Mills 2Q14 Results

Investor Relations

BM&FBOVESPA: MILS3 and OTC-US: MILTY

Mills: Net cash flow becomes positive

Rio de Janeiro, August 6, 2014 Mills Estruturas e Servios de Engenharia S.A. (Mills) presented in the second quarter of 2014
(2Q14) growth in net revenues and EBITDA, showing higher gross and EBITDA margins, compared to the same period of last
year. Main highlights of Mills 2Q14 performance:

Rental revenues of R$ 175.7 million, 5.3% higher than the second quarter of 2013 (2Q13).

Net revenue of R$ 213.0 million, 0.6% above 2Q13.

EBITDA

EBITDA margin of 49.7%, versus 46.7% in 2Q13.

Net earnings of R$ 33.4 million, impacted by R$ 7.1 million in expenses related to the former business unit Industrial

(a)

of R$ 105.9 million, an increase of 7.0% in relation to 2Q13.

Services. Excluding those, there was a reduction of 15.7% compared to earnings from continuing operations of 2Q13.

Return on invested capital (ROIC)

Capex

Positive net cash flow

Issuance of debentures totaling R$ 200 million, with a 5 year term and interest rate of 108.75% of CDI.

Proposal for shareholder remuneration totaling a gross amount of R$ 25.1 million, equivalent to R$ 0.196 per share, to be

(c)

(b)

of 9.2%, or 10.4% excluding non-recurring items, against 14.2% in 2Q13.

of R$ 54.7 million, of which R$ 48.7 million in rental equipment.

(d)

of R$ 10.9 million; first quarter with a positive net cash flow since the IPO.

paid as interest on equity, subject to approval at Mills Shareholders Meeting.

Succession plan announced: Sergio Kariya, current Rental Officer, will assume the position of CEO from January 1, 2015,
when Ramon Vazquez will begin to advise the Board of Directors for five years.
2Q13

1Q14

2Q14

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Net revenue

211.8

207.8

213.0

0.6%

2.5%

EBITDA

98.9

107.5

105.9

7.0%

-1.5%

46.7%

51.7%

49.7%

44.6

33.9

33.4

-25.1%

-1.4%

-30.5%

-1.4%

in R$ million

EBITDA margin (%)

Earnings from continuing operations
Earnings from discontinued operations

3.5

Net earnings

48.1

33.9

33.4

ROIC (%)

14.2%

11.5%

9.2%

Capex

150.3

102.3

54.7

-63.6%

-46.5%

1,447.6

1,627.8

1,725.8

19.2%

6.0%

1,023.2

1,163.8

1,189.0

16.2%

2.2%

424.4

464.0

536.8

26.5%

15.7%

Invested Capital(e)
Net rental PP&E
Others
Table 1 - Key financial indicators reclassified, for comparison.

The financial and operational information presented in this release, except when otherwise indicated, is in accordance with accounting policies adopted in Brazil,
which are in accordance with international accounting standards (International Financial Reporting Standards - IFRS).

Business perspective
The level of activity in the heavy construction sector remained lower than normal in the first half of 2014 (1H14), with stable
perspective, as indicated by the expected level of activity, according to research conducted by the National Confederation of
1

Industry (CNI - Confederao Nacional da Indstria), which reached 50.0 points in July 2014.
Investments related to the World Cup totaled R$ 25.6 billion, of which 83.6% from public resources. Only 26% of urban mobility
construction projects were concluded, according to the Brazilian Ministry of Planning (Ministrio do Planejamento), 31% are
partially under operation, and 43% still being executed, such as the Light Rail Vehicle in Cuiab.
BNDES (Banco Nacional de Desenvolvimento Econmico e Social) disbursements for infrastructure totaled R$ 21.6 billion in
the first four months of 2014, equal to 48% year-over-year (yoy) growth. According to BNDES, ministries and sectors agencies,
concessions will account for R$ 300 billion in investments between 2015 and 2017 in infrastructure, allowing for a 40% increase
in annual investments from R$ 74.0 million in 2013 to R$ 104.0 million in 2017.
We believe that the transfer of infrastructure investments to the private sector will contribute with (i) an expansion in the level of
investments in Brazil, (ii) increased pace of construction execution, and (iii) a greater appreciation of engineering solutions that
bring productivity gains through cost or project term reduction.
In the residential construction market, the balance of housing credit in May 2014 was 30% higher than the same period of 2013,
according to the Brazilian Central Bank (Bacen). Even though the activity level is below normal, real estate companies believe
1

there will be market improvement, as indicated by the index for expected level of activity, which reached 53.3 points in July
2014, according to a CNI study. According to consulting company Criactive, there was an increase of 13.5% in constructed
square meters in 1H14, compared to the first half of 2013 (1H13) and it is estimated that the total value of 2014 will be about 5%
2

higher than in 2013. New building announced by the listed real estate companies presented yoy growth of 13.9% in 1H14, but
sales fell by 8.5% in the same period.
Regarding the market for motorized access equipment, 3,000 new machines entered the Brazilian market in 1H14, an increase
of 11% compared to the end of 2013, bringing the fleet to a total of 32,800 aerial work platforms and telescopic handlers in
Brazil. The main driver for market growth is the penetration of the use of this equipment, by replacing less safe and less
productive access methods.

Revenue
Net revenue reached R$ 213.0 million in 2Q14, 2.5% higher quarter-over-quarter (qoq), but in line with the same period of 2013,
since the growth of R$ 8.8 million in rental revenues was offset by a decrease in other revenue items.
Sales revenues registered a higher expansion between quarters, R$ 8.7 million, while rental revenues decreased slightly,
impacted by slower activity in the Rental spot market, due to the higher number of holidays and the World Cup.

Costs and Expenses

The cost of goods and services sold (COGS), excluding depreciation, totaled R$ 51.5 million in 2Q14, with a 11.0% yoy
reduction, due to lower sales costs and material expenses, allowing for gross margin expansion, excluding depreciation, from
72.6% to 75.8%.
Excluding sales costs, there was a qoq increase of R$ 2.9 million, or 8.6%, of COGS, impacted by increased maintenance
activity in the Rental and Heavy Construction business units.

1
2

Values above 50 indicate a prospect of growth of activity in the sector for the next six months.
Cyrela, Direcional, Even, Eztec, Gafisa, Helbor, MRV, PDG and Rodobens.

Mills 2Q14 Results

General, administrative and operating expenses (G&A), excluding depreciation, totaled R$ 55.6 million in 2Q14, remaining
stable between quarters.

EBITDA
Cash generation, as measured by EBITDA, reached R$ 105.9 million in 2Q14, 7.0% higher yoy and in line with the amount
registered in the previous quarter. The accumulated EBITDA in the last twelve months ended June 30, 2014, LTM EBITDA,
totaled R$ 421.9 million. The EBITDA margin was 49.7% in 2Q14, against 46.7% in 2Q13 and 51.7% in the first quarter of 2014
(1Q14).

Non-recurring items
In 2Q14, there were non-recurring items related to the former Industrial Services business unit, sold in 2013, with a negative net
effect of R$ 4.2 million, due to the recognition of indemnity in this quarter, related to events that happened before the completion
of the sale.

Net Earnings
Net earnings totaled R$ 33.4 million in 2Q14, in line with the previous quarter. Excluding the effects of the non-recurring items
mentioned above, net earnings would have totaled R$ 37.6 million, 10.9% higher qoq. Tax benefit for the recognition of interest
on capital (JCP) payment more than offset the reduction in EBITDA (R$ 1.5 million) and the increase in depreciation (R$ 2.5
million) and in the negative net financial result (R$ 1.9 million). The net financial result was a negative R$ 18.4 million in 2Q14,
against a negative R$ 16.5 million in 1Q14, due to increased net debt.

ROIC
4

ROIC was 9.2% in 2Q14, or 10.4% excluding non-recurring items, against 11.5% in 1Q14, negatively impacted, primarily by
lower utilization in Rental and higher maintenance activity in the Heavy Construction and Rental business units.

Debt indicators
Mills total debt was R$ 748.4 million as of June 30, 2014. At the end of 2Q14 our net debt

(f)

position was R$ 654.7 million,

versus R$ 626.6 million at the end of 1Q14.

Our debt is 21% short-term and 79% long-term, with an average maturity of 2.9 years, at an average cost of CDI+0.79%. In
terms of currency, 100% of Mills debt is in Brazilian reais.
This quarter, we raised R$ 200 million through our third issuance of non-convertible debentures, with a maturity of five years
and interest rate equal to 108.75% of CDI (interbank interest rate). The net proceeds from the offering were used for the
redemption of promissory notes of the Company, in the same amount, issued on April 2014, which were used to (i) finance the
investment in rental equipment; (ii) pay existing debt and for (iii) general corporate purposes and expenses of the Company.
Our leverage, as measured by the net debt/LTM EBITDA, was at 1.6x as of June 30, 2014. The total debt/enterprise value

(g)

was 18.8%, while interest coverage, as measured by the LTM EBITDA/LTM interest payments, was 7.3x.
We believe that, as our investment matures, our operating cash flow will increase and, as a result, our leverage will return to a
level close to its target of 1.0x at the end of 2014. In this quarter, the cash flow generated by operations was above the level of
necessary investments, with a net balance of R$ 10.9 million.

3
4

G&A which is the sum of Rental, Heavy Construction and Real Estate business units, excluding the effects described in the Non-recurring items section.
Calculated using theoretical income tax of 30%, therefore not affected by the recognition of interest on equity payment.

Mills 2Q14 Results

Capex
Mills invested R$ 54.7 million in 2Q14, of which R$ 48.7 million in rental equipment. The Rental business unit was responsible
for 53.9% of the investments, Heavy Construction for 21.0% and Real Estate for 17.2%.
Subject to the pace of development of the motorized access equipment market and of the process to open new Rental branches
in the following months, we may take advantage of the existing fleet to equip these new branches; which would reduce the
amount of investments for this year.

Performance of the business units

Heavy Construction
Net revenue of Heavy Construction totaled R$ 55.5 million in 2Q14, with an 8.8% qoq increase and in line with the same quarter
of the previous year. Rental revenue amounted to R$ 45.9 million, an expansion of 11.8% yoy and 4.8% qoq.
In 1H14 there were several construction projects in the mobilization stage, such as the Vales project S11D, Belo Monte
hydroelectric power plant, north beltway, and So Paulo, Rio de Janeiro and Salvador subway lines, and also in the
demobilization stage, such as the airports, Jirau hydroelectric power plant and BRT Transcarioca, which led to higher than
normal turnover of equipment, resulting in lower utilization rate and higher maintenance activity in the period.
In this quarter we signed important new contracts, including Comperj-Reduc pipeline, in Rio de Janeiro; new stretches in the
transposition of the So Francisco river, in the Transnordestina and Leste-Oeste railways, and in the Belo Monte hydroelectric
power plant; new stretches of subway line 5, Gold and Silver monorail lines and north beltway, cable-stayed bridge in Salto, in
So Paulo; Vale and CSN projects, in Minas Gerais; and Ambev factory, in Paran.
For the north beltway, we signed contracts to launch nearly 1,300 beams, approximately 90% of the total construction work, and
also the supply of formwork, shoring and access. We started mobilizing equipment in June, with estimated execution time of 25
months.
In this quarter we sold equipment to Lauca hydroelectric power plant, in Angola, and to Sir Solomon Hochoy highway, in
Trinidad & Tobago, doubling sales revenue between quarters.
The new equipment lifting cart is already being employed in construction work of the Laguna Bridge in Santa Catarina.
The main projects of 2Q14, in terms of revenue were:

South and Southeastern regions: Comperj complex, Olympic Park, BRT Transcarioca, Metropolitan Arch and subway line 4,
in Rio de Janeiro; Guarulhos and Viracopos airports, Gold and Silver monorail lines, north beltway and Jacu-Pssego road
complex, in So Paulo; Vale and CSN projects, and Belo Horizonte BRT, in Minas Gerais; and the expansion of a pulp plant,
in Rio Grande do Sul.

Midwest, North and Northeastern regions: the Belo Monte, Colder, Jirau and Teles Pires hydroelectric plants; the Norte-Sul
railway; Braslia airport, in the Federal District; the Abreu e Lima refinery, in Pernambuco; transposition of the So Francisco
river; the Paraguau shipyard and an acrylic industrial pole, in Bahia; the Companhia Siderrgica do Pecm steel mill, in
Cear; Vale projects, in Par and in Maranho; and the Cuiab light rail, in Mato Grosso.

COGS was in line with the same period of the previous year. There was a qoq expansion of R$ 4.1 million in COGS due to
higher: (i) sales volume, which accounted for 34% of the increase; (ii) formwork maintenance activity, resulting in additional
expenses with material (28%) and personnel (12%); and (iii) employment of freight to transfer the equipment from the Southeast
to the North and Northeast (10%). The maintenance cost was stable yoy, remaining in the historical range of 15% to 20% of
rental revenues. G&A remained stable yoy and qoq.

Mills 2Q14 Results

EBITDA amounted to R$ 25.6 million in 2Q14, with 2.3% yoy growth. The EBITDA margin was 46.2%, versus 45.5% in 2Q13,
while ROIC was 12.5%, against 17.8% in 2Q13, mainly impacted by lower operational income, as a result of increased
depreciation and lower utilization rate in the period.

Real Estate
Net revenue for Real Estate totaled R$ 58.8 million in 2Q14, in line with 1Q14 and 11.5% lower yoy. Rental revenue presented
a slight qoq increase and yoy decrease of 12.6%, due to a utilization rate still low.
We are participating in a residential project in Rio Grande do Sul, with 23 towers of 21 floors each, using our flying table for
execution of each 600m floor in five days, for eleven towers, a reduction up to 50% of the labor work compared to the
conventional system.
There was a yoy reduction in COGS due to lower sales costs, accounting for 68% of the reduction, maintenance activity (15%)
and freight expenses (11%), enabling expansion of gross margin. There was small qoq increase in COGS due to higher sales
volume. There was a reduction in G&A yoy and qoq.
EBITDA reached R$ 25.2 million in 2Q14, a 2.5% yoy growth, returning to the historical level of profitability, with an EBTIDA
margin of 42.8%. ROIC was 7.9%, with improvement qoq, due to higher operating profit.

Rental
The net revenue of Rental amounted to R$ 98.6 million in 2Q14, a new quarterly record, with 9.4% yoy growth and stable qoq
numbers. Rental revenue reached R$ 84.4 million, with an increase of 14.3% yoy, but a 4.2% qoq decrease, negatively
impacted by the several holidays and World Cup event which caused a decline in the motorized access equipment rental spot
market, with maturities below 28 days. Therefore the utilization rate remained below normal level.
Revenue from sales, technical assistance, and others increased R$ 5.1 million qoq, offsetting the reduction in equipment rental
revenue. We delivered to the Belo Monte consortium platforms of the model ZX-135, one of the biggest in the world, which can
reach 43 meters high, increasing productivity and offering safety for the operators to work in the construction and assembling of
18 turbines of the hydroelectric power plant, which will be the third largest in the world.
This quarter we opened two new branches: one at Trs Lagoas, in Mato Grosso do Sul, and another at Belm, in Par, totaling
28 branches in the Rental business unit.
There was a qoq increase of R$ 4.1 million in COGS, due to higher cost of sales, which accounted for 79% of the increase, and
higher maintenance activity, resulting in higher expenses with material (16%) and personnel (15%). G&A remained stable qoq.
EBITDA reached R$ 55.1 million in 2Q14, with 11.7% yoy growth. EBITDA margin was 55.8%, versus 54.7% in 2Q13, while
ROIC was 13.2%, versus 18.5% in 2Q13, negatively impacted by lower utilization rate.

Teleconference and Webcast

Date: Thursday, August 7, 2014
Time: 11:00 (Braslia time)
Teleconference: +1 786 924-6977 (Dial-in) or +1 888 700-0802 (Toll-free); Code: Mills
Replay: +55 11 3193-1012 or +55 11 2820-4012, Code: 7234428# or www.mills.com.br/ri
Webcast: www.mills.com.br/ri

Mills 2Q14 Results

Tables
Table 2 Net revenue per type
in R$ million

Rental

2Q13

1Q14

2Q14

(C)/(A)

(C)/(B)

(A)

(B)

(C)

166.9

176.7

175.7

5.3%

-0.6%
21.6%

Technical support services

8.0

2.5

3.0

-62.0%

Sales

26.6

17.1

25.8

-3.0%

50.8%

Others

10.3

11.5

8.4

-18.4%

-26.8%

211.8

207.8

213.0

0.6%

2.5%

2Q13

1Q14

2Q14

Heavy construction

55.1

26.0%

51.0

24.6%

55.5

26.1%

Real estate

66.5

31.4%

59.5

28.6%

58.8

27.6%

Rental

90.1

42.6%

97.3

46.8%

98.6

46.3%

211.8

100.0%

207.8

100.0%

213.0

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

2Q13

1Q14

2Q14

Costs of job execution (h)

24.5

21.7%

22.2

21.9%

24.1

21.1%

Costs of sale of equipment

20.9

18.5%

8.9

8.7%

14.7

12.9%

Costs of asset write-offs

2.3

2.0%

1.7

1.6%

1.7

1.5%

Equipment storage

10.3

9.1%

10.1

10.0%

10.9

9.6%

57.9

51.3%

42.8

42.3%

51.5

45.1%

COGS
G&A

54.9

48.7%

58.5

57.7%

62.6

54.9%

Total COGS + G&A

112.9

100.0%

101.4

100.0%

114.1

100.0%

Table 5 EBITDA per business unit and EBITDA margin

in R$ million

2Q13

1Q14

2Q14

Heavy Construction

25.1

25.3%

25.6

23.8%

25.6

24.2%

Real Estate

24.6

24.8%

23.5

21.8%

25.2

23.8%

Rental

49.3

49.8%

58.4

54.3%

55.1

52.0%

98.9

100.0%

107.5

100.0%

105.9

100.0%

Total EBITDA
EBITDA margin (%)

Mills 2Q14 Results

46.7%

51.7%

49.7%

Table 6 Reconciliation of EBITDA

in R$ million

2Q13

1Q14

2Q14

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Results of continuing operations

44.6

33.9

33.4

-25.1%

-1.4%

Financial result

-11.8

-16.5

-18.4

56.1%

11.2%

Income tax and social contribution expenses

-11.3

-16.5

-5.0

-56.1%

-69.8%

Operational Results before Financial Result

67.7

66.9

56.8

-16.1%

-15.1%

Depreciation

31.3

39.6

42.1

34.5%

6.3%

1.1

7.1

98.9

107.5

105.9

7.0%

-1.5%

Expenses (revenues) related to the Industrial services

former business unit
EBITDA

Table 7 Investment per business unit

Realized
in R$ million

2Q13

1Q14

Budget
2Q14

1S14

2014

(A)/(B)

(A)

(B)

26.3

37.0

71.0%

Rental equipment
Heavy Construction

28.8

Real Estate

44.8

4.5

8.9

13.4

25.0

53.4%

Rental

69.3

73.3

28.5

101.9

169.0

60.3%

142.9

92.8

48.7

141.5

231.0

61.3%

7.4

9.5

6.0

15.5

42.1

36.9%

150.3

102.3

54.7

157.0

273.1

57.5%

2Q13

1Q14

2Q14

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Rental

41.0

43.8

45.9

11.8%

4.8%

Technical support services, sales and others

14.1

7.3

9.7

-31.5%

32.7%

55.1

51.0

55.5

0.7%

8.8%

2.3%

0.1%

Rental equipment
Corporate and use goods
Capex Total

15.0

11.3

Table 8 Heavy Construction financial indicators

in R$ million
Net revenue

Total net revenue

EBITDA

25.1

25.6

25.6

EBITDA margin (%)

45.5%

50.2%

46.2%

ROIC (%)

12.5%

17.8%

14.0%

Capex

29.1

15.0

11.5

-60.3%

-23.0%

Invested Capital

281.5

324.3

350.8

24.6%

8.2%

Rental net PP&E

219.9

254.7

254.5

15.7%

-0.1%

Others

61.6

69.6

96.3

56.2%

38.3%

Depreciation

7.2

9.4

10.0

39.5%

7.1%

Mills 2Q14 Results

Table 9 Real Estate financial indicators

2Q13

1Q14

2Q14

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Rental

52.0

44.8

45.5

-12.6%

1.4%

Technical support services, sales and others

14.5

14.7

13.4

-7.6%

-8.9%

Total net revenue

66.5

59.5

58.8

-11.5%

-1.2%

EBITDA

24.6

23.5

25.2

2.5%

7.3%

EBITDA margin (%)

37.0%

39.4%

42.8%

ROIC (%)

9.3%

6.6%

7.9%

Capex

45.1

5.0

9.4

-79.1%

90.2%

Invested Capital

-6.0%

in R$ million
Net revenue

448.2

509.3

478.6

6.8%

Rental net PP&E

328.1

332.0

322.9

-1.6%

-2.8%

Others

120.1

177.2

155.7

29.6%

-12.1%

Depreciation

9.6

11.5

11.7

21.3%

1.9%

2Q13

1Q14

2Q14

(C)/(A)

(C)/(B)

(A)

(B)

(C)

Rental

73.8

88.1

84.4

14.3%

-4.2%

Technical support services, sales and others

16.3

9.1

14.2

-13.0%

55.5%

Total net revenue

90.1

97.3

98.6

9.4%

1.4%

EBITDA

49.3

58.4

55.1

11.7%

-5.8%

EBITDA margin (%)

54.7%

60.1%

55.8%

ROIC (%)

13.2%

Table 10 Rental financial indicators

in R$ million
Net revenue

18.5%

17.1%

Capex

69.6

73.7

29.5

-57.6%

-60.0%

Invested Capital

528.1

648.7

737.8

39.7%

13.7%

Rental net PP&E

475.2

577.1

611.7

28.7%

6.0%

Others

52.9

71.7

126.1

138.4%

75.9%

Depreciation

14.4

18.7

20.3

40.9%

8.7%

Table 11ROIC Analysis

Heavy
Construction

Real Estate

Rental

Mills

-55 bps

83 bps

-216 bps

-174 bps

1 bps

12 bps

-87 bps

-18 bps

Others

-107 bps

29 bps

-133 bps

-49 bps

Total

-157 bps

130 bps

-396 bps

-230 bps

Operational income after taxes

-225 bps

-90 bps

-7 bps

-323 bps

Rental net PP&E

-195 bps

11 bps

-379 bps

-146 bps

Others

-195 bps

-69 bps

-225 bps

-102 bps

Total

-531 bps

-144 bps

-530 bps

-500 bps

ROIC variation (qoq)

Operational income after taxes
Rental net PP&E

ROIC variation (yoy)

Mills 2Q14 Results

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.
Quarterly ROIC: ((Quarterly Operational Income (30% Income Tax Rate) + remuneration from affiliates) / Average
Invested Capital of the last four months) * 4
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) 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.
(f) Net debt - Gross debt less cash holdings.
(g) 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.
(h) Job execution costs - Job execution costs include: (a) 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; (c) cost of materials used in the execution of our services, such as individual safety equipment (EPIs), paint,
insulation material, wood, among others; (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.

Mills 2Q14 Results

INCOME STATEMENT
in R$ million

2Q13

1Q14

2Q14

Net revenue from sales and services

211.8

207.8

213.0

Cost of products sold and services rendered

(87.3)

(79.0)

(89.9)

Gross profit

124.5

128.8

123.0

General and administrative expenses

(56.8)

(61.9)

(66.3)

67.7

66.9

56.8

(16.8)

(20.6)

(25.9)

Financial income

5.0

4.0

7.5

Financial result

(11.8)

(16.5)

(18.4)

55.9

50.3

38.4

(11.3)

(16.5)

(5.0)

44.6

33.9

33.4

3.5

48.1

33.9

33.4

127,120

127,491

128,026

0.38

0.27

0.26

Operating profit
Financial expense

Profit before taxation

Income tax and social contribution expenses
Results of continuing operations
Results of discontinued operations
Net income
Number of shares at the end of the period (in thousands)
Net income (R$ per shares)

Mills 2Q14 Results

10

BALANCE SHEET
in R$ million
Assets

2Q13

1Q14

2Q14

47.3
165.1
30.9
35.8
0.7

8.5
192.2
36.6
33.6
0.2

93.7
199.1
37.8
32.6
0.3

4.0

106.7

27.4

16.5

8.6
399.1

9.8
308.2

8.0
388.2

2.1
34.8
11.7
48.6

1.4
44.2
5.0
10.4
48.4
109.5

1.3
41.6
10.4
10.3
49.6
113.1

87.4
1,124.1
59.9
1,271.4

87.4
1,264.8
73.8
1,426.1

87.4
1,265.5
75.0
1,427.9

Total Non-Current Assets

1,319.9

1,535.6

1,541.1

Total Assets

1,719.0

1,843.8

1,929.2

Current Assets
Cash and cash equivalents
Trade receivables
Inventories
Recoverable taxes
Advances to suppliers
Derivative financial instruments
Assets available for sale
Other current assets
Total Current Assets
Non-Current Assets
Trade receivables
Recoverable taxes
Deferred taxes
Deposits in court
Other trade receivables

Investment
Property, plant and equipment
Intangible assets

Mills 2Q14 Results

11

in R$ million
Liabilities

2Q13

1Q14

2Q14

Current Assets
Suppliers
Borrowings and financings
Debentures
Salaries and payroll charges
Income tax and social contribution expenses
Tax refinancing program (REFIS)
Taxes payable
Profit sharing payable
Dividends and interest on equity payable
Derivative financial instruments
Liabilities associated with assets available for sale
Other current liabilities

70.1
15.7
110.6
23.8
0.8
0.9
10.7
10.8
20.4
12.7
3.1

55.4
49.1
120.2
23.6
6.2
1.0
4.6
0.6
41.0
3.3
3.5

29.1
45.4
107.1
24.3
2.7
1.0
8.6
1.7
21.8
5.2
5.1

Total Current Liabilities

279.7

308.5

252.0

Non-Current Assets
Borrowings and financings
Debentures
Provision for tax, civil and labor risks
Deferred taxes
Tax refinancing program (REFIS)
Other current liabilities

23.5
447.8
10.6
5.5
9.6
0.2

17.2
448.4
11.4
9.4
0.1

16.5
572.1
11.6
9.3
0.1

Total Non-Current Liabilities

497.3

486.5

609.5

Total Liabilities

776.9

795.0

861.5

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

548.8
321.0
4.7
2.9
64.6

554.9
447.9
12.4
(0.2)
33.9

563.1
447.9
14.9
(0.2)
42.2

Total Stockholders' Equity

942.1

1,048.8

1,067.7

1,719.0

1,843.8

1,929.2

Total Liabilities and Stockholders' Equity

Mills 2Q14 Results

12

CASH FLOW
in R$ million

2Q13

1Q14

2Q14

60.5

50.3

38.4

Cash flow from operating activities

Net income before taxation

Adjustments
Depreciation and amortization

34.0

39.6

42.1

Provision for tax, civil and labor risks

0.5

0.8

0.6

Accrued expenses on stock options

2.5

2.2

2.5

Profit sharing payable

6.8

0.5

1.2

(11.5)

(10.1)

(11.4)

14.5

17.2

18.9

2.7

6.5

4.9

49.4

56.7

58.8

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

Interest, monetary and exchange rate variation on loans, contingencies and deposits in court
Allowance for doubtful debts

Changes in assets and liabilities

Trade receivables

(21.1)

(21.4)

(11.5)

Inventories

(0.9)

(0.3)

(1.2)

Recoverable taxes

(1.4)

5.9

8.4

0.1

0.1

0.2

Other assets

(0.7)

(2.9)

1.7

Suppliers

(2.5)

(1.8)

1.5

Salaries and payroll charges

3.3

4.4

0.7

Taxes payable

3.0

4.0

Other liabilities

(7.6)

(1.3)

1.4

(27.8)

(17.3)

5.1

82.2

89.7

102.3

Deposits in court

Cash from operations

Lawsuits settled

(0.2)

(0.4)

Interest paid

(12.8)

(9.7)

(20.2)

Income tax and social contribution paid

(13.4)

(17.7)

(7.1)

Profit sharing paid

(0.1)

(18.6)

Net cash generated by operating activities

51.4

54.2

68.3

Cash flow from investment activities and with subsidiaries

Marketable securities
Purchases of property, plant and equipment and intangible assets
Proceeds from sale of property, plant and equipment and intangible assets
Proceeds from sale of Industrial Services business unit
Net cash generated by (used in) investing activities

138.0

(136.7)

(82.9)

(82.5)

25.3

15.3

13.8

11.3

26.7

(67.7)

(57.4)

Cash flow from financing activities

Capital contributions

9.3

1.6

8.2

Dividends and interest on capital invested paid

(36.2)

(2.5)

(41.0)

Repayment of borrowings

(28.6)

(3.0)

(292.8)

0.1

400.0

(55.4)

(3.9)

74.4

Increase (decrease) in cash and cash equivalents

22.8

(17.3)

85.3

Cash and cash equivalents at the beginning of the period

24.5

25.8

8.5

Cash and cash equivalents at the end of the period

47.3

8.5

93.7

Borrowings raised / debentures

Net cash generated by (used in) financing activities

Mills 2Q14 Results

13

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).

Mills 2Q14 Results

14