Localiza Rent a Car S.A.
         2Q06 – Public Meeting




                            0
The car rental market > US$ 30 BL

             USA
             USA                                             EUROPE
  ...
Overview of the rental car industry

Car makers exit and entrance of private equity funds:
        Sale of Hertz by Ford
 ...
Recent Achievements – 2Q06



67th stock of IBrX – Brazilian index

Best IR performance on IPO (IR Magazine Awards 2006)

...
Integrated business platform


             127 agencies
                                                    12,584 cars
 ...
Competitive advantages



                                Bargaining
Gains of scale
                                  Powe...
Growth Opportunities

                       GDP
                     elasticity

Consolidation                           ...
Strategies


Short-term:

  Maintain profitability
  (Net margin, ROE and EBITDA margin)

  EVA



Long-term:

  Increase ...
Localiza Rent a Car S.A.
        2Q06 Results Presentation
              (R$ million - USGAAP)




                       ...
2T06 Highlights



68.4% utilization rate in car rental.

43.3% increase in car rental business volume

33.7% increase in ...
Car rental performance
                                                                              (R$ million, USGAAP)
...
Fleet rental performace
                                                                                         (R$ milio...
EBITDA margin per segment
                                                                     (R$ million, USGAAP)

     ...
Consolidated Performance
                                                                                          (R$ mil...
Net income evolution
                                                                                   (R$ million, USGAA...
Cash flow
                                                                   (R$ million, USGAAP)




                    ...
Indebtedness
                                                                   (R$ million, USGAAP)

                    ...
Fleet : investment and growth
                                                                                            ...
Value Added to the shareholder
                                                                                         R$...
ROE – Return on equity




                 40,0%           38.6%                 38.9%
                                  ...
Performance RENT3

                     RENT3 X IBOVESP A
                                                          06/30/...
Perspectives




Minimum utilization rate of 65% in car rental business

35% increase in car rental business volume

25% i...
Disclaimer – Information and Projections

The material that follows is a presentation of general background information ab...
Thank You!
   Investor Relations Localiza:
   www.localiza.com/ri
   phone: +5531 3247-7039



                           ...
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2Q06 Analyst and Investors Meeting

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2Q06 Analyst and Investors Meeting

  1. 1. Localiza Rent a Car S.A. 2Q06 – Public Meeting 0
  2. 2. The car rental market > US$ 30 BL USA USA EUROPE EUROPE • traded US$ 19 billion (2005) • Traded around US$ 11 billion growth estimate of 3.6% p.a (2005) (2004 and 2009) growth estimate of 2.8% p.a. 92% of the consolidated market (2004 and 2009) (2004) 72% of the consolidated 50% of the revenue is from market (2001) airports 33% of the revenue is from airports BRAZIL BRAZIL • Traded around R$ 2.91 billion (2005) historical average growth of 12% p.a. (2000 and 2005) 33% of the consolidated market (2005) 1
  3. 3. Overview of the rental car industry Car makers exit and entrance of private equity funds: Sale of Hertz by Ford Sale of Europcar by Volkswagen Access of capital market (USA): Avis – senior notes and floating rate notes Hertz – IPO New players in the Brazilian fleet rental market: ALD – Societe Generale ARVAL – BNP Paribas Brazilian car rental market under consolidation process Increase of new cars prices, in line with inflation 2
  4. 4. Recent Achievements – 2Q06 67th stock of IBrX – Brazilian index Best IR performance on IPO (IR Magazine Awards 2006) Best car franchiser in Brazil in 2006 (“Pequenas Empresas, Grandes Negócios” Magazine) One of the 50 most admired HRs in Brazil (Gestão and RH Editoras’s research) 3
  5. 5. Integrated business platform 127 agencies 12,584 cars 19,650 cars Synergies: cost reduction, cross selling, bargaining power 195 agencies 15 points of sale in 8 countries 79% sold to final 7,004 cars consumer In 1H06: 12 new own agencies and 2 new used cars points of sale In 1H06: 12 new own agencies and 2 new used cars points of sale 4
  6. 6. Competitive advantages Bargaining Gains of scale Power Strong brand Geographical distribution Integrated platform Yield management Know-how IT Market share More increase competitiveness 5
  7. 7. Growth Opportunities GDP elasticity Consolidation Air Traffic Fleet outsourcing Credit cards Replacement 6
  8. 8. Strategies Short-term: Maintain profitability (Net margin, ROE and EBITDA margin) EVA Long-term: Increase business volume through organic growth and the opening of new agencies, leveraging on growth and consolidation opportunities and obtaining gains of scale 7
  9. 9. Localiza Rent a Car S.A. 2Q06 Results Presentation (R$ million - USGAAP) 8
  10. 10. 2T06 Highlights 68.4% utilization rate in car rental. 43.3% increase in car rental business volume 33.7% increase in fleet rental business volume 63,7% increase in car rental EBITDA (excluding used cars segment) 44.5% increase in fleet rental EBITDA (excluding used cars segment) 67th stock in IBrX – Brazilian index Highest profitability among stocks of Novo Mercado in 2Q06 (source: Economática) 9
  11. 11. Car rental performance (R$ million, USGAAP) Daily rentals (thousands) Net revenue 641 3,411 410 370 347 2,413 213 1,839 192 43% 154 162 1,059 740 155 197 271 96 35% 83 58 79 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 EBITDA Net income 179 78 53 117 53 1,1 33 72 31 80 36 64% 39 17 64% 24 19 126 52 84 4 34 2.5 53 15 24 35 15 21 (2.9) (2.3) (0.3) 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 Used Cars Car Rental 10
  12. 12. Fleet rental performace (R$ milion, USGAAP) Daily (millions) Net revenues 227 218 3,351 179 78 3,119 90 2,806 59 34% 72 1,022 128 149 47 765 120 35% 25 12 35 47 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 EBITDA Net income 103 27 90 8 37 78 7 36 4 95 63 74 83 45% 33 51 57 16 23 1 14 48% 1 32 23 22 16 (1,6) (6,7) 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 (14,8) (19,8) (35,7) Used cars Rented cars 11
  13. 13. EBITDA margin per segment (R$ million, USGAAP) 2003 2004 2005 2Q05 2Q06 Margin Margin Margin Margin Margin Rentals 34,3% 42.6% 46.3% 36.4% 44.1% Car rental Used car sales 9.7% 15.3% 14.4% 15.5% 5.3% TOTAL 20.7% 28.4% 27.9% 23.1% 24.2% Rentals 61.2% 65.2% 63.6% 63.8% 68.2% Fleet rental Used car sales 7.3% 8.2% 10.5% 10.8% 5.6% TOTAL 43.4% 41.7% 45.3% 50.1% 46.2% Rental 46% 51.5% 52.5% 46.6% 53.1% Consolidated Used car sales 9.2% 13.2% 13.7% 14.6% 5.4% Franchising 43.6% 41.5% 47.6% 29.4% 54.5% TOTAL 28.6% 33.1% 32.6% 29.4% 31.2% 12
  14. 14. Consolidated Performance (R$ milion, USGAAP) Daily rentals Net revenue 6,762 869 4,959 5,219 628 448 527 38% 303 251 16% 2,082 233 1,504 201 421 35% 325 108 276 108 93 125 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 EBITDA 286 Net income 61 210 107 40 91 152 23 69 225 24% 31% 74 41 129 170 60 6 31 16 68 44 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 Margin 13.0% * 14.3% 12.2% 15.4% 17.4% Pro forma result disregarding mark-to-market (MTM) of derivatives contracts 13
  15. 15. Net income evolution (R$ million, USGAAP) EBITDA variation = + 14 million Rental = + 24 million Other itens variation = - 4.4 milion Used car sales = - 10.9 milion Revenues Costs +32.9 -18.5 -0.1 -8.7 SG&A +33.0 -9.8 -0.3 -1,0 -1.1 Interest Stock Depreciation Option Taxes +0.8 -7.6 +7.4 -0.8 -3.5 31.3 +30.7% 40.9 Net Income Net Income 2Q05 2Q06 14
  16. 16. Cash flow (R$ million, USGAAP) 81.2 Cash and cash 50.5 Cash and cash equivalents equivalents 1Q06: 2Q06: 69.2 191.1 -9.8 Operational Investment Financing activities activities activities • Strong cash generation from operational activities • Strong cash generation from operational activities • Funding from follow-on shares offering proceeds • Funding from follow-on shares offering proceeds • Low net investment in fleet • Low net investment in fleet 15
  17. 17. Indebtedness (R$ million, USGAAP) Net debt (R$ million) USGAAP 539 366.7 272.5 281 87 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 Net debt / fleet 22% 46% 60% 51.2% 32% Net debt / equity 0.36 0.96 1.37 1.03 0.46 Rating S&P - BrA / Positive outlook The Company is prepared to a new growth cycle The Company is prepared to a new growth cycle 16
  18. 18. Fleet : investment and growth (R$ milion, USGAAP) Investment - (R$ million, USGAAP) Quantity - thousand 690 26,1 493 22,2 448 18,8 303 15,5 15,1 15,7 251 288 232 9,3 108 108 121 4,6 4,2 4,2 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 Sales Purchases Net investment Fleet growth (thousand) 2003 2004 2005 2Q05 2Q06 2003 2004 2005 2Q05 2Q06 37 190 242 124 13 -0.4 +6.2 +7.3 +4.7 0 17
  19. 19. Value Added to the shareholder R$ / thousand 29.3% 24.6% 24.1% 22.0% ROIC 24.1% 18.4% 15.8% Nominal WACC 12.9% 1,781 44,486 57,384 81,229 2003 2004 2005 1H06 EVA Nominal WACC ROIC 2003 2004 2005 1H06 Change Average Price per car R$ 16.4 18.6 23.4 25.9 +57.9% IPCA (Brazilian inflation index) 9.3% 7.6% 5.75% 1.5% +26.2% Average CDI (Brazilian interbank rate) 23.3% 16.2% 19.0% 15.6% -7.7 p.p. Brazil risk 8.4% 5.4% 4.0% 2.5% -5.9 p.p. Real WACC (excluding inflationary 14.3% 10.9% 10.5% 9.2% -5.1 p.p. effects In the last 3 years, the spread between ROIC and WACC presented low volatility In the last 3 years, the spread between ROIC and WACC presented low volatility 18
  20. 20. ROE – Return on equity 40,0% 38.6% 38.9% 36.7% 30.8% 30,0% 20,0% 2003 2004 2005 2006 (estimated) 2006 ROE may be higher than 30%, despite the R$150 million capital increase 2006 ROE may be higher than 30%, despite the R$150 million capital increase OBS: the year of 2006 was annualized based on the results of 1H06, already considering proceeds from the primary offer. ROE was calculated dividing net income by the current year’s average equity, not considering the profit of the year itself. It was not considered the mark-to-market of derivative contracts in 2003 net income. 19
  21. 21. Performance RENT3 RENT3 X IBOVESP A 06/30/06 41.5 120 50 12/31/05 45 28.63 100 40 80 35 30 60 25 40 20 20 15 10 0 Volume RENT3 RENT3 IBOVESPA Average daily volume traded in 2T06 R$ 15.1 MM Performance RENT3 2Q06: + 13% X IBOV 2Q06: -3% 20
  22. 22. Perspectives Minimum utilization rate of 65% in car rental business 35% increase in car rental business volume 25% increase in fleet rental business volume 21
  23. 23. Disclaimer – Information and Projections The material that follows is a presentation of general background information about LOCALIZA as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein. This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of LOCALIZA and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. Although LOCALIZA believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to LOCALIZA’s management, LOCALIZA cannot guarantee future results or events. LOCALIZA expressly disclaims a duty to update any of the forward-looking statement. It is not allowed to offer or sell in the United States securities not registered or exempted from registration, in accordance with the Securites Act of 1933. Any securities offering to be conducted in United States must be made through an offering memorandum, which can be obtained with the underwriters. The offering memo must contain or include reference to detailed information about LOCALIZA and its business and financial results, in addition to its financial statements. This presentation does not constitute an offering, invitation or offering request or acquisition of any type of securities. Neither this presentation nor anything here included represent the terms of a contract or commitment of any kind. 22
  24. 24. Thank You! Investor Relations Localiza: www.localiza.com/ri phone: +5531 3247-7039 23
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