Mills Locação Serviços e Logística S A : Dados Econômico-Financeiros

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Mills Locação, Serviços e

Logística S.A.

Quarterly financial information - ITR and Report on the review of quarterly information

1Q 2024

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Earnings Release

1Q24

B3:MILS3

Live Broadcast of Results

Date: Thursday, May 9, 2024

Time: 2pm (Brasília)

Watch Online: Click here

The financial and operational information contained in this press release, except as otherwise indicated, is in accordance with the accounting policies adopted in Brazil, which are in compliance with the

International Financial Reporting Standards - IFRS).

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1. Management Comments

Rio de Janeiro, May 8, 2024 - Mills Locação, Serviços e Logística S.A. (Mills) announces its results for the first quarter of 2024 (1Q24).

We started 2024 with a motivated team, focused on meeting our customers' needs and expanding our business. On a year-on-year comparison, we recorded growth in net rental revenue in all business units, reaching a total net revenue of R$ 353.2 million in the quarter.

Reflecting our purpose of transforming and leading the equipment and machinery rental market in Brazil and being ever closer to our customers, we are moving forward with our expansion plan in Light Rental and opened 4 branches, and we expect to open new Heavy Rental operating centers this year.

We have a unique capillarity which, through our 60 units located in different Brazilian regions and customers in various segments of the economy, makes us resilient to face any market fluctuations.

The results for the first quarter reflect the typical seasonality of the period in equipment rental. We renewed and closed important contracts and have a solid business perspective in the Heavy Rental unit. In Formwork and Shoring we maintain a contracted backlog greater than that recorded in the same period of the previous year, boosting the annual growth in this unit's results in 2024.

Our business units operate in a complementary manner to the Company's performance and contribute to improving results. In both Rental and Formwork and Shoring, we have cross-sell opportunities and a broad customer base to also increase our market share.

We have already secured most of the investment planned for 2024, with staggered deliveries during the year and competitive prices. In the quarter, we made total investments of R$ 188.3 million, reaffirming our commitment to provide the best solutions and equipment, quality service, reliability and safety.

We believe that the key to our success lies in the relentless pursuit of putting the customer at the core, focusing on the development of our employees, engagement and capital allocation discipline.

As a result of our growth path, we generated an adjusted operating cash flow of R$ 219.8 million in the quarter and Adjusted EBITDA of R$ 170.1 million, with 48% margin. We remain attentive to the cash return produced by our operations, monitoring the yield curve, inflation and other economic indicators that are crucial to sustaining margins and guiding our financial decisions.

When it comes to environmental, social and governance (ESG) issues, we intensified initiatives to address global challenges and guide our business practices so that we can continue to grow sustainably. Winning the "Best Rental Company of the Year" award at the IAPA Awards 2024 (International Awards for Powered Access), as well as our presence as a finalist also in the "Equity, diversity and inclusion" category, reflects our commitment to the Sustainability Journey. Our participation in the event highlighted our social initiatives and our commitment to mitigating climate change, demonstrating our ability to generate shared value and drive positive transformations.

We are aware of the macroeconomic challenges, but confident in the Company's ability to operate in any scenario. Mills remains focused on what matters: sustainable business growth, seeking to be the largest rental partner for our customers.

Have a good reading!

Sergio Kariya

Mills CEO

1Q24

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2. Highlights

The main highlights for the period were:

• In March, we received the IAPA Awards 2024 as Best Rental Company of the Year;
• Total consolidated Gross Revenue of R$ 386.4 million in 1Q24, 8.5% higher versus 1Q23;
• Increase of 8.8% in Net Revenue, with Consolidated Net Rental Revenue of R$ 317.9 million in 1Q24, up 11.6% versus 1Q23;
• Consistent growth, with consolidated Adjusted EBITDA of R$ 170.1 million in 1Q24, up by 4.4% versus 1Q23. Ex-sales EBITDA of R$ 160.7 million, versus R$ 145.2 million, with 49% margin;
• Net income of R$ 67.7 million in 1Q24, up 2.0% versus 1Q23, with 19.2% net margin in the quarter;
• Net Cash Income, considering deferred income tax and other tax credits deducted from tax payments, of R$ 87.4 million in 1Q24;
• ROIC2 at 23.1% in the Consolidated result (1Q24LTM);
• Capex of R$ 188.3 million, 97% of which in rental assets in 1Q24;
• Approval of IoE (Interest on Equity) in the amount of R$ 19.5 million in March, referring to 1Q24.

R$ million	1Q23	4Q23	1Q24	1Q24/1Q23	1Q24/4Q23
Gross Revenue	356.3	402.1	386.4	8.5%	-3.9%
Net revenue	324.7	367.3	353.2	8.8%	-3.8%
CVM EBITDA	161.4	188.8	169.4	5.1%	-10.2%
CVM EBITDA margin (%)	49.7%	51.4%	48.0%	-1.7 p.p.	-3.4 p.p.
EBIT	109.0	133.2	112.7	3.4%	-15.4%
EBIT margin (%)	33.6%	36.3%	31.9%	-1.7 p.p.	-4.4 p.p.
Adjusted EBITDA¹	162.9	190.9	170.1	4.4%	-10.9%
Adjusted EBITDA margin¹ (%)	50.2%	52.0%	48.2%	-2.0 p.p.	-3.8 p.p.
Adjusted ex-sales EBITDA margin¹ (%)	48.6%	49.9%	48.9%	0.3 p.p.	-0.9 p.p.
Profit for the year	66.4	81.0	67.7	2.0%	-16.4%
ROIC LTM (%)²	26.7%	24.1%	23.1%	-3.6 p.p.	-1.0 p.p.
Adjusted operating cash flow³	89.5	118.5	219.8	145.6%	85.5%
Adjusted free cash flow to the firm³	-245.0	55.2	31.5	112.8%	-43.0%

• Excluding non-recurring items. Unaudited information. ² Calculated with cash rate.
  ² Adjusted OCF: excluding interest on debentures, investment in lease, interest, and inflation adjustments in assets and liabilities (cash). Adjusted FCF: excluding cash flow from investing activities and acquisition of rental assets. Unaudited information.

1Q24

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3. Rental

(Light and Heavy)

We ended 1Q24 with a fleet of 11,822 assets, representing a 4% growth in fleet value compared to 1Q23 and 3% in number of assets.

Total Fleet (units)

(End of the period)

Year-to-date, we have already acquired over 480 assets to serve the Light and Heavy Rental markets.

Since 2022, we have already opened 20 branches, with 4 openings in 2024 and totaling 60 addresses to date, which reinforces the continuity of our expansion strategy to always be close to customers and disseminate the culture of using Mobile Elevating Work Platforms, providing more safety and productivity.

Net Rental Revenue 1Q24 - per activity segment

1Q24

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Results

R$ million	1Q23	4Q23	1Q24	1Q24/1Q23	1Q24/4Q23
Gross Revenue	288.0	342.5	326.0	13.2%	-4.8%
Total Net Revenue	261.0	312.4	297.4	13.9%	-4.8%
Rental	240.8	281.3	268.0	11.3%	-4.7%
Sales	15.7	25.8	24.5	56.0%	-5.0%
Other	4.5	5.4	4.9	10.2%	-8.1%
Total COGS, ex-depreciation	-67.6	-78.7	-88.4	30.7%	12.3%
Rental	-59.9	-73.4	-73.1	22.1%	-0.4%
Sales	-7.7	-5.2	-15.2	97.1%	192.1%
Gross Profit, ex-depreciation	193.3	233.7	209.0	8.1%	-10.6%
Gross Margin	74.1%	74.8%	70.3%	-3.8 p.p.	-4.5 p.p.
Gross Margin - Rental	75.1%	73.9%	72.7%	-2.4 p.p.	-1.2 p.p.
Gross Margin - Sales	50.7%	79.8%	37.7%	-13.0 p.p.	-42.0 p.p.
SG&A, ex-depreciation and ECL	-69.0	-73.9	-67.7	-1.9%	-8.4%
Expenses	-67.2	-72.2	-67.1	-0.2%	-7.2%
Non-recurring items	-1.8	-1.7	-0.6	-66.5%	-63.6%
ECL	-4.6	-3.5	-4.0	-12.8%	14.3%
EBIT	75.3	106.1	85.8	13.9%	-19.1%
EBIT margin (%)	28.9%	34.0%	28.8%	0.0 p.p.	-5.1 p.p.
CVM EBITDA	119.8	156.3	137.3	28.0%	-12.1%
CVM EBITDA margin (%)	45.9%	50.0%	46.2%	0.3 p.p.	-3.9 p.p.
Adjusted EBITDA¹	121.6	158.0	137.9	13.5%	-12.7%
Adjusted EBITDA margin (%)	46.6%	50.6%	46.4%	-0.2 p.p.	-4.2 p.p.
Adjusted ex-sales EBITDA margin (%)	46.3%	47.9%	47.2%	0.8 p.p.	-0.8 p.p.
Depreciation	-44.4	-50.2	-51.5	16.0%	2.6%

¹Excluding non-recurring items. Non-GAAP - Information unaudited by the independent auditors.

In 1Q24, net revenue reached R$ 297.4 million, with 13.9% growth as compared to 1Q23, mainly as a result of the higher rental revenue in the period. The expansion in rental revenue reflects mainly the significant growth in the Heavy segment. Compared to 4Q23, there was a drop of 4.8% mainly due to rental revenue, reflecting the business seasonality.

Costs (ex-depreciation) in 1Q24 were distributed as follows: R$ 34.2 million refers to consumables (such as tires, batteries, paints, electrical and hydraulic materials, etc.), R$ 18.5 million related to personnel, R$ 15.2 related to sales cost, R$ 13.1 million related to freight and R$ 7.4 million with miscellaneous costs.

In 1Q24, gross margin ex-depreciation totaled 70.3%, versus 74.1% in 1Q23 and 74.8% in 4Q23, as a result of the lower gross margin in the Heavy segment, which was impacted by the lower sales margin in the period. In 1Q24, we sold some equipment from the Heavy. Gross margin ex-lease depreciation totaled 73% in 1Q24, compared to 75% in 1Q23 and 74% in 4Q23.

We had a reduction in SG&A expenses as a percentage of net revenue in the annual comparison from 26.4% to 22.8%, reflecting the gains in scale and efficiency actions implemented. SG&A expenses (ex-depreciation and ECL) reached R$67.7 million in 1Q24 versus R$69.0 million in 1Q23. When compared to 4Q23, the drop was 8.4%.

1Q24

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The company maintains strong credit risk management with its customers, as reflected in the lower expenses related to ECL of R$ 0.6 million, compared to 1Q23, representing 1.4% of net revenue from the Rental business, compared to 1.8% in 1Q23 and 1.1% in 4Q23.

EBITDA margin excluding sales results was 47.2% versus 46.3% in 1Q23. In 1Q24, Adjusted EBITDA amounted to R$ 137.9 million, with 13.5% increase when compared to the same quarter of the previous year. In 4Q23, we recorded Adjusted EBITDA in the amount of R$ 158.0 million.

1Q24

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4. Formwork and Shoring

Volume (tons)

In 2024 we will continue with the strategy of generating cash and maintaining our leadership position in this market, meeting the growing pipeline of infrastructure projects with the current volume of inventory, and taking advantage of cross-sell opportunities with the other business units.

We ended 1Q24 with a volume of 49.1 thousand tons. We remain prepared to meet demand with no need for high investments and/or increased inventory.

Net Rental Revenue 1Q24 - per activity segment

1Q24

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Results

R$ million	1Q23	4Q23	1Q24	1Q24/1Q23	1Q24/4Q23
Gross Revenue	68.1	59.5	60.3	11.5%	1.4%
Total Net Revenue	63.7	54.8	55.8	-12.4%	1.7%
Rental	44.0	50.3	49.9	13.4%	-0.9%
Sales	10.3	0.1	0.3	-97.6%	83.3%
Other	9.4	4.4	5.7	-40.1%	28.9%
Total COGS, ex-depreciation	-10.8	-10.7	-11.4	5.2%	5.9%
Rental	-10.2	-11.0	-11.3	10.7%	3.1%
Sales	-0.4	0.0	0.0	-89.7%	199.3%
Other	-0.2	0.2	0.0	-82.2%	-115.6%
Gross Profit, ex-depreciation	52.9	44.1	44.4	-16.0%	0.7%
Gross Margin	83.0%	80.4%	79.6%	-3.4 p.p.	-0.8 p.p.
Gross Margin - Rental	76.8%	78.2%	77.4%	0.6 p.p.	-0.9 p.p.
Gross Margin - Sales	96.0%	89.6%	83.1%	-12.9 p.p.	-6.6 p.p.
SG&A, ex-depreciation and ECL	-9.5	-9.8	-11.9	25.6%	21.2%
Expenses	-9.0	-10.0	-11.9	31.7%	19.0%
Non-recurring items	-0.5	0.1	0.0	-90.9%	-130.5%
ECL	-2.5	-1.1	-0.4	-84.3%	-65.0%
EBIT	33.0	27.8	26.9	-18.4%	-3.2%
EBIT margin (%)	51.8%	50.7%	48.3%	-3.6 p.p.	-2.4 p.p.
CVM EBITDA	40.9	33.2	32.1	-21.5%	-3.1%
CVM EBITDA margin (%)	64.2%	60.5%	57.6%	-6.7 p.p.	-2.9 p.p.
Adjusted EBITDA¹	41.4	33.0	32.2	-22.3%	-2.6%
Adjusted EBITDA margin (%)	65.0%	60.2%	57.7%	-7.3 p.p.	-2.6 p.p.
Adjusted ex-sales EBITDA margin (%)	59.0%	60.1%	57.5%	-1.5 p.p.	-2.6 p.p.
Depreciation	-7.9	-5.4	-5.2	-34.3%	-3.0%

¹Excluding non-recurring items. Non-GAAP - Information unaudited by the independent auditors.

Net revenue recorded was R$ 55.8 million in 1Q24 with 13.4% growth in net rental revenue, compared to 1Q23.

Rental gross margin improved 0.6 p.p. year-on-year, reaching on 77.4% in 1Q24. Costs (ex-depreciation) totaled R$ 11.4 million in 1Q24, up by 5.2% when compared to 1Q23. The increase is explained by the higher volume of rental services provided. Compared to 4Q23, Gross Profit increased 0.7%. In 1Q23, gross margin was positively impacted by a one-off sale of equipment.

Expenses (ex-depreciation,non-recurring items and ECL) amounted to R$ 11.9 million in 1Q24, most of which was related to personnel expenses. The construction sector is cyclical, and the Company has carried out several actions to maintain revenue and reduce provisions for credit losses, taking advantage of the good moment in the segment. ECL amounted to R$ 0.4 million in 1Q24, representing only 0.7% of net revenue, versus 3.9% in 1Q23 and 2.0% in 4Q23.

In 1Q24, Adjusted EBITDA amounted to R$ 32.2 million, with 57.7% margin. In 1Q23, Adjusted EBITDA was R$ 41.4 million, with 65.0% margin due to the sale of equipment mentioned above. If we disregard this effect, the margin would be 59.0%. In 4Q23, Adjusted EBITDA amounted to R$ 33.0 million in 1Q24, with 60.2% margin.

1Q24

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5. Financial highlights

(Consolidated)

In R$ million

Net revenue by type

Costs & Expenses

Adjusted EBITDA

¹Excluding non-recurring items. Non-GAAP - Information unaudited by the independent auditors.

1Q24

Net revenue by business unit

Net Income

EBIT

9.