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Good morning, ladies and gentlemen. Welcome to Mills conference call, during which we will be discussing the results of the Second Quarter of 2021. [Operator Instructions] I would like to remind you that this call is being recorded and simultaneously translated into English. Questions may be asked normally by participants connected from abroad, and the recording will be available at ri.mills.com.br. This call is being broadcast simultaneously on the Internet, also with access at ri.mills.com.br.
Before proceeding, we would like to clarify that forward-looking statements that might be made during the call in relation to the business perspectives of the company as well as projections are forecasts that are based on the company's management expectations regarding the future of Mills. And these expectations are subject to macroeconomic conditions, risks -- market risks and other factors. Today with us, we have Mr. Sergio Kariya, CEO; Mr. James Guerreiro, CFO and Investor Relations Officer; Mrs. Renata Vaz, Head S&A; and Andre Rezende, Head M&A.
In order to open this call of the second quarter of 2021, we will give the floor to Mr. Sergio Kariya, CEO.
Good morning, everybody. First, I would like to thank you for your interest and your participation in this call about the results of the second quarter 2021, and we apologize for the delay.
Going to Slide 3, I would like to highlight the most relevant aspect of this quarter for the company, namely those referring to value generation for our shareholders and our stride in ESG, starting by this one. We're very proud to say to the market that we have been certified by GPTW, Great Place To Work, as one of the best companies who work in Brazil. As you know, this is an achievement on the part of our whole team, and it reflects the good work environment that we have. In spite of all the crises that we have faced in the last few years, we believe in a healthy environment with focus on the development and well-being of our people. Besides being our principles, they are a key element for the improvement of our team's performance and reinforces the ties with the company.
We also advanced in the development of themes in order to reach the objectives established in sustainability, highlighting the conclusion of the company's Materiality Matrix with themes such as: Safety, health, well-being; human development, inclusion, equality; operating eco-efficiency, sustainable solutions; relationships with surrounding community; management of the ESG impact on the chain; governance, transparency and ethics. As the next step, we will be defining our commitments and targets for the development of these themes in the company. And advancing the agenda of generating value for our shareholders in the second quarter of Mills, we have many positive events. We continue to grow organically in our rental business unit increasing the demand for lifting platforms, such as we said in 1Q '21.
This was also seen over the second quarter and rental -- increase the number of equipment rented as well as continue with the strategy of recovery of prices, which resulted into a net revenue from rental of BRL 131 million, 10% higher than the previous quarter and 78% higher year-on-year. The adjusted EBITDA of rental was BRL 60 million in the second quarter of '21, 17% higher on a quarter-on-quarter basis and 250% higher year-on-year. In order to meet the growing demand, Mills went ahead and continues with the project of adapting the fleet of our lifting platforms, which still faces the global lack of materials and a very long lead time, making the company to adopt a reinforcement strategy of inventories. And considering the expectation of recovery of the Brazilian economy in the next few years, the rental actions for the increase of the footprint, and the lead time for the part is also for the equipment.
And the Board approved yesterday the acquisition of up to 1,290 lifting platforms that will be arriving over 2022, and will correspond to a CapEx of $63 million. And this equipment will be used for the growth, the adaptation of the mix and renewal of part of Mills' fleet, improving our service to clients and the capacity to increase our footprint, and this is aligned with the organic growth plan of the company. We intend to close 2021 with 42 branches and with plans to grow an additional 20% in the number of branches in 2022. Besides these organic actions, we also advanced the agenda for inorganic growth. As we have already published in the second quarter of '21, Mills signed an agreement for the acquisition of all the quotes of SK Rental, in Brazil, under being appreciated by CADE and acquired the control of Nest proving the actions of the company focused on the consolidation of the sector of lifting platforms and our continuous focus on inorganic operation that might generate value for Mills.
With this performance of Mills and considering that the construction business units reached again, a level of breakeven of adjusted EBITDA in the second quarter of '21 that coming close the quarter with a positive consolidated performance in the economic and financial areas reaching BRL 172 million in net revenue, 75% higher than the second quarter of '20, adjusted EBITDA of BRL 62 million, 200% higher than the second quarter of '20 and net income of approximately BRL 20 million, which will be fully distributed to shareholders. And this increase in the payout for 2021 comes after the close of consecutive losses. And some -- many crisis faced by the company, it does not impact the growth potential of the company. And I would like to inform that the new share buyback approved in the first quarter this year.
In this program, we bought back approximately 3.5 million shares, representing 1.4% of outstanding shares. And these actions of readaptation of the fleet, organic growth, inorganic growth, payout and share buyback among others are aligned to the strategy of capital allocation of the company, aiming at generating value for shareholders, and they gain momentum in the second quarter. Due to the sound liquidity capacity to generate cash and also the leverage of Mills, we closed with BRL 361 million and a gross debt of BRL 184 million prepared to face the next challenges and opportunities.
Now to talk more specifically about the results of the call, I would like to give the floor to James Guerreiro, our CFO and Investor Relations.
Good morning. I would like to thank you very much for your presence. And let's go to Slide #4 of our presentation. Revenues in the quarter show the ongoing recovery of our rental and sales activities. The consolidated total net revenue of the second quarter of '21 was BRL 172.4 million, 12.2% higher quarter-on-quarter and 75.4% higher year-on-year, and the Rental business unit accounted for 88.3% of this amount. In 2Q '21, the rental net revenue amounted to BRL 152.2 million, being 15.4% higher than the previous quarter, due mainly to the increase in prices and also the volume rented with a growth of 3.6 pps in the average utilization rate of the equipment.
And when compared to the same period in the previous year, total net revenue of rental was 67. -- 87.7% higher, reflecting the recovery of the economy after the pandemic and the increase in semi new sales. The Construction business unit had a net revenue of BRL 20.2 million, 7% lower quarter-on-quarter, due to the conclusion of an indemnity negotiation in the first quarter, which contributed to the performance during that period. However, when compared to the second quarter of '20, net revenue went up 17.3%, driven by the increase in revenue from rental because of the increase in utilization rate.
Now let's go to Slide #5 where we present the consolidated costs and expenses net of depreciation and the effect of the IFRS 16, which amounted to BRL 114.3 million in the second quarter of '21, being 12.4% higher than the previous quarter. The higher cost of material, both for consumption and maintenance, are due mainly to the higher volume rented. The actions for the improvement in the level of availability of equipment, including the maintenance of those with higher average age and reinforcement of preventive maintenance and the increase in general expenses is due to expenses with consultancy and the contract of professionals to carry out the projects of the company and nonrecurring expenses.
On Slide #6, the consolidated adjusted EBITDA of Mills, BRL 61.9 million in the quarter, with a 35.9% margin, being BRL 60.3 million coming from the rental business unit and BRL 1.6 million from Construction. We also have the adjusted operating cash flow, BRL 37.9 million in 2Q '21, and the adjusted free cash flow would bring the effect of organic and inorganic investments by the company. In the sense, we highlight the purchase in the first quarter of '21 of certain models of lifting platforms, the payment of BRL 19 million in 2Q '21, investments in technology adaptation of branches in the period, and the payment of BRL 5.1 million for the acquisition of the Nest Rental control already mentioned by Kariya.
On Slide 7, we can see the data about our indebtedness, and we closed the quarter with a consolidated net debt of BRL 183.8 million and cash equivalents -- cash and cash equivalent of BRL 361.3 million, and this means a net cash of BRL 177.5 million. The average maturity for the payment of the total debt of Mills is 1.7 year with an average cost of CDI plus 3.4% per year. On June 30, 2021, Mills presented a net debt adjusted EBITDA in the last 12 months of minus 0.9x, and net debt of short term over adjusted EBITDA LTM, minus 1.4x. And lastly, on Slide #8, we show some consolidated data of the last few years of Mills. And now we are available to answer your questions.
[Operator Instructions]
Rodrigo Fonseca from [indiscernible]
Congratulations for the result, and all the initiatives that you're putting in place in terms of capital allocation. I would like to ask a question about your expansion plan. Given the current utilization rate, I think it's 57%. How do you see the progress of the utilization rate? So as you -- to avoid the risk of having the machines available but not having the necessary occupancy rate. So could you talk about that? And maybe talk about the branches. What about the implementation of this plan? And the risk of the plan and also the value generation that you foresee?
When we look at utilization rate and the figures that you see, these are consolidated figures. We -- of course, we have a stratification line of product in this utilization, and there are products that are already reaching maximum utilization levels and with adequate prices, and that deliver us the ROIC that it matches the initiatives of the company. So the CapEx project that we have already mentioned, first, we have to grow these lines of products, then we have to renew our fleet because we have a relatively high average rate, and we want to improve this in order to be able to deliver better margins and the EBITDA margin as well.
And also, we have to adapt our fleet. That is to say, we are changing the mix. When we look ahead, and we look at the business pipeline, we have to adapt our assets. We have to decrease some lines of product, and we have to grow in other lines. So part of the project is also to sell semi-new equipment. Maybe the second part of your question has to do -- well, let's say, everything goes wrong, and let's say, Brazil does not have the necessary volume next year. And we increased our sales because -- so you can see that we face a very low risk in this aspect on the cost side, and the lack of availability. This is a cost, but it generates future benefit. You have -- you had about BRL 3.5 million, but you also have to see the availability of the other machines.
I will answer on the macro side, and then Guerreiro will come. On the macro side, when you take the reduction availability because we had about 30% and then we went to 25% in the second quarter, and you have an increase in recurring costs, Phoenix, well, you saw that we rented. On the nonrecurring side, it is -- but the normal reduction of the company from 30% to 20%, 25%, the -- as the parts came in, started to put this in the second quarter, and we will still see these costs in the company, but they will gradually go back to normal. And then we will see an important improvement in margin because of the reduction in recurrent costs. You make this initial endeavor to go down from 30% to 20%, 25%. Now, Guerreiro?
Yes. When you see the cost of the company, you compare BRL 11 million to the previous quarter. Within this amount, you have the cost of sales, BRL 2.5 million. And there is the effect of the volume, the higher volume rented and a higher turnover. And that has to do with -- it has to do with a higher number and BRL 2.5 million, BRL 3 million. So there, you already have about BRL 5.5 million. So half of that comes from sales and the turnover of the month that follows the increase in revenue. And then you have between BRL 2 million and BRL 3 million that has the effect of the reduction of lack of availability.
But the reduction of lack of availability that has to do with the turnover and the increase in availability, you have the maintenance of the older fleet as Kariya said, in the purchase of equipment. This will help us in our margins over time, of course. You have this effect and you have a one-off effect that ends up impacting, which has to do with the parts that were consumed in that quarter compared to the previous quarter because this is based on the evolution of the dollar exchange rate from last year to now, and you have the overall increase of preventive maintenance on the part of the company. And -- all these items mean BRL 2.5 million, BRL 3 million. So the main impact quarter-on-quarter was the increase in the cost of sales and the increase in the number of equipment rented, BRL 5 million, BRL 6 million and then the other have lower impact.
[Operator Instructions] The Q&A session has come to an end, and we would like to turn the floor over to Mr. Sergio Kariya for his closing remarks. Mr. Kariya?
We would like to thank you very much for your participation in our call about Mills' results of the second quarter of '21. And our Investor Relations team will be available to you to clarify any doubt that you might still have. Thank you very much.
Mills conference call has come to an end. Ladies and gentlemen, the audio of this call for replay, and the slide presentation will be available at the Investor Relations website of the company, ir.mills.com.br. Thank you very much for your participation.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]