Post on 09-Jul-2016
description
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 statement,. 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 Securities and Exchange Commission - SEC.
Corporate Presentation and 1Q16 Results
3
Corporate Presentation and 1Q16 Results
Corporate Presentation and 1Q16 Results
1. Industry Overview
2. Company Overview
3. Business Units
4. Financial Profile
4
Brazil Macro Fundamentals
Corporate Presentation and 1Q16 Results
GDP Growth Inflation¹
Interest Rates² BNDES Disbursements
R$ billion
Source: Brazilian Central Bank
(1) IPCA end of period
(2) Selic end of period
In R$ million
7,5%
2,7%
1,0%
2,5%
0,1%
-3,8%
8,75%
12,25%
7,25%
10,00% 11,00%
14,25%
5,9% 6,5%
5,8% 5,9% 6,4%
10,6%
168,4
138,9
156,0
190,4 187,8
135,9
18,1
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.
5
Brazilian Outlook
Corporate Presentation and 1Q16 Results
" Meirelles argued that the solution to the economic crisis facing Brazil depends on federal government investments in
infrastructure and loans to private companies.“ O Globo. 04/29/2016
“… First, restore confidence in macroeconomics. In the second stage, take care of microeconomics, which are
investments in infrastructure, judicial issues of companies, a broad growth agenda .“ O Globo. 04/29/2016
" ( ... ) The PMDB preaches transfer to the private sector all that is possible in the field of infrastructure. ( ... ) The plan
also says the government needs to establish a new model of relations with the private sector, including modifying the
current law on bidding .“ 04/29/2016 Folha de São Paulo
" The vice –president, Michel Temer (PMDB ), defined three main axes for the formation of its eventual government:
economy, infrastructure and social area.“ 04/19/2016 . Estado de São Paulo
On May 12. 2016 the new acting President Michel Temer announced a provisory measure to create the program
Programa de Parcerias de Investimento – PPI (Investment Partnership Program), focused on job creations. with the goal
to expand investment oportunities. 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.
6
Brazil lags behind other BRIC countries
in quality of infrastructure
Corporate Presentation and 1Q16 Results
Index 1.0 (best)
0,9
0,5
0,6
0,6
0,7
USA
Brazil
Russia
India
China
Air Transport
0,8
0,4
0,6
0,6
0,6
USA
Brazil
Russia
India
China
Ports
0,7
0,2
0,6
0,6
0,7
USA
Brazil
Russia
India
China
Railways
0,8
0,4
0,4
0,6
0,7
USA
Brazil
Russia
India
China
Highways
Source: The Global Competitiveness Report 2015-2016
Infrastructure quality ranking for BRIC countries
(2014-2015)
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.
Investments in infrastructure in Brazil are historically low
2,1 1,5 0,8 0,6 0,7
0,8
0,4
0,7 0,7 0,5
2,0
1,5
0,6 0,6 0,9
0,5
0,2
0,2 0,2
0,2
5,4
3,6
2,3 2,1
2,3
1971/80 1981/89 1990/2000 2001/10 2011/14
Electricity Telecom Transportation Water and Sanitation Total (% GDP)
Source: InterB
Investment in Infrastructure Brazil (% GDP)
0%
2%
4%
6%
8%
10%
12%
14%
16%
Level of investment necessary to
maintain the capital stock per capita
Level of investment in infrastucture
necessary to reach the current levels of
South Korea and other industrialized countries of East
Asia
Level of investment necessary to boost its economic growth and approach in 15-
20 years the advanced emerging
economies
Other Contries and its investments
4-6%
5-7%
Investment in Infrastructure (% GDP)
Brazil (2011-14) = 2.3
Brazil (2007) = 1.8
Peru (2001-6) = 1.5
India (2009-10) = 4.8
Chile (2001-6) = 4.6
Peru (2008-11) = 4.2
India (2005-09) = 4.1
India (2013-17) = 6.0
Chile (2008-11) = 5.1
Thailand (2009) = 15.6
Thailand (2003) = 15.4
China (2010) = 13.4
China (2003) = 7.3
Country growth requires more investments in infrastructure. In order for Brazil to boost its economic growth and
approach in 15-20 years the quality of infrastructure of advanced emerging economies, it needs to invest in
infrastructure approximately 6% of its GDP.
Corporate Presentation and 1Q16 Results 7
New Logistics Investment Program (PIL) of the Federal Govt.
198,4
86,4
66,1
37,4
8,5
Total
Railroads
Highways
Ports
Airports
PIL - 2015
7.000
7.500
Highways
Railroads
Source: www.logisticabrasil.com.br
until 2018 69,2 35%
After 2018 129,2 65%
Estimated investments in R$ billion
Total length to be invested (new and existing
concessions - in Km)
Corporate Presentation and 1Q16 Results 8
9
Corporate Presentation and 1Q16 Results
1. Industry Overview
2. Company Overview
3. Business Units
4. Financial Profile
Corporate Presentation and 1Q16 Results
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 invested in the professional qualification, together with diversified expertise,
to deliver fast, smart and reliable responses that increase the productivity of the
works and the results of our client.
National Coverage:17 States and Federal District in 32 locations
Construction: Focus on infrastructure, Industrial, residential and commercial
projects. Engineering solutions, sales and rental of concreting and shoring,
providing services of technical planning, project and supervision related to
equipment.
Rental: Rental and sale of motorized access equipment, such as aerial
working platforms and telescopic handlers to lift workers and cargos,
respectively.
Corporate Presentation and 1Q16 Results
In 2007. two private
equity funds. managed
by IP, and Axxon,
became our shareholders.
Acquiring, each one,
10%.
Paiva construction work
Sells Events Unit
Acquired Jahu Ltda
Initiates its Rental Unit
11
Company History
Joint Venture with Aluma
Systems Inc. of Canada
(until 2001)
First Brazilian
manufacture of
formwork by license
agreement with NOE-
Schaltechnik from
Germany
50`s
Catedral da Sé
Founded on 1952.
80`s
hydroelectric power plant Lajeado
90`s
Ferrovia do Aço
2000 2010
Maracanã Stadium
Mills’ IPO
Sale of the
Industrial Services
business unit
2013
Petrobras Oil platform
2016
Capital Increase. with the
issuance of 47,528,517
new common shares, in
the total amount of R$
124,999,999.71
Cable-stayed bridge BRT Transcarioca
Corporate Presentation and 1Q16 Results
12
What We Do?
Formwork
Shoring
Access
Special systems
Corporate Presentation and 1Q16 Results
13
Strengths and Competitive Advantages
Corporate Presentation and 1Q16 Results
“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 17 States and Federal District in 32 locations;
114,000 tons of equipment in the Construction business unit vs 30,000 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%
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
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
14
Lean Organizational Structure to Face Market Challenges
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
Sérgio Kariya
CEO
Construction
4135 4263
4501
1795 2008
1558
2010 2011 2012 2013 2014 2015
Headcount as of December 31 Shareholder Breakdown¹
Free Float 63,8%
Nacht Family 34,5%
Board of Directors and
Executive Officers 0,4%
Shares in Treasury 1,3%
(1) As of April 29. 2016
Corporate Presentation and 1Q16 Results
15
Corporate Presentation and 1Q16 Results
1. Industry Overview
2. Company Overview
3. Business Units
4. Financial Profile
Corporate Presentation and 1Q16 Results
16
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 30,000 tons
Mills’ equipment volume is enough to supply
the market in Brazil and several markets in
Latin America.
Focus on larger. more complex projects with
differentiated services
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
Corporate Presentation and 1Q16 Results
17
Construction: Main Works with Mills Participation
States with Mills presence
North and Northeast
Corredor expresso Aguanambi (express
roadway)
Usina hidrelétrica São Manoel
(hydroelectric plant)
Ponte Tauape (bridge)
Vale’s S11D Project
Transposition of São Francisco River
CSN Plant
Salvador BA093 and Metropolitan
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
Central-west and South
Papuda Penitenciary
Guaíba Bridge - RS
Corporate Presentation and 1Q16 Results
18
Rental: Market Perspective
80 100 150 260 630
1540
2950
720
3218
4983
5866
8616
4567
425
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Volume of Equipment Purchased in Brazil
Source: Mills
64
165 174
1
14
Europe US CAN CHN BRA
Pote
ntia
l Mark
et
MEWP¹ Rental Fleet per 100.000 inhabitants
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.
MEWP¹: Mobile Elevating Work Platform
A measure of market maturity is to assess the ratio: MEWP rental fleet versus country
population
Corporate Presentation and 1Q16 Results
19
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
Corporate Presentation and 1Q16 Results
20
Corporate Presentation and 1Q16 Results
1. Industry Overview
2. Company Overview
3. Business Units
4. Financial Profile
Corporate Presentation and 1Q16 Results
275,5 340,4
238,2 334,9 347,9 343,8 360,3
125,4
163,9
171,6
209,1 231,5 202,6
108,3 1,5
11,3
13,9
16,2 42,3
38,2
31,5
2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM1Q16³
COGS SG&A ADD
21
Summary Financials
In R$ million
Net Revenue Costs and Expenses
Ebitda and Ebitda Margin Net profit
354.5
462.8
665.5
832.3 794.2
576.1 542.3
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
1000,0
2010¹ 2011¹ 2012¹ 2013¹ 2014 2015 LTM 1Q16
Rental Sales Technical assistance and others
168,4
217,4
339,0
419,3
340,7
161,2 142,8
47,5% 47,0%
50,9% 50,4%
42,9%
28,0% 26,3%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
400,0
450,0
2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM1Q16³
Ebitda Ebitda Margin
103,3 92,2
151,5 166,8
75,7
-60,1 -63,4
2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM 1Q16³
(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 Rorh impairment of R$26.2 million in 2015
Corporate Presentation and 1Q16 Results
22
Utilization Rate and Net Revenue
In R$ million
(*) 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.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1T10 3T10 1T11 3T11 1T12 3T12 1T13 3T13 1T14 3T14 1T15 3T15 1T16
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1T10 3T10 1T11 3T11 1T12 3T12 1T13 3T13 1T14 3T14 1T15 3T15 1T16
Average LTM 1Q16 = 6..6%
50,3 4,2 6,3
39,7
4T15 Volume Preço e Mix 1T16
59,7 5,8
4,0 49,9
4T15 Volume Preço e Mix 1T16
Average LTM 1Q16 = 47.9%
Rental
Construction
Net Revenue Volume Utilization Rate
1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16
1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16
Volume Price and Mix 4Q15
4Q15
1Q16
Volume Price and Mix 1Q16
Corporate Presentation and 1Q16 Results
23
Free Cash Flow
In R$ million
¹Before interests paid referring to debentures and investment in rental.
² Before interests paid referring to debentures
Cash Flow
158,9 198,9
295,5
383,7 372,7
288,3
80,8
-208,9
-356,5
-31,2
-154,3
116,1
281,9
79,5
2010 2011 2012 2013 2014 2015 2016
Adjusted Operating Cash Flow¹ Adjusted Free Cash Flow²
Even on an adverse scenario. the Company remains generating free cash flow
Adjusted Operating Cash Flow¹ Adjusted Free Cash Flow2
Corporate Presentation and 1Q16 Results
Railways 12.7%
Airports and ports 4.6%
Highways 21.1%
Urban Mobility 28.8%
Sanitation 5.1%
Industrial 16.2%
Power 4.6% Others
7.0%
Public 39.7%
Private 47.3%
PPP 13.0%
24
Heavy Construction: Rental Revenue Breakdown In R$ million
Per Source of Resources
R$ 23.9 million
Per sector
R$ 23.9 million
Public: resources from the government
Private: resources from the private sector.
PPP (public–private partnership) : resources from the government and the private sector
Business Unit - Construction
Corporate Presentation and 1Q16 Results
Residential 57%
Commercial 25%
Others 17%
25
Real Estate: Rental Revenue Breakdown In R$ million
Rental Revenue Breakdown
R$ 15.8 million
Business Unit - Construction
Corporate Presentation and 1Q16 Results
26
Rental: Net Revenue Breakdown In R$ million
Net Rental Revenue per Use
R$ 49.9 million
Net Revenue per Type of Service
R$ 76.4 million
Construction 48%
Non-Construction
37%
Spot 15%
Rental 65%
used equip. sales 30%
Sales 2%
Others 2%
Technical Assistance
1%
Corporate Presentation and 1Q16 Results
27
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)
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.
1.144,0 1.109,9 1.066,5
1.020,7 972,9
517,8 507,9 496,1
485,1
466,6
1.661,8
1.617,7
1.562,5 1.505,8 1.439,5
4,0%
2,0%
0,8%
-2,9%
-3,8%
-12,0%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
-100,0
100,0
300,0
500,0
700,0
900,0
1.100,0
1.300,0
1.500,0
1.700,0
1.900,0
1T15 2T15 3T15 4T15 1T16
Capital investido médio - imobilizado de locação líquido Capital investido médio - outros ROIC Average invested Capital – Net Rental PP&E Average Invested Capital - others
1Q15 2Q15 3Q15 4Q15 1Q16
Corporate Presentation and 1Q16 Results
28
Main Initiatives
ROIC LTM
-3.8%
Adjusted ¹-1.0%
NOPAT
(55.2)
(15.3)
Net Revenue
542.3
COGS
(199.2)
SG&A²
(257.4)
(200.3)
Depreciation: (166.8)
TI (rate of 30%) 24.3
7.2
Rohr Dividends 1.5
Invested Capital
1,439.5
Net Rental PP&E
972.9
Others
466.6
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
Efforts to increase presence in the
international market
Sales of assets aiming at to real estate
market
Strengthen relationships with mid-sized
construction companies
Focus on non-construction markets for the
Rental unit
Continuous search for operational efficiency
and cost reduction
Closing of five branches of the Construction
unit in progress
Initiatives ROIC Decomposition
In R$ million
Corporate Presentation and 1Q16 Results
• Construction: -5.3%
• Rental: 5.1%
29
Summary Financials
In R$ million
2010¹ 2011¹ 2012¹ 2013¹ 2014² 2015³ LTM 1Q16³
Net Revenues
Mills 354.5 462.8 665.5 832.3 794.2 576.1 542.3
Construction 259.4 287.4 412.0 474.9 423.4 283.0 252.4
Rental 95.1 175.4 253.5 357.3 370.8 293.2 289.9
Ebitda
Mills 168.4 217.4 339.0 419.3 340.7 161.2 142.8
Construction 117.4 123.8 197.8 212.3 153.5 32.2 23.4
Rental 51.0 93.6 141.2 207.0 196.7 132.6 124.9
Others -9.5 -3.7 -5.5
Ebitda Margin
Mills 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%
Equipment Rental CAPEX
Mills 308.9 395.1 271.2 463.6 166.5 11.6 10.7
Construction 178.3 232.3 110.3 196.4 62.4 11.6 10.7
Rental 130.6 162.8 160.9 267.2 104.2 0.0 0.0
Covenants
EBITDA*/Net financial results >= 2.0 7,5 9,1 9,0 5,4 3,0
2.4
Net Debt/EBITDA* <=
3.0 1.6 1.2 1.4 1.5 2.1 1.5
(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 Rorh impairment of R$26.2 million in 2015
Corporate Presentation and 1Q16 Results
30
Indebtedness
In R$ million
424
173 150 106 106
39
Cash position 2016 2017 2018 2019 2020+
574.3 56.8 631.1 423.5
207.5
Principal Interests Gross Debt Cash Net Debt
Principal Amortization Schedule
23,4%
74,3%
2.3%
IPCA CDI TJLP
31,2%
68,8%
Short Term Long Term
R$ 90 million already
paid in April/16
We do not have foreign currency exposure.
Indebtedness on 03/31/2016
17.1% 31.0% 21.9% 21.9% 8.0%
Participation of the balance due (principal) excluding payment made in April/16
Gross Debt Profile
Corporate Presentation and 1Q16 Results
Mills – Investors Relation
Phone: +55 (21) 3924-8768
E-mail: ri@mills.com.br
www.mills.com.br/ri