UBS Latam Equities Ideas
Transcript of UBS Latam Equities Ideas
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Corporate PresentationJune 2013
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Disclaimer
2
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 Comisso de Valores Mobilirios (CVM).
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Agenda
Executive Summary
Mills business segments
Growth plan
3
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182
90
250
115
214
20
273
150
920.0
374.1
0
100
200
300
400
500
600
700
800
900
1000
Net Revenue EBITDA
Rental
Industrial Service
Jahu - Residential andCommercial
Heavy Construction
4
30%
23%
27%
20%
% Total
1Q13LTM Financial highlights per business segment
40%
5%
31%
24%
% Total
Total
54.9%
9.1%
45.9%
49.3%
40.7%
EBITDAMargin (%) ROIC (%)
18.0%
4.8%
14.9%
17.7%
14.7%
1 1Q13 LTM Last twelve months ended March 31, 2013.
Mills Financial performance per business segment
R$ million
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199.1211.1
222.2 222.2
246.8239.9
86.2 84.496.1
90.4 91.7102.0
32.739.2 38.0 34.7
41.6 39.3
43.3%
40.0%
43.2%40.7%
37.1%
42.5%
15.1% 13.6% 15.8%14.5%
14.5%14.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0.0
50.0
100.0
150.0
200.0
250.0
300.0
1Q12 2Q12 3Q12 3Q12* 4Q12 1Q13
Net Revenue EBITDA Net Earnings EBITDA Margin ROIC
5
MillsFinancial performance
In R$ millions
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 consideringa theoretical 30% income tax rate.
* Excluding the positive impact of the provisions reversal in the amount of R$ 6.8 million in 3Q12
1Q13/1Q12 + 20.5% + 18.2% - 80 bps - 20 bps+ 20.2%
1Q13/4Q12 - 2.8% + 11.2% + 540 bps + 40 bps- 5.7%
550
678
879
195
238
358
104 92
152
35.0% 35.0%
41.0%
21.0%
12.3% 14.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
100
200
300
400
500
600
700
800
900
1000
2010 2011 2012
CAGR 10-12 +26.5% + 35.7% +21.1%
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Agenda
Executive Summary
Mills business segments
Growth plan
6
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Heavy Construction
BRT Transcarioca - RJ
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39.3
41.9
45.5 45.547.3
47.5
18.9
21.2
24.122.8
20.2
24.3
48.0%
50.6% 52.9%50.2%
42.7%
51.3%
16.6%
17.8%19.7% 18.3%
14.8%
18.6%
0%
10%
20%
30%
40%
50%
60%
0
5
10
15
20
25
30
35
40
45
50
1Q12 2Q12 3Q12 3Q12* 4Q12 1Q13
Net Revenue EBITDA EBITDA Margin ROIC
Heavy Construction Financial performance
8
In R$ million
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 atheoretical 30% income tax rate.
* Excluding the positive impact of the provisions reversal in the amount of R$ 1.5 million in 3Q12
+ 20.7% + 29.0% + 330 bps + 200 bps
+ 0.4% + 20.7% + 860 bps + 380 bps
1Q13/1Q12
1Q13/4Q12
+ 6.2% + 7.0%CAGR 10-12
154
132
174
74
58
84
48%
44% 48%
24.1%
12.1%
17.2%
0%
10%
20%
30%
40%
50%
60%
0
20
40
60
80
100
120
140
160
180
200
2010 2011 2012
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Important contracts per stage in the evolution of monthly revenue from the heavy
construction projectsNew
contracts*Contracts with
growing volume ofequipment
Contracts with highvolume of equipment
Contracts in thedemobilization process
Source: Mills
Time
RevenueIndex
(Basis100=Maximumm
onthlyrevenuein
thelifeofconstruction)
Newcontracts*
New phases ofBelo Monte hydroeletric powerplantOeste Leste railway New stretches of Subway lines 4 and 5 - SP New stretches of Monorail lines 2 and Silver
New stretches of Fortaleza BRT and airport BRT Belo Horizonte BRT Sul Distrito Federal
New stretches ofNorte-Sul railway Expansion of theAtlntico Sulshipyard Navy base shipyardParaguau shipyard
Duplication of the BR-101
NortheastVales mine and railway Companhia Siderrgica de Pecm steel mill
Belo Monte hydroelectricpowerplantNorte-Sulrailway Monorail line Gold Subway lines 4 RJ and 5 SP Guarulhos airport Braslia airport BRT Fortaleza Light rail Cuiab East Ring road SPAu portPorto Maravilha
Surroundings of the Maracanstadium Surroundings of theCorinthians Arena
Jirau, Colderand Teles Pireshydroelectric powerplantsAbreu e Lima refineryComperjrefinery
Monorail line Silver - SP
Viracopos airport Manaus airport BR-448 BRT Transcarioca Metropolitan arch RJParanaenses arena
Beira-Rio stadium
Subway line 2 - SP CSN steel plantTransordestina railway BRT Belm
Serra Leste mine
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The construction work related to World Cup and Olympic events represented 25%
of the Heavy Construction business segments 1Q13 revenue
10
Source: 4th 2014 World Cup Report and Mills
1Q13 RevenueR$ 47.5 million
World Cup and
Olympics25%
Industry31%
Infrastructure34%
Others9%
4.2
2.9
9.0
6.8
0.7
Stadiums Urban mobility Airports Ports
In progess
Concluded
Investments in Infrastructure for the 2014 World CupTotal: R$ 23.6 bil lion
1 7 of the 30 airport projects were concluded, however there is no information abouttheir investments
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18.5
23.5
- 20 40 60
Up to 20 years
In the f irst 5 years
HighwaysIn R$ billion
53.5
133.7
- 30 60 90 120 150
Up to 20 years
In the first 5years
TotalIn R$ billion
Total: R$ 42 billion(7,500 km)
Total: R$ 91 billion(10,000 km)
Total: R$ 187 billion
New logistic investment program
54.2
- 20 40 60
Colunas2
Colunas3
PortsIn R$ billion
Total: R$ 54 billion
Source: Programa de investimento em Logstica,August 2012 and O Globo newspaper
35.0
56.0
- 20 40 60
Colunas3
Colunas2
RailwaysIn R$ bill ion
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Jahu - Residential and Commercial
Reserva do Paiva Pernambuco
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52.5
58.960.5 60.5
66.0 64.9
26.3 27.2
33.8
29.426.1
27.7
50.1%
46.1%
55.9%
48.6%
39.6% 42.8%
15.6% 14.8% 20.2%
16.9%12.6% 12.8%
0%
10%
20%
30%
40%
50%
60%
0
10
20
30
40
50
60
70
1Q12 2Q12 3Q12 3Q12* 4Q12 1Q13
Net Revenue EBITDA EBITDA Margin ROIC
Jahu Financial performance
13
In R$ millions
1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROICwas calculated considering a theoretical 30% income tax rate.
* Excluding the positive effect of R$ 5.3 million of tax contingency reversal in 3Q12
1Q13/1Q12
1Q13/4Q12
+ 23.6% + 5.5% - 730 bps - 280 bps
- 1.8% + 6.1% + 320 bps + 20 bps
CAGR 10-12 + 50.5% + 60.7%
105
156
238
44
66
113
42% 42%48%
23.5%
14.3%
15.7%
0%
10%
20%
30%
40%
50%
60%
0
50
100
150
200
250
2010 2011 2012
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19%12%
17%
7%
18%
32% 45% 36%
43%
32%
32%
34%34%
36% 37%
9%
3%2%
1% 1%
8% 6% 11% 13% 12%
45.3 48.5 49.2 49.9 53.3
1Q12 2Q12 3Q12 4Q12 1Q13
Others
Industrial
Commercial
Residential - others
Residential - listed
companies
14
Commercial projects contributed 37% of 1Q13 equipment rental revenues
In R$ million
Residential51 %
Residential57 %
Residential53 %
Residential50%
Residential50%
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Jahu Revenue Breakdown
100%
85%
61%
49%
15%
39%
51%
2009 2010 2011 2012
New branches
Established branches
1 Branches opened since November 2009
Growth drivers in the residential market: geographic expansion
1
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16Source: BACEN and FGV
Housing FinancingIn R$ million
Growth drivers of the residential market: housing financing
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10.76.8 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
Higher purchasing power of the Brazilian population
17
-0.4%
+3.9%
+7.1%
In million families
+33.2 millionfamilies with income
betweenR$ 1,000 to 8,000
Growth rate(%, p.a.)
Source: IBGE and FGV
Growth drivers of the residential market: higher purchasing power
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18Source: Sondagem Especial Construo Civil, April 2011, CBIC , CNI, Tchne Magazine, June 2012 and Mills
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
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
System Traditionalwith wood
Deck Type FlyingTable
Cycle betweenconcreting activities
15 days 6-8 days 4-7 days
Growth drivers of the residential market: industrialization of the construction process
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19
Great penetration of concrete wall for the Minha Casa, Minha Vidaprogram
Use of concrete wall should reach 40% of the properties of the Minha Casa, Minha Vida program in2014/15; escalating the sales potential of our product Easy Set formwork.
3%
97%
2010/11
15%
85%
2012/13
40%
60%
2014/15
30,000 HU 150,000 HU 400,000 HU
Concrete wall construction Construction using other systems
Source: Criative
R t l M t i d A E i t
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Rental Motorized Access Equipment
Castelo Stadium Fortaleza, CE
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56.5 55.4
67.4
74.276.1
34.931.4
38.0 36.9
43.6
61.8%
56.6% 56.5%
49.8%
57.3%
20.3%
16.3%
16.3% 16.9%19.1%
0%
10%
20%
30%
40%
50%
60%
70%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
1Q12 2Q12 3Q12 4Q12 1Q13
Net Revenue EBITDA EBITDA Margin ROIC
Rental Financial Performance
21
In R$ million
1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROICwas calculated considering a theoretical 30% income tax rate.
+ 34.8% + 24.9% - 450 bps - 120 bps
+ 2.6% +18.0% + 750 bps + 220 bps
1Q13/1Q12
1Q13/4Q12
+ 63.3% +66.4%CAGR 10-12
95
175
253
51
94
141
54%53%
56%
19.2%
16.5%
18.2%
0%
10%
20%
30%
40%
50%
60%
0
50
100
150
200
250
300
2010 2011 2012
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Rental Awards
22
2012 IDF Award (ndice de Desempenho Fornecedor- SupplierPerformance Index) from Vale: best material supplier for Vale inBrazil.
2011 Best Company for Access of the Year" by the International
Awards for Powered Access (IAPA Awards)
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23
Rental Revenue Breakdown
69%
42% 38%
31%
58%62%
2009 2010 2011 2012
New branches
Established branches
1 Branches opened since January 2010
Growth drivers in the motorized access equipment market: geographic expansion
1
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Motorized Access Equipment Rental market outlook
24
Current underutilization of motorized access equipment in Brazil and favorable regulationindicate 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
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In 2012, the Brazilian fleet of motorized access equipment grew 32.1% compared to 2011
25Source: Mills and Yengst Associates
+34.9%
+46.2%
+32.1%
+13.9% p.a.
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26
Industrial Services
Estaleiro Mau (shipyard) Niteri, RJ
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Industrial Services Financial performance
27
50.954.8
48.8
59.3
51.5
6.24.7
0.1
8.46.3
12.1%
8.5%
0.2%
14.2%12.2%
7.5%
3.9%
-6.2%
13.3%
8.9%
-10%
-5%
0%
5%
10%
15%
20%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
1Q12 2Q12 3Q12 4Q12 1Q13
Net Revenue EBITDA EBITDA Margin ROIC
In R$ millions
1 ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROICwas calculated considering a theoretical 30% income tax rate.
+ 1.2% + 2.0% + 10 bps + 140 bps
- 13.2% - 25.3% - 200 bps - 440 bps
1Q13/1Q12
1Q13/4Q12
+ 4.6% - 13.8%CAGR 10-12
195
215 214
26
21 19
13%
10%
9%
16.0%
5.9%
4.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
50
100
150
200
250
2010 2011 2012
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Agenda
Executive Summary
Mills business segments
Growth plan
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29
in R$ million
Capex
7447 51
2254
89
104185
60
25
112
112
25
17
5
0
6
6
131
163
161
73
124
27415
18
21
8
349
430
297
128
296
481
0
100
200
300
400
500
600
2010 2011 2012 1Q13 Previous Revised
Rental
Industrial Services
Jahu - Residential andCommercial
Heavy Construction
Our 2013 capex budget for rental equipment was revised upward to R$ 481 million
2013 Capex Budget
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30
1.0x
0.7x0.7x
0.8x
1.9x 1.9x
1.7x
1.5x
1.3x
1.2x 1.2x 1.2x
0.0
0.5
1.0
1.5
2.0
2.5
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Net Debt/LTM EBITDA
Target = 1.0x
Capturing opportunities maintaining the commitment to low leverage
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31
Evolution of the number of branches
5 6 6 6 6 68
5 6
14 1516
16
4
44
66
7
7
44
14
1617
18
2007 2008 2009 2010 2011 2012 Colunas1 1Q13
Rental
Industrial Services
Jahu - Residential and
Commercial
Heavy Construction
9
1920
40
43
46
49+3
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Mills Investor Relations
Tel.: + 55 21 2123-3700E-mail: [email protected]
www.mills.com.br/ri
mailto:[email protected]:[email protected]