Ita? BBA - 8th annual Latam Conference*

8/20/2019 Ita? BBA - 8th annual Latam Conference*

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November 2015

Corporate Presentation


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1

• Since 3Q14, organizational structure was resized, with annualized personnel

savings estimated at R$ 24 million per year¹

• Non-recurring layoff costs of R$ 3.1 million in 3Q15

Ricardo GusmãoCommercial Officer

for Construction

Avelino GarzoniEngineering and

OperationsOfficer

Marcelo YamaneRental Officer CFO and IRO

Deise VieiraHuman Resources

Officer

Sérgio KariyaCEO

Changes in the organization structure

¹Excluding costs with layoffs

Organization structure as of September 2015:

Construction


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• Market leader with more than 60 years ofexperience

• Focus on: infrastructure projects, industrial,residential and commercial construction works.

• Products: engineering solutions and rental offormworks and shoring

• Services: planning, designing, technicalsupervision, equipment and related services

• Clients:

Construction

• Market leader; started in 2008

• Focus on: civil construction. Industry, retail eothers

• Products: rental and sale of motorized accessequipment, such as aerial work platforms andtelescopic handlers

• Elected "Best Company for Access of the Year"by the International Awards for Powered

Access (IAPA Awards) for the year of 2011

Rental

Adjustments aiming to increase synergies between HeavyConstruction and Real Estate operations and markets

The consolidation of the two business units have generated the “Construction” business unit

2


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3

Mills – 3Q15LTM Financial highlights per business unit

In R$ million

EBITDA margin ROIC

17.6% -3.1%

43.5% 5.2%

30.2% 0.8%306.7

133.5

323.3

56.8

Revenue EBITDA

Construction

Rental

51%

30%49%

70%


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¹ Reclassified excluding the Industrial Services business unit for comparison.

² ROIC: Return on Invested Capital.

4

Financial Performance1

In R$ million

3Q15/3Q14 3Q15/2Q15 LTM3Q15/2014 CAGR 12-14

Net revenue -29% -8% -21% 9%

EBITDA -47% -33% -41% 0%

Net earnings n.d. 110% n.d. -35%

191.5181.9

163.9

147.9136.5

66.755.6

47.4 52.135.1

3.2

-6.2-14,5

-8.2-17.2

34.8%

30.6% 28.9%

35.3%

25.7%

9.4%

6.6%4.0%

2.0% 0.8%

3T14 4T14 1T15 2T15 3T15

Receita Líquida EBITDA Lucro Líquido Margem EBITDA (%) ROIC

665.5

832.3794.2

630.1

339.0

403.1

335.7

190.3151.5 172.6

64.3

-46,1

50.9%48.4%

42.3%

30.2%

14.7% 14.1%

6.6%

0.8%

2012 2013 2014 LTM3T15


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ADD reached 5.9% of net revenue in 3Q15

5

0.3%

1.7% 2.1%2.0%

5.3%

12.8%

1.2%

5.9%

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

2010 2011 2012 2013 2014 1Q15 2Q15 3Q15

2010-2014 average = 2.3%

As % of net revenues

Changes in allowance for doubtful debts

(ADD)

6.8%

Ex clients under investigation

4.2%5.9%

-0.8%


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159

199

296

384 373

310

79102 105

86 9268 65

-209

-357

-31

-154

116

207

-13

11

7445

7037 55

Adjusted¹ operational cash flow and free² cash flow

R$ million

Adjusted¹ operational cash flow Free² cash flow

Cash generation

6

1 Net cash generated by the operating activities minus net cash applied in investment activities


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193174

150

106 106

38

Cash

position

2016 2017 2018 2019 2020

Principal amortization scheduleIn R$ million

57447 193

428

Principal Interests Cash

Position

Net Debt

Debt, as of September 30, 2015In R$ million

Debt profile

7

Credit lines available¹,2

Used R$ 15.9 million

Not used R$ 328.8 million

¹As of September 30, 20152 Unsecured overdraft account+ Secured bank credit lines


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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

1Excluding R$ 40.1 million of non-recurring effects from 1Q15 , R$ 44.9 million from 2Q15 and R$ 34.6 million from 3Q15

5.9

4.9

3.9

4.5

3.3

4.0

2.9

3.5

3Q14 4Q14 1Q15 1Q15¹ 2Q15 2Q15¹ 3Q15 3Q15¹

1.51.7

1.8

1.6

2.2

1.8

2.3

1.9

3Q14 4Q14 1Q15 1Q15¹ 2Q15 2Q15¹ 3Q15 3Q15¹


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Semi-new equipment sales effort

Rental

• Sales of semi-new equipment totaled R$ 13.8 million in 9M15

• Rental equipment planned sales amount to € 8.0 million for 2H15 and 1Q16;2015 shipments scheduled for October and November; remaining equipment to

be shipped by February 2016

Construction:

• Sales of semi-new equipment totaled R$ 6.7 million in 9M15

• International Market: searching for distribution channels

• Brazilian market: plans to develop local sales partners

8


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Business Units


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Rental

Aerial work platforms


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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) recommend the use of aerial platforms to lift

people, increasing safety and productivity in the work site


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1,889

403

277233

72

Mobile ladders Vehicles with lifttables, dock

levellers, ramps andflying tables

Fixed scaffolding Mobile scaffolding Aerial platform

13

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


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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

14


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0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

USA + Canada Latin America Europe Asia Middle East and Africa

Booms Scissor Lift Others

World fleet of motorized access equipment estimated at 1.1million units, being half of it in North America

Estimated annual market for semi-new equipment accounts for 5% of world fleet

Size of motorized access fleet# of machines

Source: IPAF Powered Access Rental Market report, produced by Ducker

15


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Brazil presents low penetration in motorized access market,since it is still an incipient market

0

50

100

150

200

250

Source: IPAF Powered Access Rental Market report, produced by Ducker

Penetration stage in motorized access market# motorized access machines per 100 thousand habitants

16


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Construction sector remains the main user of Mills’

motorized access equipment

17

Construction72%

Industry19%

Spot9%

Rental revenue by useIn 3Q15

Rental85%

Technical Assitance

2%

Sales7%

Others6%

Net revenues per type of serviceIn 3Q15


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Source: Mills

Distribution of Mills fleet by age% Fleet in number of pieces of equipment

70% of Mills fleet is less than 48 months old, and do notrequire rebuilding in next three years

months

18%

52%

26%

4%

0%

10%

20%

30%

40%

50%

60%

< 24 24-48 48-72 72-96

18


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Rental – Financial Performance

19

1 ROIC: Return on Invested Capital.

In R$ million

3Q15/3Q14 3Q15/2Q15 LTM3Q15/2014 CAGR 12-14

Net revenue -24% -8% -17% 21%

EBITDA -47% -33% -32% 18%

91.0

83.979.6

74.5

68.7

50.0

33.2 34.439.4

26.4

54.9%

39.6%

43.3%

53.0%

38.4%

14.5%

11.5% 8.8% 7.4%5.2%

3Q14 4Q14 1Q15 2Q15 3Q15

Net revenue EBITDA EBITDA margin (%) ROIC¹

253.5

357.3370.8

306.7

140.8

207.0196.7

133.5

55.6%57.9%

53.0%

43.5%

18.2% 18.2%

11.5%

5.2%

2012 2013 2014 LTM3Q15


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Construction

Laguna bridge – Santa Catarina


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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.

21


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Logistics investment program (PIL)

66

86

9

37

198

42

91

0

54

187

0 50 100 150 200 250

Highways

Railroads

Airports

Ports

Total

PIL - 2012 PIL - 2015

7,500

10,000

6,974

7,537

0 5000 10000 15000

Highways

Railroads

Estimated investments

in R$ billion

Foreseen expansionin Km

Source: Valor Econômico newspaper, June 10, 2015

22

until 201835%

After201865%


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Of the R$ 66 billion investments planned for highwayconcessions, approximately 75% should be auctioned in2015/16

23

6.3

2.5

2

3.2

1.1

2.1

3.2

3.1

1.9

1.6

4.2

4.5

3.1

4.1

6.6

BR-364 (RO/MT)

BR-262 (MS)

BR-267 (MS)

BR-101/116/290/386 (RS)

BR-101 (SC)

BR-280 (SC)

BR-470/282 (SC)

BR-101/493/465 (RJ/SP)

BR-262/381 (MG)

BR-101 (BA)

BR-101/232 (PE)

BR-476 /153/282/480 (PR/SC)

BR-364 (GO/MG)

BR-364/060 (MT/GO)

BR-163 (MT/PA)

InvestmentsIn R$ billion

2 0 1 5

2 0 1 6

Source: Mills, Valor Setorial –

Infraestrutura, June 2015


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2015 2016

aug sep oct nov dec jan feb mar apr may jun jul aug sep

Signaturesof

contracts

Auction

AuctionPublicNotice

Public

Hearing

Studies Construction

Estimated Schedule of Logistics investment program

Construction jobs should start at the end of 2016, presentingrevenues opportunity for Mills in 2017 onwards

24


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In 2015, civil construction GDP should present largerreduction than the previous year

-10%

-5%

0%

5%

10%

15%

2009 2010 2011 2012 2013 2014 1H15 2015E

Total GDP Civil construction GDP

Source: Bacen (2009-2013), IBGE (2014 e 1H15) and estimatives from Bloomberg and Sinduscon

GDPYoy variation (%)

25


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26

Heavy Construction - Rental revenue breakdown in 3Q15

Industry12%

Infrastructure 75%

Others13%

Per sector

R$ 33.4 million

Public47.8%

Private36,8%

PPP15.4%

Source of funds

R$ 33.4 million


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27

Demand for metallic formworks is more sensitive to cycles,while metallic shoring is more resilient

Source: Criactive

6.2%8.7%

11.4%8.2%

5.4% 4.7% 5.1%

70.2%67.8%

71.2%

76.4%

80.1%83.3% 84.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013 2014 2015

Metallic formwork Metallic shoring

Evolution of use in built-up areas

in %


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28

4.6

5.2

4.0 3.7

2.9

2.611.9%

-22.6%

-7.6%

-21.1%

-12.7%

-65%

-45%

-25%

-5%

15%

35%

55%

75%

95%

-

1.0

2.0

3.0

4.0

5.0

6.0

3Q10 3Q11 3Q12 3Q13 3Q14 3Q15

V a r . ( % )

L a u n c h e s ( i n R $ b i l l i o n )

1 Cyrela, Direcional, Even, Gafisa, Helbor, MRV and Rodobens.

Source: Operational reports from companies and Mills

Total launches1

in R$ billion

Launches and sales continued to decline in 3Q15

4.1

4.54.4

4.2

3.4 3.3

9.2%

-2.0% -4.0%

-19.9%

-2.2%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

3Q10 3Q11 3Q12 3Q13 3Q14 3Q15

V a r . ( % )

L a u n c h e s ( i n R $ b i l l i o n

)

Total sales1

in R$ billion

Presentation of 3Q15 Results – 11/05/2015


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Stages of industrialization of the construction process

29

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


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Residential49%

Commercial39%

Others12%

Rental revenue per segment

R$ 22.9 million

Real Estate - Rental revenue breakdown in 3Q15

30 Presentation of 3Q15 Results – 11/05/2015


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31

Construction – Financial Performance¹

3Q15/3Q14 3Q15/2Q15 LTM3Q15/2014 CAGR 12-14

Net revenue -33% -8% -24% 1%

EBITDA -48% -32% -59% -18%

Presentation of 3Q15 Results – 11/05/2015

¹ It does not exclude non recurring items.

100.5 98.0

84.3

73.467.7

16.7 22.413.0 12.7

8.716.6%

22.9% 15.4%17.3%

12.8%

4.4%1.2%

-2.2% -3.1%

3Q14 4Q14 1Q15 2Q15 3Q15

Net revenue EBITDA EBITDA margin (%) ROIC

412.0

474.9

423.4

323.4

197.7 201.9

139.0

56.8

48.0%

42.5%

32.8%

17.6%

4.4%

-3.1%

2012 2013 2014 LTM3Q15


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Mills – Investor Relations

Tel.: +55 21 2123-3700

E-mail: [email protected]

www.mills.com.br/ri

Ita? BBA - 8th annual Latam Conference*

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