To facilitate understanding of the main lines that make up our operating and financial results, which serve as the basis for Mills’ financial modeling, we present a brief description and method of calculation of our main performance indicators:
The data shown in the spreadsheet below refer to the historical financial indicators of our segments, in addition to the consolidated result.
Utilization Rate
The calculation of the utilization rate can be done in two ways: by quantity or by asset value.
Quantity
Current Fleet:
1,000 machines
Rented Machines:
450 machines
Usage Rate:
450/1,000 = 45%
Asset Value
Current Fleet:
BRL 100 Million
Rented Machines:
BRL 45 Million
Usage Rate:
45/100 = 45%
Why use Asset Value?
When working with quantity, all equipment has the same value. For example: a 6m scissors platform has the same effect in use as a 48m telescopic boom.
When we work with Asset Value, a big telescopic boom that costs U$S 350 thousand is worth much more for use than a U$S 12 thousand scissors platform.
Thus, the calculation is more accurate because the maintenance and cost of the big telescopic boom in relation to the scissors platform is much higher. As well as the work needed to carry out the lease.
Availability and Unavailability Rate – by Asset Value
To calculate the entire fleet it is necessary to find the Availability and Unavailability rates.
Availability
Total Fleet:
BRL 100 Million
Available Machines:
BRL 10 Million
Availability Rate:
10/100 = 10%
Unavailability
Total Fleet:
BRL 100 Million
Unavailable Machines:
BRL 15 Million
Unavailability Rate:
15/100 = 15%
Utilization Rate + Availability Rate + Unavailability Rate = 100% of the Fleet
Rental Rate
Rental rate is the rate of return on the lease of the equipment and can be calculated in two ways: purchase price or replacement price.
Acquisition Price
Equipment Price:
BRL 50k
Lease Price:
BRL 2.5K
Rental Rate:
2,5/50 = 5%
Replacement Price
Equipment Price:
BRL 75k
Lease Price:
BRL 2.5K
Rental Rate:
2,5/75 = 3,3%
Rental Rate
Why use Replacement Value?
This model is used to prepare the company for fleet renewal. A suitable Rental Rate, and calculated by the replacement value, means that when renewing the fleet, the company will not lose profitability.
What is the ideal Rental Rate?
Calculations are made individually by equipment model. This allows you to better define the composition of the fleet and understand when to renew.
Fleet Profitability Rate (DU)
Total Revenue:
BRL 20 Million
Total Fleet:
BRL 100 Million
DU:
20 / 100 = 20%
