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Good afternoon, everybody, and thank you for waiting. Welcome to Mills conference call about the results of the fourth quarter and full year of 2021. I would like to mention that those of you who need simultaneous translation, we do have this tool available on the platform. And you should click on the interpretation button on the globe icon on the lower part of your screen and choose your preferred language, either Portuguese or English. For those of you who are listening to the video conference in English, you may mute the original audio, which is Portuguese, by clicking on the respective button. We would like to inform you that this video conference is being recorded. And will be available at the Investor Relations website of the company, where the full material of this quarter is already available. [Operator Instructions]
We would like to inform you that information contained during this presentation, and forward-looking statements that might be made during the call in relation to the company's perspectives and businesses as well as projections are assumptions based on the company's management expectations in relation to Mills future. Forward-looking statements are no guarantee of performance. They involve macroeconomic conditions, market risks and other factors.
Now I would like to give the floor to Sergio Kariya, CEO of Mills. You may proceed, Sergio.
Good afternoon, everybody. Welcome to Mills live meeting about the fourth quarter and full year 2021. 2021 made us very proud. We were very pleased with our trajectory of growth and transformation. Today, we have a team which is focused on organic growth and the opening of branches and the increase in the coverage of the existing branches, also the increase in the penetration of the concept and use of the lift platforms in Brazil. We focus on inorganic growth as well.
As one example, we made 3 acquisitions last year, totaling BRL 150 million. And we started the new position of the company, bringing a new brand, a brand focused on satisfaction and experience for the customers and our challenges of growth and also the journey of sustainability by means of increase of margins and prices, improving our results.
And one example is some of the highlights that we have for this period. Our gross margin had an improvement, a very significant one when we compare the fourth quarter of 2021 and '21 and '20, 74.2% improvement year-on-year. We see 69% improvement in 2021. Total consolidated net revenue, BRL 221 million in the fourth quarter, almost BRL 740 million in 2021 grew respectively 48% quarter-on-quarter and 46% year-on-year.
Over this year, we also improved our rented volume, and we also improved our geographical position bringing the opening of almost 10 branches over 2021. All these impacts have brought about the consistent improvement in our results that you may see reflected in the adjusted EBITDA for 2021, reaching consolidated for the company, almost BRL 290 million, almost 100% improvement. We almost doubled the EBITDA in 2021 year-on-year, an improvement of margin, 40%, the consolidated margin of the company.
And when we look specifically at the fourth quarter of 2021, we reached consolidated BRL 93 million, a growth of 76% year-on-year, an improvement in margin as well, almost 43% EBITDA margin. And we also improved our ROIC. As a consequence, the ROIC of the company, 15.1% in the fourth quarter in the last 12 months and 21.5%. If we look only at the rental division, we delivered a net income, which was very robust when we compare 2021 to the previous when we had a net loss of BRL 5 million and we have BRL 102 million positive in 2021 with a margin of almost 20%.
Another important points that I would like to highlight here are the following. We had the approval last year in July, August last year of an investment for 2022 of approximately $63 million for the purchase of assets and lift platforms, focusing on our growth increasing our mix and the renewal of our fleet.
And going to Slide #4, I would like to mention some other important points of our cultural focus, which is integrated to our sustainability agenda. When we look at that, we could mention very important victories in 2021 as well. Even in -- or in spite of a pandemic, we received an award by the Great Place to Work in 2021, and we are among the 10 companies of B3 with most women in our Board, and we got the award of women on Board and some other plans that show that the company integrates its culture to sustainability.
We could mention in this regard, 2 interesting project, the first one is the Partilhar project, and we channel part of our cash flow so that we may have donations made to social institutions and another very important thing for us because we have a very strong focus on the training of people. We created a program called TransFORMAR. And this program awards scholarships for technical courses in the regions where the human development index is very low. We are not looking for any counterpart. That is to say this person who graduates, she is not obligated to work for Mills. We intend to train technicians and improving their possibilities to get a job in that specific region.
And other important points of the company are the following: We focused actions on our materiality matrix; we defined primary and secondary targets linked to the [ ODS of the UN ] the sustainable development objectives. And I could mention a few of them.
The 3 primary challenges of the company where we want really to be outstanding are safety and well-being, human development, equity, sustainable solutions and eco efficiency and sustainable operations. I can say that we are focusing on the investment that we announced last year of hybrid machines. They emit less greenhouse gases.
And talking about GHGs in 2022, we are concluding our inventory in 3 areas so that we may carry out our study about the carbon footprint, 2022. Next month, we will be issuing the first standard GRI standard report. And we will be celebrating 70 years of existence, and we will be seeking certification via system B.
I'm now going to Slide #5. From 5 to 8, I mentioned what really differentiates Mills. We try to differentiate ourselves from our competitors by means of operating excellence. One example are our operations and their maintenance because we have standardized maintenance. We have the lean concept applied to our maintenance, and this means that we don't have only the shops that are standardized, but they are organized as maintenance cost. As you can see on the slides, we look for digital transformation, and digitalization and technology are extremely important as pillars, and we try to generate value for our shareholders and other systems of the company as well.
We have digital resources being used in our branches, be it in maintenance, also integrated to our systems. And our yards have a functional layout. And this optimizes not only the movement of machinery but also the safety of people and our employees. All our loading is done online via photo checklist and with digital signature by means of an app. And our field services are also done with an app integrated to our planning system and all that, you can see on the following slides because we are always seeking to bring or to extend the useful life of the equipment. The company has gone through many cycles already. And over these years, we created experiences in order to really extend the use of life of the equipment.
And we have some examples. On Slide 6 to 8, you can see that equipment with 10, 11 years of use that we overhauled last year. And one important point here is that this is not concentrated in one location. Just to remind you, we have over 40 addresses all over Brazil. And these operations of extension of useful lives is done in many other areas in Brazil.
Now I would like to turn the floor over to Camila. Camila will be talking about the results of the fourth quarter. Thank you.
Good afternoon, everybody. Now let's go to Slide #10 with the consolidated net revenue. As you can see, the net revenue to reach BRL 219 million, 40% higher and with a much higher rental revenue 91% of the revenue in the period. In the year, the net revenue totaled BRL 738 million, BRL 738 million because of the increase in demand in many sectors and our initiatives to extend our market coverage. The rental revenue chart per sector showed the evolution of the rental activity of equipment in Brazil and the success of the implementation of our diversification strategy in our revenue base.
Now Slide 11. The performance of each one of the business unit 4Q '21, rental net revenue was BRL 190 million, 46% higher year-on-year. As a result of the higher rental revenue increasing 60% in the period. This increase of BRL 65 million in rental revenue was due to the increase in the average ticket and also the volume rented. The demand is resilient and growing consistently in almost all segments. For the year, the net revenue of rental was BRL 646 million growing 52% on a year-on-year basis, and the net revenue from rental accounted for over 90% of this because of the increase of about 25% of the average ticket and also the higher percentage of volume rented. The sales revenue, 39% increase in line with our strategy of adapting the fleet and also reflects the increase in prices of equipment, both new and used.
Because of the international concepts, we closed the year with 8,503 billion lift platforms already, including the SK Rental equipment acquired in 2021 and part of the acquisition of Auto part. And the second part was concluded in January this year.
Now for more can ensuring in the net revenue was BRL 95 million, 61% higher on a year-on-year comparison and due to the higher rental revenue increasing 52% as a consequence of the increase in the average ticket and the volume rented as well. For the year, the net revenue grew 13% year-on-year and the rental net revenue increased 32% because of the gradual recovery of the infrastructure sector.
Now going to Slide #12, we can see the consolidated adjusted EBITDA with a relevant growth in the period. In the fourth quarter, 76% increase year-on-year. Practically, we doubled our adjusted EBITDA for the year. BRL 289 million and 39% margin. In the rental unit, the adjusted EBITDA reached BRL 89 million in the fourth quarter of '21, 77% higher year-on-year and 47% margin. The good performance is due to the increase in revenue because of the higher volumes and advances also in prices besides the higher gross margin x depreciation, which went from 68% in 4Q '20 to 75% in 4Q '21.
As a percentage of the net revenue, operating and administrative expenses net of depreciation IFRS 16 and nonrecurring items had levels similar in both periods, 29% and 28%, respectively. In the year, the adjusted EBITDA of rental reached BRL 274 million with a 43% margin vis-a-vis BRL 137 million with a margin of 33%, a growth of almost 100%, showing that we are making strides in our growth trajectory and also generating value for our shareholders.
Now let's talk about formwork and shoring. The adjusted EBITDA was BRL 5 million and BRL 15 million for the year, 16% margin vis-a-vis 12%.
Now I would like to give the floor to Renato [indiscernible] our invest...
Thank you very much, and it is with great pleasure that we present on Slide 13 in the income, BRL 44 million, the highest since 2006 and with a growth of [ 171% ] and 39%, respectively. In 2021, we had consolidated net income of BRL 102 million after 6 years of consecutive losses. Trying to maximize value generation for our shareholders, the company will be channeling 100% of its net income in legal -- ex legal reserve. In remuneration to shareholders and share buyback, we will be distributing BRL 59 million between interest on equity and dividends, of which BRL 46 million have already been distributed in 2021 and the BRL 13 additional million will be paid in 2022, a payout of 58%.
In January this year, we concluded the second program for share buyback and we bought back about 8 million shares equivalent to 3% of its capital stock. Still about the share buyback. Last week, we approved the cancellation of 6 million shares in the third share buyback program up to 15 million shares. The shares bought back, have the objective to have the long-term remuneration of shareholders being used as an instrument for negotiation for M&As and cancellation to maximize value generation for the shareholders and improving the capital structure of the company.
Talking about cash generation. On this chart, you can see BRL 66 million in the fourth quarter of BRL 187 million in the year of '21. The adjusted free cash flow was negative by BRL 22 million in the year because of organic and inorganic investments of the company. And we can see on the upper part the ROIC and the ROE, 15% ROIC and 9% ROE.
Now going to Slide #14. We show the composition -- the breakdown and the profile of our debt. On December 31, 2021, 100% was backed to the CDI with an average duration of 1.5 year and the average cost of CDI plus 3.3% a year. We closed 2021 with a cash of approximately BRL 215 million and gross debt of BRL 148 million. And this shows the strong cash generation of the company and the considerable position of leverage, as you can see. And also in order to meet our demand for growth. Last week, the company announced the offering of debentures, BRL 300 million with a 5-year duration and the cost of CDI plus 2.73% a year.
And finalizing our presentation, we will be opening for questions. you say was.
[Operator Instructions] Sell side analyst of XP. Larissa.
We're very impressed with the results that you presented in spite of the assembly blocks with your audit. I have 3 questions. They are long. Could you give me an idea of the utilization rate now at the beginning of the year? Could we expect an improvement vis-a-vis what you have already announced? Or do you believe it will become more stable?
Last week, we talked about the demand for smaller machines. And now I would like to know about the demand for bigger machines. And could you talk about the demand perspectives for this year? These are my questions.
Thank you very much for the questions. Well, talking about the utilization rate. Of course, in the first half, we believe it's not going to be so fast. During the year, the curve will be getting closer to 70% or higher. We see 2022 with an improvement. In terms of the mix of our machines at the beginning of the year, we see a mix very similar to the fourth quarter, smaller machines and medium-sized electric or diesel, but more on the medium-sized side. And we start to see the improvement regarding the bigger machines and higher machines over 2022. This is our estimate.
When we look in verticals of industries, we have a very bullish estimate for improvement in infrastructure, specifically the infrastructure works. We have about BRL 800 million to be invested. We have a pipeline of this size in Brazil, when we expect to see part of these investments over this year and the next year or so. So in terms of penetration of verticals in construction. I would say that it should increase during 2022.
Another question. You talk about the import of equipment? And could you extend the depreciation of your machines?
Well, some assets, we are already doing this, and we are studying this for some other models of equipment so that we may have a different depreciation, both fiscal and accounting. Thank you.
Next, Pedro Gonzaga, buy side analyst, Pacifico Asset Management.
Congratulations on your result. I have 2 questions. The rental rate, when do you expect to have a rental rate close to your objective? I believe it is 4%? When do you expect this to convert to your target and the drop in the rental prices, do you believe this will be sustainable over the year?
Pedro, thank you for the questions. Starting with the rental rate. It's already close to 3.7%, very close to 4%. And there is a very interesting factor here. The value still has the dollar higher than what we see today on the screen, about BRL 5 in Brazil. So we will see an improvement, of course. And our focus is always looking at the internal rate of return, the ROIC, looking for the best price compared to the market demand and whatever we can apply in terms of results.
With relation to the acquirees, we could mention some lessons that we learned. There is always a price attrition because when we look at Mills' prices compared to competitors' our prices are always higher. And this is a slower curve that is to say when you acquire up to the moment when you can transfer this to the customers so that they may perceive the value and the advantages that Mills offers, and then we can charge higher prices.
We have not been looking for a big bank of M&As. We always do more local M&As with specific objectives, as I always repeat, improving our market penetration, but also our pricing. Over time, the curve gets closer to our rental rate strategy. We shouldn't see a total impact on prices of the company in a consolidated fashion.
And there were some important things regarding cost. Of course, you have inflation that pressures costs. But as the dollar is a little bit lower now, some of our expenses are in dollars. So if you compare year-on-year '21 and '22, some things might be offset because of the lower exchange rate. And more and more, we have been improving our operations and we have more efficiency gradually. And over 2022, we intend to look for our historical margins, be it an EBITDA or gross margin ex depreciation. So over the year, in spite of inflation either via price or process improvement and productivity improvement we intend to improve this margin relation.
Andres Centeno, buy-side analyst.
What about the company's plans in terms of growing in other segments besides lift platforms?
Andres, thank you for the question. The company is very diversified already. Of course, we have a big concentration on lift platforms, but we have generators and compressors. And the important point here is the following. Given the position of the company vis-a-vis cash and cash generation in the future. We have a surplus of cash that we intend to utilize by means of diversification of product lines. So we have already had some meetings with our Board of Directors, and we have planned. Of course, I cannot review the products or the segments yet, but we do have plans in place in order to further diversify our top line regarding the products offered by the company.
[Operator Instructions] Pedro Gonzaga has a follow-up question.
I have two questions in formwork and shoring. There is an appreciation there. There is a higher relevance in this area now. I would like to understand if in the net income of this quarter, was there some relevant effect of these 2 areas because the cash income was very different from the accounting income?
Well, I'm going to answer the first question. The increase in the commodity in a way has already been inexistent for some time, the replacement cost, and this is the reason why this unit has some challenges in terms of price recovery. It is one step behind when you look at rental, in rental we have been able to close this curve much faster. But construction, every quarter, we try to improve our prices.
When we look at replacement, this unit still has a low utilization. We have about half of our assets still idle in our warehouses. And only the other half is being used. So we have a lot of room to grow without making any further investments, which is an important point. Of course, there is some investment to be made but not in the acquisition of assets. The market that we address is much smaller than the rental market. This is why we don't want to make a lot of investment in this business unit.
And the second question was about our cash income. Yes, there is one impact. But when we roll out a new line of products, it will have a bigger impact on our cash earnings than fiscal and tax. At rental, we do have a fiscal benefit, a tax benefit. We have accumulated losses. Regarding the cash income, we have the delta, so to say, but it is still marginal compared to what we have in the future, be it in terms of new investments or recovery of ICMS and COFINS taxes and also income generation and the use of amortization of the accumulated losses of the company. And the fiscal depreciation and the accounting depreciation will happen when we get to this point.
Depending on the product line, Pedro, it is important to say, we have the question by Larissa. She asked about extending the useful life and having this difference between fiscal and accounting. But by the Brazilian IRS, you can defer depreciation on the book side and the fiscal side in different manners. And this has a very positive impact on our cash net income for the company.
[ Kate D'Souza ] sell side analyst.
The first question. Could you talk about the schedule for the receiving of new machines? And how do you evaluate the utilization rate of the assets?
And the second question in relation to the share buyback, will you be canceling shares?
And the third question even if it is not very representative, how do you evaluate your expectations for the construction industry?
Thank you, [indiscernible] I will start with the schedule to receive the machines. The global market is under stress and the supply chain is under a lot of stress still. We visited abroad some other countries, and there is a lot of stress, not only because of chips and rubber but also labor. And some suppliers are facing a more complicated situation in terms of lead time for delivery. We are looking for alternatives, but part of the assets that we would like to be receiving in 2022 will probably only materialize in 2023. And this is why we are looking for other suppliers in order to bridge this gap, specifically in 2022.
Regarding utilization, it is designed in a way so as equipment arrives, we channel, these new machines to branches, and we intend to continue our geographic penetration and being closer to our customers, and this is why we do not see a drop in utilization. We see an improvement in the utilization rate up to the moment when the new equipment arrives and then we keep a healthy stability of utilization over 2022.
And the deficit of machines in 2022, we had a plan to resell semi-new equipment over this year, and we will probably be holding this back so that we may continue to use these machines and continue to have a balance between supply and demand.
And you asked about the share buyback. We have already carried out the cancellation in the second share buyback plan. And the third one, we have some objectives in order to supply the long-term incentive program for our employees, for the share program that we have in the company. And we can also use these shares for inorganic moves or even continue to cancel them. And we will be making this decision based on the best possible value generation for our shareholders, but we have not defined this yet.
And you asked about the Construction segment. The formwork and shoring segment has a smaller addressable market. So we do see an expansion over the next few years in Brazil in terms of investments in infrastructure but this is not the growth that we have in terms of rental heavy equipment, heavy equipment rental business. Of course, we see an improvement in prices and margins but we have to take into account the fact that the addressable market is much smaller than the heavy equipment market.
[Operator Instructions] Luis Guillorme buy side analyst of [indiscernible].
What happened in the world was the following: Americans taxed the Chinese products to come into the United States. So they lost a lot of competitiveness, and they are looking for other alternatives worldwide. We study all product lines, but it's important to say that equipment is mainly the lift platforms.
We have to look at the safety, and they have to be extremely reliable and extremely safe. Of course, we study all the product lines and all the manufacturers such as [indiscernible], they are not different. Of course, we are studying these products as well, but you have to take into account the account -- the reliability because you have really to understand the impact on the quality, et cetera.
And another relevant point in our model is not only the acquisition price because sometimes you make a mistake when you look only at the acquisition price. You have to look at the TCO. The total cost of ownership is very important. So you have to look at along the useful life of the equipment. What is the cost, be in terms of the frequency of repairs and the cost of spare parts, and we have many years mapped already in our database about that. We know the TCO per model of equipment per manufacturer. And this considerably changes the internal rate of return of the products that you buy from supplier A or B, and it is not different when you talk about the 2 that you mentioned.
And the third I'd like to say the resale, this is very important for us today in global terms. Life has 2 years of manufacturing and the other one a little bit less, but the history is not so clear yet about the operating costs and the reselling price. So in order to make a decision in terms of investing or buying any line of Chinese product to really have to take this into account. This is very important.
[Operator Instructions] The Q&A session has come to an end. We would like to turn the floor back to Mr. Sergio Kariya for his closing remarks.
Thank you very much for participating in this live meeting about the fourth quarter and full year '21. Should you have any further questions, you may address them to our Investor Relations area. Thank you very much.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]