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Rio de Janeiro, March 4, 2013 - Mills Estruturas e Servios de Engenharia S.A. (Mills) presented in 2012 record net revenue, EBITDA and net earnings, with expansion in profitability over the year 2011. In 2012 Mills maintained its strong growth trend with rates above 30% in the Heavy Construction, Jahu and Rental segments, despite the weak performance of the Brazilian economy, showing the potential penetration of our services that aim to increase productivity in the civil construction industry, such as Heavy Construction and Jahu, and in several other industries, such as Rental , stated Ramon Vazquez, Mills president and CEO. Main highlights of Mills 2012 performance: Record net revenue of R$ 879.3 million, 29.8% higher than 2011. Record EBITDA(a) of R$ 358.4 million, 50.5% above 2011. EBITDA margin of 40.8%, versus 35.1% in 2011. Net earnings of R$ 151.5 million, 64.4% above 2011. Capex (b) reached R$ 297.6 million in 2012, of which R$ 76.3 million in the last quarter. Return on invested capital (ROIC) (c) of 14.7%, against 12.3% in 2011. Proposal for shareholder remuneration totaling R$ 41.8 million (gross amount), to be paid as interest on equity, subject to approval at Mills Shareholders Meeting. Success in the introduction of new technologies to enable productivity gain, such as Alumills, Modular System and mast climbing platform. Award for best access company of the year at International Awards for Powered Access (IAPA Awards).
Table 1 - Main financia l indicators
4Q11
in R$ millions
Net revenue EBITDA EBITDA margin (%) Net earnings ROIC (%) Capex
Excluding the positive effect of reversal of allowance for doubtful debts and tax contingency in the amount of R$ 6.8 million in 3Q12.
The financial and operational information presented in this release, except when otherwise indicated, is in accordance with a ccounting policies adopted in Brazil, which are in accordance with international accounting standards (International Financial Reporting Standards - IFRS)
Investor Relations Alessandra Gadelha IR Office r Camila Conrado IR Specia list Carolina Gonalves IR Analyst
ri@mills.com.br
Revenue
Net revenues reached a new annual record, R$ 879.3 million, in 2012, with the branches opened in the last three years contributing 38.0% of this amount. The increase of 34.0% in equipment rental revenues was the main growth driver for the total revenue, followed by the expansion of 82.7% of sales revenues in the same period.
Brookfield, Cyrela, Direcional, Even, Eztec, Gafisa, Helbor, MRV, Rodobens, Tecnisa and Trisul.
4Q12 Results
Net revenues reached R$ 246.8 million in 4Q12, a new quarterly record, 11.1% higher qoq. Sales revenues presented qoq growth of 50.6%, due to higher sales in the Industrial Services , Jahu and Heavy Construction segments, while equipment rental revenues expanded 7.0%.
EBITDA
Cash generation, as measured by EBITDA, reached R$ 358.4 million in 2012, an annual record, with 50.5% yoy growth. The EBITDA margin was 40.8% in 2012, against 35.1% in 2011. In 4Q12, EBITDA amounted to R$ 91.7 million, with a slight qoq expansion. The EBITDA margin was 37.1%, against 40.7% in 3Q12. We had higher maintenance and freight costs in the last quarter to enable us to meet the strong demand from our clients, during a period when we were working with utilization rates above normal level. We believe that as we make our investments in 2013, the utilization rate, maintenance activity and, therefore, operating margins will return to normal levels.
Net Earnings
Net earnings presented annual record amount of R$ 151.5 million in 2012, with a yoy expansion of 64.4%. This increase in net earnings is explained by the rise in EBITDA (R$ 120.3 million), partially offset by the expansion in the amount of depreciation (R$ 32.4 million) and negative net financial result (R$ 7.3 million). The net financial result was a negative R$ 39.1 million in 2012, versus negative R$ 31.8 million in 2011, since the increase in net debt was partially offset by lower interest rates in the period. Net earnings reached a new quarterly record of R$ 41.6 million in 4Q12, 19.9% above the previous quarter, influenced by the recognition of payment of interest on equity (JCP) and the shareholder remuneration from Rohr of R$ 3.2 million, of which R$ 1.5 million and R$ 1.7 million related to 2011 and 2012 fiscal years, respectively.
ROIC
ROIC reached 14.7% in 2012, against 12.3% in 2011. The yoy improvement in ROIC is explained by the recovery of demand in the heavy construction sector and the maturing of the large investments made in the residential and commercial markets in 2011. ROIC was 14.5% in 4Q12, equal to 3Q12, since the positive impact of sales of semi-used equipment in the Industrial Services and Rental segments was offset by the negative effect of higher operational costs. It is worth mentioning that the recognition of the interest on equity did not affect ROIC, since it is calculated using a theorical tax rate of 30%, rather than the effective tax rate.
Excluding reversals of provisions totaling R$ 6.8 million in 3Q12. For further information, refer to section Provision Reversals in Mills press release for 3Q12 results.
Capex
Mills invested R$ 297.6 million in organic growth in 2012. In 4Q12, gross investments amounted to R$ 76.3 million, of which 70.4% in the Rental segment, since we have already started receiving new motorized access equipment related to the agreement made in October 20124. The Jahu segment was responsible for 11.9%, Heavy Construction for 8.3% and Industrial Services for 0.5 %. The 2013 budget involves capital expenditures of R$ 296 million5. The issuance of non-convertible debentures in 2012 will ensure the financing of these investments, which could expand during 2013, in accordance with the development of the demand in our markets and with our geographic expansion.
3 4
For further information, refer to the section Debt indicators in Mills press release for 3Q12 results. For further information, refer to press release Mills makes agreement to buy equipment for the Rental division, of October 24, 2012. 5 For further information, refer to press release Mills to invest R$ 296 million in 2013, of December 20, 2012.
4Q12 Results
The main projects in 4Q12, in terms of revenues, were: South and Southeastern regions: the Comperj refinery, Maracan stadium, Rio Port Complex, BRT Transcarioca and CSN steel plant, in Rio de Janeiro; subway lines 2 and 5, monorail lines Silver and Gold, and Viracopos airport, in So Paulo; Vale projects in Minas Gerais; Paranaenses arena, in Paran; and BR-448 and Grmio stadium, in Rio Grande do Sul. Midwest, North and Northeast regions: the Jirau, Colder, Teles Pires and Belo Monte hydroelectric power plants, Norte-Sul and Transnordestina railways, Abreu e Lima refinery and Pernambuco arena, in Pernambuco; BRT Belm, Vale projects and the Suzano pulp and paper plant, in Par and Maranho; Manaus airport, in Amazonas; and the stadiums Fonte Nova, in Bahia, and Verdo, in Mato Grosso. COGS presented a qoq expansion due to higher volume of sales and increase in the maintenance activity. The volume of returns was above the normal level in the last quarter, largely related to the stadiums that will host the Confederations Cup next June, which associated with the low idle capacity and strong demand, resulted in the need to process equipment quickly, leading to higher personnel and material expenses. G&A expanded qoq in preparation for the opening of two new branches in the northeast region in 2013, given the large volume of construction work in the North and Northeast regions. EBITDA totaled R$ 20.2 million in 4Q12, with an EBITDA margin of 42.7% and ROIC of 14.8%, all negatively impacted by higher maintenance costs. In 2012, EBITDA amounted to R$ 84.3 million, with a yoy growth of 45.9%. The EBITDA margin was 48.5%, versus 43.9% in 2011, while ROIC was 17.2%, versus 12.1% in the previous year.
Jahu
The net revenue of Jahu totaled R$ 238.0 million in 2012, a new annual record, 52.8% higher than 2011. The rental revenue expanded R$ 60.7 million, or 45.9%, of which R$ 56.8 million came from greater volume of rented equipment. The branches which have opened since November 2009 contributed 51% of the revenue for Jahu in the last year (vs. 39% in 2011). We restarted the geographic expansion process opening a new branch in Belm, in the state of Par, in the last quarter; ending the year with 16 branches. We plan to open at least two new branches in 2013. The year 2012 was marked by the success of the consolidation of new equipment, such as Mills Deck, Alumills, SL-2000 formwork and the mast climbing platform, and a strong performance in larger construction projects, such as shopping malls, hotels and resorts, which require higher volumes of equipment and are longer term. Moreover, with the resumption of the Minha Casa, Minha Vida program, we doubled our sales of Easy-set formwork. Net revenues reached R$ 66.0 million in 4Q12, a new quarterly record, being 9.1% higher than 3Q12, with larger sales revenues contributing 57% of the increase. The utilization rate remains above the normal levels, with equipment rental revenue stable, since there was almost no purchase of new equipment in the last quarter. Consequently, to meet the strong demand of our clients on time in this scenario of low idle capacity and no new equipment, we had to perform maintenance in a shorter time-frame than normal, incurring extra expenses with personnel and material, as well as freight, in order to deliver the required equipment mix at the desired locations. In addition, there was an increase in the cost of sales due to the large volume of sales in the period. There was an increase in G&A, mainly due to expansion in the commercial and technical teams, in order to support the growth of business, including the opening of the new branch in Belm and new branches in 2013. EBITDA totaled R$ 26.1 million in 4Q12, with an EBITDA margin of 39.6% and ROIC of 12.6%, all negatively impacted by higher maintenance and freight costs. In 2012, EBITDA amounted to R$ 113.4 million, with a yoy growth of 71.9%, as a result of the maturation of investments made in the last twelve months. The EBITDA margin was 47.7%, versus 42.4% in 2011, while ROIC was 15.7%, versus 14,3% in the previous year.
Rental
The net revenue of Rental amounted to R$ 253.5 million in 2012, a new annual record, 44.5% above 2011. Higher volume of rented equipment contributed with 98.5% of the yoy expansion of R$ 65.5 million in equipment rental revenues. The branches opened since 2010 contributed 62% of the Rental segment revenue last year (vs. 58% in 2011). Our greatest achievement in 2012 was the award for Best Access Company of the Year at the IAPA Awards as an international recognition of our work to foster the motorized access market in Brazil. This year we are competing for the prize "Contribution to Safe Working at Height", that is, we are among the top four companies in the world that contributed the most in the market of aerial work platforms for safe working at heights. Additionally, the sales revenues from semi-used equipment outperformed the sales of new equipment this year. We understand that, as the average age of our fleet increases, the sale of semi-used equipment will grow and become an important means of financing fleet renewal, in order to maintain a low average fleet age and low maintenance costs. Net revenues totaled R$ 74.2 million in 4Q12, a new quarterly record, with 10.2% qoq growth, due to higher equipment rental revenue, as a result of the arrival of new equipment. The utilization rate remained at normal levels. There was a qoq increase in COGS, ex-depreciation, due to higher maintenance expenses spare parts, material and personnel as a result of the increase of the utilization rate in the period. There was an expansion in G&A, mainly due to growth in the commercial and technical teams and to expenses in order to improve branch facilities, to support their growth and prepare for the resumption of our geographic expansion in 2013, opening at least five new branches. EBITDA totaled R$ 36.9 million in 4Q12, with an EBITDA margin of 49.8% and ROIC of 16.9%, all affected by higher maintenance costs and G&A expenses. In 2012, EBITDA amounted to R$ 141.2 million, with a yoy growth of 50.8%. The EBITDA margin was 55.7%, versus 53.4% in 2011, while ROIC was 18.2%, versus 16.5% in the previous year.
4Q11
in R$ millions
Heavy Construction Jahu - Residential and Commercial Construction Industrial Services Rental Total net revenue
Table 4 Cost of goods and services sold (COGS) and gene ral, adminis trative and ope rating expenses (G&A) in R$ millions
4Q11
(g)
Costs of sale of equipment Costs of asset w rite-offs Equipment storage COGS, ex-depreciation G&A Total COGS, ex-depreciation + G&A
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100.0% 155.1
Excluding the pos itive im pact of the reversal of allowance for doubtful debts and of provision for fiscal contingencies amoun ting to R$ 6.8 million.
Heavy Construction Jahu - Residential and Commercial Industrial Services Rental Total EBITDA EBITDA margin (%)
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Excluding the positive impact of the reversal of allowance for doubtful debts and of provision for fisca l contingencies amounting to R$ 6.8 million.
4Q12 Results
Table 6 Investment per business segment
Realized
in R$ millions
Heavy Construction Jahu - Residential and Commercial Construction Industrial Services Rental Corporate Organic Grow th Acquisition Total Capex
4Q11
in R$ millions
3Q12 (B) 37.0 8.5 45.5 24.1 52.9% 19.7% 11.3 247.7 6.6
3Q12 (C) 37.0 8.5 45.5 22.8 50.2% 18.3% 11.3 247.7 6.6
4Q12 (D) 39.1 8.2 47.3 20.2 42.7% 14.8% 6.3 254.7 6.7
2012 (F) 146.1 28.0 174.1 84.3 48.5% 17.2% 50.5 241.8 24.8
(A) 32.5 3.5 36.1 19.5 54.0% 17.5% 16.9 222.0 5.6
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Net revenue Rental Technical support services, sales and others Total net revenue EBITDA EBITDA margin (%) ROIC (%) Capex Invested Capital Depreciation
Excluding the pos itive im pact of the reversal of allowance fo r doubtful debts am ounting to R$ 1.5 million.
Table 8 Jahu Res idential and Comme rcial Cons truction financial indicators
4Q11
in R$ millions
3Q12 (B) 49.2 11.4 60.5 33.8 55.9% 20.2% 22.8 365.8 7.4
3Q12 (C) 49.2 11.4 60.5 29.4 48.6% 16.9% 22.8 365.8 7.4
4Q12 (D) 49.9 16.1 66.0 26.1 39.6% 12.6% 9.1 388.2 8.7
2012 (F) 192.9 45.1 238.0 113.4 47.7% 15.7% 59.8 366.7 31.0
(A) 40.3 12.1 52.5 23.9 45.5% 16.3% 56.6 310.8 5.8
Net revenue Rental Technical support services, sales and others Total net revenue EBITDA EBITDA margin (%) ROIC (%) Capex Invested Capital Depreciation
Excluding the positive impact of the reversal of provision for fiscal contingencies amounting to R$ 5.3 m illion.
4Q12 Results
4Q11
in R$ millions
3Q12 (B) 30.3 18.5 48.8 0.1 0.2% -6.2% 0.2 123.7 2.9
4Q12 (C) 32.8 26.5 59.3 8.4 14.2% 13.3% 0.4 117.6 2.8
2012 (E) 135.8 78.0 213.8 19.4 9.1% 4.6% 4.9 123.3 11.4
(A) 39.5 10.7 50.2 2.3 4.7% -1.2% 4.1 133.3 2.9
Net revenue Maintenance New plants Total net revenue EBITDA EBITDA margin (%) ROIC (%) Capex Invested Capital Depreciation
4Q11
in R$ millions
3Q12 (B) 57.0 10.4 67.4 38.0 56.5% 16.3% 40.3 389.7 10.6
4Q12 (C) 64.3 9.9 74.2 36.9 49.8% 16.9% 53.7 417.1 11.8
2012 (E) 222.5 31.0 253.5 141.2 55.7% 18.2% 160.9 383.1 41.4
(A) 47.2 7.7 54.9 30.7 56.0% 18.6% 33.4 334.8 8.5
Net revenue Rental Technical support services, sales and others Total net revenue EBITDA EBITDA margin (%) ROIC (%) Capex Invested Capital Depreciation
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4Q11 193.5 (95.6) 97.9 (44.2) 53.7 (12.5) 2.7 (9.9) 43.8 (14.3) 29.5 125,657 0.24
3Q12 222.2 (105.2) 117.0 (48.3) 68.7 (11.2) 1.1 (10.1) 58.6 (20.6) 38.0 126,314 0.30
4Q12 246.8 (120.2) 126.6 (65.1) 61.6 (16.2) 8.6 (7.6) 54.0 (12.4) 41.6 126,399 0.33
2011 677.6 (340.4) 337.2 (175.2) 162.0 (46.6) 14.7 (31.8) 130.1 (38.0) 92.2 125,657 0.73
2012 879.3 (410.9) 468.3 (218.5) 249.9 (51.2) 12.1 (39.2) 210.7 (59.2) 151.5 126,399 1.20
Net revenue from sales and services Cost of products sold and services rendered Gross profit General and administrative expenses Operating profit before financial result Financial expense Financial income Financial result Profit before taxation Income tax and social contribution expenses Net incom e Number of shares at the end of the per iod ( in thousands) Net income per thousand shares at the end of the period R$
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4Q11
3Q12
4Q12
Assets
Current Assets Cash and cash equivalents Marketable securities Trade receivables Inventories Recoverable taxes Advances to suppliers Der ivative financial instruments Other current assets Total Current Assets Non- Current Assets Trade receivables Recoverable taxes Deferred taxes Deposits in court 2.6 31.6 4.9 10.9 50.0 Investment Pr operty, plant and equipme nt Intangible assets 87.4 872.9 45.5 1,005.8 Total Non- Current Assets Total Assets 1,055.8 1,280.6 2.5 29.5 2.8 11.5 46.3 87.4 978.6 51.6 1,117.6 1,163.9 1,691.9 2.5 30.7 11.9 45.1 87.4 1,003.3 54.5 1,145.3 1,190.4 1,664.1 35.2 139.1 11.2 22.1 11.5 2.8 3.0 224.9 299.4 168.1 21.3 27.8 6.9 0.0 4.6 528.0 44.2 159.6 194.8 26.9 35.0 6.7 6.5 473.7
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4Q12 Results
in R$ millions
4Q11
3Q12
4Q12
Liabilities Current Liabilities Suppliers Borrow ings and financings Debentures Salar ies and payroll charges Income tax and social contribution Tax refinancing program ( REFIS) Taxes payable Profit shar ing payable Dividends payable Der ivative financ ial instruments Other current liabilities Total Current Liabilities Non- Current Liabilities Borrow ings and financings Debentures Prov ision for tax, civil and labor risks Deferred taxes Tax refinancing program ( REFIS) Other non-current liabilities Total Non- Current Liabilities Total Liabilities Stockholders' Equity Capital Earnings reserves Capital reserves Valuation adjustments to equity Retained earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 527.6 212.0 (5.6) 2.1 736.1 1,280.6 536.2 210.9 (1.9) 0.3 89.2 834.7 1,691.9 537.6 321.8 0.2 (0.3) 859.3 1,664.1 71.1 268.4 16.1 10.5 0.6 366.7 544.5 40.4 537.3 11.0 9.9 0.6 599.2 857.2 30.2 537.5 9.9 2.4 9.8 0.4 590.2 804.7 35.9 65.3 6.1 25.0 2.7 0.4 8.1 7.9 21.9 4.4 177.7 46.1 109.1 13.2 37.2 4.7 0.9 9.9 11.8 18.8 6.3 258.0 47.8 41.8 13.0 27.6 0.9 18.6 20.1 36.2 0.8 7.8 214.5
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4Q11
4Q12
2011
2012
22.8 0.2 0.9 3.2 (4.3) (1.5) 9.9 (0.3) 0.9 31.7
30.1 (1.1) 2.1 8.4 (3.7) 0.1 14.4 3.9 (0.1) 54.0
76.2 1.7 3.1 7.9 (19.3) (1.5) 38.9 11.4 1.2 119.6
Changes in assets and liabilities Trade receivables Inventories Recoverable taxes Deposits in court Other assets Suppliers Salaries and payroll charges Taxes payable Other liabilities (11.8) 0.6 4.2 0.1 (3.7) 6.0 (8.3) (5.3) (0.5) (18.5) Cash from operations Interest paid Income tax and social contribution paid Profit sharing paid Lawsuits settled Net cash provided by operating activities Cash flow from investment activities Marketable securities Acquisitions of investments Acquisitions of fixed and intangible assets Revenue f rom sale of non current and intangible assets Cash used in investing activities Cash flow from financing activities Capital subscription Shares in treasury Costs of issues of shares Dividends and interest on capital inv ested paid Amortization of borrowings New borrowings / debentures Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 0.8 (0.0) 3.6 (8.0) 27.8 24.2 (37.1) 72.2 35.2 1.4 (69.6) (68.2) (255.2) 299.4 44.2 2.5 (0.5) (24.5) (86.3) 356.7 247.8 29.0 6.2 35.2 10.0 (0.0) (21.9) (95.2) 306.9 199.8 9.0 35.2 44.2 1.5 0.6 (102.1) 6.6 (93.4) (159.6) (74.5) 14.6 (219.6) 137.7 (92.9) (430.3) 26.1 (359.4) (159.6) (279.6) 46.1 (393.1) 57.0 (22.2) (2.7) (0.0) 32.1 (30.7) (5.7) 0.6 (0.4) (1.6) (0.1) (9.6) 8.6 1.4 (37.5) 70.5 (22.5) (15.3) 32.6 (27.2) (5.6) (6.0) (0.3) (5.7) 1.1 3.7 (2.9) 3.7 (39.2) 210.6 (32.2) (20.3) (17.5) 140.6 (71.6) (15.7) 13.5 (0.9) 4.2 (6.1) 2.6 7.9 3.1 (63.1) 315.0 (47.1) (55.1) (7.9) (2.6) 202.3
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4Q12 Results
This press release may include declarations about Mills expectations regarding future events or results. All declarations based upon future expectations . rather than historical facts. are subject to various risks and uncertainties. Mills cannot guarantee that such declarations will prove to be correct. These risks and uncertainties include factors related to the following: the Brazilian economy. capital markets. infrastructure. real estate and oil & gas sectors . among others. and government rules that are subject to change without previous notice. To obtain further information on factors that may give rise to results different from those forecasted by Mills . please consult the reports filed with the Brazilian Comisso de Valores Mobilirios (CVM. equivalent to U.S. SEC).
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