credit suisse latam investment conference*
TRANSCRIPT
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January 2015
Corporate Presentation
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Executive Summary
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Heavy
Cons
truc
tion
Market leader, extensive trackrecord, with more than 60 yearsof experience
Focus on: large and complexinfrastructure projects
Products: engineeringsolutions and rental offormwork and shoring
Services: planning, design,technical supervision,
equipment and related services
Main clients:
Rea
lEs
tate
Market leader; acquired in 2008
Focus on: residential and
commercial constructions
Products: engineering solutionsand rental of formwork, shoringand suspended access
Services: planning. design.technical supervision. equipmentand related services
Clients: real estate companies.such as:
Ren
tal
Market leader; started in2008
Focus on: civil construction.Industry, retail e others
Products: rental and sale ofmotorized accessequipment, such as aerialwork platforms andtelescopic handlers
Cross-selling with all otherMills business units
Elected "Best Company forAccess of the Year" by theInternational Awards forPowered Access (IAPA
Awards) for the year of 2011
Mills - Business Units
2
http://www.pdgrealty.com.br/pdg/Capa.aspxhttp://www.pdgrealty.com.br/pdg/Capa.aspx -
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3
Mills 3Q14LTM Financial highlights per business unit
Excluding the Industrial Services business unit.
In R$ million
384.0
219.5
221.2
61.1
217.1
101.9
822.3
382.4
Receita Lquida EBITDA
Heavy Construction
Real Estate
Rental
27%
47%
27%
16%
57%
26%
EBITDA margin ROIC
46.9% 13.3%
27.6% 2.1%
57.2% 14.5%
46.5% 9.4%
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Estamos presentes em 16 estados no Brasil com 56 unidades
Geographic Presence
4
Branches locationAs of September 30. 2014
MinasGerais
Rio Grandedo Sul
Santa Catarina
So Paulo
Mato Grosso
do Sul
Rio deJaneiro
(headquarters)
EspiritoSanto
Bahia
DistritoFederal
Goias
Sergipe
Paraiba
Rio GrandeCear
Piaui
Maranho
Tocantins
Par
Rondnia
Acre
Roraima Amap
Amazonas
Mato Grosso
Parana
Alagoas
States with Mills' presence
Pernambuco
do Norte
Rental
Heavy Construction
Real Estate
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5Source: The Conference Board Total Economy Database, January 2014
Brazil presents a low level of productivity compared to otherdeveloping countries
17.2%
34.0%
8.1%
17.1%
28.2%
34.5%
31.4%
Brazil Russia India China South Africa Chile Mexico
GDP per person employed. % of U.S. 2013
Productivity growth is essential for higher sustainable GDP growth
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The potential penetration of our services for increasingproductivity enables us to grow more than the overalleconomy
60%
35%
31%
44%
25%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
2009 2010 2011 2012 2013
Mills GDP Industrial GDP Civil Construction GDP
Source: Mills and Bacen
Mills revenue1 versus GDPyoy variation (%)
6 Excluding the Industrial Services business.
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354.5
462.8
665.5
832.3 822.3 822.3
168.4217.4
339.0
403.1382.4 394.8
103.3 92.2
151.5172.6
116.1 124.1
47.5% 47.0%50.9%
48.4%46.5%
48.0%
21.0%
12.3%
14.7%14.1%
9.4% 9.9%
2010 2011 2012 2013 LTM3Q14 LTM3Q14
188.4
211.8222.0
210.1 207.8 213.0
191.5 191.5
95.7 98.9106.1 102.4 107.5 105.9
66.779.0
39.348.1
39.6 45.6 33.9 33.4
3.211.3
50.8%
46.7% 47.8% 48.7%51.7%
49.7%
34.8%
41.3%
14.7% 14.8% 14.4% 14.1% 13.8% 12.3%9.4% 9.9%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 3Q14
Net revenue EBITDA Net earnings EBITDA margin (%) ROIC
7
Financial Performance3
Excluding Easy-set effect.
ROIC: Return on Invested Capital. Until 2010, ROIC was calculated considering the effective income tax rate for the period, while from 2011 onwards ROIC was calculated considering atheoretical 30% income tax rate.
Reclassifiedexcluding the Industrial Services business unit, for comparison
In R$ million
3Q14/3Q13 3Q14/2Q14 LTM3Q14/LTM3Q13 CAGR 10-13
Net revenue -14% -10% 2% 33%
EBITDA -26% -25% 3% 34%
Net earnings -72% -66% -26% 19%
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7447 51
106
35
104
185
60
90
15
131
163
161
267
105
15
18
20
36
21
324
413
292
499
177
2010 2011 2012 2013 9M14
Rental
Real Estate
HeavyConstruction
In R$ million
Capex
Realized 9M14 /2014 Capexbudget (%)
96%
60%
62%
Mills invested R$ 155.3 million in rental equipment in 9M14, ofwhich R$ 13.8 million in 3Q14
8 Reclassified excluding Industrial Services business unit, for comparison.
Total 76%
Rental equipment
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Positive cash flow of R$ 74 million in 3Q14
9
(340)
(219)
(31)
(154)
(13)
11
74
(400)
(350)
(300)
(250)
(200)
(150)
(100)
(50)
-
50
100
2010 2011 2012 2013 1Q14 2Q14 3Q14
Free cash flow1
1 Net cash generated by the operating activities minus net cash applied in investment activities
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72 57 34 38 31 34
134 174
150106 106
31
161
205230
184
144 137
65
Cashposition
2015 2016 2017 2018 2019 2020
Interest Principal
92%
8% Debentures
Borrowings andfinancing
3%
83%
17% TJLP
CDI
IPCA
Debt Profile
Mills total debt was R$ 746.2 million and net debt was R$ 585.1 million in September 30, 2014.Leverage, as measured by net debt/ LTM EBITDA, was 1.5x.
Debt amortization schedule, as of Sep 30, 2014in R$ million
Debt profile (%)
By index
By type
10
Credit lines available As of Sep 30, 2014
Used R$ 62.1 million
Not used R$ 486.9 million
Unsecured overdraft account + Secured bank credit lines
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1,0x
1,6x 1,6x
1,4x
1,3x
1,2x 1,2x 1,2x
1,4x
1,3x
1,5x 1,5x
1,6x
1,5x
2Q113Q114Q11 1Q12 2Q12 3Q12 4Q12 1Q132Q133Q134Q131Q142Q14 3Q14
Debt indicators
11
Net debt-to-EBITDA
Debentures Covenants:
(1) EBITDA-to-net financial result equal to or more than two; and
(2) Net debt-to-EBITDA ratio equal to or less than three.
23,0x
9,6x
7,5x6,8x 6,9x
8,3x
10,4x 9,8x 10,2x 9,6x8,5x
7,6x
5,1x5,9x
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
EBITDA-to-net financial result
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Business Units
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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) oblige the use of aerial platforms to lift people,increasing safety and productivity in the work site
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Modest rental penetration of 15% in Brazil. Rental penetration is approximately 50% in the USA,
60% in Japan and 80% in England.
Rental penetration in the USA increased to approximately 50% in 2014 from 5% in 1993: 20
years of continuous penetration growth.
Growth drivers in the motorized access equipment market:low penetration
15Source: Goldman Sachs and United Rentals
20%
35%
40%43%
50%
-20%
0%
20%
40%
60%
1993 1998 2004 2009 2011 2014E
Rental penetration in the USA
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21%
13%
28%
24%
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013
Penetration of use has enabled the branches opened prior to the IPO to have an average annual
growth of 22% in the last four years.
Growth drivers in the motorized access equipment market:low penetration
Growth rates considering only branches which were opened until 2010
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Revenue Breakdown
69%
42%38% 31%
31%
58% 62%
69%
2009 2010 2011 2012 2013
New branches
Established branches
Growth drivers in the motorized access equipment market:geographic expansion
171 Branches opened since January 2010
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Revenues per type of use
Construction sector is the major user of motorized access inBrazil
18Source: Mills 2013. United Rental 2011 and Ramirent 1Q14
58%69% 73%
60% 63%
25%
23% 16%35%
19%
17%8% 11%
5%18%
Brazilian Market Mills United Rentals(pre-merger RSC)
United Rentals(post-merger RSC)
Ramirent
Others
Spot
Industry
Construction
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Rental Financial Performance
19
1 ROIC: Return on Invested Capital. Until 2010. ROIC was calculated considering the effective income tax rate for the period. while from 2011 onwards ROIC was calculated considering atheoretical 30% income tax rate.
In R$ million
3Q14/3Q13 3Q14/2Q14 LTM3Q14/LMT3Q13 CAGR 10-13
Net revenue -3% -8% 15% 55%
EBITDA -4% -9% 21% 58%
95.1
175.4
253.5
357.3384.0
51.0
93.6
141.2
201.2219.5
53.6% 53.4%55.7%
56.3%
57.2%
19.2%16.5% 18.2% 18.2%
14.5%
2010 2011 2012 2013 LMT3Q14
76.1
90.193.9
97.2 97.3 98.6
91.0
43.649.3
52.356.0 58.4 55.1
50.0
57.3%54.7% 55.7%
57.7%60.1%
55.8%54.9%
18.0%18.5% 18.1% 18.2% 17.8% 16.2% 14.5%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Net revenue EBITDA EBITDA margin (%) ROIC
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Heavy Construction
Cinta costeira - Panam
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1.00
0.33
0.36
0.48
0.62
- 0,50 1,00
USA
Brazil
Russia
India
China
Infrastructure
0.50 1.00
Infrastructure quality ranking for BRIC countries (2011-12)
Index EUA = 1.0
1.00
0.11
0.38
0.51
0.73
- 0,50 1,00
USA
Brazil
Russia
India
China
Ports
0.50 1.00
1.00
0.42
0.93
0.97
0.99
- 0,50 1,00
USA
Brazil
Russia
India
China
Railways
0.50 1.00
1.00
0.33
0.36
0.48
0.62
- 0,50 1,00
USA
Brazil
Russia
India
China
Highways
0.50 1.00
Brazil is behind other BRIC countries quality of infrastructure
Source: World Economic Forum. The Global Competitiveness Report 2012-2013
21
Investments in infrastructure and industry in Brazil should
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Investments in infrastructure and industry in Brazil shouldamount R$ 1.5 trillion in the 2015-2018 period, with 24%growth compared to the 2010-2013 period
22
358
44 20 22 20
303
767
191
10249 62 23 15 11
111
453
509
4012 22 21
307
911
192141
89 8045 36 16
177
599
Oilan
dG
as
Min
ing
Stee
l
Chem
ica
l
Pu
lpan
dPa
per
Oth
ers
To
talIndus
try
Eletricity
Te
lec
om
San
itation
Roa
ds
Ra
ilways
Ports
Airports
To
talLogis
tics
To
talInfras
truc
ture
2010-2013
2015-2018
Investiment per sector
In 2013 R$ billion
2015-2018 / 2010-2013 Growth rate(%)
53% 8% -58% 24% 44% 25% 31% 9% 29% 82% 15% 97% 173% 43% 61% 35%
Source: BNDES November 2014
1
1 Logistics is the sum of roads, railways, ports and airports
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New logistic investment program
23
18.5
23.5
- 20 40 60
Up to 20 years
In the first 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
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$ billion
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Of the R$ 104 billion investments planned, approximately R$74 billion have been successfully auctioned
24
Lucas do Rio Verde railroad
Curitiba subway
Ports - 2th stage - 18 contracts
Ports - 1th stage - 31 contracts
BR 262 (MG/ES)
BR 116 (MG)
BR 101 (BA)
Tamoios highway
So Paulo subway line 18
BR 153 (GO/TO)
BR 040 (DF-MG)
BR 163/267/262 (MS)
BR 060/153/262 (DF/GO/MG)
BR 163 (MT)
Goinia VLT
Confins airport
Galeo airport
So Paulo subway line 6
BR 262 (MG/ES)
BR 050 (MG/GO)
Salvador subway line 2
InvestimentsIn R$ billlion
2013
2014
Source: Mills, Goldman Sachs and Credit Suisse
Presentation of 3Q14 Results 11/06/2014
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Cafezalmountain
Tamoios highwayoutline
Fortaleza subway
Jo Elevated roadduplication - RJ
Comperjrefinery*
Transocenica
highway - BA
Sanitation projectsCE
BR-040 highway MG/MT/GO
BR- 163 highwayMT
Gerdau expansionMG
BR-381 highway
duplication MGEv
olution
ofrevenue
generation
(Bas
is100=
Max
imum
mon
thlyrevenuein
the
lifeo
fcons
truc
tion
)
Length of time of Mills participation in the construction work average cycle is 24 months
Belo Monte
hydroelectric powerplant
Jirau hydroelectricpower plant*
Vales S11D project
Transnordestina
railroad
Oeste-Leste railroad
North beltway
Subway line 5 SP
Salvador subway Olympic Park
Reduc-Comperj
Pipeline
Silver monorail line -SP
Colder and Teles Pireshydroelectric power plants
Comperjrefinery Companhia Siderrgica do
Pecm steel mill
Norte-Sulrailroad
Transposition of the SoFrancisco river
Vale projects
Gold monorail line- SP
Subway line 4 RJ
Olympic Park
Subway line 4 SP
Cuiab light rail
Paraguau shipyard
Jirau hydroelectric power plant
Viracopos airport.
Goinia airport.
BRT Transcarioca
Metropolitan Arch RJ
Vale projects
Pulp mill expansion- RS
Newcontracts*
Contracts with growingvolume of equipment
Contracts with high volumeof equipment
Contracts in the process ofdemobilization
* New stretches
Important contracts per stage1 in the evolution of monthlyrevenue from projects
25
1 In 3Q14
Presentation of 3Q14 Results 11/06/2014
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1
in 3Q14
26
Characteristics of the major projects in progress
Private54%
PPP15%
Public31%
Source of funds
Industry36%
Infrastructure56%
Others8%
Per sector
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47.5
55.1 55.7 55.758.6
51.0
55.551.9
24.3 25.1
29.4 28.2 29.325.6 25.6
21.4
51.3%
45.5%
52.8% 50.6%
49.9%50.2%
46.2%41.2%
17.8% 17.7%18.1% 18.1% 19.2% 17.9%
16.3% 13.3%
1Q13 2Q13 3Q13 3Q13* 4Q13 1Q14 2Q14 3Q14
Net Revenue EBITDA EBITDA Margin (%) ROIC
In R$ million
3Q14/3Q13 3Q14/2Q14 LTM3Q14/LTM3Q13 CAGR 10-13
Net Revenues -7% -7% 0% +12%
EBITDA -27% -17% -6% +14%
Heavy Construction Financial Performance
27
* Excluding the positive effect of tax reversal in the amount of R$ 1.5 million in 3Q13.
1 ROIC: Return on Invested Capital. Until 2010.,ROIC was calculated considering the effective income tax rate for the period,while from 2011 onwards ROIC was calculated considering atheoretical 30% income tax rate.
154.3
131.6
174.1
217.0 217.1
73.6
57.8
84.3
108.1101.9
47.7%
43.9%
48.5% 49.8%46.9%
19.2%
13.3%
2010 2011 2012 2013 LTM3Q14
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Real Estate
Mast climbing platform
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Growth drivers of the residential market: housing financing
29
2.6%
3.5%
7.4%
11.5%
14.4%
24.0%
45.3%
76.1%
83.7%
Russia
India
Brazil
Chile
China
South Africa
Germany
USA
UK
Housing financing relative to GDP (%)
3.1%
4.1%
5.4%
6.8%
7.4%
2009 2010 2011 2012 2013
Housing financing relative to GDP (%)in Brazil
In 2011; In 2010; In 2013.
Source: Valor Econmico Newspaper, with data from Abecip and Secovi
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In million families% of families per social class Number of families per income range
Growth drivers of the residential market: higher purchasingpower
30
31.729.1
27.2
60.4
1.45.9
2007 2030E
< R$ 1,000
>= R$ 1,000 and R$ 8,000
-0.4%
+3.9%
+7.1%
+33.2 millionfamilies with income
betweenR$ 1,000 to 8,000
Growth rate(%. p.a.)
10.7 6.8 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
Source: IBGE and FGV
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The major challenge for the sector: labor
31Source: Sondagem Especial Construo Civil. April 2011. CBIC. CNI. and Mills
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
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Stages of industrialization of the construction process
32
1Approximately 800 m2
Source: Tchne 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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33
17.9
21.6
13.8 13.813.1
20.2%
-36.0%
0.2%
-5.4%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0
5
10
15
20
25
9M10 9M11 9M12 9M13 9M14
Var.
(%)
Lauunc
hes
(In
R$m
illion
1 PDG, Cyrela, MRV, EVEN, Helbor, Eztec, Direcional, Rodobens, Gafisa and Tecnisa
Source: Operational reports from companies and Mills
Total launches1
in R$ billion
Launches and sales declined 5.4% and 13.9% respectively in9M14
18.2
19.9
16.7 16.8
14.5
9.3%
-15.8%
0.7%
-13.9%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0
5
10
15
20
25
9M10 9M11 9M12 9M13 9M14
Var.
(%)
Sa
les
(In
R$m
illion)
Total sales1
in R$ billion
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64.9 66.5
72.4
54.2
59.5 58.8
48.6 48.6
27.724.6 24.4
17.1
23.525.2
-4.7
7.7
42.8%
37.0% 33.7% 31.5%
39.4%42.8%
-9.6%
15.8%15.0% 13.4%10.6%
8.1% 6.7% 6.5%
2.1%3.8%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 3Q14
Net revenue EBITDA EBITDA margin (%) ROIC
Real Estate Financial Performance
34
Excluding Easy Seteffect.
ROIC: Return on Invested Capital, Until 2010. ROIC was calculated considering the effective income tax rate for the period. while from 2011 onwards ROIC was calculated considering atheoretical 30% income tax rate.
In R$ million
105.1
155.8
238.0
258.0
221.2 221.2
43.966.0
113.4
93.8
61.1
73.4
41.7% 42.4%47.7%
36.4%
27.6%
33,2%
23.5%
14.3% 15.7%
8.1%
2.1%2.1%
2010 2011 2012 2013 LTM3Q14 LTM3Q14
3Q14/3Q13 3Q14/2Q14 LTM3T14/LMT3T13 CAGR 10-13
Receita Lquida -33% -17% -18% 35%
EBITDA -69% -70% -29% 29%
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Mills Investor Relations
Tel.: +55 21 2123-3700
E-mail: [email protected]
www.mills.com.br/ri