Corporate Presentation March 2013
Disclaimer This presentation may include declarations about Mills expectations regarding future events or results. All declarations based upon future expectations, rather than historical facts, are subject to various risks and uncertainties. Mills cannot guarantee that such declarations will prove to be correct. These risks and uncertainties include factors related to the following: the Brazilian economy, capital markets, infrastructure, real estate and oil & gas sectors, among others, and governmental rules, that are subject to change without prior notice. To obtain further information on factors that may give rise to results different from those forecast by Mills, please consult the reports filed with the Brazilian Comissão de Valores Mobiliários (CVM). 2
Agenda Executive Summary Mills business segments Financial performance Growth plan 3
Mills at a Glance One of the largest specialty engineering services company in Brazil 60 years of market leadership 4 business segments: Heavy Construction Rental Jahu Industrial Services 4
Mills Financial performance per business segment R$ million 2012 Financial highlights per business segment 1000 900 879.3 % Total EBITDA Margin (%) ROIC (%) 800 700 253 29% Rental 55.7% 18.2% 600 Industrial Services 9.1% 4.6% 500 214 24% 400 358.4 % Total Jahu - Residential and Commercial 47.7% 15,7% 300 200 238 27% 141 19 39% 5% Heavy Construction 48.5% 17.2% 100 0 174 Net Revenue 20% 113 84 EBITDA 32% 24% Total 40.8% 14.7% 5
Mills Shareholder Structure % Total Capital Nacht family 1 36% Free float 61% Management 3% Position: December 31, 2012 1 includes Snow Petrel 6
Agenda Executive Summary Mills business segments Financial performance Growth plan 7
Heavy Construction Transnordestina Railway
Heavy Construction Focus on large and complex infrastructure projects Products: Engineering solutions and equipment rental: formwork and shoring Planning, design, technical supervision, equipment and related services Market leader Extensive track record with 60 years of experience Critical success factor is reliability Main clients are the Brazilian largest contractors, such as Number of contracts: 288 at the end of 2012 São Paulo s Subway Yellow Line Santo Antonio Hydroelectric Power Plant Dutra Highway Overpass (São Paulo) 9
Heavy Construction market outlook Investments in infrastructure and industry in Brazil should amount R$ 1.5 trillion in the 2013-2016 period Industry investments 2013-2016 R$ 1,033 billion Infrastructure investments 2013-2016 R$ 489 billion Others 483 Oil and Gas 405 Roads 69 Ports 24 Airports 9 Energy 166 Pulp and Paper 30 Mining 57 Chemical Steel 30 28 Railways 77 Sanitation 42 Telecom 102 Growth compared to the 2008-2011 period (%) 22% 36% Source: BNDES February 2013 10
New logistic investment program Highways In R$ billion Railways In R$ billion Ports In R$ billion Total In R$ billion In the first 5 years 23.5 Colunas2 Colunas3 56.0 In the first 5 54.2 years 133.7 Up to 20 years 18.5 Colunas3 35.0 Colunas2 Up to 20 years 53.5-20 40 60-20 40 60-20 40 60-30 60 90 120 150 Total: R$ 42 billion (7,500 km) Total: R$ 91 billion (10,000 km) Total: R$ 54 billion Total: R$ 187 billion Source: Programa de investimento em Logística, August 2012 and O Globo newspaper 11
Infrastructure Market Outlook To ensure its competitive edge in the global scenario and to keep its growth rates at a sustainable pace, Brazil will have to invest heavily in the infrastructure sector in the coming years Roads Railways Déficit em infraestrutura USA Index = 1.0-2008-2009 average Ports Infrastructure China 0.71 China 0.85 China 0.75 China 0.68 India 0.53 India 0.94 India 0.61 India 0.54 Russia 0.41 Russia 0.81 Russia 0.61 Russia 0.56 Brazil 0.47 Brazil 0.38 Brazil 0.46 Brazil 0.58 USA 1.00 USA 1.00 USA 1.00 USA 1.00-0.50 1.00 Source: 2009 World Economic Forum - 0.50 1.00-0.50 1.00-0.50 1.00 12
The construction work related to World Cup and Olympic events represented 22% of the Heavy Construction business segment s 4Q12 revenue Investments for the 2014 World Cup by project stage Total: R$ 27 billion 16.9 0.3 2.6 Others 14% 4Q12 Revenue R$ 47.3 million World Cup and Olympics 22% 7.3 7.6 0.6 0.3 0.3 6.8 2.3 4.5 2.3 2.4 Infrastructure 39% Industry 25% Concluded Under construction work Wating for the construction work to start On studying stage or licensing process Stadiums Urban Mobility Airports Ports Source: 3º Balanço das ações do Governo Brasileiro para a Copa Report on April 2012 and Mills 13
Sport events: the cherry of the cake 12 stadiums (R$ 6.7 billion) = 5 highways 1 = 1 railroad 2 = 0.4 hydroelectric powerplant 3 1 Considering the average investment of the Bus Rapid Transit (BRT): Transcarioca (R$ 1.3 billion), Transolímpica (R$ 2.2 billion) and Transoeste (R$ 0.7 billion) 2 Investiment in the Norte-Sul railway (R$ 6.7 billon) 3 Investment in the Santo Antônio hydroelectric powerplant (R$ 16.0 billion) 14
Revenue Index (Basis 100= Maximum monthly revenue in the life of construction) Important contracts per stage in the evolution of monthly revenue from the heavy construction projects New contracts* Contracts with growing volume of equipment Belo Monte hydroelectric powerplant Monorail line Gold Subway line 5 SP Subway line 4 RJ Açu port Verdão stadium Light rail Cuiabá Norte-Sul railway New phases of Ponta da Madeira port Contracts with high volume of equipment Jirau, Colíder and Teles Pires hydroelectric powerplants Abreu e Lima refinery Paranaenses arena Monorail line Silver - SP Transordestina railway BR-448 Comperj refinery Manaus airport BRT Transcarioca Porto Maravilha Aratu Port Metropolitan arch RJ Carajás railway BRT Belém Contracts in the demobilization process Subway line 2 - SP Maracanã stadium Mané Garrincha stadium Sudeste port Ponta da Madeira port Serra Leste mine New contracts* Source: Mills New phases of Belo Monte hydroeletric powerplant New stretches of subway lines 4 and 5 New stretches of Monorail line Gold BRT Fortaleza Guarulhos airport Fortaleza airport Natal airport Viracopos airport Brasília airport Surroundings of the Maracanã stadium Surroundings of the Corinthians Arena Bridge over the Araguaia River Expansion of Carajás mine Paraguaçu shipyard Time 15
Characteristics of the major projects in progress Source of Funds Public- Private Partnership 29% Public 32% Private 39% 16
Construction Applied technological innovation Automatic Climbing Formwork SM Mills Alumills 17
Heavy Construction Financial performance 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 In R$ million 52.2% 51.9% 42.7 41.7 35.7 45.9% 28.5% 25.5% 24.4% 21.6 22.3 16.4 34.2 38.8% 18.8% 13.3 48.9% 31.8 15.6 14.4% 46.2% 30.6 14.1 12.1% 54.0% 39.3 36.1 48.0% 33.2 33.2 43.5% 19.5 18.9 26.0% 14.4 17.5% 16.6% 12.0% 8.6 4.5% 45.5 52.9% 41.9 50.6% 24.1 21.2 19.7% 17.8% 45.5 50.2% 22.8 18.3% 47.3 42.7% 20.2 14.8% 60% 50% 40% 30% 20% 10% - 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 3Q11* 4Q11 1Q12 2Q12 3Q12 3Q12* 4Q12 0% Net Revenue EBITDA EBITDA Margin ROIC¹ 4Q12/4Q11 4Q12/3Q12* +31.2% +3.6% - 1,130 bps - 270 bps +3.9% - 11.6% - 750 bps - 350 bps * Excluding the negative impact of R$ 5.8 million of Allowance for Doubtful Debts (ADD) in 3Q11 and the positive impact of the provisions reversal in the amount of R$ 1.5 million in 3Q12 1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering a theoretical 30% income tax rate. 18
Jahu - Residential and Commercial Reserva do Paiva Pernambuco 19
Jahu Residential and Commercial Focus on residential and commercial construction Products: Engineering solutions and equipment sales and rental: formwork, scaffolding and shoring Market leader Innovative product - Easy-Set aluminum formwork - to serve low income housing construction Clients are the Brazilian real estate companies, such as Number of contracts: 4,361 at the end of 2012 20
Growth drivers of the residential market: housing financing Housing Financing In R$ million Source: BACEN and FGV 21
Growth drivers of the residential market: higher purchasing power Higher purchasing power of the Brazilian population In million families 6.0 5.7 6.2 8.1 9.8 11.7 Class A 60.4 37.0 49.7 58.4 Class B Class C +33.2 million families with income between R$ 1,000 to 8,000 31.7 27.2 29.1 < R$ 1,000 Growth rate (%, p.a.) -0.4% 38.2 Class D >= R$ 1,000 and <= R$ 8,000 +3.9% 28.0 10.7 20.1 6.8 3.6 Class E 1.4 5.9 > R$ 8,000 +7.1% 2002 2009 2014E 2007 2030E Source: IBGE and FGV 22
Growth drivers of the residential market: industrialization of the construction process 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 System Cycle between concreting activities Traditional with wood Deck Type Flying Table 15 days 6-8 days 4-7 days 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 Source: Sondagem Especial Construção Civil, April 2011, CBIC, CNI, Téchne Magazine, June 2012 and Mills 23
Great penetration of concrete wall for the Minha Casa, Minha Vida program Use of concrete wall should reach 40% of the properties of the Minha Casa, Minha Vida program in 2014/15 2010/11 3% 2012/13 2014/15 15% 40% 60% 97% 85% 30,000 HU 150,000 HU 400,000 HU Concrete wall construction Construction using other systems Source: Criative 24
Applied technological innovation: reduction in labor and construction cycle Mills Deck Light Alumalight SL-2000 Easy set Alumills Mast Climbing Platform 25
Growth drivers in the residential market: geographic expansion Jahu Revenue Breakdown 15% 39% 51% New branches 1 100% 85% 61% 49% Established branches 2009 2010 2011 2012 1 Branches opened since November 2009 26
Jahu Financial performance In R$ millions 70.0 60.0 50.0 40.0 30.0 20.0 10.0 45.3% 46.0% 42.8% 42.0% 35.5% 29.2% 32.8 23.6% 21.3% 27.9 29.2 22.7 21.8 22.3% 15.2% 11.9 10.3 11.6 12.3 10.0 58.9 50.1% 46.1% 52.5 52.5 41.6% 45.5% 38.8% 39.4 34.7 26.3 27.2 23.9 16.3% 15.6% 14.8% 13.0% 12.5% 16.4 13.5 55.9% 60.5 60.5 48.6% 33.8 20.2% 29.4 16.9% 66.0 39.6% 26.1 12.6% 60% 50% 40% 30% 20% 10% - 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12* 4Q12 Net Revenue EBITDA EBITDA Margin ROIC¹ 0% 4Q12/4Q11 4Q12/3Q12* + 25.9% + 9.5% - 590 bps - 370 bps + 9.1% - 11.2% - 900 bps - 430 bps * Excluding the positive effect of R$ 5.3 million of tax contingency reversal in 3Q12 1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering a theoretical 30% income tax rate. 27
Rental Motorized Access Equipment Castelão Stadium Fortaleza, CE
Rental - Motorized Access Equipment Rental Serves all Mills business segments as well as the automotive, retail and logistics sectors, among others Products: Rental and sale of motorized access equipment, such as aerial work platforms and telescopic handlers, to lift people or cargo, respectively Market leader Cross-selling with all other Mills business segments Elected "Best Company for Access of the Year" by the International Awards for Powered Access (IAPA Awards) for the year of 2011 Number of contracts: 1,597 at the end of 2012 29
Motorized Access Equipment Rental market outlook Current underutilization of motorized access equipment in Brazil and favorable regulation indicate significant growth potential in this market. The Brazilian aerial platforms and telehandler fleet is very small compared to the US fleet; less than 3% Modest rental penetration of 15% in Brazil. Rental penetration is approximately 40% in the USA, 60% in Japan and 80% in England Recent regulation obliges the use of aerial platforms to lift people, increasing safety and productivity in the work site Brazilian fleet should increase at average annual rate of 14% in the next few years and reach 40,000 units by 2017 Source: Mills 30
In 2012, the Brazilian fleet of motorized access equipment grew 32.1% compared to 2011 45 Motorized access equipment fleet In thousands of units Fleet profile Brazil - 2012 Total: 21,000 40 35 40 Telescopic handlers 11% 30 +13.9% p.a. 25 20 15 10 5 0 +34.9% +46.2% 16 +32.1% 11 8 2009 2010 2011 2012... 2017E 21 Telescopic handlers 22% USA - 2011 Total: 785,000 Aerial work platforms 89% Aerial work platforms 78% Source: Mills and Yengst Associates 31
Growth drivers in the motorized access equipment market: geographic expansion Rental Revenue Breakdown 31% 58% 62% New branches 1 69% 42% 38% Established branches 2009 2010 2011 2012 1 Branches opened since January 2010 32
Rental Financial Performance In R$ million 80.0 74.2 70% 70.0 60.0 57.0% 55.8% 56.6% 47.6% 56.0% 54.1% 47.6% 54.8% 56.0% 54.9 61.8% 67.4 56.6% 56.5% 56.5 55.4 49.8% 60% 50% 50.0 40.0 30.0 20.0 10.0 23.5% 17.2 9.8 33.7 30.8 25.8 21.3 18.7% 17.3% 19.6% 17.3% 18.9 14.6 14.7 11.9 45.6 45.6 41.2 17.1% 25.0 22.3 21.7 16.0% 12.9% 30.7 18.6% 34.9 20.3% 38.0 36.9 31.4 16.3% 16.3% 16.9% 40% 30% 20% 10% - 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 3Q11* 4Q11 1Q12 2Q12 3Q12 4Q12 Net Revenue EBITDA EBITDA Margin ROIC¹ 0% 4Q12/4Q11 4Q12/3Q12 + 35.3% + 20.2% - 620 bps - 170 bps + 10.2% - 2.9% - 670 bps + 60 bps * Excluding the positive effect of R$ 5.3 million of tax contingency reversal in 3Q12 1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering a theoretical 30% income tax rate. 33
Industrial Services Rental Financial performance In R$ millions 70.0 67.4 70% 61.8% 60.0 50.0 57.0% 55.8% 56.6% 47.6% 56.0% 54.1% 54.8% 47.6% 45.6 45.6 56.0% 54.9 56.5 56.6% 55.4 56.5% 50.40% 60% 50% 40.0 30.0 20.0 10.0 23.5% 17.2 9.8 21.3 19.6% 11.9 30.8 25.8 17.3% 18.7% 14.6 14.7 33.7 17.3% 18.9 41.2 22.3 21.7 17.1% 12.9% 25.0 16.0% 30.7 18.6% 34.9 20.3% 38.0 37.4 31.4 16.3% 16.3% 17.20% 40% 30% 20% 10% - 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 3Q11* 4Q11 1Q12 2Q12 3Q12 4Q12 Net Revenue EBITDA EBITDA Margin ROIC¹ 0% 4Q12/4Q11 4Q12/3Q12 +35.3% +21.6% - 566 bps - 148 bps + 10.2% +1.8% - 610 bps +83 bps * Excluding the negative effect of R$ 3.3 million of Allowance for Doubtful Debt (ADD) in 3Q11 Ocean Star Platform Angra dos Reis, RJ 1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering a theoretical 30% income tax rate. 34
Industrial Services Focus on large industrial plants, both on construction and maintenance phases Products offered during construction and maintenance: access structures rental and erection/dismantling services industrial painting and surface treatments thermal insulation Cross-selling with Heavy Construction business segment Recurring and less volatile revenue base Labor intensive, instead of capital intensive, as the other business segments Industries served: oil & gas, petrochemicals, pulp & paper, steel, among others Number of contracts: 114 at the end of 2012 35
Petrobras has announced its 2012-2016 Business Plan with investments totaling US$ 236.5 billion in this period Petrobras total investment plan for 2012-2016 period: US$ 236.5 billion Petrobras pre-salt investment plan for 2012-2016 period: US$ 49.7 billion US$ 131.6 billion will be invested in E&P in Brazil, with the aim of increasing domestic oil production from 2.0 million bpd (Mbpd) in 2011 to 2.5 Mbpd in 2016, with 0.8 Mbpd related to pre-salt Critical resources needed up till 2020: 65 drilling rigs 68 platform-vessels # Petrobras Plataforms CAGR 10-20: +7.9% 61 44 94 361 special support vessels 2010 2015 2020 US$ 51.7 billion will be invested in refining, of which 48% to expand the refining facilities, the major refinery projects being Abreu e Lima (PE) and Comperj (RJ). Source: Petrobras 2012-2016 Business Plan and Revista Exame (6/27/2012). 36
Industrial Services Financial performance In R$ millions 70.0 60.0 50.0 40.0 17.7% 15.8% 40.0 17.3% 14.9% 56.4 14.8% 14.9% 52.5 13.4% 50.2 46.5 12.2% 10.3% 9.6% 57.5 56.9 14.2% 14.2% 7.2% 54.8 50.2 50.9 12.1% 8.5% 48.8 59.3 14.2% 13.3% 20% 15% 10% 30.0 3.2% 4.7% 7.5% 3.9% 0.2% 5% 20.0-1.2% 0% 10.0-6.3 6.9 7.0 8.1 8.4 5.8 6.1 6.2 4.1 4.7 2.3-6.2% 0.1 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Net Revenue EBITDA EBITDA Margin ROIC¹ -5% -10% 4Q12/4Q11 + 18.2% + 259.6% +950 bps +1,450 bps 4Q12/3Q12 + 21.5% + 7,268.7% + 1,400 bps +1,950 bps 1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering a theoretical 30% income tax rate. 37
Agenda Executive Summary Mills business segments Financial performance Growth plan 38
Mills Financial performance In R$ millions 300.0 50% 250.0 200.0 150.0 100.0 50.0 37.0% 23.1% 115.5 42.8 18.7 43.3% 43.2% 45% 246.8 39.5% 40.0% 40.7% 38.4% 37.6% 36.4% 222.2 222.2 37.1% 40% 35.4% 34.2% 211.1 193.5 199.1 35% 29.4% 29.0% 175.1 164.0 30% 148.9 154.2 175.1 145.0 25% 131.3 23.0% 20.3% 18.8% 20% 76.4 86.2 96.1 90.4 13.8% 91.7 12.7% 84.4 50.5 55.9 59.9 14.2% 13.6% 15.8% 14.5% 15% 15.1% 14.5% 52.8 58.0 45.4 50.8 11.1% 10% 39.2 26.1 28.5 30.1 29.5 32.7 38.0 41.6 8.6% 34.7 22.2 22.6 17.8 23.8 5% - 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 3Q11* 4Q11 1Q12 2Q12 3Q12 3Q12* 4Q12 Net Revenue EBITDA Net Earnings EBITDA Margin ROIC¹ 0% 4Q12/4Q11 +27.5% +20.0% +41.0% - 234 bps +27 bps 4Q12/3Q12* +11.1% +1.4% +19.9% - 354 bps +3 bps * Excluding the negative impact of R$ 9.1 million of Allowance for Doubtful Debts (ADD) in 3Q11 and the positive impact of the provisions reversal in the amount of R$ 6.8 million in 3Q12 1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering a theoretical 30% income tax rate. 39
Capturing opportunities maintaining the commitment to low leverage 2.5 Net Debt/LTM EBITDA 2.0 1.9x 1.9x 1.7x 1.5 1.5x 1.3x 1.2x 1.2x 1.0 1.0x 0.7x 0.7x 0.8x Target = 1.0x 0.5 0.0 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 40
Agenda Executive Summary Mills business segments Financial performance Growth plan 41
We plan to invest R$ 296 million in organic growth in 2013 Capex in R$ million 450 430 400 350 300 349 15 161 18 163 298 296 21 Rental 2013 Capex (%) 42% 250 17 124 200 150 100 25 104 185 161 5 60 6 112 Industrial Services Jahu - Residential and Commercial 2% 38% 50 0 74 47 51 54 2010 2011 2012 2013 Budget Heavy Construction 18% 42
We are present in 14 states of Brazil with 46 branches Branch locations As of December 28, 2012 Roraima Amapá Amazonas Acre Rondônia Heavy Construction Mato Grosso Pará Tocantins Distrito Federal Maranhão Piaui Bahia Ceará Rio Grande do Norte Paraiba Sergipe Pernambuco Alagoas Jahu Industrial Services Rental Mato Grosso do Sul Goias São Paulo Minas Gerais Espirito Santo States with Mills Presence Parana Rio de Janeiro (sede) Santa Catarina Rio Grande do Sul 43
Mills Investor Relations Tel.: + 55 21 2123-3700 E-mail: ri@mills.com.br www.mills.com.br/ri