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 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 the Brazilian Comissão de Valores Mobiliários (CVM). 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% 2,3% 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 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 5 Source: The Global Competitiveness Report

6 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 6

7 Brazilian Outlook On May 12, 2016 the acting President Michel Temer announced a provisory measure (MP 727) to launch the infrastructure program Programa de Parcerias de Investimento PPI (Program of Investment Partnerships), focused on job creations, with the goal to expand investment opportunities, 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. Details of the program have not been announced. Main changes expected in the new program, according to the brazilian press articles: Projects rates of return will be established by the market and would not have a cap pre-established by the Federal Government; Exclude the state owned company Infraero and Valec from new airport and railway concessions s shareholder structure, given the current fiscal consolidation environment. Source: Brazilian newspapers 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 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 33 locations Highlights & Shareholder Structure¹ Approximately 1,600 employees Capillary attendance to the whole country 2 business segments: Construction and Rental Portfolio with more than 50 products Board of Directors and Executive Officers 0,4% Shares in Treasury 1,3% Nacht Family 34,5% Free Float 63,8% 10 (1) As of April

11 Construction Rental Business Units Market leader, extensive track record, with more than 60 years of experience in the infrastructure sector. 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. Market leader; started in 2008 Focus Civil Construction, Industry, Retail and Others. Rental and sale of motorized access equipment, such as aerial work platforms and telescopic handlers. 1Q16: Equipment volume: approximately 114,000 tons Average duration of contracts: 18 months for infrastructure projects and 8 months for real estate projects Number of active contracts: 192 for infrastructure and 816 for real estate 1Q16: Equipment volume: approximately 6,100 equipment Average duration of contracts: 7 months for long term contracts and 2 months for spot contracts Number of active contracts: 2,011 11

12 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 12 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

13 What We Do? Formwork Special systems Shoring Access 13

14 Presence on all Construction Phases Our work starts on preliminary economic and technical viability studies and go 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. 14

15 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 33 locations; 114,000 tons of equipment in the Construction business unit vs 60,000 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 15

16 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 Shared Services Engineering Rental Construction ¹ 2011¹ 2012¹ (1) Excludes Industrial Services, sold in 2013

17 Management Team Committed with Corporate Governance High Corporate Governance Standards Board comprised of 6 members, of which 3 are independent Fiscal Council, permanent, since 2012 Professional Management: Board s segregation (CEO and Chairman) Code of Conduct Audited by Big Four Companies and currently by KPMG Listed in Novo Mercado (High level of corporate governance of BM&FBOVESPA) since 2010 ERP system (SAP) 17

18 1. Industry Overview 2. Company Overview 3. Business Units 4. Financial Profile 18

19 Construction: Strong Background Projects Subway Line 4 (São Paulo) Viaduct Rodovia Dutra (São Paulo) Cable-stayed bridge BRT Transcarioca (Rio de Janeiro) 19

20 Construction: Strong Background Balanced Cantilevers and Trusses Concrete Formworks Shoring Systems 20

21 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 60,000 tons Mills equipment volume is enough to supply the market in Brazil and several markets in Latin America. 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 21

22 Construction: Main Works with Mills Participation North and Northeast North Corredor expresso Aguanambi (express roadway) Northeast Usina hidrelétrica São Manoel (hydroelectric plant) Ponte Tauape (bridge) Central west Vale s S11D Project Transposition of São Francisco River CSN Plant Southeast Salvador BA093 and Metropolitan Central-west and South Papuda Penitenciary Guaíba Bridge - RS South 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 22

23 Rental: Main Products Aerial Work Platforms Telescopic Handlers Others Equipment sale Technical Assistance Trainning 23

24 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. AWP¹ 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 AWP¹: Mobile Elevating Work Platform

25 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 25

26 1. Industry Overview 2. Company Overview 3. Business Units 4. Financial Profile 26

27 Summary Financials In R$ million Net Revenue Costs and Expenses ¹ 2011¹ 2012¹ 2013¹ LTM 1Q16 Equipment Rental Sales Technical assistance and others ¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM 1Q16³ 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 27 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 Rohr impairment of R$26.2 million in 2015

28 Rental Revenue Breakdown In R$ million Construction Business Unit Heavy Construction: Per Source of Resources R$ 23.9 million Heavy Construction: Per sector R$ 23.9 million Real Estate: Per Type R$ 15.8 million Power 4.6% Others 7.0% Railways 12.7% PPP 13.0% Private 47.3% Public 39.7% Sanitation 5.1% Industrial 16.2% Urban Mobility 28.8% Highways 21.1% Airports and ports 4.6% Others 17% Commercial 25% Residential 57% Rental Business Unit 28 Net Revenue per Type of Service R$ 76.4 million Sales 2% Others 2% Semi new equip. sales 30% Technical Assistance 1% Rental 65% Per Use R$ 49.9 million Non- Constructio n 37% Spot 15% Constructio n 48% Public: resources from the government Private: resources from the private sector. PPP (public private partnership) : resources from the government and the private sector

29 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% 30% Utilization rate Average LTM 1Q16 = 47.9% Average 1Q16 = 44.1% 20% 10% 0% 1Q10 1T10 3T10 3Q10 1T11 1Q113T11 3Q111T12 1Q123T12 3Q121T13 1Q13 3T13 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% 40% Utilization rate Average LTM 1Q16 = 61.6% Average 1Q16: 59.0% 30% 20% 10% 0% 1Q10 1T10 3T10 3Q10 1T11 1Q113T11 3Q111T12 1Q123T12 3Q121T13 1Q13 3T13 3Q13 1T14 1Q14 3T143Q14 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. 29

30 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, Q16³ -31,2-208,9-154,3-356,5 Adjusted Operating Cash Flow¹ Adjusted Free Cash Flow 2 ¹Before interests paid referring to debentures and investment in rental. ² Before interests paid referring to debentures ³ includes R$ 29.2 million of revenue from sales of semi new equipment 30

31 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, , , , ,0 900,0 700,0 500,0 300,0 100,0-100, ,8 4,0% 1.617,7 2,0% 1.562, , ,5 675,8 712,4 696,9 0,8% 654,7 632,5-2,9% -3,8% 801,5 776,3 747,2 716,6 681,7 1Q15 2Q15 3Q15 4Q15 1Q16 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% -6,0% -8,0% -10,0% -12,0% Construction Rental Others¹ 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. (1) Includes Rohr, Events and Industrial Services business units 31

32 Main Initiatives In R$ million ROIC Decomposition Net Revenue COGS (199.2) NOPAT (55.2) (15.3) SG&A² (257.4) (200.3) Depreciation: (166.8) ROIC LTM -3.8% Adjusted ¹-1.0% Construction: -5.3% Rental: 5.1% TI (rate of 30%) Rohr Dividends 1.5 Invested Capital 1,439.5 Net Rental PP&E Others 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

33 Summary Financials In R$ million 2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM 1Q16³ % 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% 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% Rental Equipment CAPEX Consolidated % Construction % Rental % Utilization rate (volume) Construction 76.5% 73.6% 75.4% 72.3% 63.0% 49.9% 47.9% Rental 77.9% 77.8% 72.5% 73.0% 63.2% 61.9% 61.6% 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

34 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 R$ 484 million considering the amount paid in April Principal Interests Gross Debt Cash Net Debt 34

35 Rewards and Recognition 2016 Elected as a Company with Contribution to secure access height - IAPA Awards 2015 Elected as pioneer company in Motorized Access IAPA Awards 2014 Elected best material supplier and best product in PINI s (national key magazine) ranking Executives ranked as the best of Latin America by Institutional Investidor magazine: Investor Relations, CEO and CFO Elected IPAF training center of the year IAPA Awards Elected best material supplier for Vale Ranked amongst the top 5 rental companies of motorized access equipment with the fastest growth and the 30rd largest of the world, according to Access International ranking Ranked amongst the top 10 well succeeded IPOs of the decade, according to Capital Aberto magazine ranking of 2011 Executives ranked as the best of Latin America by Institutional Investidor magazine: Investor Relations, CEO and CFO Elected best material supplier for Vale 2011 Elected Best Company for Access of the Year IAPA Awards Recognized for its contribution for Concrete Show - the largest technology event for the construction industry in Latin America 35

36 Key Takeaways Infrastructure investment needs to be substantially increased to meet social needs and support economic growth; Largest footprint: present in 19 States and Federal District in 33 locations; Largest fleet in Brazil in all business units; AWP: Immature market with low penetration and the safest way to work on height; Efforts to increase presence in the international market; Sales of assets aiming at to real estate market (lower turnover); Strengthen relationships with mid-sized construction companies Focus on non-construction markets for the Rental unit Continuous search for operational efficiency Management committed to Corporate Governance Agility and Matchless Executions Reliability Best in Class Solutions National Coverage Tailor Made Projects Complete Product Portfolio 36

37 Mills Investor Relations Phone: +55 (21)