Corporate Presentation

September 2015

Mills - Business Units

Focus on: large and complex

infrastructure projects
Products: engineering
solutions and rental of
formwork and shoring
Services: planning, design,
technical supervision,
equipment and related services

Main clients:

Market leader; acquired in 2008

Focus on: residential and
commercial constructions
Products: engineering solutions
and rental of formwork, shoring
and suspended access
Services: planning. design.
technical supervision. equipment
and related services

Clients: real estate companies.

such as:

Rental

Market leader, extensive track

record, with more than 60 years
of experience

Real Estate

Heavy Construction

Market leader; started in

2008
Focus on: civil construction.
Industry, retail e others
Products: rental and sale of
motorized access
equipment, such as aerial
work platforms and
telescopic handlers
Cross-selling with all other
Mills business units
Elected "Best Company for
Access of the Year" by the
International Awards for
Powered Access (IAPA
Awards) for the year of 2011

Mills 2Q15LTM Financial highlights per business unit

In R$ million

685.1

Heavy Construction

197.3

Real Estate

EBITDA margin

ROIC

32.0%

4.3%

1.1%

-7.6%

47.7%

7.4%

32.4%

2.0%

158.8

221.9

329.0

63.1
1.8
157.1

Net Revenue

EBITDA

Rental

Financial Performance1

832.3
794.2

794.2

50.9%

In R$ million
213.0
49.7%
191.5

48.4%

685.1

665.5
191.5
41.3%

44.1%
42.3%

181.9
163.9

34.8%
30.6%
105.9

32.4%

147.9
35.3%

403.1
339.0

28.9%

350.2

335.7

79.0
14.7%

66.7
12.3%
9.4%

9.9%

33.4

55.6

47.4

52.1

151.5

14.1%

221.9
172.6
6.6%

6.6%
4.0%
3.2

2Q14

3Q14
Net revenue

11.3
3Q14

4Q14
-6.2
EBITDA

64.3

2.0%

1Q15
2Q15
-8.2
-14.5
Net earnings

2012

2013

EBITDA margin (%)

2014

6.6%
81.7

2.0%

2014

LTM2Q15
-25.7

ROIC

2Q15/2Q14

2Q15/1Q15

LTM2Q15/2014

CAGR 12-14

Net revenue

-31%

-10%

-14%

9%

EBITDA

-51%

10%

-37%

2%

n.a.

n.a.

n.a.

n.a.

Net earnings

Reclassified excluding the Industrial Services business unit for comparison

ROIC: Return on Invested Capital.
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

Positive cash flow of R$ 37 million in 2Q15, reaching R$ 226

million in the last twelve months
Free cash flow1
In R$ million

200
116
100

74

70
45

37

11
2010

2011

2012

2013

2014

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

(13)

(31)
(100)
(154)

(200)
(219)
(300)

(340)
(400)
1 Net

cash generated by the operating activities minus net cash applied in investment activities

Debt profile

Debt, as of June 30, 2015

Debt amortization schedule1

in R$ million

in R$ million

618
138

231

480

206

194
Already paid

184

Gross debt Cash position

Net debt

Cash
position

134

144

137

106

106

65

31

38
27

2019

2020

174
150

72

57

34

38

2015

2016

2017

2018

Interest

Principal

Credit lines available,2

Used
Not used

R$ 64.5 million
R$ 505.6 million
As of December 31st ,2014
2 Unsecured overdraft account+ Secured bank credit lines

Debt indicators
EBITDA/Net financial results

Net Debt/EBITDA

8.0x
2.2x

7.1x
6.1x

1.8x
1.6x

5.2x

1.5x

1.5x

1.5x

1Q14

2Q14

3Q14

1.8x
1.6x

4.5x
4.0x

3.9x
3.3x

1Q14

2Q14

3Q14

4Q14

1Q15

1Q151

2Q15

2Q15 1

4Q14

1Q15

1Q15 1 2Q15

2Q151

Debentures Covenants :
(1) EBITDA/net financial results higher than or equal to two; and
(2) Net Debt/EBITDA less than or equal to three.
1Excluding

R$ 40.1 million of non-recurring items from 1Q15 and R$ 44.9 million from 2Q15.

ADD reached 1.2% of net revenue in 2Q15, positively

impacted by reversals of R$ 6.8 million

Changes in allowance for doubtful debts (ADD)

15.0%

As % of net revenues

12.8%

13.0%

11.0%

Ex clients under investigation

9.0%
7.3%
7.0%

6.8%
5.3%

5.0%

4.2%

3.2%

3.0%
1.7%

2.1%

2010-2014 average = 2.3%

2.0%

1.0% 0.3%
2010

-1.0%

1.2%
2011

2012

2013

2014

1Q15

2Q15

-0.8%

1S15

Planned sales for semi-new equipment have already

amounted R$ 40 million
Target:
Sales above R$ 30 million in 2015
To reduce 10% of Rental assets in the next three years
To reduce 20% of Real Estate assets in the next three years
Ongoing actions:
International Market: establishment of new distribution channels and hiring of
commercial representatives
Brazilian market: development of sales partners in the Real Estate market
Sales of semi-new equipment totaled R$ 13.5 million in 1H15

Centralization aims more efficiency and control of processes

Organizational structure was resized, with annual savings of R$ 14 million

Centralization timeline

Billing

Administrative
jobs

Engineering
Procurement

Operations
Collection

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

Business Units

Aerial work platforms

Rental

Growth drivers in the motorized access equipment market:

safety and productivity
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

Market penetration
through
substitution of less
secure and
efficient access
methods

Source: Mills

12

Safety - Growth driver in the motorized access equipment

market
Number of accidents by type of access equipment
EUA 2010-2011

1,889

403
277

233
72

Mobile ladders

Vehicles with lift

tables, dock
levellers, ramps and
flying tables

Fixed scaffolding

Mobile scaffolding

Aerial platform

Source: HSE HandS-On Statistics Data Tool

13

Productivity - Growth driver in the motorized access

equipment market

Preparation: scaffolding assembly last 2 days

with 8 people
Operation: fixed structure makes it difficult to
access certain points

14

Preparation: it reaches working heights in

one and half minutes
Operation: flexible, easy to operate and
maneuver

World fleet of motorized access equipment estimated at 1.1

million units, being half of it in North America
We estimate that the annual market for semi-new equipment accounts for 5% of world fleet
Size of motorized access fleet

700,000

# of machines

600,000

500,000

400,000

300,000

200,000

100,000

0
USA + Canada

Latin America
Booms

Europe
Scissor Lift

Asia

Middle East and

Africa

Outros
Source: IPAF Powered Access Rental Market report, produced by Ducker

15

Brazil presents low penetration in motorized access market,

since it is still an incipient market

Penetration stage in motorized access market

# motorized access machines per 100 thousand habitants

250

200

150

100

50

Source: IPAF Powered Access Rental Market report, produced by Ducker

16

Construction sector remains the main user of Mills

motorized access equipment

Rental revenue by use

Net revenues per type of service

In 2Q15

In 2Q15
Sales of
semi-new
equipment
Sales of new 6%
equipment
3%

Spot
18%

Industry
16%

Others
3%

Construction
66%

Rental
88%

17

70% of Mills fleet is less than 48 months old, and do not

require rebuilding in next three years

Distribution of Mills fleet by age

% Fleet in number of pieces of equipment

60%
52%
50%

40%

30%

20%

26%
18%

10%
4%
0%

0%
< 24

24-48

48-72

72-96

>96

months

Source: Mills

18

Rental Financial Performance

In R$ million

357.3
57.9%

55.6%

55.8%

54.9%

98.6

370.8
329.0
53.0%

53.0%

91.0
83.9
39.6%

79.6

253.5

43.3%

47.7%

74.5

207.0

196.7

55.1

157.1

50.0
16.2%

140.8

14.5%

39.4
11.5%

33.2

34.4
8.8%

18.2%

18.2%

7.4%

11.5%
7.4%

2Q14

3Q14

4Q14

1Q15

Net revenue

2012

2Q15
EBITDA

2013

EBITDA margin (%)

2014

LTM2Q15
ROIC

2Q15/2Q14

2Q15/1Q15

LTM2Q15/2014

CAGR 12-14

Net revenue

-24%

-6%

-11%

21%

EBITDA

-28%

15%

-20%

18%

ROIC: Return on Invested Capital.

19

Laguna bridge Santa Catarina

Heavy Construction

Infrastructure investments are priority in Brazil. However,

there are major uncertainties regarding its execution.

Expected investments in Brazil

in R$ billion

Exame - Balance 2014/2015

Infrastructure

643

Total

1,013

830

Sobratema - 2014 - 2019

1,772

BNDES - 2015-2018

598
1,509

Source: BNDES December 2014, Sobratema 5 Edio 2014, Anurio Exame 2014-2015, data
from 1,565 construction works.

21

Logistics investment program (PIL)

Estimated investments
in R$ billion

until 2018
35%
187
198

Total

After
2018
65%

54

Ports

37
Foreseen expansion
0

Airports

in Km

91
86

Railroads

42

Highways

7,537

Railroads

10,000

6,974

Highways

7,500

66
0

50

100

150

200
PIL - 2012

250

5000

10000

15000

PIL - 2015
Source: Valor Econmico newspaper, June 10, 2015

22

Of the R$ 66 billion investments planned for highway

concessions, approximately 75% should be auctioned in 2015/16
Investments
In R$ billion
BR-163 (MT/PA)

6.6
4.1

BR-364 (GO/MG)

3.1

BR-476 /153/282/480 (PR/SC)

4.5

BR-101/232 (PE)

4.2

BR-101 (BA)

1.6

BR-262/381 (MG)

1.9

BR-101/493/465 (RJ/SP)

3.1

BR-470/282 (SC)

2.1
1.1

BR-101/116/290/386 (RS)
BR-267 (MS)
BR-262 (MS)
BR-364 (RO/MT)

2016

3.2

BR-280 (SC)
BR-101 (SC)

2015

BR-364/060 (MT/GO)

3.2
2
2.5
6.3
Source: Mills, Valor Setorial Infraestrutura, June 2015

23

Construction jobs should start at the end of 2016, presenting

revenues opportunity for Mills in 2007 onwards

Estimated Schedule of Logistics investment program

Auction
Public
Auction
Hearing Public Notice

Signatures
of
contracts

Studies
aug

sep

oct

2015

24

nov

dec

jan

feb

mar

apr

2016

may

jun

jul

aug

sep

Construction

Rental revenue breakdown in 2Q15

Source of funds

PPP
7%

Per sector

Others
10%
Industry
29%

Private
50%

Public
43%

Infrastructure
61%

25

Heavy Construction Financial Performance

In R$ million
217.0
51.3%

49.1%

211.0
197.3

55.5 46.2%
52.5

51.9

51.1

41.2%

42.1%

174.1
41.8

32.0%

31.0%
29.8%

111.4

25.3%
25.6
16.3%

21.4
13.3%

12.9

12.5

7.0%

3T14

4T14

Receita Lquida

63.1

19.2%

16.3
9.9%

2T14

88.9

85.5
17.2%

9.9%
4.3%

4.3%

1T15

2T15
EBITDA

2012

2013

Margem EBITDA (%)

2014

LTM2Q15
ROIC

2Q15/2Q14

2Q15/1Q15

LTM2Q15/2014

CAGR 12-14

Net revenue

-25%

-18%

-6%

10%

EBITDA

-51%

-4%

-29%

2%

ROIC: Return on Invested Capital.

26

Flying table

Real Estate

In 2015, civil construction GDP should present larger

reduction than the previous year

GDP
Yoy variation (%)

15%

10%

5%

0%
2009

2010

2011

2012

2013

2014

1H15

2015E

-5%

-10%
Total GDP

Civil construction GDP

Source: Bacen (2009-2013), IBGE (2014 e 1H15) and estimatives from Bloomberg and Sinduscon

28

Demand for metallic formworks is more sensitive to cycles,

while metallic shoring is more resilient

Evolution of use in built-up areas

in %

90%
83.3%

84.2%

80.1%

80%

76.4%
70.2%

70%

71.2%
67.8%

60%
50%
40%
30%
20%
10%

6.2%

8.7%

11.4%

8.2%
5.4%

4.7%

5.1%

0%
2009

2010

2011

Metallic formwork

2012

2013

2014

2015

Metallic shoring
Source: Criactive

29

Stages of industrialization of the construction process

System

Traditional with wood

Traditional with steel

Deck type

Flying table

Cycle between
concreting activities

15 days

7-10 days

6-8 days

4-7 days

Labor required1

30 people

20 people

12 people

10 people

Approximately 800 m2
Source: Tchne Magazine, June 2012 and Mills

30

Launches and sales declined in 2Q15, with possible negative

impact on construction activities throughout the year

Total sales1

in R$ billion

in R$ billion

7.6

95%

8.0

100%

7.0

80%

6.0

60%

35%

4.4

15%

17.6%

5.0

4.5

4.0
18.2%

3.2
3.0

-5%
-13.7%

-25%

6.0

40%

5.0

4.6

4.0

20%

3.3

18.6%
8.2%

0%

2.0

-20%

1.0

-40%

-60%

3.0

2.0
-21.7%

-29.1%
-45%

7.0

6.5

Sales (in R$ million)

5.2

6.5

5.5

Var. (%)

6.5

55%

Var. (%)

8.0

7.0

Launches (in R$ million)

75%

Total launches1

-29.0%
-29.1%

1.0

-42.0%

-65%

2Q10

2Q11

2Q12

2Q13

2Q14

2Q15

2Q10

1 Cyrela,

2Q11

2Q12

2Q13

2Q14

2Q15

Direcional, Even, Eztech Gafisa, Helbor, MRV, Rodobens, PDG e Tecnisa.

Source: Operational reports from companies and Mills

31

Built-up area in square meters in the structure phase may

suffer contraction in 2H15, recovering in the beginning of
2016
Evolution in built-up area by phase
in m2

18000

16000
14000
12000
10000

Finishing
Structure

8000

Foundation

6000
4000

2000
0
2H09

2H10

2H11

2H12

2H13

2H14

2H15E

Source: Criactive

32

Rental revenues breakdown in 2Q15

Rental revenue per segment

In 2Q15

Others
15%

Residential
50%
Commercial
36%

33

Real Estate Financial Performance

In R$ million

50.1%

258.0

238.0

58.8

39.1%
48.6

212.4

212.4

48.6

45.4

30.4%
158.8
33.2

31.6

42.8%

23.6%

119.3

25.2

15.7%

100.9
8.1%

6.5%
2.1%
2Q14

3Q14
-4.7
-9.6%

15.7%
7.6

13.5%
6.1

3.8%

0.4%

3Q14

4Q14

64.6

10.2%

50.1
0.4%
0.1
0.2%
-3.3% 1Q15

0.7%

16.2

0.2

2Q15

2012

2013

2014

-7.6%
Net revenue

2.5%

2014

LTM2T15
-7.6%

EBITDA

EBITDA margin (%)

ROIC

2Q15/2Q14

2Q15/1Q15

LTM2Q15/2014

CAGR 12-14

Net revenue

-46%

-5%

-25%

-6%

EBITDA

-99%

244%

-68%

-35%

Excluding non-recurring effects of R$ 14.5 million in 2014. of which R$ 12.3 million was in 3Q14.
ROIC: Return on Invested Capital

34

Mills Investor Relations

Tel.: +55 21 2123-3700
E-mail: ri@mills.com.br
www.mills.com.br/ri