Brazilian rental group Mills has confirmed two acquisitions along with an $63 million investment on new access platforms at the same time it has released its half yearly results which show a massive rebound from last year.
The new acquisitions include SK Rental Locação Equipamentos, and sales, distribution and rental company Nest Locação e Revenda de Máquinas.
Mills has acquired all the shares of SK Rental for R80 million ($15.2 million). A division of the Sigdo Koppers group, it was set up in 2010 in Curitiba, the capital of the southern Brazilian state of Paraná, today it covers the region and runs a fleet of around 300 aerial work platforms, mostly Haulotte and JLG - topped by a 125ft JLG 1250AJP - along with some general construction equipment. The deal was agreed earlier this year but is still subject to the relevant approvals.
A company statement said: “The acquisition of SK Rental do Brasil is in line with Mills’ strategic objectives related to improvement of customer experience, growth, consolidation and increase in market share.”
At the same time, Mills acquired a 51 percent controlling stake in Nest Locação, based in São Paulo it was established by Paulo Esteves in 2018. It is the exclusive distributor for JLG low level equipment in Brazil it also runs a modest rental fleet of JLG low level platforms, with models including the LiftPod and JLG/Power Towers EcoLift as well as the new JLG 1030P.
Nest is an innovator in the market, with its Nest Online and the Nest Express Totem kiosk allowing contractors to rent and collect units from an onsite pool of machines, paying with a credit card, along similar lines as a vending machine. A code is then issued and input into the machine to permit the use for the selected time frame.
Mills' investment in the company - through its Solaris subsidiary - is costing R5.1 million ($971,000), of which R3 million ($571,000) will be invested in Nest itself, increasing the share capital by the same amount. The deal, which was agreed earlier this year also provides an opportunity for Mills to acquire the other 49 percent in 2025 at a agreed multiple of earnings.
Esteves said: “The 'on demand' rental of access platforms through a kiosk had not been seen before in the industry, until now. It allows customers to rent a machine almost as easily as buying a soft drink from a vending machine. JLG's support was essential in making the Nest Express Totem a reality.”
“This is a unique partnership between the concessionaire / rental company and the manufacturer to present a disruptive business model to the market. It goes beyond launching access equipment at low heights. It is a profound change from the traditional leasing model, capitalising on opportunities only made possible by the acceleration of business via the Internet and new sales tools, including Nest Express, Nest Online, sales process automation, integrated logistics and modular branches at points of concentration of demand. We are very confident that this will all accelerate thanks to the new acquisition.”
Moving on to the financial results, total revenues for the six months to the end of June were R326 million ($62 million), up 46 percent on the same period last year, while pre-tax profit came in a R39.7 million ($7.5 million) compared to a loss in the same period last year of R19.7 million ($3.7 million). Capital expenditure was just R23.9 million ($4.5 million) following a long period with negligible investment. The company has also approved the purchase of 1,290 new aerial work platforms for delivery in 2022, with an expected cost of $63.2 million. The company said: “The new machines will be used to expand, adjust and renew part of the company’s fleet.”
Looking at the second quarter, revenues improved 75 percent to R171.6 million ($32.7 million) and it reported pre-tax profits of R23.9 million ($4.5 million). Utilisation improved from 53.6 to 57.2 percent.
This is a fair bit to digest in one go! It is certainly a bold set of moves after years of difficulty, following a gross - some might say ‘wild’ - over expansion just before the financial crisis. However, after several restructurings and recapitalisations the business looks to be bouncing back with a vengeance. It also looks as though the growth plans this time round are more intelligent and measured.
It bodes will for the business and the industry as a whole. Positive news for Friday the 13th.