1. Localiza Rent a Car S.A.
11th Annual Latin America Conference - Santander
0
2. Integrated Business Platform
133 agencies
14,250 cars
25,138 cars
Synergies:
cost reduction,
cross selling,
bargaining power
179 agencies 23 points of sales
in 8 countries 79% directly sold to
6,816 cars consumers
1
3. Strategy by segment
Increase market leadership maintaining high return on
investment
Core Businesses
Add value to the brand by expanding the network in
Brazil and South America
Create value through fleet management market
opportunities, taking advantage of the synergies
generated by the integrated business platform
Support
Add value to the businesses of the platform as a
competitive advantage, reducing depreciation costs
2
4. Car rental financial cycle
Financing Car Sales Revenue
100 102 Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
Car acquisition 115 Financial payment 115,00
Financial payment
(List price net of dealers
discount = 125)
Depreciation = estimated price of selling after one year, net of SG&A and safety
margin minus price of purchase. Depreciation rate: 100-(102.2*0.9) = 8.02%
Holding cost of cars after tax with 3% margin = depreciation + financial cost.
Either the leverage is through third party financing or shareholder’s capital.
3
5. Car rental financial cycle
Financing Car Sales Revenue
100 102 Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Revenues = 114,58 ** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Expenses = 62,84
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
115
Car acquisition Financial payment 115,00
Financial payment
(List price net of dealers
discount = 125)
Car Rental* *
R$ % EBITDA margin of 45.2% reflects
Car rental revenue 114,58 100,0%
high fixed cost and the utilization
Costs (46,00) -40,1% rate between 65% and 70%.
SG&A (16,84) -14,7%
EBITDA 51,75 45,2%
Net margin of 31,6% necessary to
Tax (30%) (15,52) -13,5%
36,22 31,6%
cover car holding cost.
NET INCOME
% over car rental revenue 31,6%
* Car analysis of LTM over the average price of cars purchased of the previous year.
4
6. Car rental financial cycle
Financing Car Sales Revenue
100 102 Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Revenues = 114,58 ** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Expenses = 62,84
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
115
Car acquisition Financial payment 115,00
Financial payment
(List price net of dealers
discount = 125)
Car Rental * Car Resale (Seminovos)
R$ % R$ %
Car rental revenue 114,58 100,0% 102,20 100,0%
Costs (46,00) -40,1% Car holding cost is 12.3%
SG&A (16,84) -14,7% (7,15)
Book value of car resale (91,99) -90,0%
of car rental revenues.
EBITDA 51,75 45,2% 3,06 3,0%
Depreciation (8,20) -8,0%
Interest (15,00) -14,7%
Tax (30%) (15,52) -13,5% 6,04 5,9%
NET INCOME 36,22 31,6% (14,10) -13,8%
% over car rental revenue 31,6% -12,3%
* Car analysis of LTM over the average price of cars purchased of the previous year.
5
7. Car rental financial cycle
Financing Car Sales Revenue
100 102 Revenue per car sold** 102,20
SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Revenues = 114,58 ** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Expenses = 62,84
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
115
Car acquisition Financial payment 115,00
Financial payment
(List price net of dealers
discount = 125)
Car Rental Car Resale (Seminovos) Consolidated
R$ % * R$ % R$ %
Car rental revenue 114,58 100,0% 102,20 100,0% 216,78 100,0%
Costs (46,00) -40,1% (46,00)
SG&A (16,84) -14,7% (7,15) (23,99)
Book value of car resale (91,99) -90,0% (91,99) -3,8%
EBITDA 51,75 45,2% 3,06 3,0% 54,81 25,3%
Depreciation (8,20) -8,0% (8,20) -3,8%
Interest (15,00) -14,7% (15,00) -6,9%
Tax (30%) (15,52) -13,5% 6,04 5,9% (9,48) -4,4%
NET INCOME 36,22 31,6% (14,10) -13,8% 22,12 10,2%
% over car rental revenue 31,6% -12,3% 19,3%
Consolidated net margin is 19,3% of car rental revenues (if 100% leveraged).
6
8. Fleet rental financial cycle
Financing Car Sales Revenue
Revenue per car sold** 102,20
100 102 SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
Car acquisition 115 Financial payment 115,00
(List price net of dealers Financial payment
discount = 125)
Depreciation = estimated price of selling after one year, net of SG&A and safety
margin minus price of purchase. Depreciation rate: 100-(102.2*0.9) = 8.02%
Holding cost of fleet cars after tax with 3% margin = depreciation + financial cost.
Either the leverage is through third party financing or shareholder’s capital.
7
9. Fleet rental financial cycle
Financing Car Sales Revenue
Revenue per car sold** 102,20
100 102 SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Revenues = 53,64 ** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Expenses = 18,21
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
Car acquisition 115 Financial payment 115,00
(List price net of dealers Financial payment
discount = 125)
Fleet Rental**
R$ %
EBITDA margin of 66% reflects
Fleet rental Revenue 53,64 100,0% lower fixed costs and utilization
Costs (14,24) -26,5% rates around 97%.
SG&A (3,97) -7,4%
EBITDA 35,43 66,0%
Tax (30%) (10,63) -19,8%
Net margin of 46.2% necessary to
NET INCOME 24,80 46,2% cover fleet holding cost higher than
% over fleet rental revenue 46,2% car rental.
* Car analysis of LTM over the average price of cars purchased of two years before.
8
10. Fleet rental financial cycle
Financing Car Sales Revenue
Revenue per car sold** 102,20
100 102 SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Revenues = 53,64 ** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Expenses = 18,21
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
Car acquisition 115 Financial payment 115,00
(List price net of dealers Financial payment
discount = 125)
Fleet Rental * Car Resale (Seminovos)
R$ % * R$ %
Fleet rental Revenue 53,64 100,0% 102,20 100,0%
Costs (14,24) -26,5%
SG&A (3,97) -7,4% (7,15) Car holding cost is the
Book value of car resale (91,99) -90,0% same as in the car rental
EBITDA 35,43 66,0% 3,06 3,0% (R$14.1) but represents
Depreciation (8,20) -8,0%
Interest (15,00) -14,7% 26.3% of fleet rental
Tax (30%) (10,63) -19,8% 6,04 5,9% revenues.
NET INCOME 24,80 46,2% (14,10) -13,8%
% over fleet rental revenue 46,2% -26,3%
* Car analysis of LTM over the average price of cars purchased of two years before.
9
11. Fleet rental financial cycle
Financing Car Sales Revenue
Revenue per car sold** 102,20
100 102 SG&A (7%) (7,15)
Safety Margin (3%) (3,06)
Book value after 12 months 91,99
Revenues = 53,64 ** Depreciation over list price:
100-(102.2/125)x100 = 18,2%
Expenses = 18,21
Principal 100,00
100 Interest (CDI + 1 p.p.) 15,00
Car acquisition 115 Financial payment 115,00
(List price net of dealers Financial payment
discount = 125)
Fleet Rental* Car Resale (Seminovos) Consolidated
R$ % R$ % R$ %
Fleet rental Revenue 53,64 100,0% 102,20 100,0% 155,84 100,0%
Costs (14,24) -26,5% (14,24) -9,1%
SG&A (3,97) -7,4% (7,15) (11,12) -7,1%
Book value of car resale (91,99) -90,0% (91,99) -59,0%
EBITDA 35,43 66,0% 3,06 3,0% 38,49 24,7%
Depreciation (8,20) -8,0% (8,20) -5,3%
Interest (15,00) -14,7% (15,00) -9,6%
Tax (30%) (10,63) -19,8% 6,04 5,9% (4,59) -2,9%
NET INCOME 24,80 46,2% (14,10) -13,8% 10,70 6,9%
% over fleet rental revenue 46,2% -26,3% 20,0%
Consolidated net margin is 20% of fleet rental revenues (if 100% leveraged).
10
12. Growth opportunities
GDP elasticity
Consolidation Air traffic
Fleet outsorcing Credit cards
Replacement
11
13. Competitive advantages
Bargaining
Scale gains
power
Integrated platform
Geographical distribution
Yield management
Bargaining power
Credit with lower interest rate
Know-how
Depreciation
Strong brand
IT
Market share Higher
expansion competitiveness
12
14. EBITDA Margin per Segment
(R$ million, USGAAP)
2003 2004 2005 3Q05 3Q06
Margin Margin Margin Margin Margin
Fleet Rental Car Rental
Rentals 34.3% 42.6% 46.3% 45.3% 44.5%
Used Cars Sales 9.7% 15.3% 14.4% 12.5% 2.7%
Rentals 61.2% 65.2% 63.6% 64.2% 70.1%
Used car sales 7.3% 8.2% 10.5% 7.9% 2.9%
Rentals 46% 51.5% 52.5% 52.1% 53.4%
Consolidated
Used car sales 9.2% 13.2% 13.7% 11.7% 2.8%
Franchising 43.6% 41.5% 47.6% 47.4% 47.4%
TOTAL 28.6% 33.1% 32.6% 31.1% 28.0%
13
15. Economic Value Added (EVA)
R$ / thousand
100,000 30.0%
24.6% 29.3% 82,736
24.1%
80,000
24.1%
18.4% 57,384 21.1% 20.0%
60,000
44.486 15.8%
40,000
12.0% 10.0%
20,000
1,781
- 0.0%
2003 2004 2005 2006
EVA Nominal WACC ROIC
2003 2004 2005 2006A Change
Average price per car R$ 16.4 19.5 23,4 *26.2 59.8%
IPCA (consumer inflation index) 9.3% 7.6% 5.7% *2.0% 26.9%
Average CDI (interbank rate) 23.3% 16.2% 19.0% 15.7% -7.6p.p.
Sovereign risk 8.4% 5.4% 4.0% 2.5% -5.9p.p.
Real WACC (excluding inflation) 14.3% 10.9% 10.5% 9.1% -5.2p.p.
Spread 0.6p.p. 10.8p.p. 8.3p.p. 9.1p.p. -
* 9M06
In the last 3 years the spread between ROIC and WACC has shown little volatility
In the last 3 years the spread between ROIC and WACC has shown little volatility
14
16. Cash Flow
(R$ million, USGAAP)
334,4
281,7
12,9
Cash and cash Cah and cash
equivalents at the equivalents on
beginning of 2006: 09/30/06
70.8 193.6
-506,2
Operating New Cost of Other financing
activities acquisitions used car sale and investment
activities
Investment activities include fleet (renewal: 14,861 cars and growth: 2,853)
15
18. Indebtedness Profile
(R$ million, USGAAP)
Net Debt (R$ million) USGAAP
539
349.3 351.3
281
87
2003 2004 2005 9M05 9M06
2003 2004 2005 9M05 9M06
Net debt / fleet 22% 46% 60% 49% 34%
Net debt / equity 0.36 0.96 1.37 0.95 0.57
S&P Rating - BrA / Positive outlook
The Company is prepared for a new growth cycle.
The Company is prepared for a new growth cycle.
17
19. ROE – Return on Equity
38.6% 38.9%
36.7%
30.4%
2003 2004 2005 2006
NB: The 2006 figure was annualized based on the results of the first nine months, already considering the proceeds from the shares offering.
ROE was arrived at by dividing net income by average shareholders’ equity for the year’, excluding net profit from the respective year.
In 2003, the mark-to-market of derivative contracts was excluded from net income.
Localiza is ranked 13th, among the 500 largest companies in Brazil, in terms of ROE.
Localiza is ranked 13th, among the 500 largest companies in Brazil, in terms of ROE.
(FGV ranking)
(FGV ranking)
18
20. Localiza awarded
•Best Company for Shareholders Capital Aberto Ranking
(companies worth up to R$5 billion)
•Cases of corporate governance Brazilian Corporate Governance
in family-owned companies Institute book
•13ª most profitable Company Conjuntura Econômica (FGV)
•467ª largest Company in Brazil Exame magazine
•Best car rental franchisee Pequenas empresas grandes
negócios magazine
•Best IR team in an IPO IR Magazine
•Brazil’s Top CEO Institutional Investor magazine
•Outstanding CEO Capital Aberto Magazine
•Administrator of the Year ANEFAC
•Best at Service Rendering Hoje em Dia newspaper
21. Price
23
-M
a
10
15
20
25
30
35
40
45
50
55
60
65
7- y
Ju
21 n
-J
un
5-
Ju
19 l
-J
2- u l
Au
16 g
-A
30 ug
-A
u
14 g
-S
e
28 p
-S
e
13 p
-O
27 ct
-O
11 ct
-N
28 ov
-N
12 ov
-D
26 ec
-D
10 ec
-J
a
24 n
-J
an
8-
F
22 eb
-F
e
10 b
-M
24 ar
-M
a
7- r
Ap
25 r
-A
10 pr
-M
Performance: RENT3 2006 + 116%
24 ay
RENT3 X IBOV
-M
a
7- y
Ju
X
22 n
-J
un
6-
Ju
20 l
-J
3- u l
Au
17 g
-A
31 ug
-A
u
15 g
-S
29 ep
-S
e
16 p
-O
Average daily trading volume in 2006 R$ 10,6 million
30 ct
-O
14 ct
-N
30 ov
-N
14 ov
IBOV 2006: + 30%
-D
RENT3: +438%
ec
IBOV: +80%
0
20
40
60
80
100
120
20
From 05/23/05 (IPO) to 12/15/06.
Volume-R$ thousand
Performance - RENT3
22. 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.
21
28. On-airport X off-airport market
US – market share (2005)
US airport segment* - US$10BN US local segment* - US$10BN
Enterprise All others
Other
7% DTG 19%
Avis Budget 2%
11% Avis/Budget
32%
7%
National/Alamo
Hertz
20% Enterprise
Hertz 9%
65%
28%
Source:*Avis presentation nov/06 - local segment share amounts are company estimates
Airport (50%): Avis and Hertz (focused on business and services) were not affected by Enterprise
Budget and Alamo (focused on leisure) lost market in the last years
Off-airport (50%): Hertz and Avis are fighting for the off-airport market
27
29. On-airport X off-airport market
Brazil – number of agencies (2005)
BR airport segment** - agencies BR local segment** - agencies
Localiza
267 Hertz
OTHERS
OUTRAS
84 Avis
49 LOCALIZA
83
76
Unidas
74
UNIDAS
30
AVIS HERTZ Others ***
31 33 1723
Source:** As of each company website, in Nov/06
*** Assuming that each company has in average only one agency
• In the airports the market is concentrated in the hands of the networks
• Off-airport market is fragmented mainly among the small car rental companies
28
30. On-airport X off-airport market
Localiza – number of agencies
Owned agencies
133
96 60.0%
88
Off-airport agencies
55 9.8%
Airport agencies
41 45
9/30/2005 9/30/2006
The share of the off-airport agencies is growing in volume and revenue
Volume Revenue
100 100 100 100
6 p.p.
6 p.p.
65% 53% 59%
71%
-6 p.p. -6 p.p.
35% 29% 47% 41%
9M05 9M06
9M05 9M06
Off-airport agencies Airport agencies
29
