BTG Pactual XV Brazil CEO Conference 2014*

8/12/2019 BTG Pactual XV Brazil CEO Conference 2014*

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February 2014

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.aspx


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334

182

270

103

206

99

810

384

Revenue EBITDA

Heavy Construction

Real Estate

Rental

3

Mills - 3Q13LTM Financial highlights per business unit

MargemEBITDA ROIC

48.2% 18.1%

38.1% 10.6%

54.5% 18.1%

47.4% 14.3%

26%

27%

47%

26%

33%

41%

3Q13LTMLast twelve months ended September 30, 2013. Excluding the Industrial Services business unit.


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173.4 173.4187.5

188.4

211.8222.0

95.990.3

83.3

95.7 98.9106.1

38.032.3

41.6 39.3 48.1 39.6

55.3%

52.1%

44.4%

50.8%

46.7% 47.8%

15.8%14.5% 14.5% 14.9% 14.2% 13.9%

3Q12 3Q12* 4Q12 1Q13 2Q13 3Q13

Net Revenue EBITDA Net Earnings EBITDA Margin ROIC

4

Mills - Financial Performance

Reclassified excluding the Industrial Services business unit, for comparison.

ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering atheoretical 30% income tax rate.

3Q13LTMLast twelve months ended September 30, 2013.

* Excluding the positive impact of the provisions reversal in the amount of R$ 6.8 million in 3Q12.

3Q13/3Q12 3Q13/2Q13 CAGR 10-12

Net Revenue 28% 5% 37%

EBITDA 11% 7% 42%

Net Earnings 4% -18% 21%

354.5

462.8

665.5

809.7

168.4

217.4

339.0384.0

103.3 92.2

151.5 168.6

47.5% 47.0%50.9%

47.4%

21.0%

13.2%

15.9%14.4%

2010 2011 2012 3Q13LTM


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Estamos presentes em 16 estados no Brasil com 56 unidades

MillsGeographic Presence

5

Branches locationAs of December 31, 2013

MinasGerais

Rio Grandedo Sul

Santa Catarina

So Paulo

Mato Grossodo Sul

Rio deJaneiro

(sede)

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

Rental

Heavy Construction

Real Estate

Pernambuco

do Norte

We are present in 17 states of Brazil with 51 branches


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Heavy Construction

Cinta costeira - Panam


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Investments in infrastructure and industry in Brazil should amount R$ 1.6 trillion in the 2014-

2017 period

Oil and Gas458

Mining

48Steel10

Chemical25

Pulp and Paper19

Others540

Industry investments 2014-2017R$ 1,100 billion

Energy176

Telecom125

Sanitation45

Railways59

Roads62

Ports

34

Airports8

Infrastructure investments 2014-2017R$ 510 billion

Source: BNDESOctober 2013

Growth compared to the 2009-2012 period (%)

24% 25%

Investments in infrastructure and industry in Brazil shouldamount R$ 1.6 trillion in the 2014-2017 period


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2.031.48

0.63 0.621.0 0.8 0.7

0.80

0.43

0.73 0.640.4

0.5 0.6

2.13

1.47

0.760.67

1.00.8 0.8

0.46

0.24

0.150.19

5,4

3,6

2,32,2

2.4

2.1 2.2

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1971-80 1981-89 1990-2000 2001-10 2010 2011 2012

Sewage and Sanitation Energy Telecommunication Transport

19% 17%12%

42%36%

36%

39%

47% 52%

2010 2011 2012

Private PPP Public

Investments in Infrastructure% of GDP

Investments in InfrastructurePer source of funds

Higher participation of the private sector in infrastructureinvestments in recent years

9Source: Credit Suisse report The Brazilian Infrastructure: Itsnow or never , from July, 2013


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New logistic investment program

10

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$ 106 billion planned, approximately R$ 62 billionhave been successfully auctioned, surpassing the projectsawarded to the private sector in the past ten years

11

Campinorte - Lucas do Rio Verde railway

Curitiba subway

So Paulo subway line 18

Tamoios

Ports - 2nd stage - 18 contracts

Ports - 1st stage - 31 contracts

BR 262 (MG/ES)

BR 116 (MG)

BR 153 (GO/TO)

BR 101 (BA)

BR 040 (DF-MG)

BR 163/267/262 (MS)

BR 060/153/262 (DF/GO/MG)

BR 163 (MT)

VLT Goinia

Confins airport

Galeo airport

So Paulo subway line 6

BR 262 (MG/ES)

BR 050 (MG/GO)

Salvador subway line 2

InvestmentsIn R$ billion

2013

2014

Source: Mills, Goldman Sachs, and Credit Suisse


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Vales S11D project

So Lus airport

Transposition of theSo Francisco river*

Subway lines 4 and 5SP*

Viracopos andGuarulhos Airports*

CompanhiaSiderrgica do Pecmsteel mill*

North beltway*

Belo Montehydroelectric powerplant*

Norte-Sul railroad*

Duplication of BR-163e MT-364 highways

Thermal power plant -MA

Pulp mill expansion-RS

Salvador subway

Evo

lution

ofrevenue

generation

(Bas

is100=

Maxim

um

mon

thlyrevenue

in

the

lifeo

fcons

truc

tion)

Time of Mills participation in the construction workaverage cycle duration is 24 months

Belo Monte hydroelectricpower plant

Norte-Sul railroad

Oeste-Leste railroad

Subway line 4SP

Companhia Siderrgica

do Pecm steel millBraslia airport

Fortaleza airport

Natal airport

BRT SulDF

Cais das Artes

Paraguau shipyard

Manaus thermal powerplant

Libras terminal

Colder, Teles Pires andFerreiraGomeshydroelectric power plantsComperjrefineryVale and Gerdau projectsEast beltway- SP

Gold and Silver monorail lines- SPMetropolitan Arch - RJSubway line 4RJ

BRT TranscariocaViracopos airportGuarulhos airportBeira-RiostadiumSurroundings of MaracanPorto Maravilha

Jirauhydroelectric powerplantAbreu e Lima refineryCSN steel plantParanaensesArenaManaus airportPantanalarenaNatal arenaBR-448Cuiab lightrailSubway line 2SPBRT Belo Horizonte

Newcontracts*

Contracts with growingvolume of equipment

Contracts with high volume

of equipmentContracts in the

demobilization process

* New streches

Important contracts per stage1in the evolution of monthlyrevenue from the heavy construction projects

12

1In 3Q13

Five hydroelectric power plants, two refineries, eight airports, and urban mobility projects inmajor cities


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1In 3Q13

Per sector

13

Public-Private

Partnership25.2%

Public21.5%

Private53.3%

Source of Funds

Heavy Constructioncharacteristics of the major projects inprogress

Industry22%

Infrastructure29%

Others10%

Airports16.7%

Urban mobility10.4%

Stadiums11.2%

World Cupand Olympics

38%


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45.5 45.547.3 47.5

55.155.7

55.7

24.1 22.820.2

24.3 25.1

29.4 28.2

52.9%

50.2%

42.7%

51.3%

45.5%

52.8%50.6%

19.7%18.3%

14.8%

18.6% 17.8%20.9% 19.7%

3Q12 3Q12* 4Q12 1Q13 2Q13 3Q13 3Q13**

Net Revenue EBITDA EBITDA Margin ROIC

In R$ million

* Excluding the positive impact of the provisions reversal in the amount of R$ 1.5 million in 3Q12.

1ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROIC was calculated considering atheoretical 30% income tax rate.


* * Excluding the positive effect of tax reversal in the amount of R$ 1.5 million in 3Q13.

3Q13/3Q12 3Q13/2Q13 CAGR 10-12


EBITDA 22% 17% 7%

Heavy ConstructionFinancial Performance

14

154.3

131.6

174.1

205.6

73.6

57.8

84.3

99.0

47.7%43.9%

48.5%

48.2%

24.1%

12.1%

17.2%18.1%

2010 2011 2012 3Q13LTM


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Real Estate

Mast climbing platform


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Growth drivers of the residential market: housing financing

16

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 EconmicoNewspaper, 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

17

31.729.1

27.2

60.4

1.4

5.9

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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Stages of industrialization of the construction process

19

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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Revenue Breakdown

Growth drivers in the residential market: geographic expansion

20

85%

61%

49% 45%

15%

39%

51% 55%

2009 2010 2011 2012 2013

New branches

Established branches

1Branches opened since November 2009


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21

18.3

30.6

23.4

19.8

23.3

67.4%

-23.5%

-15.4%

17.6%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2009 2010 2011 2012 2013

YoY(%)

Launches(inR$billion)

1 PDG, Cyrela, Direcional,Even, Eztec, Gafisa, Helbor, MRV, Rodobens, Tecnisa and Trisul

Source: Operational reports from companies, Criactive and Mills

Total launches1

in R$ billion

24.6

28.2 31.0

38.9

43.1

14.6%

10.2%

25.5%

10.7%

0%

5%

10%

15%

20%

25%

30%

35%

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2009 2010 2011 2012 2013

YoY(%)

Constructedarea(inmillion

m2)

Constructed area

in million m2

Launches in 2013 represent construction opportunities in2014


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60.5 60.5

66.0 64.9 66.572.4

33.8

29.426.1 27.7

24.6 24.4

55.9%

48.6%

39.6%42.8%

37.0%

33.7%

20.2%

16.9%12.6% 12.8%

9.3% 8.2%

3Q12 3Q12* 4Q12 1Q13 2Q13 3Q13


* Excluding the positive effect of R$ 5.3 million of tax contingency reversal in 3Q12

1ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROICwas calculated considering a theoretical 30% income tax rate.

3Q13/3Q12 3Q13/2Q13 CAGR 10-12


EBITDA -28% -1% 61%


Real EstateFinancial Performance

22

In R$ million

105.1

155.8

238.0

269.7

43.9

66.0

113.4102.8

41.7% 42.4% 47.7%38.1%

23.5%

14.3% 15.7%

10.6%

2010 2011 2012 3Q13LTM


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Castelo stadiumFortaleza, CE

Rental


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24

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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Aerial workplatforms

95%

Telescopichandlers

5%

Brazil - 2013Total: 29,500

Growth drivers in the motorized access equipment market:low penetration

25Source: Mills and Yengst Associates

Aerial workplatforms

78%

Telescopichandlers

22%

USA - 2011Total: 785,000

Fleet Profile

The Brazilian aerial platforms and telehandler fleet is very small compared to the US fleet; less

than 5%.

Modest rental penetration of 15% in Brazil. Rental penetration is approximately 40% in the USA,

60% in Japan and 80% in England.


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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

261Branches opened since January 2010


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In 2013, the Brazilian fleet of motorized access equipmentgrew 40% compared to 2012

27Source: Mills and Yengst Associates

8

11

16

21

30

35%

46%

33%

40%

20%

30%

40%

50%

60%

70%

80%

0

5

10

15

20

25

30

35

2009 2010 2011 2012 2013

Fleet size YOY (%)

Motorized access equipment fleet

In thousands of units


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RentalRecognition of our differentiation

28

2013

Nominated for Best Company for Access of the Year

Nominated for IPAF Training Center of the YearAward will be granted in April 2014

2011

Elected Best Company for Access of the Year


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67.4

74.2 76.1

90.1

93.9

38.0 36.9

43.6

49.352.3

56.5%

49.8%

57.3%54.7% 55.7%

19.8%16.9%

19.1% 18.5% 18.1%

3Q12 4Q12 1Q13 2Q13 3Q13


3Q13/3Q12 3Q13/2Q13 CAGR 10-12


EBITDA 38% 6% 66%

RentalFinancial Performance

29

In R$ million

95.1

175.4

253.5

334.4

51.0

93.6

141.2

182.1

53.6% 53.4% 55.7% 54.5%

19.2% 16.5% 18.2% 18.1%

2010 2011 2012 3Q13LTM

1ROIC: Return on Invested Capital. Until 4Q10, ROIC was calculated considering the effective income tax rate for the period, while in 1Q11 onwards ROICwas calculated considering a theoretical 30% income tax rate.



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Growth Plan

The potential penetration of our services for increasing


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The potential penetration of our services for increasingproductivity enables us to grow independently of theeconomic performance

60%

35%

31%

44%

30%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

2009 2010 2011 2012 9M13

Mills GDP Industrial GDP Civil Construction GDP

Source: Mills and Bacen

Companys revenue versus GDPyoy growth (%)

31


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7447 51

77

37

104185

60

86

25

131

163

161

217

169

15.4

18

20

26

324

413

292

406

231

2010 2011 2012 9M13 2014 Capex Budget

Rental

Real Estate

Heavy Construction

In R$ million

Capex

9M13 Realized /2013 Budget (%)

86%

77%

79%

Our 2014 capex budget for rental equipment is R$ 231 million

32 Reclassified excluding the Industrial Services business unit, for comparison.


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Capturing opportunities maintaining the commitment to lowleverage

33

0.7x

1.0x

1.6x 1.6x

1.4x

1.3x

1.2x 1.2x 1.2x

1.4x

1.3x

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13

Target = 1.0x


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5 6 6 6 6 68

5 6

14 15 1617

4 4

1416

17

26

5

15 16

34

3739

51

2007 2008 2009 2010 2011 2012 2013

Rental

Real Estate

Heavy Construction

Evolution of the number of branches

34

+12

Excluding the Industrial Services business unit branches, for comparison.


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MillsInvestor Relations

Tel.: +55 21 2123-3700

E-mail: [email protected]

www.mills.com.br/ri

Documents

BTG Pactual XV Brazil CEO Conference 2014*