Post on 01-Jun-2018
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
1/35
May 2015
Corporate Presentation
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
2/35
Executive Summary
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
3/35
H e a v y C o n s t r u c t i o n
•
• Market leader. extensive trackrecord, with more than 60 yearsof experience
• Focus on: large and complexinfrastructure projects
• Products: engineeringsolutions and rental offormwork and shoring
• Services: planning, design,technical supervision,equipment and related services
• Main clients:
R e a
l E s t a t e
•
• Market leader; acquired in 2008
• Focus on: residential andcommercial constructions
• Products: engineering solutionsand rental of formwork, shoringand suspended access
• Services: planning, design,technical supervision, equipmentand related services
• Clients: real estate companies,such as:
R e n t a l
• Market leader; started in2008
•Focus on: civil construction,Industry, retail e others
• Products: rental and sale ofmotorized accessequipment, such as aerialwork platforms andtelescopic handlers
• Cross-selling with all other
Mills’ business units
• Elected "Best Company for Access of the Year" by theInternational Awards forPowered Access (IAPA
Awards) for the year of 2011
Mills - Business Units
2
http://www.pdgrealty.com.br/pdg/Capa.aspx
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
4/35
3
Mills – 2014 Financial highlights per business unit
In R$ million
353.1
172.7
186.1
26.7
211.0
76.2
750.2
275.6
Net Revenue EBITDA
Heavy Construction
Real Estate
Rental
EBITDA margin ROIC
36.1% 7.0%
14.3% -3.3%
48.9% 8.8%
36.7% 4.0%
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
5/35
Estamos presentes em 16 estados no Brasil com 56 unidades
Geographic Presence
4
Branches location As of March 31, 2015
MinasGerais
Rio Grandedo Sul
Santa Catarina
São Paulo
Mato Grosso
do Sul
Rio deJaneiro
(headquarters)
EspiritoSanto
Bahia
DistritoFederal
Goias
Sergipe
Paraiba
Rio GrandeCeará
Piaui
Maranhão
Tocantins
Pará
Rondônia
Acre
Roraima Amapá
Amazonas
Mato Grosso
Parana
Alagoas
States with Mills' presence
Pernambuco
do Norte
Rental
Heavy Construction
Real Estate
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
6/35
5
Financial Performance1
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
In R$ million
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%
207.8213.0
191.5 191.5
181.9163.9
107.5 105.9
66.779.0
55.647.4
33.9 33.4
3.211.3
-6,2-14,5
48.7% 49.7%
34.8%
41.3%
30.6%28.9%
12.3%
9.4%9.9%
6.6%4.0%
1Q14 2Q14 3Q14 3Q14³ 4Q14 1Q15
Net revenue EBITDA Net earnings EBITDA margin (%) ROIC²
665.5
832.3794.2 794.2
750.2
339.0
403.1
335.7 350.2
275.6
151.5172.6
64.3 81.7
23.0
50.9%48.4%
42.3%
44.1%
36.7%
14.7% 14.1%
6.6% 6.6% 4.0%
2012 2013 2014 2014³ LTM1Q15
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
7/35
Positive cash flow of R$ 70 million in 1Q15, reaching R$ 200million in the last twelve months
6
(340)
(219)
(31)
(154)
116
(13)
11
7445
70
(400)
(300)
(200)
(100)
-
100
200
2010 2011 2012 2013 2014 1Q14 2Q14 3Q14 4Q14 1Q15
Free cash flow1
1 Net cash generated by the operating activities minus net cash applied in investment activities
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
8/35
72 57 34 38 31 27
134 174
150106 106
38
194206
231
184
144 137
65
Cashposition
2015 2016 2017 2018 2019 2020
Interest Principal
Debt profile
Debt amortization schedule1 in R$ million
7
Credit lines available¹.2
Used R$ 64.5 million
Not used R$ 505.6 million
¹As of December 31st, 20142 Unsecured overdraft account+ Secured bank credit lines
712
214 498
Gross debt Cash position Net debt
Debt, as of March 31, 2015in R$ million
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
9/35
Debt indicators
Net Debt/EBITDA
Debentures Covenants :
(1) EBITDA/net financial results higher than or equal to two; and
(2) Net Debt/EBITDA less than or equal to three.
EBITDA/Net financial results
8
1.5x 1.5x 1.5x
1.6x
1.8x
1.6x
1Q14 2Q14 3Q14 4Q14 1Q15 1Q15
8.0x
7.1x
6.1x
5.2x
4.0x
4.5x
1Q14 2Q14 3Q14 4Q14 1Q15 1Q15 1 1
1Excludind R$ 40.1 million of non-recurring items from LTM EBITDA.
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
10/35
The new organizational structure aims to improve operationalefficiency and synergy from the Heavy Construction and RealEstate business units
CEO
CommercialHeavyConstruction
CommercialReal Estate
Operations
Maintenance
Inventoryhandling and
control
Engineering
Projects
Field service
Rental
9
New Organizational Structure
CEO
Heavyconstruction
Commercial
Maintenance
Projects
Field service
Real estate
Commercial
Maintenance
Projects
Field service
Rental
Old Organizational Structure
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
11/35
We have a broad client base
10
IndicatorsHeavy
ConstructionReal 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%
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
12/3511Source: The Conference Board Total Economy Database, January 2014
Brazil presents a low level of productivity compared to otherdeveloping countries
17.2%
34.0%
8.1%
17.1%
28.2%
34.5%
31.4%
Brazil Russia India China South Africa Chile Mexico
GDP per person employed, % of U.S. 2013
Our services enable productivity growth, which is essential for higher sustainable GDP growth
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
13/35
Business Units
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
14/35
Rental
Aerial work platforms
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
15/3514
Growth drivers in the motorized access equipment market:safety and productivity
Source: Mills
Market penetrationthroughsubstitution of lesssecure andefficient access
methods
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
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
16/35
Safety - Growth driver in the motorized access equipmentmarket
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
Leading causes of fatal accidents in construction work
4%
8%
10%
35%
8%
5%
12%
19%
Crushing
Collision
Electric shock
Falls
Brazil
USA
15
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
17/35
1,889
403
277233
72
Mobile ladders Vehicles with lifttables, dock
levellers, ramps andflying tables
Fixed scaffolding Mobile scaffolding Aerial platform
16
Number of accidents by type of access equipment
EUA – 2010-2011
Source: HSE HandS-On Statistics Data Tool
Safety - Growth driver in the motorized access equipmentmarket
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
18/35
Productivity - Growth driver in the motorized accessequipment market
Preparation: scaffolding assembly last 2 dayswith 8 peopleOperation: fixed structure makes it difficult toaccess certain points
Preparation: it reaches working heights inone and half minutesOperation: flexible, easy to operate andmaneuver
17
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
19/35
Evolution in Rental’s number of units
Geographic expansion - Growth driver in the motorizedaccess equipment market
18
4 4
14
1617
26
30
2008 2009 2010 2011 2012 2013 2014
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
20/35
Revenues per type of use
64% 67%73%
45%
63%
19% 16%16%
51% 17%
17% 17%11%
4%
20%
Brazilian market Mills United Rentals(pre-merger
RSC)
United Rentals(post-merger
RSC)
Ramirent
Others
Spot
Industry
Construction
Construction sector is the major user of motorized access inBrazil
19Source: Brazilian Market – 2014, estimated by Mills Mills – 2014, United Rental - 2014 and Ramirent - 2014
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
21/35
Rental – Financial Performance
20
1 ROIC: Return on Invested Capital.
In R$ million
1Q15/1Q14 1Q15/4Q14 LTM1Q15/2014 CAGR 11-14
Net revenue -18% -5% -5% 28%
EBITDA -41% 4% -12% 28%
97.3 98.6
91.0
83.979.6
58.455.1
50.0
33.2 34.4
60.1%
55.8% 54.9%
39.6%43.3%
17.8% 16.2%14.5%
11.5%
8.8%
1Q14 2Q14 3Q14 4Q14 1Q15
Net revenue EBITDA EBITDA margin (%) ROIC¹
253.5
357.3370.8
353.1
141.2
201.2 196.7
172.7
55.7% 56.3%53.0%
48.9%
18.2% 18.2%
11.5%8.8%
2012 2013 2014 LTM1Q15
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
22/35
Heavy Construction
Laguna bridge – Santa Catarina
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
23/35
1.00
0.53
0.71
0.64
0.76
- 0,50 1,00
USA
Brazil
Russia
India
China
Infrastructure
0.50 1.00
Infrastructure quality ranking for BRIC countries (2013-14)
Index EUA = 1.0
1.00
0.47
0.68
0.70
0.81
- 0,50 1,00
USA
Brazil
Russia
India
China
Ports
0.50 1.00
1.00
0.35
0.88
0.86
0.98
- 0,50 1,00
USA
Brazil
Russia
India
China
Railways
0.50 1.00
1.00
0.49
0.47
0.67
0.81
- 0,50 1,00
USA
Brazil
Russia
India
China
Highways
0.50 1.00
Brazil is behind other BRIC countries quality of infrastructure
Source: World Economic Forum, The Global Competitiveness Report 2014-2015
22
Infrastructure investments are priority in Brazil However
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
24/35
1,509
1,772
1,013
598
830
643
BNDES - 2015-2018
Sobratema - 2014 - 2019
Exame - Balance 2014/2015Infrastructure
Total
Infrastructure investments are priority in Brazil. However,there are major uncertainties regarding its execution.
Expected investments in Brazil
in R$ billion
Source: BNDES – December 2014. Sobratema – 5ª Edição – 2014. Anuário Exame 2014-2015, datafrom 1,565 construction works.
23
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
25/35
24
Characteristics of 2015 backlog1
Public40%
Private46%
PPP13%
Source of funds
Industry32%
Infrastructure55%
Other13%
Per sector
1
Revenues expected in 2015 for signed contracts of December 31st
, 2014
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
26/35
In R$ million
Heavy Construction – Financial Performance
25
1 ROIC: Return on Invested Capital.
1Q15/1Q14 1Q15/4Q14 LTM1Q15/2014 CAGR 11-14
Net revenue 0% -3% 0% 17%
EBITDA -50% -21% -14% 15%
51.0
55.5
51.9 52.5 51.1
25.6 25.6
21.4
16.312.9
50.2%
46.2%
41.2%
31.0%
25.3%
17.9% 16.3%13.3%
7.0%
1Q14 2Q14 3Q14 4Q14 1Q15
Net revenue EBITDA EBITDA margin (%) ROIC¹
174.1
217.0 211.0 211.1
84.3
108.1
88.9
76.2
48.5%49.8%
42.1%
36.1%
17.2%19.2%
9.9%7.0%
2012 2013 2014 LTM1Q15
9.9%
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
27/35
Real Estate
Flying table
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
28/35
Growth drivers of the residential market: housing financing
27
¹ In 2011; ² In 2012; ³ In 2013; 4 In 2014.
Source: Valor Econômico Newspaper, with data from Abecip and Secovi
3.2%
3.5%
9.3%
14.5%
18.9%
24.0%
35.2%
68.8%
81.0%
Russia
India
Brazil
China
Chile
South Africa
Germany
USA
Reino Unido
Housing financing relative to GDP (%)
3.1%
4.1%
5.4%
6.8%
7.4%
9.3%
2009 2010 2011 2012 2013 2014
Housing financing relative to GDP (%)
in Brazil
2
2
3
1
2
2
4
1
2
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
29/35
In million families% of families per social class Number of families per income range
Growth drivers of the residential market: higher purchasingpower
28
31.729.1
27.2
60.4
1.45.9
2007 2030E
< R$ 1,000
>= R$ 1,000 and R$ 8,000
-0.4%
+3.9%
+7.1%
+33.2 millionfamilies with income
betweenR$ 1,000 to 8,000
Growth rate(%. p.a.)
10.7 6.8 3.6
38.2
28.0
20.1
37.0
49.7
58.4
8.1 9.8 11.7
6.0 5.7 6.2
2002 2009 2014E
Class A
Class B
Class C
Class D
Class E
Source: IBGE and FGV
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
30/35
The major challenge for the sector: labor
29Source: Sondagem Especial Construção Civil, April 2011, CBIC, CNI and Mills
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
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
31/35
Stages of industrialization of the construction process
30
1 Approximately 800 m2
Source: Téchne Magazine, June 2012 and Mills
System Traditional with wood Traditional with steel Deck type Flying table
Cycle betweenconcreting activities
15 days 7-10 days 6-8 days 4-7 days
Labor required1 30 people 20 people 12 people 10 people
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
32/35
31
29.8
32.1
21.3
23.4
19.1
7.6%
-33.7%
10.1%
-18.6%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0
5
10
15
20
25
30
35
2010 2011 2012 2013 2014
V a r . ( % )
L a u n c h e s ( i n R $ m i l l i o n )
1 Cyrela. Direcional, Even. Eztech, Gafisa, Helbor, MRV, Tecnisa, Rodobens, and PDG
Source: Operational reports from companies and Mills
Total launches1
in R$ billion
Launches and sales declined in 2014, with possible negativeimpact on 2015 construction activities
26.627.9
22.7
25.0
20.0
4.7%
-18.4%
9.8%
-19.9%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0
5
10
15
20
25
30
2010 2011 2012 2013 2014
V a r . ( % )
S al e s ( i nR $ mi l l i on )
Total sales1
in R$ billion
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
33/35
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
34/35
8/9/2019 Merrill Lynch LatAm Growth Opportunities - London
35/35
Mills – Investor Relations
Tel.: +55 21 2123-3700
E-mail: ri@mills.com.br
www.mills.com.br/ri