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Apresentação institucional eng

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  • 1. 1August, 2012
  • 2. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 2
  • 3. Company: milestonesPhase I – Rise to #1 Phase II – Expansion Phase III – Reaching Scale1973 – Founded in Belo Horizonte/MG 1984 – Expansion strategy by 2005 – IPO: market cap of US$ 295 mm adjacencies: FranchisingLate 70’s - Acquisitions in the 2011 – Rated as investment grade byNortheast of Brazil 1991 – Expansion strategy by Moody’s, Fitch and more recently S&P adjacencies: Seminovos1981 – Brazilian car rental leader in # 2012 – ADR level Iof branches 1997 – PE firm DL&J enters at a market cap of US$ 150 mm 06/30/2012 – Market cap pf US$3.1 bi with ADTV of 37.1 million 1997 – Expansion strategy by adjacencies: Fleet rental 1973 1982 1983 1990 2004 2005 2011 3
  • 4. Company: Ownership breakdown FoundersSalim Mattar Eugenio Mattar Antonio Claudio Flavio Resende Free-float Resende 9.0% 7.1% 10.5% 7.1% 66.3% 100.0% 100.0% 100.0% 4
  • 5. Company: integrated business platform 58,436 cars 31,412 cars 3.1 million clients 699 clients 253 locations 343 employees 4,057 employees Synergies: bargaining power cost reduction cross selling 13,389 cars 66.6% sold to final consumer 201 locations in Brazil 71 stores 48 locations in South America 951 employees 34 employeesThis integrated business platform gives Localiza flexibility and superior performance. 5 Based on the 2Q12
  • 6. Company: Business platform divisionsCar rental Franchising Fleet management Used car salesLocaliza car rental rents to Supplementary business, Total Fleet, offering Support area, with theindividuals or businesses with the purpose to expand customized fleet for terms objective to sell theat airports and other the brand’s network. of 2-3 years. Company’s used cars andlocations. add know-how in buying cars and to estimate the residual value.The traditional backbone of Franchising is seen as a Total Fleet is seen as an As a support businessLocaliza. With its giant fleet primarily strategic business additional business that activity, Seminovos enablesthat gets renewed annually, by management – the generates value by the sell 70% of used carsit lays the foundation for all revenues generated are leveraging synergies directly to the finalscale effects captured by low, however brand and created by the integrated customer, therebythe group as a whole. network expand at platform approach. maximizing the residual minimum capital value of used rental cars. expenditure. 6
  • 7. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 7
  • 8. Overview Corporate fleet size Corporate locations2007 35.686 2007 1782009 47.517 2009 2142011 64.688 2011 247 Fleet composition Financial performance 23.0% CAGR: 980.7 1 , 1 00 . 0 0 63.1% 9 0 . 0 % 9 00 . 0 0 585.2 Compact cars 7 00 . 0 0 5 00 . 0 0 428.0 3 00 . 0 0 46.0% 46.9% 4 0 . 0 % 1 00 . 0 0 41.9%36.9% 1 - 00 . 0 0 3 - 00 . 0 0 2007 2009 2011Others 5 - 00 . 0 0 1 - 0 . 0 % Car rental net revenues EBITDA margin (%) 8 *Source: each company website (May, 2012)
  • 9. Overview Car rental distribution (Brazil) 415 449 452 346 381 279 312 254 2005 2006 2007 2008 2009 2010 2011 1H12 # of branches # of cities 452 318 289 62 107 71 60 32 120 Localiza Hertz Unidas AvisLocaliza holds an extraordinarily strong position in the Brazilian market, as over decades it has been successfully competing against major global players through local scale. 9 Source: Each company’s website as of May, 2012.
  • 10. Overview Car Rental market share - Brazil (# of cars) 36.5% Car rental locations in Brazil Airport locations Off-airport locations Others LocalizaAvis 36 Localiza Hertz 351 35 101 Unidas 78 73 Avis 27 OthersUnidas Hertz 2079 34 42 Off-airport market is still fragmented. 10 Source: ABLA (Brazilian Car Rental Association) and each company’s website (May, 2012)
  • 11. Main competitorsMarket share* 6.7% 3.1% 2.8%Airport locations 34 35 42Off-airport locations 73 27 78 • Capitalized by three • International brand • International brandStrengths Private Equity funds • Local expertise • Local expertise • Local expertise • Weak footprint • Relatively weak brand • Weak footprint in Brazil • Weak footprint in Brazil • Unclear priorities between • Master franchisee in Brazil inWeaknesses • Used car sales retail network rental and fleet business “Chapter 11” • Used car sales retail • Used car sales retail network network 11 *Source: Roland Berger report, as of June 21, 2012, based on 2010 figures
  • 12. Drivers Investments in Brazil Air traffic passengers - million 679 % % 16.2 20.3 179 % 154 343 80.3 128 182 71 85 83 107 2003 2009 2010 2011 s try gy e s n ga ag er tio er us thil/ ew ta En dO O or In /s sp er at an W Tr Car rental affordability GDP per capita 645 (R$ thousands) 545 51% 510 465 21.3 415 19.0 38% 380 16.0 16.6 37% 35% 350 14.2 300 11.7 12.8 260 10.7 240 8.4 9.5 180 200 6.9 7.5 151 31% 27% 22% 20% 18% 16% 15% 15% 13% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Monthly m inim um salary (R$) Daily rental price over m inim um salary (%) 12
  • 13. Satisfaction survey2011 - Would you recommend Localiza? YES! 95.9%94.6% 94.8% 96.0% 95.5% 95.3% 96.3% 95.9%2005 2006 2007 2008 2009 2010 2011Customers recognize premium service and recommend it! 13Source: based on “Fale Fácil” satisfaction survey answered by more than 350,000 customers in 2011
  • 14. Financial cycle Net car sale revenue 1 - year cycle $26.4 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $27.5Car acquisition Fleet Rental Seminovos Total 2011 per operating car per operating car per year R$ % R$ % R$ Net Revenues 19,1 100,0% 29,2 100,0% 48,3 Cost s (7,4) - 0,0% (7,4) SG&A (2,7) -14,1% (2,8) -9,6% (5,5) Net car sale revenue 26,4 90,4% 26,4 Book value of car sale (25,7) -90,0% (25,7) EBITDA 9,0 47,2% 0,7 2,4% 9,7 Depreciation (vehicle) (2,0) -6,8% (2,0) Depreciation (non-vehicle) (0,3) -1,6% (0,3) Interest on debt (2,4) -8,2% (2,4) Tax (2,7) -14,2% 1,1 3,8% (1,6) NET INCOME 6,0 31,5% (2,6) -8,9% 3,4 NOPAT 5,2 ROIC 18,9% Spread Cost of debt after tax (CDI+1,5%) 8,6% 10,3p.p. 14
  • 15. Figures Per operating car Renting cars 2010 2011 2010 2011Net revenues 802.2 980.7 18.7 19.1EBITDA 363.3 460.3 8.5 9.0Depreciation (81.1) (103.4) (1.9) (2.0)EBIT 282.2 356.9 9.5 10.1Financial expenses (87.1) (123.8) (2.0) (2.4)EBT 195.1 233.1 4.5 4.5 Per car sold Selling cars 2010 2011 2010 2011Net revenues 1,101.1 1,241.1 27.8 29.2EBITDA 32.1 30.0 0.8 0.7Depreciation (5.1) (6.1) (0.1) (0.1)EBIT 27.0 23.9 0.7 0.6EBT 27.0 23.9 0.7 0.6End of period fleet 61,445 64,688 - -Average operating fleet 42,903 51,285 - -Average rented fleet 29,646 35,348 - -Number of cars sold 39,658 42,483 - - 15
  • 16. Volumes and revenues # daily rentals (thousand) 24.6% 12,794 CAGR: 10,734 7,940 8,062 6.8% 5,793 6,243 6,664 4.9% 4,6683,411 3,179 3,3342005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Net revenues (R$ million) 24.9% 980.7 CAGR: 802.2 585.2 12. 7 % 565.2 10. 4 % 532.3 428.0 472.4 346.1258.6 239.4 264.32005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Revenue grew above volume due to the increase in the average rental rate per car. 16
  • 17. Fleet and utilization rate Fleet .9% -8.0% CAGR: 17 61,445 64,688 63,500 58,436 47,517 39,112 31,373 35,68624,1032005 2006 2007 2008 2009 2010 2011 1H11 1H12 Utilization rate 65.5% 70.7% 67.9% 68.8% 69.1% 68.9% 68.9% 74.2%58.8% 2005 2006 2007 2008 2009 2010 2011 1Q11 1Q12 17
  • 18. Average depreciation per car Hot used car market Financial crisis effect 5.468,2 2.546,0 2.577,0 1.683,9 2.062,3 Reflex of the 1.536,0 492,3 939,1 IPI reduction 332,9 2005 2006 2007 2008 2009 2010 2011 Jan-Apr/12* 1H12* * Annualized Additional depreciation related to the IPI reduction on May, 2012 R$ million Fleet as of May, 2012 Additional estimated depreciation Quantity of cars by year of maturity of estimated useful lifeDivision 2Q12 After 2Q12 Total 2012 2013 2014 2015 Total 85 (*) 31 116 45,486 12,187 143 5 57,821Car rental 73% 27% 100% 79% 21% 0% 0% 100% (*) Additional estimated depreciation of R$31 million will be accounted prospectively in the next 12 months Depreciation was impacted by the decrease in car prices due to the IPI reduction. 18
  • 19. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 19
  • 20. Overview Fleet size Number of clients2007 17,790 2007 4562009 22,778 2009 5842011 31,629 2011 687 Financial performance Fleet composition 19.0% 5 0 0. 0 0 CAGR: 455.0 1 0 0 . 0 % 4 5 0. 0 0 4 0 0. 0 0 303.2 42.6% 3 5 0. 0 0 219.8 3 0 0. 0 0 Compact cars 2 2 5 0. 0 0 0 0. 0 0 71.3% 68.7% 68.6% 1 5 0. 0 0 1 0 0. 0 0 5 0. 0 0 0. 0 0 5 0 . 0 %57.4% 2007 2009 2011Others Fleet rental net revenues EBITDA margin (%) 20
  • 21. Overview Fleet Rental division - Brazil (# of cars) 13.9%The business greatly profits from synergies with its car rental affiliate, and as the Brazilian economy matures, one can expect a higher percentage of companies to take advantage of fleet rental. 21 Source: based on ABLA 2012 yearbook
  • 22. Main competitorsMarket share* 9.5% 7.1%Revenues (R$ million) 272.5 204.7Fleet size 27,262 16,418 • Capitalized • Brazil’s second playerStrengths • Synergies with its rental car • Successful IPO 04/2012 business area • Low profitability (competing • Loss making in the last six on price in the pursuit of years (competing on price inWeaknesses market share) the pursuit of market share) • Depreciation calculus • Used car sales retail network • Used car sales retail network 22 *Source: Roland Berger report, as of June 21, 2012, based on 2011 figures.
  • 23. Drivers Outsourced fleet penetrationBrazilian Market World 58.3%Corporate fleet: 46.9% 4,200,000 37.4% 24.5% Targeted fleet: 16.5% 13.3% 500,000 5.4% 8.9% Rented fleet: nd l n k nd ce lic y zi U ai an ra la an la b Sp pu m ol B Po Fr 245,000 er H Re G ch ze C 31,629 Less than 50% of targeted fleet is rented. 23 Source: ABLA and Datamonitor
  • 24. Financial cycle Net car sale revenue 2 - year cycle $26.3 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $36.1Car acquisition Fleet Rental Seminovos Total 2011 per operating car per operating car per year R$ % R$ % R$ Net Revenues 16,3 100,0% 28,6 100,0% 44,9 Costs (4,2) - 0,0% (4,2) SG&A (0,9) -5,5% (2,3) -8,0% (3,2) Net car sale revenue 26,3 92,0% 26,3 Book value of car sale (24,9) -90,0% (24,9) EBITDA 11,2 68,7% 1,4 4,9% 12,6 Depreciation (vehicle) (4,2) -14,7% (4,2) Depreciation (non-vehicle) (0,1) -0,3% (0,1) Interest on debt (2,0) -7,0% (2,0) Tax (3,4) -20,6% 1,4 5,0% (1,9) NET INCOME 7,8 47,8% (3,4) -11,7% 4,4 NOPAT 5,8 Spread ROIC 16,2% 7,6p.p. Cost of debt after tax (CDI+1,5%) 8,6% 24
  • 25. Figures Per operating car Renting cars 2010 2011 2010 2011Net revenues 361.1 455.0 15.8 16.3EBITDA 245.6 312.1 10.7 11.2Depreciation (81.1) (115.8) (3.5) (4.2)EBIT 164.5 196.3 7.2 7.0Financial expenses (43.4) (57.0) (1.9) (2.0)EBT 121.1 139.3 5.3 5.0 Per car sold Selling cars 2010 2011 2010 2011Net revenues 220.8 227.0 28.9 28.6EBITDA 2.3 11.4 0.3 1.4Depreciation (0.1) - (0.0) -EBIT 2.2 11.4 0.3 1.4EBT 2.2 11.4 0.3 1.4End of period fleet 26,615 31,629 - -Average operating fleet 22,916 27,858 - -Average rented fleet 22,343 26,676 - -Number of cars sold 7,627 7,929 - - 25
  • 26. Satisfaction survey 2011 - Would you recommend Total Fleet? YES! 98.0% 98.0% 99.0% 93.0% Users VIP Users Contract managers Customers recognize good service and recommend it! 26Source: Users and VIP users based on phone interviews made by the Company with customers. Contract managers made by an independent research: Vox Populi
  • 27. Volumes and revenues # daily rentals (thousand) 19.2% CAGR: 9,603 8,044 6,437 7,099 13. 5 % 5,144 4,625 5,248 11. 2 % 4,1883,351 2,372 2,6372005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Net revenues (R$ million) 21.4% CAGR: 455.0 361.1 268.4 303.2 21.1% 261.3 18. 7 % 219.8 215.7 184.0142.0 131.8 111.02005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Revenues reflect the interest and depreciation assumptions at the time of the agreement. 27
  • 28. Fleet and utilization rate Fleet .9% 9.6% CAGR: 17 31,629 31,412 26,615 28,654 23,403 22,778 17,790 14,63011,7622005 2006 2007 2008 2009 2010 2011 1H11 1H12 Utilization rate96.9% 96.5% 96.1% 94.0% 96.8% 97.5% 95.8% 96.1% 97.7%2005 2006 2007 2008 2009 2010 2011 1Q11 1Q12 28
  • 29. Average depreciation per car 5.083,1 5.406,3 4.371,7 4.133,0 4.289,3 Reflex of the 2.981,3 3.509,7 IPI reduction 2.383,3 2.395,8 2005 2006 2007 2008 2009 2010 2011 Jan-Apr/12* 1H12* * Annualized Additional depreciation related to the IPI reduction on May, 2012 R$ million Fleet as of May, 2012 Additional estimated depreciation Quantity of cars by year of maturity of estimated useful lifeDivision 2Q12 After 2Q12 Total 2012 2013 2014 2015 Total 15 (*) 49 64 5,340 10,303 11,590 4,055 31,288Fleet rental 23% 77% 100% 17% 33% 37% 13% 100% (*) Additional estimated depreciation of R$49 million will be accounted prospectively throughout the prospective life of the cars Depreciation was impacted by the decrease in car prices due to the IPI reduction. 29
  • 30. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 30
  • 31. OverviewLocaliza launched Seminovos in 1993, a brand new concept featuring younger cars. Combining the Localiza brand with a growing network of stores enables the firm to continuously sell thousands of cars at market prices. 31 Source: Fenabrave 2011
  • 32. Overview Used car sales net revenues Cars sold 1,468.11 , 7 00 . 0 01 , 5 00 . 0 01 , 3 00 . 0 0 2007 30.0931 , 1 00 . 0 0 850.5 922.4 9 00 . 0 0 7 00 . 0 0 5 00 . 0 0 2009 34.519 3 00 . 0 0 1 00 . 0 0 1 - 00 . 0 0 2011 50.772 2007 2009 2011 0.6% 1.5% 10.6% 2011 Used cars 2011 Brand news 8,862,951 2011 Up to 2 years 3,425,499 476,827 32
  • 33. Main competitors • Dealers • “Auto malls” and • Rental operators • RetailersExamples • Fiat, VW, Ford, GM most “Cidade do • Locamerica, Hertz • “Loja do carro” successful automóvel” • Brand and perceived • Tailored to popular • Comfort and • Often appeal to lower image/ experience customer demand at convenience income classes, with • Support often directly purchase, hence likely • Variety of modelsStrengths older cars from the OEM’s to be an attractive value and brands • Occasionally • Flexibility in trade-in cars proposition when for • Flexibility in specialized in niches • Strong media presence sale exchange • Stigma about heavy • Lower media usage during rental car • No brand recognition • Used cars not a core presence years (lower reputation business • Cars often older thanWeaknesses • Weak retail network market) • Cars often older than 2 2 years • Geographical • Financing options with years • It hasn’t been concentration (SP) higher interest rates successful • Lower media presencePoints of sale • 3,714 (Anfavea) • 95* • 45,600 (Fenauto) • 71 (Fenauto) *Seminovos Localiza and main rentals, estimates 33
  • 34. Drivers # of inhabitants per car (2011) # of inhabitants per car - Brazil 8.0 7.9 USA 1.3 7.4United Kingdon 1.8 Germany 1.9 6.9 France 2.0 6.5 Japan 2.1 5.9 South Korea 3.6 5.5 Russia 4.0 Argentina 4.2 Brazil 5.5 2005 2006 2007 2008 2009 2010 2011 Brazilian car market: new x used car market and affordability 17.4 Individuals with 15.8 affordability to 11.9 buy a new car* 8.9 7.9 8.9 7.0 8.4 Used cars 6.8 7.1 7.3 7.1 5.6 6.7 2.6x 2.7x 2.4x 2.5x 4.4x 3.7x 3.1x 3.5 New cars 3.0 3.3 1.6 1.8 2.3 2.7 2005 2006 2007 2008 2009 2010 2011 34 * Population with affordability to buy a new compact car (R$25,000) with 20% downpayment
  • 35. Satisfaction survey2011 - Would you recommend Seminovos? YES! 94.0% 94.0% 92.3% 94.0% 2009 2010 2011 Customers recognize our quality and recommend it! 35 Source: based on phone interviews made by the Company with customers started in 2009
  • 36. Network increase # of points of sale +5 71 66 55 49 32 35 26132005 2006 2007 2008 2009 2010 2011 1H12 Used car sales network has increased by 5 stores. 36
  • 37. Car sales per street store Monthly average Car sold per store/month 82 82 82 74 73 74 70 592008 2009 2010 2011 1Q12 Apr-12 May-12 Jun-12 Number of sold cars is weighed by number of opened stores in the period Productivity has improved, contributing to the reduction of fixed cost per car sold. 37
  • 38. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 38
  • 39. 2011 Consolidated P&L P&L 2010 2011 16% 34%Net revenues 2,497.2 2,918.1 RevenuesEBITDA 649.5 821.3Depreciation (167.4) (225.6) 50%EBIT 482.1 595.7Financial expenses (130.1) (179.0)EBT 352.0 416.7 Operating dataAverage operating fleet 65,819 79,143Cars purchased 65,934 59,950Cars sold 47,285 50,772 57% EBITDA 38% 5% 39
  • 40. Net Investment Fleet increase * (quantity) 18,649 9,178 9,930 8,642 65,934 10,346 7,957 59,950 7,342 47,285 4,608 44,211 43,161 50,772 (5,868) 38,050 34,281 34,519 8,124 (1,306) 33,520 30,093 28,66726,105 27,789 23,174 24,059 21,921 20,602 18,763 14,504 12,478 13,198 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 * It does not include theft / crashed cars. Purchased cars Sold cars Net investment (R$ million) 588.5 308.4 354.5 1,910.4 210.4 281.8 1,776.5 341.5 1,468.1 132.3 243.5 1,335.3 1,321.9 (134.2) 1,204.2 241.1 1,060.9 980.8 (10.3) 930.3 850.5 922.4 825.6 690.0 693.3 762.7 588.8 628.5 593.8 446.5 352.7 379.0 389.3 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Purchases (accessories included) Net used car sales revenues Car purchases were adjusted to improve fleet productivity. 40
  • 41. End of period fleet Quantity -2.5% .9% CAGR: 17 96,317 92,154 89,848 88,060 70,295 26,615 31,629 28,654 62,515 31,412 53,476 22,778 46,003 23,40335,865 14,630 17,79011,762 61,445 64,688 63,500 58,436 35,686 39,112 47,51724,103 31,373 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 Car rental Fleet rental Fleet is adjusted to demand. 41
  • 42. Consolidated net revenues R$ million : 22.7% CAGR 2,918.1 2,497.2 7% 1,823.7 1,820.9 1,468.1 12. 1,505.5 1,321.9 1,564.3 1,387.9 1,126.2 8% 854.9 980.8 922.4 762.7 11. 850.5 693.3 706.4 789.6 588.8 1,450.0 4% 446.5 898.5 1,175.3 15. 352.7 .2% 389.3 655.0 842.9 694.6 801.6 3 408.4 537.4 353.7 1 400.3 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Rentals SeminovosIn the 2Q12, net revenues grew due to the increase of 13.2% in rental and 10.4% in Seminovos revenues 42
  • 43. EBITDA R$ million : 19 .8% 821.3 CAGR 649.5 504.1 10.1% 311.3 403.5 469.7 386.8 425.7 7.5% 277.9 200.6 215.7 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12Margin per division 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12Car rental 47.5% 43.4% 46.0% 45.9% 41.9% 45.3% 46.9% 45.1% 41.3% 46.1% 40.6%Fleet rental 65.5% 71.4% 71.3% 69.1% 68.7% 68.0% 68.6% 67.1% 66.0% 68.5% 65.8%Rental consolidated 53.6% 52.9% 54.5% 53.3% 51.1% 52.3% 53.8% 52.0% 49.4% 53.1% 48.9%Seminovos 13.2% 4.6% 5.5% 5.6% 1.1% 2.6% 2.8% 3.7% 3.9% 3.6% 5.1% EBITDA margin in the 2Q12 was impacted by complement bonuses and accessories expenses. 43
  • 44. Consolidated net income R$ million % 16.4 291.6 250.5 -39.4 % 190.2 138.2 137.6 -85.5 106.5 127.4 116.3 % 83.4 74.0 10.7 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12EBITDA x net income Reconciliation 2009 2010 2011 Var. R$ Var. % 1H11 1H12 Var. R$ Var. % 2Q11 2Q12 Var. R$ Var. %Consolidated EBITDA 469.7 649.5 821.3 171.8 26.5% 386.8 425.7 38.9 10.1% 200.6 215.7 15.1 7.5% (172.3) (146.3) (201.5) (55.2) 37.7% (89.7) (223.3) (133.6) 148.9% (43.3) (165.3) (122.0) 281.8%Car depreciationOther property and equipment dep. (21.0) (21.1) (24.1) (3.0) 14.2% (12.3) (15.6) (3.3) 26.8% (6.3) (8.1) (1.8) 28.6%Financial expenses, net (112.9) (130.1) (179.0) (48.9) 37.6% (88.0) (77.7) 10.3 -11.7% (45.2) (34.1) 11.1 -24.6%Income tax and social contribution (47.2) (101.5) (125.1) (23.6) 23.3% (59.2) (25.7) 33.5 -56.6% (31.8) 2.5 34.3 -107.9%Net income 116.3 250.5 291.6 41.1 16.4% 137.6 83.4 (54.2) -39.4% 74.0 10.7 (63.3) -85.5% Excluding the additional depreciation, 1H12 net income would have reached R$149.5 million. 44
  • 45. SWOT Analysis: Localiza business platform According to Roland Berger report as of June 21, 2012 Strengths Weaknesses• Unrivaled local scale • Strong focus on airport locations• Vertical integration, creating synergies for all four • Renewal of airport concessions costlybusinesses • Dependence on passengers travelling by air (growth• Strong business operating performance and limited by Brazilian infrastructure)experienced leadership • Weak footprint outside of Brazil, resulting in• Strong footprint in Brazil’s extreme traffic locations exposure to national economic development • Dependence on long-term capital to finance renewal of fleet Opportunities Threats• Increase in market share through further •Any measures of the Brazilian government whichconsolidation of Brazilian rental car market impact car sales prices, potentially lowering asset value (e.g. new car sales tax)• Underdeveloped fleet outsorcing in Brazil • New competitors entering the market (rental car or• Upcoming mega events in Brazil fleet management)• Positive outlook for Brazilian business and tourism • Increasing fuel price Localiza’s brand is top of mind in Brazil. Localiza doesn’t see it as a weakness or a threat 45
  • 46. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 46
  • 47. Free cash flow - FCFFree cash flow - R$ million 2005 2006 2007 2008 2009 2010 2011 1H12EBITDA 277.9 311.3 403.5 504.1 469.7 649.5 821.3 425.7Used car sales net revenues (446.5) (588.8) (850.5) (980.8) (922.4) (1,321.9) (1,468.1) (762.7)Depreciated cost of used car sales (*) 361.2 530.4 760.0 874.5 855.1 1,203.2 1,328.6 687.7(-) Income tax and social contribution (32.7) (42.7) (63.4) (52.8) (49.0) (57.8) (83.0) (54.9)Working capital variation (24.2) (4.8) 13.3 (44.8) (11.5) 54.5 (83.9) (18.9)Cash provided before capex 135.7 205.4 262.9 300.2 341.9 527.5 514.9 276.9Used car sales net revenues 446.5 588.8 850.5 980.8 922.4 1,321.9 1,468.1 762.7Capex of car - renewal (496.0) (643.3) (839.0) (1,035.4) (947.9) (1,370.1) (1,504.5) (628.5)Net capex for renewal (49.5) (54.5) 11.5 (54.6) (25.5) (48.2) (36.4) 134.2Capex – other property and equipment, net (28.0) (32.7) (23.7) (39.9) (21.0) (51.1) (63.0) (36.0)Free cash flow before growth 58.2 118.2 250.7 205.7 295.4 428.2 415.5 375.1Capex of car - growth (194.0) (287.0) (221.9) (299.9) (241.1) (540.3) (272.0) -Change in accounts payable to car suppliers (capex) (25.5) 222.0 (51.0) (188.9) 241.1 111.3 32.7 (132.8)Net capex for fleet growth (219.5) (65.0) (272.9) (488.8) 0.0 (429.0) (239.3) (132.8)Fleet increase – quantity 7,342 10,346 7,957 9,930 8,642 18,649 9,178 (5,868)Free cash flow after growth (161.3) 53.2 (22.2) (283.1) 295.4 (0.8) 176.2 242.3 47 (*) Without tecnical discount deduction up to 2010 (see item 18 – Glossary)
  • 48. Changes in net debt in 1H12 (R$ million) FCF 242.3 Net debt Net debt12/31/2011 06/30/2012- 1,363.4 - 1,254.9 (78.9) (54.9) Interest Dividends Net debt was reduced by R$108.5 million (-8.0%). 48
  • 49. Debt profile R$ million Debt profile in 06/30/2012- principal (R$ million) 562.0 432.0 323.5 303.5 161.816.5 26.0 52.02012 2013 2014 2015 2016 2017 2018 2019Cash673,9 Strong cash position and comfortable debt profile. In the 1H12, all in spread was of 1.3p.p. above the Selic rate. 49
  • 50. Debt – ratios R$ million 2,446.7 2,681.7 2,391.2 1,752.6 1,907.8 1,492.9 1,363.4 1,247.7 1,254.5 1,281.1 1,254.9 1,078.6 900.2 765.1 535.8 440.4 2005 2006 2007 2008 2009 2010 2011 1H12 Net debt Fleet valueEND OF PERIOD BALANCE 2005 2006 2007 2008 2009 2010 2011(**) 1H12 (**)Net debt / Fleet value 60% 36% 51% 72% 57% 52% 51% 52%Net debt / EBITDA (*) 1.9x 1.4x 1.9x 2.5x 2.3x 2.0x 1.7x 1.5xNet debt / Equity 1.4x 0.7x 1.3x 2.0x 1.5x 1.4x 1.2x 1.1xEBITDA / Financial expenses, net 3.3x 4.8x 5.4x 3.8x 4.2x 5.0x 4.6x 5.5x (*) annualized (**) From January 1st 2011, adress financial statements in IFRS The Company presents conservative indebtedness ratios. 50
  • 51. Agenda1. Company overview2. Main business divisions Car rental Fleet rental Seminovos3. Consolidated4. Debt and cash5. Key value drivers 51
  • 52. Key value drivers Adding value  to shareholders Spread Ability to sustain ROIC > DEBT COST Growth (competitive advantages) (1) (2) (3)1- Spread around 8p.p. on the invested capital above the cost of debt after taxes.2- Growth: GDP elasticity has been 5.7x over the last 6 years.3- Localiza’s competitive strengths: the competitive strengths in each step of theprocess allow the Company to grow profitably on a sustainable manner. 52
  • 53. Spread 24,80% 21,25% 18,70% 17,03% 16,94% 17,12% 15,10% 11.2p.p. 7.8p.p. 12.9p.p. 11,54% 8.2p.p. 9.6p.p. 8.5p.p. 8.1p.p. 13,60% 4.0p.p. 10,90% 8,40% 8,84% 7,59% 8,60% 7,33% 7,05% 2005 2006 2007 2008 2009 2010 2011 1H12 annualized Cost of debt after tax ROIC 2005 2006 2007 2008 2009 2010 2011 1H12 aAverage capital investment - R$ million 606.3 986.2 1,137.5 1,642.3 1,702.3 1,984.6 2,445.3 2,645.6NOPAT margin (over rental net revenues) 37.0% 34.5% 36.9% 32.1%* 21.9% 28.6% 28.9% 24.9%*Turnover of average capital investment(over rental net revenues) 0.67x 0.55x 0.58x 0.53x 0.53x 0.59x 0.59x 0.61xROIC 24.8% 18.7% 21.3% 17.0% 11.5% 16.9% 17.1% 15.1%Interest on debt after tax 13.60% 10.90% 8.40% 8.84% 7.59% 7.33% 8.60% 7.05%Spread (ROIC – Interest after tax) - p.p. 11.2 7.8 12.9 8.2 4.0 9.6 8.5 8.1 ROIC and spread reflect the Company’s competitive pricing strategy. 53 * Excludes additional fleet depreciation, following the concept recommended by Stern Stewart
  • 54. GDP elasticity Rental revenues real growth elasticity x GDP Localiza 5.7x Sector GDP 2.9x 2005 2006 2007 2008 2009 2010 2011Localiza’s competitive advantages resulted in a growth above the industry level. 54
  • 55. Growth and profitability track record Consolidated revenues .4% 2,918.1 R: 24 CAG 2,497.2 1,823.7 1,820.9 1,4 6 8 .1 1,505.5 1,3 2 1.9 CAGR: 15.9% 1,126.2 9 8 0 .8 9 2 2 .4 854.9 8 5 0 .5 634.4 CAGR: 5 15 .7 5 8 8 .8 23.4% 4 5 7 .4 4 4 6 .5 1,4 5 0 .0 2 3 4 .1 2 9 6 .1 4 0 2 .7 3 0 3 .0 1,17 5 .3 2 12 .9 2 2 5 .9 8 4 2 .9 8 9 8 .5 5 3 7 .4 6 5 5 .0 3 3 1.4 4 0 8 .4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Consolidated Rentals Used car sales Consolidated EBITDA % : 22.6 CAGR 23.9% 821.3 CAGR: 649.5 504.1 469.7 403.5 278.1 311.4 154 152.1 197.8 134.3 149.9 42 62 85.2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011GDP 3.4 0.0 0.3 4.3 1.3 2.7 1.1 5.7 3.2 4.0 6.1 5.2 -0.6 7.5 2.9Average 1.9 4.3 Average growth of EBITDA is in line with the average growth of rental revenues 55
  • 56. Ability to sustain: competitive advantages brAAA Aa1.br AA+ (bra) Raising money Buying cars Localiza’s bought 2.3% of the main automakers sales in 2011 Selling cars Renting carsSales to final consumer 452 locations71 points of sale Top of Mind brandAdditional fleet during peaks of demand Strong know-how Stable management Localiza managed to close the cycle of the rental business through integration, capturing competitive advantages at every step. 56
  • 57. IR Team Roberto Mendes Silvio Guerra Nora Lanari CFO - RI RI RI Website: www.localiza.com/ir E-mail: ri@localiza.com Phone: 55 31 3247-7024DisclaimerThe material presented 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 tobe complete. It is not intended to be relied upon as advice to potential investors. This presentation is strictly confidential and may not be disclosed to any other person. No representationor 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, asthe 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 resultsof 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’smanagement, LOCALIZA cannot guarantee future results or events. LOCALIZA expressly disclaims a duty to update any of the forward-looking statement.Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the Securities Act of 1933. Any offering of securities to be made inthe United States will be made by means of an offering memorandum that may be obtained from the underwriters. Such offering memorandum will contain, or incorporate by reference,detailed information about LOCALIZA and its business and financial results, as well as its financial statements.This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained hereinshall form the basis of any contract or commitment whatsoever. 57
  • 58. Localiza x Peers 58
  • 59. 2011 Consolidated P&L Financial statements per operating car AdjustedNet revenues 2,918.1 670.9 390.7EBITDA 821.3 167.1 167.9Depreciation (225.6) (120.0) (89.2)EBIT 595.7 47.0 78.7Financial expenses (179.0) (111.1) (83.2)EBT 416.7 (64.1) (4.5) Operating dataAverage operating fleet 63,206 24,455 21,590Cars purchased 59,950 15,341 11,052Cars sold 50,412 12,742 5,489 59
  • 60. 2011 Fleet Division P&L Financial statements per operating car AdjustedNet revenues 16.3 13.0 12.6EBITDA 11.2 8.3 7.7Depreciation (4.2) (4.6) (4.1)EBIT 7.0 3.7 3.6Financial expenses (2.0) (3.9) (3.9)EBT 5.0 (0.2) (0.2) Operating dataAverage operating fleet 27,858 15,674 21,590Cars purchased 13,204 15,341 11,052Cars sold 7,929 12,742 5,489Average price of cars purchased 33.9 27.5 28.6Average price of car sold 28.6 24.3 21.5Purchase price – sales price 5.3 3.2 7.1 60
  • 61. Localiza - Fleet rental financial cycle 2011-year cycle Net car sale revenue $26.3 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $36.1Car acquisition Fleet Rental Seminovos Total per operating car per operating car per year R$ % R$ % R$ Net Revenues 16,3 100,0% 28,6 100,0% 44,9 Costs (4,2) - 0,0% (4,2) SG&A (0,9) -5,5% (2,3) -8,0% (3,2) Net car sale revenue 26,3 92,0% 26,3 Book value of car sale (24,9) -90,0% (24,9) EBITDA 11,2 68,7% 1,4 4,9% 12,6 Depreciation (vehicle) (4,2) -14,7% (4,2) Depreciation (non-vehicle) (0,1) -0,3% (0,1) Interest on debt (2,0) -7,0% (2,0) Tax (3,4) -20,6% 1,4 5,0% (1,9) NET INCOME 7,8 47,8% (3,4) -11,7% 4,4 NOPAT 5,8 ROIC 16,2% Spread Cost of debt after tax (CDI+1,5%) 8,6% 7,6p.p. 61
  • 62. Unidas - Fleet rental financial cycle 2011 - year cycle Net car sale revenue $22.6 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $29.4Car acquisition Fleet Rental Seminovos Total per operating car per operating car per year R$ % R$ % R$ Net Revenues 13,0 100,0% 24,3 100,0% 37,3 Costs (2,6) - 0,0% (2,6) SG&A (2,1) -16,2% (1,7) -7,0% (3,8) Net car sale revenue 22,6 93,0% 22,6 Book value of car sale (23,1) -90,0% (23,1) EBITDA 8,3 63,8% (0,5) -2,1% 7,8 Depreciation (vehicle) (4,6) -18,9% (4,6) Depreciation (non-vehicle) (0,1) -0,8% (0,1) Interest on debt (3,9) -16,0% (3,9) Tax (2,5) -19,2% 2,7 11,1% 0,2 NET INCOME 5,7 43,9% (6,3) -25,9% (0,6) NOPAT 2,2 ROIC 7,4% Spread Cost of debt after tax (CDI+4,7%) 10,8% -3,4p.p. 62
  • 63. Locamerica Adjusted - Fleet rental financial cycle 2011- year cycle Net car sale revenue $19.2 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $27.0Car acquisition Fleet Rental Seminovos Total per operating car per operating car per year R$ % R$ % R$ Net Revenues 12,6 100,0% 21,5 100,0% 34,1 Costs (3,4) - 0,0% (3,4) SG&A (1,5) -11,9% (2,3) -10,7% (3,8) Net car sale revenue 19,2 89,3% 19,2 Book value of car sale (19,2) -90,0% (19,2) EBITDA 7,7 61,1% 0,0 0,0% 7,7 Depreciation (vehicle) (4,1) -19,1% (4,1) Depreciation (non-vehicle) * - 0,0% - Interest on debt (3,9) -18,1% (3,9) Tax (2,3) -18,3% 2,4 11,2% 0,1 NET INCOME 5,4 42,8% (5,6) -26,0% (0,2) NOPAT 2,5 ROIC 9,3% Spread Cost of debt after tax (CDI+5,1%) 11,0% -1,7p.p. 63
  • 64. 2011 Car Division P&L Financial statements per operating carNet revenues 19.1 17.8EBITDA 9.0 5.1Depreciation (2.0) (5.3)EBIT 10.1 (0.2)Financial expenses (2.4) (5.4)EBT 4.5 (5.6) Operating data ConsolidatedAverage operating fleet 35,348 8,781Cars purchased 46,746 15,341Cars sold 42,483 12,742Average price of cars purchased 28.4 27.5Average price of car sold 29,2 24.3Purchase price – sales price (0.8) 3.2 64
  • 65. Localiza – Car Rental financial cycle 2011 - year cycle Net car sale revenue $26.4 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $27.5Car acquisition Fleet Rental Seminovos Total per operating car per operating car per year R$ % R$ % R$ Net Revenues 19,1 100,0% 29,2 100,0% 48,3 Cost s (7,4) - 0,0% (7,4) SG&A (2,7) -14,1% (2,8) -9,6% (5,5) Net car sale revenue 26,4 90,4% 26,4 Book value of car sale (25,7) -90,0% (25,7) EBITDA 9,0 47,2% 0,7 2,4% 9,7 Depreciation (vehicle) (2,0) -6,8% (2,0) Depreciation (non-vehicle) (0,3) -1,6% (0,3) Interest on debt (2,4) -8,2% (2,4) Tax (2,7) -14,2% 1,1 3,8% (1,6) NET INCOME 6,0 31,5% (2,6) -8,9% 3,4 NOPAT 5,2 ROIC 18,9% Spread Cost of debt after tax (CDI+1,5%) 8,6% 10,3p.p. 65
  • 66. Unidas – Car Rental financial cycle 2011 - year cycle Net car sale revenue $22.6 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $29.4Car acquisition Car Rental Seminovos Total per operating car per operating car per year R$ % R$ % R$ Net Revenues 17,8 100,0% 24,3 100,0% 42,1 Costs (5,7) - 0,0% (5,7) SG&A (7,0) -39,3% (1,7) -7,0% (8,7) Net car sale revenue 22,6 93,0% 22,6 Book value of car sale (23,1) -90,0% (23,1) EBITDA 5,1 28,7% (0,5) -2,1% 4,6 Depreciation (vehicle) (5,3) -21,8% (5,3) Depreciation (non-vehicle) (0,1) -0,6% (0,1) Interest on debt (5,4) -22,2% (5,4) Tax (1,5) -8,6% 3,4 13,8% 1,8 NET INCOME 3,5 19,5% (7,8) -32,3% (4,4) NOPAT (0,6) ROIC -1,9% Spread Cost of debt after tax (CDI+4,7%) 10,8% -12,7p.p. 66
  • 67. Localiza consolidated Fleet and net income evolution 96,317 Fleet 88,060 70,295 62,515 53,47646,003 16.1% CAGR: 291,600 250,500 190,200 Net income138,200 127,400 116,300 2006 2007 2008 2009 2010 2011 67
  • 68. Unidas consolidated Fleet and loss evolution 37,982 36,000 Fleet 30,882 29,790 28,00523,204 2006 2007 2008 2009 2010 2011 -17,377 -9,172 -17,377 Net income -40,484 -64,121 -116,847 68
  • 69. Locamerica - Adjusted Fleet and loss evolution 27,262 Fleet 21,91315,335 2009 2010 2011 Net income -2,643 -5,534 -8,462 69
  • 70. Fleet Consolidated Consolidated2006 2007 2008 2009 2010 2011 70
  • 71. Rating evolution – Localiza x Competitors National scale National scale 2008 2009 2010 2011 2012 AAA AA+ AA AA- A+Rating A A- BBB+ BBB BBB- Localiza S&P Competitors FITCH 71 Source: Itaú/ Bloomberg, as of May, 2012