4q14 presentation of results
TRANSCRIPT
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March 11th, 2015
Presentation of 4Q14 and 2014Results
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210.1 207.8 213.0
191.5 191.5181.9
102.4 107.5 105.9
66.779.0
55.645.633.9 33.4
3.211.3
-6.2
48.7% 51.7%49.7%
34.8%
41.3%
30.6%
14.1% 13.8% 12.3%9.4% 9.9%
6.6%
4Q13 1Q14 2Q14 3Q14 3Q14³ 4Q14
Net revenue EBITDA Net earnings EBITDA margin (%) ROIC²
2
Financial Performance 1
¹ Reclassifiedexcluding 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
Presentation of 4Q14 Results – 03/11/2015
In R$ million
4Q14/4Q13 4Q14/3Q14³ 2014³/2013 CAGR 11-14³
Net revenue -13% -5% -5% 20%
EBITDA -46% -30% -13% 17%
Net earnings -114% -155% -53% -4%
462.8
665.5
832.3794.2 794.2
217.4
339.0
403.1
335.7 350.2
92.2
151.5 172.6
64.3 81.7
47.0% 50.9%48.4%
42.3%44.1%
12.3%14.7% 14.1%
7.0% 7.0%
2011 2012 2013 2014 2014³
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Rental82%
Technicalassistence
1%
Sales10% Others
7%
Per service type
HeavyConstruction
29%
Real Estate25%
Rental46%
Per business unit
3
Net revenue totaled R$ 181.9 million in 4Q14
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We have a broad client base
4 Presentation of 4Q14 Results – 03/11/2015
Indicators HeavyConstruction Real 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%
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5
EBITDA reduction of R$ 11 million qoq
79
3.68.4
0.3 4.68.9
1.1 2.3 3
55.6
0
10
20
30
4050
60
70
80
90
In R$ millionChange in EBITDA
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4.2%
6
Historical level of Mills’ ADD represented 2.3% of net revenue
0.3%
1.7%
2.1% 2.0%
5.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2010 2011 2012 2013 2014
2010-2014 Average
As % of Revenues
Changes in allowance for doubtful debts (ADD)
Presentation of 4Q14 Results – 03/11/2015
Excluding creditdowngrade
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Positive cash flow of R$ 116 million in 2014, of which R$ 119million was in the second half of 2014
7
(340)
(219)
(31)
(154)
(13)
11
7445
116
(400)
(300)
(200)
(100)
-
100
200
2010 2011 2012 2013 1Q14 2Q14 3Q14 4Q14 2014
Free cash flow 1
1 Net cash generated by the operating activities minus net cash applied in investment activities
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7447 51
106
48
104
185
60
90
19
131
163
161
267
105
15
18
20
36
27
324
413
292
499
199
2010 2011 2012 2013 2014
Rental
Real Estate
Heavy Construction
In R$ millionCapex ¹
Mills invested R$ 172 million in rental equipment in 2014, of which R$ 17 million in 4Q14
8¹ Reclassified excluding Industrial Services business unit, for comparison.
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72 57 34 38 31 27
134 174150
106 106
38
194206
231
184
144 137
65
Cashposition
2015 2016 2017 2018 2019 2020
Interest Principal
Debt profile
Debt amortization schedule 1in R$ million
9
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
745
194552
Gross debt Cash position Net debt
Debt 1in R$ million
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Debt indicators
10
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.
8.9x
8.0x
7.1x
6.1x
5.2x
4Q13 1Q14 2Q14 3Q14 4Q14
EBITDA/Net fincancial results
1.5x 1.5x 1.5x 1.5x1.6x
4Q13 1Q14 2Q14 3Q14 4Q14
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The new organizational structure aims to improve operationalefficiency and synergy from the Heavy Construction and RealEstate business units
Apresentação de Resultados 4T14 – 11/03/2015
CEO
HeavyConstructionCommercial
Real EstateCommercial Operations Engineering
Projects
Field Operation
Rental
11
New Organizational Structure
Maintenance
Inventoryhandling and
control
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Actions to mitigate risks with companies under ongoinginvestigations
• Diversify new rental contracts, regarding clients and projects• To prioritize projects with lower risk of paralization
• To reduce or maintain current customer credit risks exposure
• To diversify our client base
• Strengthen relationship with medium-size companies from the infrastructure
market
• Increase Rental’s market share in the non -construction market
• Preserve cash and expenses reduction where there is no impact on
operations
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97.2 97.3 98.691.0
83.9
56.0 58.4 55.150.0
33.2
57.7%60.1%
55.8% 54.9%
39.6%
18.2% 17.8%16.2% 14.5%
11.5%
4Q13 1Q14 2Q14 3Q14 4Q14
Net revenue EBITDA EBITDA margin (%) ROIC¹
Rental – Financial Performance
13
1 ROIC: Return on Invested Capital.
In R$ million
4Q14/4Q13 4Q14/3Q14 2014/2013 CAGR 11-14
Net revenue -14% -8% 4% 28%
EBITDA -41% -34% -2% 28%
Presentation of 4Q14 Results – 03/11/2015
175.4
253.5
357.3 370.8
93.6
141.2
201.2 196.7
53.4% 55.7% 56.3%
53.0%
16.5%18.2% 18.2%
11.5%
2011 2012 2013 2014
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Utilization rate increased to the detriment of price in 4Q14
14
Changes in revenuein R$ million
Fonte: Mills
91
3.8 11.7
0.8
83.9
0
10
20
30
40
50
60
70
80
90
100
3Q14Revenues
RentedVolume
Price andmix
OthersRevenues
4Q14Revenues
Utilization RateIn %
0%
20%
40%
60%
80%
100%
2014 Average = 63%
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Appreciation of our work: Nominated again to IAPA Awards
2015: Among the three finalists for
“Powered Access Pioneer”
2014: We were awarded in “IPAF TrainingCenter of the Year” category
2012: We were awarded in “Access Rental
Company of the Year”
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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
16Source: Brazilian Market – 2014, estimated by Mills Mills – 2014, United Rental - 2014 and Ramirent - 2014
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8
11
16
21
30
34
38%
45%
31%
43%
13%
0%
10%20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014
# Machines YoY (%)
17
Motorized acess equipment fleet
In thousands of units
Source: Mills
4,000 motorized access units came onto the Brazilianmarket in 2014
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Safety - Growth driver in the motorized access equipmentmarket
Source: (1) EUA: Osha – data of 2010 and (2) Brazil : BOLETIM SIRENA – Accidents in workanalysis -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
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1,889
403
277 233
72
Mobile ladders Vehicles with lifttables, dock
levellers, ramps andflying tables
Fixed scaffolding Mobile scaffolding Aerial platform
19
Number of accidents by type of access equipmentEUA – 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
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Evolution in Rental’s number of units
Geographic expansion - Growth driver in the motorizedaccess equipment market
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4 4
14
16 17
26
30
2008 2009 2010 2011 2012 2013 2014
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58.6
51.055.5
51.9 52.5
29.325.6 25.6
21.4
16.3
49.9%50.2%
46.2%41.2%
31.0%
19.2% 17.9%16.3%
13.3%9.9%
4Q13 1Q14 2Q14 3Q14 4Q14Net revenue EBITDA EBITDA margin (%) ROIC¹
In R$ million
Heavy Construction – Financial Performance
22
1 ROIC: Return on Invested Capital.
4Q14/4Q13 4Q14/3Q14 2014/2013 CAGR 11-14
Net revenue -10% 1% -3% 17%
EBITDA -44% -24% -18% 15%
Presentation of 4Q14 Results – 03/11/2015
131.6
174.1
217.0211.0
57.8
84.3
108.1
88.9
43.9%48.5% 49.8%
42.1%
12.1% 17.2%
19.2%
9.9%
2011 2012 2013 2014
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Utilization rate decrease qoq was partially offset by thepositive effect of price and mix
23
Change in revenuein R$ million
Source: Mills
51.9
2.61.6 1.6
52.5
0
10
20
30
40
50
60
3Q14Revenues
RentedVolume
Price andmix
OthersRevenues
4Q14Revenues
Utilization RateIn %
0%
20%
40%
60%
80%
100%
2014 Average = 68%
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Characteristics of 2015 backlog 1
Presentation of 4Q14 Results – 03/11/2015
Public40%
Private46%
PPP13%
Source of funds
Industry32%
Heavy Construction
55%
Others13%
Per sector
1Revenues expected in 2015 for signed contracts of December 31st., 2014
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Source: Credit Suisse report about infraestructure in Brazil “ The Brazilian Infraestructure: It’s ‘now or never ’ ” from July 2013 and Inter.B (2013)
2.031.48
0.63 0.620.90 1.1
0.80
0.43
0.73 0.640.50 0.5
2.13
1.47
0.760.67
0.74 0.8
0.46
0.24
0.150.19
0.21 0.21
5,4
3,6
2,3 2,22.4 2.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1971-80 1981-89 1990-2000 2001-10 2011-12 2013
Sewage and sanitation
Energy
Telecom
Logistics
Infrastructure investmentsin % of GDP
Infrastructure investments varied from 2.0 to 2.5% of BrazilGDP in the last 25 years, below the estimated % required totheir maintainance
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Infrastructure investments are priority in Brazil However
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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 Brazilin R$ billion
Source: BNDES – December 2014, Sobratema – 5ª Edição – 2014, Anuário Exame 2014-2015, datafrom 1,565 construction works.
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54.2
59.5 58.8
48.6 48.645.4
17.1
23.5 25.2
-4.7
7.7 6.1
31.5%
39.4%42.8%
-9.6%
15.7% 13.5%8.1% 6.7% 6.5%
2.1% 3.8% 0.4%
4Q13 1Q14 2Q14 3Q14 3Q14¹ 4Q14
Net revenue EBITDA EBITDA margin (%) ROIC²
Real Estate – Financial Performance
27
¹ Excluding non-recurring effects of R$ 14.5 million in 2014, of which R$ 12.3 million was in 3Q14.
² ROIC: Return on Invested Capital.
In R$ million
4Q14/4Q13 4Q14/3Q14¹ 2014/2013 CAGR 11-14
Net Revenue -16% -6% -18% 11%
EBITDA -64% -20% -47% -9%
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155.8
238.0
258.0
212.4 212.4
66.0
113.493.8
50.164.6
42.4%
47.7%
36.4%
23.6%
30.4%
14.3% 15.7%
8.1%
0.4%2.5%
2011 2012 2013 2014 2014¹
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Utilization rate continued to decrease in 4Q14, partially offsetby a positive effect of price and mix
28
Change in revenuein R$ million
Fonte: Mills
48.6
4.81.7 0.1
45.4
0
10
20
30
40
50
60
3Q14Revenues
RentedVolume
Price andmix
OthersRevenues
4Q14Revenues
Utilization rateIn %
0%
20%
40%
60%
80%
100%
2014 average = 60%
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29
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 launches 1in 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 sales 1in R$ billion
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In 2015, civil construction GDP should present reductionsimilar to the previous year
-10%
-5%
0%
5%
10%
15%
2009 2010 2011 2012 2013 2014* 2015*
Total GDP Civil construction GDP
Source: Bacen and estimative from Ibre-FGV for both periods
GDPYoy variation (%)
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Stages of industrialization of the construction process
31
1 Approximately 800 m 2
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 required 1 30 people 20 people 12 people 10 people
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Mills - Investor Relations
Tel.: +55 21 2123-3700
E-mail: [email protected]
www.mills.com.br/ri