3Q15 earnings release

Investor Relations

BM&FBOVESPA: MILS3 and OTC-US: MILTY

Rio de Janeiro, November 4, 2015 - Mills Estruturas e Servios de Engenharia S.A. (Mills) announces its results for 3Q15.

Highlights
Teleconference
and Webcast
Date: November 5, 2015,
Thursday
Time:

Teleconference: +1 888 7000802 or +1 786 924-6977,

code: Mills

Webcast: www.mills.com.br/ri

Sales of semi new equipment of R$ 7.0 million in the third quarter of 2015

(3Q15), totaling R$ 20.5 million in 9M15.

12:00 pm Braslia time

9:00 am New York time
2:00 pm London time

Replay: +55 11 3193-1012 or

+55 11 2820-4012, code:
5482507# or
www.mills.com.br/ri

Positive free cash flow of R$ 55.3 million in 3Q15, reaching R$ 162.2 million

in the first nine months of 2015 (9M15).

Total revenue of R$ 136.5 million in 3Q15, 28.7% lower yoy and 7.7% lower

quarter over quarter (qoq).

Changes in the organizational structure generated non-recurring expenses of

R$ 3.1 million in 3Q15. Annual cost reduction is estimated at R$ 10 million.

EBITDA of R$ 35.1 million in 3Q15, with a reduction of 32.8% qoq, impacted

by lower revenues (-R$ 11.4 million), increased allowance for doubtful debts (+ R$ 6.0
million) and increase in costs of lay-off (+ R$ 1.3 million).

EBITDA excluding non-recurring items summed R$ 38.5 million in 3Q15, with

EBITDA margin of 28.3%.

3Q14

2Q15

3Q15

(C)/(A)

(A)

(B)

(C)

Net revenue

191.5

147.9

136.5

-28.7%

-7.7%

EBITDA

66.7

52.1

35.1

-47.4%

-32.8%

34.8%

35.3%

25.7%

80.5

56.9

38.5

-52.2%

-32.5%

n.a.

n.a.

-51.3%

-1.6%

in R$ million

EBITDA margin (%)

EBITDA ex nonrecurring items
Net profit (loss) for the period

3.2

-8.2

-17.2

ROIC LTM (%)

9.4%

2.0%

0.8%

Gross Capex

19.5

9.7

9.5

(C)/(B)

The financial and operating information contained in this press release, unless otherwise indicated, is in accordance with the accounting policies
adopted in Brazil, which are in conformity with the International Financial Reporting Standards (IFRS).

Business perspective
A survey conducted by the National Confederation of Industry (CNI Confederao Nacional da Indstria) continues to show
the slowdown in the construction industry activity. The indicator of activity level for the infrastructure industry was 36.0 points in
October, below the 40.91 points in July. The Federal Government estimates new auctions for highway, electric power and ports
still in 2015, which can influence the activity in 2016, but there are still uncertainties regarding the private sectors interest and
the difficulties to finance the projects.
In the real estate market, the launches of the listed companies 2 recorded a fall of 12.7% in 3Q15 as compared to the same
period of the previous year. According to ABECIP (Brazilian Association of Real Estate Loans and Savings Companies), the
volume of loans granted for purchase and construction of real estate totaled R$ 5.87 billion in August, a fall of 35.9% against the
same period of 2014.
In the motorized access equipment market, prices are pressured since the beginning of the year due to the high idleness in the
market.

Changes in the organizational structure

Since the end of 2014, Mills has carried out a series of adjustments in its organizational structure in order to strengthen the
concept of single undertaking and create synergies between its businesses, making them leaner and more agile as the current
times demand. As part of this process, in September 2015 the Company made changes in its workforce, which resulted in nonrecurring layoff costs of R$ 3.1 million in 3Q15, but that will allow for annual savings of R$ 10 million in personnel expenses.
Heavy Construction and Real Estate commercial management have been brought together in a single business unit.
Engineering and operational Officers functions were also consolidated. As a result, the Heavy Construction and Real Estate
business units will now be reported together, under the label Construction. We will continue to monitor Heavy Construction and
Real Estate revenues separately, due to its different market dynamics. The Rental business unit continues to be treated
separately due to the specific characteristics of its business. The Investor Relations department was integrated with the finance
department and a Human Resources Officer was hired to support these changes consistently and to take care of employees in
these difficult times.

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

In October we concluded the move of Mills headquarters from Barra da Tijuca to Jacarepagu, at the same address of the
warehouse and operations in Rio de Janeiro. The move, approved by the shareholders at the Extraordinary General Meeting
(EGM) held on October 13, aims at a closer proximity among the board of officers, administrative and operating departments,
improving the information flow and streamlining the decision-making process, as well as reducing expenses.
Mills continues its efforts to reduce costs and expenses, seeking to adapt to the uncertainties in the market in which it operates.
1

Values below 50 indicate perspective of slowdown in the industrys activity in the next six months, while values above 50 indicate perspective of expansion of the
industrys activity in the next six months.
2
Cyrela, Direcional, Even, Gafisa, Helbor, MRV and Rodobens.

3Q15 Earnings Release

Revenue
Net revenue reached R$ 136.5 million in 3Q15, a drop of 7.7% qoq and of 28.7% year-over-year (yoy).

Rental revenues dropped 7.9% in 3Q15 over the previous quarter, or R$ 9.9 million. Losses in price and mix of the three
business units were responsible for a contraction of R$ 11.3 million in revenues, of which R$ 3.2 million was in the Construc tion
business unit and R$ 8.1 million in the Rental business unit. The drop in prices is the result of a market shrinkage, resulting in
lower demand and increased idleness. Rental revenues in Construction business unit were also affected by a R$ 1.1 million
decrease in rented volumes, whereas in the Rental business unit, there was a positive effect in volume of R$ 2.6 million.
Net Revenue Evolution
In R$ million

0.4

2.6

8.1

1.8
65.3
0.7

35.6

33.4

Heavy
Construction

2Q15

Volume

25.0

Price
and Mix

3Q15

2Q15

Real Estate

Volume

59.8

1.4
Rental

22.9

Price 3Q15
and Mix

2Q15

Volume

Price 3Q15
and Mix

The utilization rate in the last twelve months was 52.3% in Construction, worse than the previous quarter mainly due to the
deterioration of the real estate market since volumes in Heavy Construction remained stable in the quarter. In Rental the
utilization rate in the last twelve months was 61.6%, reflecting an improvement in rental volume as compared to the previous
quarter.
100%

Construction

Rental
100%

80%
80%
60%

60%
40%

20%

0%

3Q15 Earnings Release

40%

LTM 3Q15 average = 52.3%

20%

LTM 3Q15 average = 61.6%

0%

Sales in the quarter totaled R$ 10.2 million, of which R$ 7.0 million related to semi new equipment. Sales of semi new
equipment totaled R$ 1.6 million in Construction and R$ 5.4 million in Rental, part of it coming from equipment exports. In
August, Rental closed an equipment sale agreement estimated at EUR 8 million, a revenue that will be recognized as the
equipment are delivered, which are estimated to occur during 4Q15 and 1Q16.

Costs
COGS (Cost of Goods Sold), excluding depreciation, totaled R$ 49.2 million in 3Q15, 1.4% up from the previous quarter and
22.7% down from 3Q14. In 3Q15, COGS was impacted by the change of address from Simes Filho branch to Camaari, which
generated non-recurring expenses of R$ 0.3 million. The move was necessary since Simes Filho branch had not enough
space to store equipment that were previously located in the Bahias warehouse sold in 2013 together with the sale of
Industrials Services business unit.
Mills COGS are indicated in the table bellow. Costs of job execution and equipment storage include expenses on personnel,
maintenance, bulk material, transfers between branches, among other items.
COGS, ex-depreciation in 3Q15
R$ 49.2 million
3Q14
in R$ million

2Q15

(A)

(B)

3Q15
(C)

(C)/(A)

(C)/(B)

Sales and asset write-offs

25.5

11.4

9.8

-61.4%

-13.8%

Sales and asset write-offs, ex- Easy Set adjustments

13.2

11.4

9.8

-25.4%

-13.8%

Job execution and equipment storage(g, h)

38.2

37.1

39.4

3.2%

6.1%

Total COGS, exc. depreciation

63.6

48.5

49.2

-22.7%

1.4%

Freight
8%
Assets
write-off
6%

Others
6%

Workforce
41%

Sales
14%

Bulk
Material
25%

In 3Q14, costs of sales and asset write-offs were impacted by R$ 12.3 million in Easy Set adjustments that, if not considered,
would amount to R$ 13.2 million in the quarter. Thus, costs of sales and asset writes-offs, excluding the Easy Set adjustments,
decreased by 25.4% in 3Q15 against 3Q14, as a result of the drop in sales revenues and indemnities in the period (-38.0%).
Quarter-over-quarter, the decrease in COGS in Construction is due to lower sales and asset write-offs costs (-R$ 1.2 million), a
greater rationalization of freight costs (-R$ 1.2 million), partially offset by the increase in maintenance costs (+R$ 1.0 million),
such as utilization of wooden sheets in formworks. In Rental, the growth as compared to the previous quarter is due a greater
consumption of spare parts for machinery maintenance, which lead to an increase of R$ 1.2 million in maintenance costs, and a
larger volume of contracted freight between units (+R$ 0.7 million). COGS in 3Q15 was impacted by R$ 0.6 million in layoff
costs.

1,2

COGS, ex-depreciation
R$ million
1,2
1,0
0,3

COGS, ex-depreciation
R$ million
0,2
0,4

28,0

1,2

0,7

27,1

22,1

20,5
Construction
COGS, ex Sales and Workforce Maintenance
depreciation Asset write2Q15
offs

3Q15 Earnings Release

Rental
Freight

Others

COGS, ex
COGS, ex
depreciation depreciation
2Q15
3Q15

Sales and
Asset writeoffs

Maintenance

Freight

COGS, ex
depreciation
3Q15

The proportion of COGS over net revenue has grown since last year. Further to the decrease in sales margins, which impacted
this ratio, this result is impacted by personnel costs that are not reduced in the same proportion as the increase in equipment
idleness. The costs of operational staff and materials used in the maintenance activity also did not decrease because more
equipment have entered the warehouses as a result of higher idleness.

Cost of Job Excution and Equipment storage

evolution
R$ Million

Cost of sales and assets write-offs evolution

R$ Million

33%

50.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0

46%

46%

52%

1.8

3.9

4.7

11.4

10.5

10.9

4Q14

1Q15

57%

55%

3.2

3Q14*

3.0

8.2

6.8

2Q15

3Q15

40.060%
50%
30.040%
20.030%
20%
10.0
10%
0.00%

29%
23%

25%

14.9

14.7

23%

14.2

14.9

23.0

24.5

2Q15

3Q15

13.3
23.3

3Q14*

22.4

18.1

4Q14

1Q15

35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%

Equipment Storage
Assets write-offs

Job Execution

Cost of Sales

Cost of Job Excution and Equipment storage / Rental net

revenue+Technichal Assistance

Cost of sales + assets write-offs/ Sales net revenue+indemnities

* Excluding Easy Set adjustment of R$ 12.3 million

Expenses
SG&A (Selling, General and Administrative Expenses)3, excluding depreciation and allowance for doubtful debts (ADD), totaled
R$ 44.3 million in 3Q15, 2.3% down from 2Q15 and 15.6% down from 3Q14. The table bellow presents SG&A breakdown and
shows the effects of cost reduction initiatives performed until now. The major impact was the contribution to a reduction of
commercial, operational and administrative SG&A of 24.3% yoy.
This reduction is higher in real terms, considering the average raises of 8% from labor disputes. The restructuring effect
performed this quarter provides estimated annual savings of R$ 10 million.
3Q14

2Q15

3Q15

(C)/(A)

(A)

(B)

(C)

Selling, Operating and Administrative

41.3

31.5

31.2

-24.3%

-0.7%

General Services

9.8

10.9

11.3

15.6%

3.5%

Other expenses

1.4

2.9

1.7

20,1%

-41.4%

Total SG&A, ex- depreciation and ADD

52.5

45.3

44.3

-15.6%

-2.3%

in R$ million

(C)/(B)

The SG&A relating to Selling, Operating and Administrative functions include current expenses of various departments,
including sales, marketing, engineering, projects and the administrative back office, such as HR and Financial
departments.

General Services comprise the expenses incurred by the head office and the various branches (rents, fees, security
and cleaning, mainly).

Other expenses are items in great part without cash effect, such as provisions for stock option programs, provisions for
contingencies, provisions for slow-moving inventories and some occasional disbursements.

General Services expenses increased due to contractual adjustments of property rental and security and cleaning services.
Besides, there were changes of address of some branches, which also impacted this account.
Other expenses presented a reduction due to lower stock options expenses.

G&A corresponds to the sum of the Rental and Construction business units.

3Q15 Earnings Release

Allowance for doubtful debts

ADD amounted to R$ 7.9 million, or 5.9% of the net revenue in 3Q15, against 1.2% in 2Q15.
The net effect in the allowance for doubtful debts in the quarter from customers involved in ongoing federal investigations was of
only R$ 0.1 million in the quarter. The constitution of new provisions had a higher impact in the Rental business unit, whereas
reversals benefited the Heavy Construction business unit. Net receivables exposure to these customers totaled R$ 29 million at
the end of September 2015, versus R$ 21 million at the end of June 2015. In the last twelve months, the allowance for doubtful
debts amounted to R$ 53.2 million, of which R$ 21.8 million relating to customers involved in the investigations.
Changes in allowance for doubtful debts
(ADD)

15,0%

As % of net revenues

13,0%

11,0%

12,8%
Ex clients under investigation

9,0%

7,0%

6,8%
5,9%
5,9%

5,3%
4,2%

5,0%

3,0%

1,7%

2,1%

2010-2014 average = 2.3%

2,0%

0,3%

1,2%

1,0%

2010
-1,0%

2011

2012

2013

2014

1Q15

2Q15

3Q15

-0,8%

ADD Balance/ Trades receivable overdue + extended

maturity

49.9%

3Q14

70.7%

70.4%

1Q15

2Q15

76.9%

57.9%

4Q14

3Q15

The graph above shows the effect of allowance for doubtful debts on the coverage of Mills past due receivables, including the
trade notes with maturities extended.
By business unit, ADD posted growth in Rental, stability in Heavy Construction, and decrease in Real Estate in 3Q15 as
compared to the previous quarter. The allowance for doubtful debts for each business segment is as follows:
3Q14

2Q15

3Q15

(C)/(A)

(C)/(B)

(A)

(B)

(C)

27.4%

-2.7%

n.a.

n.a.

n.a.

n.a.

-8.1%

n.a.

in R$ million
Heavy Construction
% of net revenue
Real Estate
% of net revenue
Rental
% of net revenue
Total allowance for doubtful debts
% of net revenue
3Q15 Earnings Release

2.3

2.9

2.9

4.3%

7.0%

7.0%

2.2

0.8

-0.3

4.5%

2.4%

-1.3%

4.3

-1.8

5.4

4.7%

-2.4%

7.9%

8.7

1.9

7.9

4.5%

1.2%

5.9%
6

EBITDA
Cash generation, as measured by EBITDA, reached R$ 35.1 million in 3Q15, 47.4% down from 3Q14 and 32.8% down from
2Q15, mainly due to the price and mix effect (- R$ 11.3 million) and increased allowance for doubtful debts in Rental business
unit (+ R$ 7.2 million). The result was also affected by the move of the Bahia branch to Camaari (+R$ 0.3 million) and
increased layoff costs, of R$ 3.1 million in 3Q15 versus R$ 1.8 million in 2Q15.
Change in EBITDA
In R$ million

60

1.5

11.3

50

1.5

0.2

1.8

6.0

40

1.6

30
52.1

35.1

20
10
0

The EBITDA margin was 25.7% in 3Q15, against 34.8% in 3Q14 and 35.3% in 2Q15. Excluding the layoffs in the period, the
move to Camaari and the allowance for doubtful debts relating to customers involved in ongoing investigations, EBITDA would
total R$ 38.5 million, with EBITDA margin of 28.3% in 3Q15.
Accumulated EBITDA for the twelve-month period ended September 30, 2015, LTM EBITDA, totaled R$ 190.3 million.
Excluding extraordinary items, such as inventory adjustments (R$ 2.3 million), restructuring indemnities (R$ 10.3 million), ADD
related to the effects of ongoing investigations (R$ 21.8 million) and expenses incurred on the move to Camaari (R$ 0.3
million), LTM EBITDA would be R$ 224.9 million.

Financial result
3Q14

2Q15

3Q15

(C)/(A)

(C)/(B)

(A)

(B)

(C)

10.4

6.9

8.9

-14.6%

28.2%

in R$ million
Financial income
Financial expense

28.2

23.0

24.1

-14.5%

4.9%

Financial result

-17.8

-16.1

-15.2

-14.5%

-5.2%

The finance result was negative by R$ 15.2 million in 3Q15, against a negative R$ 16.1 million in 2Q15, due to the decrease in
net indebtedness quarter-over-quarter, in spite of the increase in the average cost of debt for the period.

Net earnings
In 3Q15 Mills reported a loss of R$ 17.2 million, against a loss of R$ 8.2 million in 2Q15 and profit of R$ 3.2 million in 3Q14.
Quarter-over-quarter, the variation is explained mainly by the R$ 17 million decrease in EBITDA, impacted by the decrease in
revenue (-R$ 11.4 million), increase in ADD (+R$ 6.0 million) and layoff costs (+R$ 1.3 million).

ROIC
ROIC was 0.8% in 3Q15, against 2.0% in 2Q15, impacted mainly by lower average prices of rental volume and increased
allowance for doubtful debts in the period.
3Q15 Earnings Release

Debt and indebtedness indicators

Mills total debt was R$ 618.2 million as of June 30, 2015, versus R$ 620.5 as of September 30, 2015. We closed 3Q15 with a
net debt(e) position of R$ 428.0 million against R$ 480.2 million at the end of 2Q15.
The Companys debt is 31% short-term and 69% long-term, with an average maturity of 3.0 years and average cost of
CDI+0.95%. In terms of currency, 100% of Mills debt is in Brazilian Reais.
Leverage, as measured by net debt/LTM EBITDA, was 2.2x in 3Q15. LTM EBITDA/Financial result was of 2.9x in the same
period. Excluding non-recurring items of the last twelve months, net debt/LTM EBITDA was 1.9x, while LTM EBITDA/Financial
result reached 3.5x.
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

Cash flow
Cash flow from operating activities, before interest paid plus proceeds from sale of property, plant and equipment and intangible
assets, amounted to R$ 65 million in 3Q15, against R$ 68 million in 2Q15, impacted by restructuring expenses. In the last
twelve months, cash flow from operating activities totaled R$ 310 million.
The free cash flow, measured by cash flow from operating activities minus investments, was positive by R$ 55.2 million in 3Q15,
totaling R$ 206.9 million in the last twelve months.
Adjusted operational cash flow and free cash flow
R$ million
384

373
310

296

207

199

159
116
79

102

105
74

92

86
45

11

70

68

65

37

55

-13

-31

-154

Adjusted operational cash flow

-209

Free cash flow

-357
Before interest paid plus proceeds from sale of property, plant and equipment and intangible assets
Net cash generated by operational activities, excluding net cash used in investment activities

3Q15 Earnings Release

The cash flow generated by investing activities was positively impacted by the R$ 18.6 million received in July from the sale of
the Industrial Services business unit occurred in 2013.
Mills invested R$ 9.5 million in 3Q15, of which R$ 4.2 million in rental equipment and R$ 1.6 million in equipment licenses,
which are disbursed every five years.

Share buyback program

Up to September 30, 2015, the Company acquired 2,285,300 shares, with a total value of R$ 19.8 million, the last acquisition
being made in 1Q15. During 3Q15, no shares were acquired, aiming at preserving cash generation for the Company.
The Board of Directors approved in 2Q15 the sale of 6,878 shares, which were held in treasury, to attend the exercise of stock
options. As of September 30, 2015, Mills holds 2,278,422 shares in treasury.

Tables
Table 2 Net revenue per type
in R$ million

Rental

3Q14

2Q15

3Q15

(C)/(A)

(C)/(B)

(A)

(B)

(C)

161.4

125.9

116.0

-28.1%

-7.9%

Technical support services

1.3

1.8

2.6

104.6%

43.2%

Sales

19.1

12.3

10.2

-46.7%

-17.5%

Others

9.8

7.8

7.7

-21.1%

-1.8%

191.5

147.9

136.5

-28.7%

-7.7%

3Q14

2Q15

3Q15

Heavy construction

51.9

27.1%

41.8

28.3%

41.2

30.2%

Real estate

48.6

25.4%

31.6

21.3%

26.5

19.4%

Rental

91.0

47.5%

74.5

50.4%

68.7

50.4%

191.5

100.0%

147.9

100.0%

136.5

100.0%

Total net revenue

Table 3 Net revenue per business unit
in R$ million

Total net revenue

Table 4 Cost of goods and services sold (COGS) and general, administrative and operating expenses (G&A), ex-depreciation
in R$ million

3Q14

2Q15

3Q15

Costs of job execution

23.3

18.6%

23.0

23.9%

24.5

24.1%

Costs of sale of equipment

19.1

15.2%

8.2

8.6%

6.8

6.7%

Costs of asset write-offs

6.4

5.1%

3.2

3.3%

3.0

3.0%

(g)

(h)

14.9

11.8%

14.2

14.8%

14.9

14.7%

COGS

Equipment storage

63.6

50.7%

48.5

50.6%

49.2

48.4%

SG&A

52.5

41.8%

45.3

47.2%

44.3

43.6%

ADD

8.7

6.9%

1.9

1.9%

7.9

7.8%

SG&A + ADD relative to SI

0.7

0.6%

0.1

0.1%

0.3

0.3%

125.5

100.0%

95.9

100.0%

101.7

100.0%

Total COGS + G&A

Table 5 EBITDA per business unit and EBITDA margin
in R$ million

3Q14

2Q15

3Q15

Construction

16.7

25.1%

12.7

24.4%

8.7

24.8%

Rental

50.0

74.9%

39.4

75.6%

26.4

75.2%

66.7

100.0%

52.1

100.0%

35.1

100.0%

Total EBITDA
EBITDA margin (%)

3Q15 Earnings Release

34.8%

35.3%

25.7%

Table 6 Reconciliation of EBITDA

in R$ million

3Q14

2Q15

3Q15

(C)/(A)

(C)/(B)

(A)

(B)

(C)

3.2

-8.2

-17.2

-634.2%

110.2%

Financial result

-17.8

-16.1

-15.2

-14.5%

-5.2%

Income tax and social contribution expenses

-1.7

-1.1

5.5

-433.7%

-588.7%

Operational Results before Financial Result

22.7

9.0

-7.5

-133.1%

-183.4%

Depreciation

43.3

43.0

42.3

-2.3%

-1.7%

Results of continuing operations

Expenses (revenues) related to the Industrial services former business

unit

0.7

0.1

0.3

-59.8%

123.4%

EBITDA

66.7

52.1

35.1

-47.4%

-32.8%

Table 7 Investment per business unit

in R$ million

Actual

Budget

3Q14

2Q15

3Q15

9M15

2015

(A)/(B)

(A)

(B)

Rental equipment
Construction

10.8

5.1

4.2

10.5

10.0

4.7%

Rental

3.0

0.0

0.0

0.0

0.0

n.d.

Rental equipment

13.8

5.1

4.2

10.5

10.0

104.8%

Corporate and use goods

5.7

4.5

5.3

15.1

24.0

62.7%

Capex Total

19.5

9.7

9.5

25.5

34.0

75.1%

Table 8 Rental financial indicators

in R$ million

3Q14

2Q15

3Q15

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Rental

79.7

65.3

59.8

-25.0%

-8.4%

Technical support services, sales and others

11.3

9.2

9.0

-20.8%

-2.6%

Total net revenue

91.0

74.5

68.7

-24.5%

-7.7%

COGS, ex-depreciation

23.5

20.5

22.1

-5.9%

7.6%

G&A, ex-depreciation and ADD

13.3

16.3

14.9

12.1%

-8.9%

ADD

4.3

-1.8

5.4

n.a

n.a

EBITDA

50.0

39.4

26.4

-47.2%

-33.1%

EBITDA margin (%)

14.5%

7.4%

5.2%

ROIC (%)

10.4%

1.2%

-2.2%

3.6

0.4

0.2

-94.8%

-48.1%

Invested Capital

683.8

698.7

679.1

-0.7%

-2.8%

Rental net PP&E

584.3

570.2

545.2

-6.7%

-4.4%

Others

99.6

128.5

134.0

34.5%

4.3%

Depreciation

20.9

20.8

20.1

-3.6%

-3.2%

Net revenue

Capex

3Q15 Earnings Release

10

Table 9 Construction financial indicators

in R$ million

3Q14

2Q15

3Q15

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Net revenue
Rental

81.7

60.6

56.2

-31.2%

-7.2%

Heavy Construction

44.4

35.6

33.4

-24.8%

-6.3%

Real Estate

37.3

25.0

22.9

-38.7%

-8.5%
-10.1%

Technical support services, sales and others

18.8

12.7

11.5

-38.9%

Heavy Construction

7.5

6.2

7.8

4.3%

26.5%

Real Estate

11.3

6.6

3.7

-67.6%

-44.4%

Total net revenue

100.5

73.4

67.7

-32.6%

-7.5%

COGS, ex-depreciation

40.1

28.0

27.1

-32.5%

-3.1%

G&A, ex-depreciation and ADD

39.2

29.0

29.4

-25.0%

1.3%

ADD

4.4

3.7

2.5

-43.0%

-31.5%

EBITDA

16.7

12.7

8.7

-48.1%

-31.7%

EBITDA margin (%)

16.6%

17.3%

12.8%

ROIC (%)

6.7%

-2.2%

-3.1%

Capex

11.7

5.1

5.8

-50.3%

13.2%

Invested Capital

820.3

774.6

743.9

-9.3%

-4.0%

Rental net PP&E

577.9

539.7

521.3

-9.8%

-3.4%

Others

242.4

234.9

222.5

-8.2%

-5.3%

Depreciation

22.4

22.2

22.2

-1.2%

-0.4%

Table 10 ROIC Analysis

Construction

Rental

Mills

Operational income after taxes

-70 pbs

-229 pbs

-131 pbs

Rental net PP&E

-5 pbs

27 pbs

6 pbs

ROIC variation (qoq)

Others

-4 pbs

-6 pbs

2 pbs

Total

-82 pbs

-214 pbs

-128 pbs

ROIC variation (yoy)

Operational income after taxes

-944 pbs

-933 pbs

-866 pbs

Rental net PP&E

49 pbs

88 pbs

57 pbs

Others

17 pbs

-70 pbs

2 pbs

-973 pbs

-929 pbs

-861 pbs

Total

3Q15 Earnings Release

11

Glossary
(a) EBITDA EBITDA is a non-accounting measurement which we prepare and which is reconciled with our financial statement
in accordance with CVM Instruction 01/2007, when applicable. We have calculated our EBITDA (usually defined as earnings
before interest, tax, depreciation and amortization) as net earnings before financial results, the effect of depreciation of
assets and equipment used for rental, and the amortization of intangible assets. EBITDA is not a measure recognized under
BR GAAP, IFRS or US GAAP. It is not significantly standardized and cannot be compared to measurements with similar
names provided by other companies. We have reported EBITDA because we use it to measure our performance. EBITDA
should not be considered in isolation or as a substitute for "net income" or "operating income" as indicators of operational
performance or cash flow, or for the measurement of liquidity or debt repayment capacity.
(b) ROIC - (Return on Invested Capital) - Calculated as Operating Income before financial results and after the payment of
income tax and social contribution (theoretical 30% income tax rate) on this income, divided by average Invested Capital, as
defined below. ROIC is not a measure recognized under BR GAAP, and it is not significantly standardized and cannot be
compared to measurements with similar names provided by other companies.
ROIC LTM: ((Net earnings in the last twelve months (30% IR) + (firms remuneration in which possess minority
shareholding)/ (Average Invested Capital in the last thirteen months))
Annual ROIC: (Annual Operational Income (30% Income Tax Rate) + remuneration from affiliates) / Average Invested
Capital of the last thirteen months
(c) Capex (Capital Expenditure) Acquisition of goods and intangibles for permanent assets.
(d) Net cash flow - Net cash generated by operating activities minus net cash used in investing activities.
(e) Net Debt Gross debt less cash holdings.
(f) Enterprise value (EV) Company value at the end of the period. It is calculated by multiplying the number of outstanding
shares by the closing price per share, and adding the net debt.
(g) Job execution costs Job execution costs include: (a) labor costs from construction jobs supervision and technical
assistance; (b) labor costs for erection and dismantling of the equipment rented to our clients, when such tasks are carried
out by the Mills workforce; (b) equipment freight costs, when under Mills responsibility; (d) cost of materials used in the
maintenance of the equipment, when it is returned to our warehouse; and (e) cost of equipment rented from third-parties.
(h) Warehouse costs Warehouse costs includes expenses directly related to the warehouse management, storage, repair
and maintenance of equipment to be rented and to be sold, including labor costs, PPEs used in the warehouse activities
(handling, storage and maintenance), materials needed (forklift fuel, gases for welding, plywood, paints, timber battens,
among others) and machines and equipment maintenance (forklifts, welding machines, water-blasting hoists and tools in
general).
(i) Invested Capital For the Company, invested capital is defined as the sum of its own capital (net equity or shareholders
equity) and capital from third parties (total loans and other liabilities that carry interest, from banks or not), both being
average capital from the beginning to the end of the period considered. By business segment, it is the average of the capital
invested by the company weighted by the average assets of each business segment (net liquid assets plus PPE Property,
Plant and Equipment). The quarter asset base is calculated as the average of the asset base of the last four months and the
annual asset base is calculated as the average of the last thirteen months.

3Q15 Earnings Release

12

INCOME STATEMENT
in R$ million

3Q14

2Q15

3Q15

Net revenue from sales and services

191.5

147.9

136.5

(102.7)

(87.1)

(87.0)

88.7

60.8

49.5

(66.1)

(51.8)

(57.0)

Operating profit

22.7

9.0

(7.5)

Financial expense

(28.2)

(23.0)

(24.1)

Financial income

10.4

6.9

8.9

Financial result

(17.8)

(16.1)

(15.2)

4.9

(7.1)

(22.7)

(1.7)

(1.1)

5.5

3.2

(8.2)

(17.2)

128,058

128,058

128,058

0.03

(0.06)

(0.14)

Cost of products sold and services rendered

Gross profit
General and administrative expenses

Profit before taxation

Income tax and social contribution expenses

Net income (Loss)

Number of shares at the end of the period (in thousands)
Net income (R$ per shares)

3Q15 Earnings Release

13

Balance Sheet
in R$ million
Assets
Current Assets
Cash and cash equivalents
Trade receivables
Inventories
Recoverable taxes
Advances to suppliers
Derivative financial instruments
Other receivables- Sale of investee
Other current assets
Current Assets held for sale
Total Current Assets

3Q14

2Q15

3Q15

161.1
177.9
32.0
29.8
0.2
0.1
17.0
4.7
422.7

138.0
121.1
21.4
29.8
0.2
18.5
7.5
336.6

192.5
114.8
20.5
28.8
0.2
19.1
7.6
22.0
405.5

0.9
36.4
20.0
10.5
34.0
101.7

22.1
23.7
11.4
37.0
1.1
95.2

17.6
29.2
11.7
19.1
77.7

Investment
Property, plant and equipment
Intangible assets

87.4
1,230.9
76.0
1,394.3

87.4
1,113.3
76.3
1,277.0

87.4
1,049.2
78.2
1,214.7

Total Non-Current Assets

1,496.0

1,372.3

1,292.4

Total Assets

1,918.7

1,708.9

1,697.9

Non-Current Assets
Trade receivables
Recoverable taxes
Deferred taxes
Deposits in court
Other trade receivables
Other assets

3Q15 Earnings Release

14

in R$ million
Liabilities

3Q14

2Q15

3Q15

Current Liabilities
Suppliers
Borrowings and financings
Debentures
Salaries and payroll charges
Income tax and social contribution
Tax refinancing program (REFIS)
Taxes payable
Dividends and interest on equity payable
Derivative financial instruments
Other current liabilities

18.6
46.4
109.6
25.3
2.9
1.0
4.7
21.8
1.2
2.1

11.1
3.2
107.8
21.7
1.1
2.9
0.0
0.0
0.2

11.4
3.2
189.2
23.2
1.2
2.1
0.0
0.6

Total Current Liabilities

233.6

148.1

230.9

Non-Current Liabilities
Borrowings and financings
Debentures
Provision for tax, civil and labor risks
Tax refinancing program (REFIS)

15.7
573.3
12.8
9.2

13.5
493.7
12.0
8.9

12.7
415.4
12.8
9.3

Total Non-Current Liabilities

611.0

528.1

450.3

Total Liabilities

844.6

676.2

681.2

Stockholders' Equity
Capital
Earnings reserves
Capital reserves
Valuation adjustments to equity
Retained earnings

563.3
447.9
17.3
0.3
45.4

563.3
487.0
4.8
0.2
(22.7)

563.3
487.0
6.0
0.2
(39.9)

Total Stockholders' Equity

1,074.1

1,032.7

1,016.7

Total Liabilities and Stockholders' Equity

1,918.7

1,708.9

1,697.9

3Q15 Earnings Release

15

Cash Flow
in R$ million

3Q14

2Q15

3Q15

4.9

(7.1)

(22.7)

Cash flow from operating activities

Net income before taxation

Adjustments
Depreciation and amortization

43.3

43.0

42.3

Provision for tax, civil and labor risks

1.5

(0.0)

0.4

Accrued expenses on stock options

2.4

2.2

1.2

Profit sharing payable

(1.7)

Gain on sale of property, plant and equipment and intangible assets

(12.0)

(0.2)

(7.1)

Interest, monetary and exchange rate variation on loans, contingencies and deposits in court

18.9

19.7

20.5

Allowance for doubtful debts

8.7

1.8

8.0

2.7

12.3

0.8

(3.3)

73.3

67.3

64.7

Slow turnover inventory provisions

Others

Changes in assets and liabilities

Trade receivables

12.9

2.1

(5.2)

Inventories

(2.0)

(2.3)

0.9

8.6

6.2

5.9

(0.1)

(0.6)

(0.5)

Other assets

3.4

(0.0)

0.5

Suppliers

1.0

(3.7)

1.6

Salaries and payroll charges

1.0

1.7

1.5

Taxes payable

(0.6)

0.0

(0.9)

Other liabilities

(3.2)

(1.1)

0.8

21.1

2.2

4.6
46.5

Recoverable taxes
Deposits in court

Cash from operations

99.3

62.4

Lawsuits settled

(0.2)

(0.8)

Interest paid

(16.8)

(24.5)

(18.6)

Income tax and social contribution paid

(10.7)

71.6

37.2

28.0

Net cash generated by operating activities

Cash flow from investment activities
Purchases of property, plant and equipment and intangible assets

(31.0)

(6.4)

(9.5)

Proceeds from sale of property, plant and equipment and intangible assets

16.8

5.8

18.2

Proceeds from sale of SI business unit

16.6

18.6

Net cash proceeded from (applied on) investment activities

2.4

(0.6)

27.3

0.3

0.0

Dividends and interest on capital invested paid

(3.3)

(21.8)

(0.0)

Repayment of borrowings

(3.6)

(90.8)

(0.8)

Net cash generated by (used in) financing activities

(6.6)

(112.5)

(0.8)

Increase (decrease) in cash and cash equivalents

67.3

(76.0)

54.5

Cash and cash equivalents at the beginning of the period

93.7

214.0

138.0

Cash and cash equivalents at the end of the period

161.1

138.0

192.5

Cash flow from financing activities

Capital contributions
Shares in treasury

3Q15 Earnings Release

16

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).

3Q15 Earnings Release

17