1. Market Overview
2. Company Overview
3. Business Units
4. Financial Profile
Economic Overview
A slight improvement of market expectation, as presented below, can indicate a possible closure of an unprecedented
recession period.
GDP Growth
In % per year
In %
0.5
7.6
7.5
5.9
4.9
3.5
5.0
4.2
4.1
3.4
3.2
6.0
5.7
4.4
4.0
3.9
3.1
2.7
2.5
1.8
3.1
1.0
0.4
-0.1
-0.5
0.5
1.3
1.3 1.2
-0.2
0.1
-3.2
-3.9
-3.4
-3.2
2015
2016
-3.8
1-may-
1-apr-
1-mar-
1-feb-
1-jan-
1-dec-
1-nov-
1-oct-
1-sep-
2020E
1-aug-
2015
1-jul-
2010
1-jun-
2005
1-may-
2000
1-apr-
1995
1-mar-
1990
1-feb-
1985
1-jan-
-3.8
Source: Brazilian Central Bank (historical series); Focus Report until 9/9/2016; Market Expectations Systems (9/9/2016)
Economic Overview
After strong market deterioration, political uncertainty and lack of confidence, there is an overall improvement of expectation
in the medium term.
Delinquency Rate
SELIC
In %
In %, end of period
7.7
6.7
12.8
10.0
6.8
6.3
6.6
6.5
6.3
3.7
3.6
3.5
5.7
11.8
11.0
7.5
10.0
8.8
4.5
8.5
8.5
4.0
8.5
7.3
4.0
3.9
3.5
3.1
3.4
2018E
Legal Entity
2017E
2016E
2015
2014
2013
2012
2011
2010
2009
2020E
2019E
2018E
2017E
2016E
2015
2014
2013
2012
2011
2010
2009
Private Entity
Inflation rates
3.2
4.5
2019E
3.8
6.2
4.7
2020E
10.8
7.2
2021E
7.7
-4.3p.p.
14.3
Business Confidence
(%YoY)
10.7
9.3
4.5
4.5
4.5
5.0
4.5
4.5
54
+ Positive
Environment
Environment
Negative
47
46
50
36
IPCA
2019E
2017E
2016E
2015
2014
2013
2012
2011
2018E
IGPM
-1.7
2010
5.0
jul-16
5.0
2016
5.2
3.7
2009
5.0
2015
5.0
7.0
5.5
5.1
6.0
2014
10.5
2013
6.4
2012
5.9
2011
4.3
5.8
7.8
2021E
6.5
2020E
5.9
2010
11.3
Investments in infrastructure
It is known that investment in infrastructure is historically low in Brazil and still far from the levels seen in developing
countries.
Investment in Infrastructure
(% GDP)
(% GDP)
China
(2010)
5.4
0.5
13.4
ndia
(2013Chile
17) Costa Rica
(2008- Uruguai
(2013)
Nicaragua
11) (2013)
(2013) Bolvia
(2013)
6.0
5.5
5.1
5.1
4.9
2.0
3.6
0.2
0.8
Brazil
(2011-14) EUA
Peru
2.3
(2013) (2001-16)
4.5
2.0
1.5
1.5
2.3
0.2
0.6
0.4
2.1
0.2
0.7
2.3
0.2
0.6
0.9
0.7
0.5
2.1
1.5
0.8
0.6
0.7
1971/80
1981/89
1990/2000
2001/10
2011/14
Electricity
Telecom
Transportation
Total (% GDP)
Railways
Highways
China
China
0.7
India
0.6
India
0.6
Russia
Russia
Brazil
0.4
Brazil
0.8
China
0.6
0.4
USA
0.7
India
Russia
USA
Air Transport
Ports
0.2
Brazil
0.7
USA
China
0.6
India
0.6
Russia
0.6
Brazil
0.4
0.8
USA
0.7
0.6
0.6
0.5
0.9
2017
2018
1 powerplant
128
4 mining
4 powerplants
106
114
7 electricity distrib.
Transport
2 ports
11
2 highways
3 railways
4 airports
Sanitation
3 water and
sewage
3
2015A
2016E
2017E
Ten points of the Crescer program, released by the executive office of the president of Brazil:
Only feasible projects
Environmental licensing
Concession
announcement
Bidding
documents
publication
Auction
Contract
signature
December/2012
October/2013
November/2013
April/2014
June/2014
9 months
May/2011
December/2011
February/2012
May/2012
August/2012
8 months
February/2008
May/2011
August/2011
November/2011
August/2012
Beginning of
Length of time to
work
impact Mills revenue
The next investments should take longer between notice and works, as the government announced that
increased the auction deadlines from 45 to 120-180 days.
Source: Concession contracts; Globo (5/27/2014); GRU Airport (5/2014); Estado (6/30/2016)
Land purchase
Planning
12 months
24 months
Real Estate
market
2H 2018:
Rock bottom
Start/Launch
12 months
Mills
Market
Work beginning
2012
12 months
Plataforms
Construction
12 months
2016
2018
2020
Time
1. Market Overview
2. Company Overview
3. Business Units
4. Financial Profile
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 invest in the expertise of our team of professionals, which, allied to our
diversified experience, allows us to deliver prompt, clever and reliable solutions that
increase our clients results and productivity in construction works.
National Coverage:19 States and Federal District in 32 locations
2 business units:
Construction and Rental
Board of
Directors and
Executive
Officers 0.4%
Shares in
Treasury 1.3%
Nacht Family
34.5%
Free Float
63.8%
11
Company History
First Brazilian
manufacture of
formwork by license
agreement with NOESchaltechnik from
Germany
Founded on 1952.
50`s
90`s
Ferrovia do Ao
Catedral da S
80`s
2013
Sale
of
the
Industrial Services
business unit
Maracan Stadium
2010
12
Mills IPO
Business Units
Construction
Rental
3Q16:
Equipment volume: approximately 110,000 tons
3Q16:
Equipment volume: approximately 6,000 equipment
13
Business Units
Mills is the national market leader in equipment rental for both business Units.
Construction equipment: 2015 Net Revenues
Mills
283
Mills
144
Solaris
Ulma
94
141
Locar
Rohr
70
142
Metax
70
Pashal
85
23
Not listed
110
SH
Not listed
(R$ million)
Trimak
293
140-160
120
80
304
97
Degraus 20
Grupo Orguel
216
70
46
Considers the competitors total revenue and the revenue related to Millss similar products are estimated. 2014 data for Metax and Pashal. Metax has a Rental business unit only in Ribeiro Preto and
was not considered in the estimated value.
14
What We Do?
15
Formwork
Special systems
Shoring
Access
Viability Studies
The
knowledge
and strategic
partnerships
allow us to
provide the
BEST
solution in
terms of
quality, costs,
risks,
deadlines and
interferences.
16
Executive
Projects
Our product
mix enables
the execution
of the best
solutions.
Implementation
(Construction
Site)
Supply of
scaffolding,
aerial work
platforms,
water tank
shoring etc.
Foundation
Supply of
scaffolding,
forms and
shoring.
Structure
Supply of
shoring
systems,
formwork,
scaffolding,
aerial work
platforms and
telehandlers.
Finishing
Supply of aerial
work platforms,
mast climbing
work platform,
liftpod and
scaffolding.
Diversified revenue
streams
Diversified revenue base serves several segments through its business units
(3Q16);
Rental: Construction 52%, Non-construction 34% and Spot 14%
Heavy Construction: Urban Mobility 27%, Logistics 35%, Industrial 11%, Others 27%
Real Estate: 47% Residential, 34% Commercial and Others 19%
Corporate Governance
Listed on BM&FBOVESPA at the highest corporate level (Novo Mercado) since 2010;
Audited by Big Four Companies and currently by KPMG;
Professional Management
17
Ricardo Gusmo
Commercial Officer
for Construction
Marcelo Yamane
Rental Executive
Avelino Garzoni
Engineering and
Operations Officer
Gustavo Zeno
CFO and IRO
Fernanda Pinheiro
Human Resources
Executive
Construction
Headcount as of December 31
2,054
2,008
208
1,795
1,706
27
1,558
371
1,347
Shared Services
Engineering
2015
Rental
Construction
952
2010
2011
2012
2013
2014
2015
2015
18
1. Market Overview
2. Company Overview
3. Business Units
4. Financial Profile
19
20
21
Concrete Formworks
Shoring Systems
VLT Fortaleza - CE
Canal Alagoano - AL
Rail Extension PA
Shopping Olinda - PE
South
Southeast
Confins Airport Expansion
MG
Consortium So Loureno
SP
Duplication BR-381 MG
Subway Line 5 SP
Duplication BR-101 RJ
Contagem Viaduct - MG
22
23
Telescopic Handlers
Atualizar tudo
Rental
In addition to the recovery in the cycle, leasing platforms in Brazil has significant potential to increase penetration
In USD Billion
In 100.000 habitants
3x more aerial work platforms per US$ Industrial GDP in the USA
15
Best potential
comparison
165
5
14
EUA
Brazil
24
EUA
Brazil
Mills
owns
approximately
6,000
In Brazil, platforms are mainly used in construction works and buildings - and industrial maintenance.
However, they can be used for any work that needs to be
done in time.
8616
5866
4983
4567
3218
2950
1540
80 100 150 260
630
720
425
93
25
1. Market Overview
2. Company Overview
3. Business Units
4. Financial Profile
26
Summary Financials
In R$ million
Net Revenue
900.0
354.5
462.8
832.3
56.8
101.3
665.5
800.0
700.0
39.9
64.1
600.0
500.0
400.0
30.1
36.0
300.0
200.0
288.4
100.0
794.2
576.1
50.4
80.5
561.4
516
500
8.3
59.6
400
663.3
300
484.4
2
125
200
358.5
100
2011
2012
Equipment Rental
276
11
164
585
529
38
26
209
232
203
181
335
348
344
323
2013
2014
2015
LTM
3Q16
16
14
42
172
340
238
2013
Sales
2014
2015
LTM
3Q16
Technical assistance and others
2010
2011
168.4
217.4
600.0
47.5%
339.0
50.9%
47.0%
419.3
340.7
161.2
80.9
168.4
28.0%
2012
166.8
64.3
2010
2011
2012
2013
2014
30.0%
395.1
320.9
217.4
2011
151.5
40.0%
19.8
2013
2014
20.0%
12.7
148.5
13.0
67.9
2015
LTM 3T16
0.0
2010
92.2
50.0%
18.0%
323.2
103.3
50.4%
15.8
200.0
ADD
60.0%
24.2
300.0
SG&A
42.9%
400.0
2012
COGS
27
622
2010
100.0
560
600
0.0
500.0
424
700
27.6
36.8
398.4
402
800
37.8
53.9
674.2
900
449.5
Ebitda
2015
LTM 3Q16
-97.8
-118.9
10.0%
0.0%
Ebitda Margin
Heavy Construction:
Per sector R$ 27.0 million
Real Estate:
Per Type R$ 15.7 million
Sanitation
11.2%
Others
17.4%
PPP
15.6%
Private
38.2%
Industrial
10.6%
Subway/Train/BRT
27.4%
Residential
48.5%
Others
15.4%
Commercial
34.2%
Highways
18.3%
Public
46.3%
Railways
5.9%
Airports
11.1%
Technical
Assistance Indemnities
3.0%
0.9%
Sales of new
equipment
2.8%
Per Use
R$ 39.6 million
Spot
14.1%
Nonconstruction
34.3%
Construction
51.6%
Rental 91.2%
Public: resources from the government
Private: resources from the private sector.
PPP (publicprivate partnership) : resources from the government and the private sector
28
Net Revenue
Construction
100%
90%
80%
70%
37.8
2.6
60%
0.9
34.3
3Q16
50%
40%
30%
20%
10%
0%
1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
100%
2Q16
Rented Volume
Rental
90%
80%
70%
47.2
2.9
4.7
39.6
60%
50%
40%
30%
20%
10%
2Q16
Rented Volume
3Q16
0%
1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
(*) 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.
29
7.0%
6.0%
5.9% 5.8%
5.30%
3.2%
2.10% 2.0%
1.70%
1.2%
0.30%
2010
2011
2012
2013
2014
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Delinquency Evolution
65.0%
68.2%
72.9%
72.0%
60.1%
62.3%
1Q16
2Q16
75.2%
60.7%
70.0%
48.6%
2Q15
51.8%
3Q15
56.9%
4Q15
30
3Q16
2010-2014 Average:
2.3%
Even on an adverse scenario, the Company remains generating free cash flow
Cash Flow
383.7
372.7
295.5
288.3 281.9
198.9
158.9
116.1
80.8
2010
2011
2012
2013
2014
2015
79.5
1Q16
50.1 48.6
46.4 67.1
2Q16
3Q16
-31.2
-154.3
-208.9
Adjusted Operating Cash Flow
-356.5
0.2
4.9
0.8
2.6
1.2
46.2
20.1
Non-Cash
Operating Cash
Flow
Interest paid
Operating Cash
Flow before interest
paid
Other liabilities
Trade payables
Other assets
Purchases of rental
equipment
26.1
Trade receivables
Interest and
monetary and
exchange gains
Accrued expenses
on stock options
5.7
0.7
1.1
Allowance for
doubtful debts
0.9
Gain on sale of
property, plant and
equipment
1.7
Profit sharing
payable
11.2
Ebitda CVM
11.3
2.8
Cash
Before interests paid referring to debentures, FINAME and investment in equipment rental.
Before interests paid referring to debentures and FINAME.
Includes R$6.2 million of revenue from sales of new and semi new equipment in 3Q16, R$ 8.5 million in 2Q16 and R$ 31.4 million in 1Q16. In 2015 the revenue of sales was R$ 53.9 million.
31
Due to the reduction of the investments and assets sales, the average capital invested tends to fall, since it illustrates the
average of the period.
ROIC Breakdown
1,800.0
Net Revenue
449.5
5.0%
1,617.7
1,600.0
144.5
1,562.5
COGS
(179.7)
1,505.8
1,439.5
2.0% 139.6
1,374.0
134.5
1,400.0
125.3
0.8%
116.2
0.0%
1,302.7
104.8
NOPAT
(93.4)
(53.4)
1,200.0
696.9
675.8
-2.9%
654.7
1,000.0
-3.8%
632.5
-5.0%
-5.8%
606.9
-7.2%
580.3
SG&A
(246.0)
(188.9)
Depreciation:
(160.6)
800.0
-10.0%
ROIC LTM
-7.2%
Adjusted -4.2%
600.0
400.0
776.3
747.2
716.6
681.7
-15.0%
650.9
617.6
Net Rental PP&E
878.8
200.0
-20.0%
2Q15
3Q15
Construction
4Q15
Rental
1Q16
2Q16
Others
3Q16
ROIC
Invested Capital
1,302.7
Others
423.9
ROIC = NOPAT/Average Invested Capital. Invested Capital = 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.
Includes Rohr, Events and Industrial Services business units. Excluding impairment (R$57.1 million) from NOPAT
32
Summary Financials
In R$ million
2010
2011
Consolidated
Construction
Rental
354.5
259.4
95.1
462.8
287.4
175.4
Consolidated
Construction
Rental
Others
168.4
117.4
51.0
217.4
123.8
93.6
Consolidated
Construction
Rental
47.5%
45.3%
53.6%
47.0%
43.1%
53.4%
Consolidated
Construction
Rental
308.9
178.3
130.6
395.1
232.3
162.8
Construction
Rental
76.5%
77.9%
73.6%
77.8%
7.5
1.6
2012
2013
2014
2015 LTM 3Q16
Net Revenues
665.5
832.3
794.2
576.1
449.5
412.0
474.9
423.4
283.0
205.0
253.5
357.3
370.8
293.2
244.5
Ebitda
339.0
419.3
340.7
161.2
80.9
197.8
212.3
153.5
32.2
2.1
141.2
207.0
196.7
132.6
84.6
-9.5
-3.7
-5.9
Ebitda Margin
50.9% 50.4% 42.9% 28.0%
18.0%
48.0% 44.7% 36.3% 11.4%
1.0%
55.7% 57.9% 53.0% 45.2%
34.6%
Rental Equipment CAPEX
271.2
463.6
166.5
11.6
2.4
110.3
196.4
62.4
11.6
2.3
160.9
267.2
104.2
0.0
0.1
Utilization rate (volume)
75.4% 72.3% 63.0% 49.9%
43.7%
72.5% 73.0% 63.2% 61.9%
60.7%
Covenants
9.1
9.0
5.4
3.0
2.5
1.2
1.4
1.5
2.1
1.4
% Part
100.0%
45.6%
54.4%
100.0%
2.6%
104.6%
-7.2%
100.0%
97.0%
3.0%
-
33
Indebtedness
In R$ million
The weighted average maturity of our debt is 2.8 years at a cost of CDI+0.17%.
Gross Debt Profile
35.9%
150.3
106.2
106.2
64.1%
38.9
0.8
Caixa
Short Term
2016
2017
2018
2019
2020+
Finame
3rd Emission of Debentures - 108,8% CDI
2nd Emission of Debentures - IPCA +5,5%
2nd Emission of Debentures - CDI + 0,88%
Long Term
Indebtedness on 06/30/2016
-2.8%
50.6
-32.8%
452.8
322.6
402.2
-64.4%
130.3
TJLP
CDI
IPCA
Principal
34
Interests
Gross Debt
Cash
Net Debt
Key Takeaways
Infrastructure investment needs to be substantially increased to meet social needs and support economic growth;
Largest footprint: present in 19 States and Federal District in 32 locations;
Largest fleet in Brazil in all business units;
AWP: Immature market with low penetration and the safest way to work on height;
Efforts to increase presence in the international market;
Reliability
Agility and
Matchless
Executions
National
Coverage
Best in Class
Solutions
Tailor Made
Projects
Complete Product
Portfolio
35
Disclaimer
This presentation may contain statements that present expectations of the Management of Mills Estruturas e Servios 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 statements, 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 Comisso de Valores Mobilirios CVM.
www.mills.com.br/ri