Presentation of 3Q15 Results

November 5th, 2015

Changes in the organization structure

Since 3Q14, organizational structure was resized, with annualized personnel
savings estimated at R$ 24 million per year
Non-recurring layoff costs of R$ 3.1 million in 3Q15

Organization structure as of September 2015:

Srgio Kariya
CEO

Ricardo Gusmo
Commercial Officer
for Construction

Avelino Garzoni
Engineering and
OperationsOfficer

Marcelo Yamane
Rental Officer

Frederico Neves
CFO and IRO

Deise Vieira
Human Resources
Officer

Construction

Excluding

Presentation of 3Q15 Results 11/05/2015

costs with layoffs

Adjustments aiming to increase synergies between Heavy

Construction and Real Estate operations and markets
The consolidation of the two business units have generated the Construction business unit
Market leader with more than 60 years of
experience
Focus on: infrastructure projects, industrial,
residential and commercial construction works.

Focus on: civil construction. Industry, retail e

others

Products: engineering solutions and rental of

formworks and shoring

Products: rental and sale of motorized access

equipment, such as aerial work platforms and
telescopic handlers

Services: planning, designing, technical

supervision, equipment and related services
Clients:

Elected "Best Company for Access of the Year"

by the International Awards for Powered
Access (IAPA Awards) for the year of 2011

Construction

Market leader; started in 2008

Presentation of 3Q15 Results 11/05/2015

Rental

Financial Performance1
In R$ million
34.8%

832.3

35.3%
30.6%
181.9

191.5

794.2

50.9%
48.4%

28.9%

25.7%

665.5

42.3%

163.9

630.1

147.9
136.5

30.2%
403.1
339.0

9.4%
66.7
55.6
6.6%

335.7

14.7%

14.1%

52.1

47.4
4.0%

35.1
2.0%

172.6

151.5

0.8%

190.3
6.6%
0.8%

64.3

3.2
3Q14

4Q14
-6.2
Net revenue

1Q15
-14.5
EBITDA

2Q15
-8.2

3Q15

2012

2013

2014

LTM3Q15
-46.1

-17.2

Net earnings

EBITDA margin (%)

ROIC

3Q15/3Q14

3Q15/2Q15

LTM3Q15/2014

CAGR 12-14

Net revenue

-29%

-8%

-21%

9%

EBITDA

-47%

-33%

-41%

0%

n.a.

110%

n.a.

-35%

Net earnings

Reclassified excluding the Industrial Services business unit for comparison. It does not exclude non recurring items.

Presentation of 3Q15 Results 11/05/2015

Net Revenue Breakdown

191.5
48.6
51.9

Per business unit

R$ Million
147.9
31.6

191.5
11.0
19.1

41.2

91.0

74.5

68.7

3Q14

2Q15

3Q15

Heavy Construction

136.5
10.3
10.2

161.4

3Q14

Real Estate

Rental

Sales

125.9

116.0

2Q15

3Q15

Technical assistance and Others

3Q15/3Q14

3Q15/2Q15

Rental

-28.1%

-7.9%

-1.5%

Sales

-46.7%

-17.5%

-45.4%

-16.0%

Technical assistance and others

-6.8%

6.6%

-28.7%

-7.7%

Total

-28.7%

-7.7%

3Q15/3Q14

3Q15/2Q15

Rental

-24.5%

-7.7%

Heavy Construction

-20.6%

Real Estate
Total
5

147.9
9.6
12.3

136.5
26.5

41.8

Rental

Per service type

R$ Million

Presentation of 3Q15 Results 11/05/2015

Sales of semi-new equipment totaled R$ 20.5 million in 9M15

Equipment sales
In R$ million

30
25
20
15

10
5
0
1Q14

2Q14

3Q14

4Q14

Sales of semi-new equipment

Presentation of 3Q15 Results 11/05/2015

1Q15

2Q15

Sales of new equipment

3Q15

Evolution in Net Revenue per business unit

Net Revenue Evolution

In R$ million

0.4

2.6

8.1

1.8
65.3
0.7

35.6
Heavy
Construction

2Q15

Volume

Price
and Mix

33.4
25.0

3Q15

Presentation of 3Q15 Results 11/05/2015

2Q15

Real Estate

Volume

59.8

1.4

Rental

22.9

Price 3Q15
and Mix

2Q15

Volume

Price 3Q15
and Mix

Utilization rate dropped in Construction and increased in

Rental

100%

Construction

Rental
100%

80%
80%
60%
60%
40%

20%

40%

LTM 3Q15 average = 52.3%

0%

0%

20%

Presentation of 3Q15 Results 11/05/2015

LTM 3Q15 average = 61.6%

Heavy Construction - Rental revenue breakdown in 3Q15

Source of funds

Per sector

R$ 33.4 million

R$ 33.4 million

PPP
15.4%

Others
13%

Industry
12%

Public
47.8%
Private
36,8%

Presentation of 3Q15 Results 11/05/2015

Infrastructure
75%

Important construction Works with Mills participation

North e Northeast
Vales S11D project
Votorantims cement factory
Transposition of So Francisco river
Companhia Siderrgica do Pecm
steel mill
Transnordestina Railroad
Beira-Mar set
Salvador subway

Central West and South

BR 163 highway -MT
So Manoel Hydroelectric power
plant
Colder Hydroelectric power
plant

Southeast
Jirau Hydroelectric
power plant
Gold Monorail Line
North Beltway
Subway line 5 SP
Olympic Park
Subway line 4 - RJ

Galeo Airport
Jo Elevated road
duplication - RJ
CSN project
Gerdau project
Duplication of BR 381
Rio Manso water
treatment center
States wtih Mills presence

10

Presentation of 3Q15 Results 11/05/2015

Real Estate - Rental revenue breakdown in 3Q15

Rental revenue per segment

R$ 22.9 million
Others
12%

Residential
49%
Commercial
39%

11

Presentation of 3Q15 Results 11/05/2015

Launches and sales continued to decline in 3Q15

Total launches1

Total sales1

in R$ billion

in R$ billion
5.0

100%

6.0

95%

4.5
5.2

80%

75%

4.4
4.1

4.5

4.2

5.0

4.6

4.0

3.4
4.0

3.7
Var. (%)

35%

2.9
15%

2.6

3.0

11.9%
-5%

2.0

-7.6%

-12.7%

-65%

3Q12

2.5

20%

2.0

9.2%

0%

-2.2%
-2.0%

-4.0%

3Q13

3Q14

1.5
1.0

-19.9%

-45%

3Q11

3.0

-21.1%

1.0

3Q10

3.5

-20%

-25%
-22.6%

3.3

40%

Var. (%)

4.0

Launches (in R$ billion)

55%

3Q15

Launches (in R$ billion)

60%

-40%

0.5
-

-60%

3Q10

3Q11

3Q12

1 Cyrela,

3Q13

3Q14

3Q15

Direcional, Even, Gafisa, Helbor, MRV and Rodobens.

Source: Operational reports from companies and Mills

12

Presentation of 3Q15 Results 11/05/2015

Construction sector remains the main user of Mills

motorized access equipment

Rental revenue by use

Net revenues per type of service

In 3Q15

In 3Q15

Spot
9%

Technical
Assitance
2%

Sales
7%

Others
6%

Industry
19%

Construction
72%

Rental
85%

13

Presentation of 3Q15 Results 11/05/2015

Evolution of COGS, ex-depreciation

3Q15
63.6
51.4

51.5

38.2

37.1

47.1

48.5

49.2

38.2

25.5
3Q14

31.5

37.1

Others
6%

Freights
8%
Write-off
of Assets
6%

Personnel
41%

39.4
Sales
14%

13.2

14.5

15.6

11.4

9.8

3Q14

4Q14

1Q15

2Q15

3Q15

Material
25%

Execution of works and warehouse

Sales and write-off of assets

Sales and write-off of assets

Execution of works and warehouse
COGS total, ex-depreciation

3Q15/3Q14

3Q15/3Q14*

3Q15/2Q15

-61,4%

-25,4%

-13,8%

3,2%

3,2%

6,1%

-22,7%

-4,3%

1,4%

1 Excluding

14

Presentation of 3Q15 Results 11/05/2015

non-recurring effects of R$ 12.3 million

Evolution of COGS, ex-depreciation, per business unit

COGS, ex-depreciation
R$ million
1.0

0.3

1.2

CPV, ex
Vendas e
depreciao baixas de
2T15
ativos

Pessoal

0.4

Manuteno

1.2

27.1

Fretes

Outros

CPV, ex
depreciao
3T15

0.7

22.1

20.5

15

0.2

Construction

28.0

COGS, ex
depreciation
2Q15

1.2

Rental
Sales and Asset
write-offs

Presentation of 3Q15 Results 11/05/2015

Maintenance

Freight

COGS, ex
depreciation
3Q15

Commercial, Operating and Administrative G&A were 25%

lower yoy.
Changes in G&A , ex-depreciation and ADD
52.5
1.4
9.8

52.6
5.0
9.9

48.2
3.7
10.0

41.3

37.7

4Q14

3Q14

45.3
2.9
10.9

44.3
1.7
11.3

34.4

31.5

31.2

1Q15

2Q15

3Q15

Commercial, Operating and Administrative

General Services

3Q15/3Q14

3Q15/2Q15

Commercial, Operating e Administrative

-24.3%

-0.7%

General Services

15.6%

3.5%

Other Expenses

20.1%

-41.4%

SG&A total, ex-depreciation and ADD

-15.6%

-2.3%
1 G&A

16

Other Expenses

Presentation of 3Q15 Results 11/05/2015

corresponds to the sum of Rental and Construction business units

ADD reached 5.9% of net revenue in 3Q15

Changes in allowance for doubtful debts
(ADD)

15.0%

As % of net revenues

13.0%

12.8%
Ex clients under investigation

11.0%

9.0%

7.0%

6,8%
5.9%
5,9%

5.3%
4,2%

5.0%

3.0%

1.7%

2.1%

0.3%

2010-2014 average = 2.3%

2.0%

1.2%

1.0%

2010
-1.0%

17

2011

2012

Presentation of 3Q15 Results 11/05/2015

2013

2014

1Q15

2Q15

-0,8%

3Q15

EBITDA impacted by non-recurring effects of R$ 3.4 million

Changes in EBITDA
In R$ million

60

1.5

11.3

50

1.5

40

0.2

1.8

6.0
1.6

30
52.1
20
10
0

18

Presentation of 3Q15 Results 11/05/2015

35.1

Construction Financial Performance

474.9

48.0%

42.5%

412.0

100.5

423.4

98.0
84.3
32.8%

323.4

73.4
67.7
201.9

197.7

17.6%
139.0

16.7
16.6%

3Q14

22.4
22.9%
4.4%

4Q14

15.4%
13.0
1.2%
1Q15

17.3%
12.7

56.8

8.7

-2.2%

-3.1%

2Q15

3Q15

Net revenue

4.4%

12.8%

-3.1%

2012

EBITDA

2013

EBITDA margin (%)

2014

LTM3Q15

ROIC

3Q15/3Q14

3Q15/2Q15

LTM3Q15/2014

CAGR 12-14

Net revenue

-33%

-8%

-24%

1%

EBITDA

-48%

-32%

-59%

-18%

It does not exclude non recurring items.

19

Presentation of 3Q15 Results 11/05/2015

Rental Financial Performance

370.8
357.3

In R$ million

57.9%
55.6%
53.0%

306.7

91.0
54.9%

83.9

53.0%

79.6

253.5

74.5
43.3%

68.7

39.6%

207.0

38.4%

43.5%
196.7

50.0
140.8

133.5

39.4
14.5%

33.2
11.5%

34.4
8.8%

18.2%

18.2%
26.4

7.4%

11.5%

5.2%

5.2%

3Q14

4Q14

1Q15

2Q15

Net revenue

2012

3Q15
EBITDA

2013

EBITDA margin (%)

2014

LTM3Q15

ROIC

3Q15/3Q14

3Q15/2Q15

LTM3Q15/2014

CAGR 12-14

Net revenue

-24%

-8%

-17%

21%

EBITDA

-47%

-33%

-32%

18%

It does not exclude non recurring items.

20

Presentation of 3Q15 Results 11/05/2015

Cash generation
Adjusted operational cash flow and free cash flow
R$ million
384

373
310

296

207

199
159
116

102

79

105
74

92

86
45

11

70

68

65
37

55

-13

-31

-154

Adjusted operational cash flow

-209

Free cash flow

-357
Before the interest paid and increased by the receipts from asset and intangible sales.
Net cash generated by the operating activities minus net cash applied in investment activities

21

Presentation of 3Q15 Results 11/05/2015

Debt profile

Debt, as of September 30, 2015

In R$ million
574

47

Principal amortization schedule

In R$ million

193

428
193

174

150
106

106
38

Principal Interests

Cash Net Debt

Position

Cash
position

2016

2017

2018

2019

2020

Credit lines avaiable,2

Used

R$ 15.9 million

Unused

R$ 328.8 million
2

22

Presentation of 3Q15 Results 11/05/2015

As of September 30, 2015

Unsecured overdraft account+ Secured bank credit lines

Debt indicators
EBITDA/Net financial results

Net Debt/EBITDA

5.9
4.9
4.0

3.9

1.8
3.5

3.3
2.9

3Q14

4Q14

2.3

2.2

4.5

1Q15 1Q15 2Q15 2Q15 3Q15 3Q15

1.5

3Q14

1.7

4Q14

1.8

1.9

1.6

1Q15 1Q15 2Q15 2Q15 3Q15 3Q15

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

23

Presentation of 3Q15 Results 11/05/2015

R$ 40.1 million of non-recurring effects from 1Q15 , R$ 44.9 million from 2Q15 and R$ 34.6 million from 3Q15

Mills - Investor Relations

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