, management rituals, etc.) Implementation of Mapa project in Rental business unit Main risks Political risk Deterioration of the macroeconomic scenario Postponement of works impacting the backlog and the pipeline Rental strategy for the non-construction industry with low impact on Mills results No reduction of delinquency due to the deterioration of our clients' cash 22

23 Notes Aerial Work Plataform - Spazio Residence Formwork and Shoring Salvador`s Subway 23

24 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