1. Localiza Rent a Car S.A.
4Q09 and 2009 Results - R$ million, USGAAP
Localiza’s flexible
business model
proved to be effective
during the crisis period.
March, 2010 1
2. Integrated business platform
47,517 cars 22,778 cars
1.9 million clients 584 clients
214 locations 225 employees
2,768 employees
Synergies:
cost reduction
cross selling
bargaining power
8,791 cars 34,519 cars sold
238 locations in 9 countries 78% sold to final consumer
167 locations in Brazil 49 stores
71 locations in South America 588 employees
23 employees
This integrated business platform gives Localiza flexibility and superior performance
2
As of 12/31/2009
3. Car rental financial cycle
1-year cycle
Funding (PV) Net car sale revenue
$26.6 $27.5
Revenue: 18.5
1 2 3 4 5 Expenses: (10.3) 8 9 10 11 12
$26.6 $29.7
Car acquisition Funding (FV)
Car rental Used car sales Total
Per operational car Per operational car 1 year
R$ % R$ % R$
Revenues 19.0 100.0% 29.2 100.0% 48.2
Additional revenue 0.6 2.1% 0.6
Cost (8.0) -42.1% (8.0)
SG&A (2.8) -14.7% (2.3) -7.8% (5.1)
Net car sale revenue 27.5 94.3% 27.5
Book value of car sale (27.0) -92.5% (27.0)
EBITDA 8.2 43.2% 0.5 1.8% 8.7
Depreciation (non-vehicle) (0.3) -1.6% (0.2) -0.6% (0.5)
Depreciation (vehicle) (1.6) -5.5% (1.6)
Interest on debt (1.9) -6.3% (1.9)
Tax (2.4) -12.5% 0.9 3.2% (1.4)
NET INCOME 5.5 29.1% (2.2) -7.4% 3.4
Return on asset 12.6%
3
4. Fleet rental financial cycle
Funding (PV) 2-year cycle Net car sale revenue
33.8 28.8
Revenue: 32.4
1 2 3 4 5 Expenses: (10.5) 20 21 22 23 24
33.8 42.0
Car acquisition
Funding (FV)
Fleet rental Used car sales Total
Per operational car Per operational car 2 years 1 year
R$ % R$ % R$ R$
Revenues 32.4 100.0% 29.6 100.0% 62.0 31.0
Additional revenue 0.5 1.8% 0.5 0.3
Cost (8.7) -26.7% (8.7) (4.3)
SG&A (1.8) -5.6% (1.4) -4.6% (3.2) (1.6)
Net car sale revenue 28.8 97.2% 28.8 14.4
Book value of car sale (27.9) -94.2% (27.9) (13.9)
EBITDA 21.9 67.6% 0.9 3.0% 22.8 11.4
Depreciation (non-vehicle) (0.4) -1.2% (0.7) -2.3% (1.1) (0.5)
Depreciation (vehicle) (6.5) -22.0% (6.5) (3.3)
Interest on debt (4.9) -16.6% (4.9) (2.5)
Tax (6.5) -19.9% 3.4 11.4% (3.1) (1.5)
NET INCOME 15.1 46.5% (7.8) -26.5% 7.2 3.6
Return on asset 10.7%
4
5. Strategy by division
Increase market leadership maintaining high return
Core Businesses
Add value to the brand by expanding the network in Brazil and
South America, with profitability
Create value taking advantage of the fleet rental market,
leveraging the synergies from the integrated business platform
Support
Add value to the businesses, optimizing fleet renewal and
reducing depreciation as a competitive advantage
5
6. Growth opportunities
GDP elasticity
Rental divisions 5.9x GDP
Sector: 2.6x GDP
Source: Localiza, ABLA and Central Bank
Consolidation Air traffic
US market: 4 players 95%
BR market: 4 players 40% 9.1% CAGR (2004/2009)
1,893 players 60% Growth forecast between 2% - 5%
Source: Auto Rental News and estimates Source: Infraero, Gol and Tam
Fleet outsourcing Credit cards
Corporate target fleet of 500,000 cars 20.8% CAGR (2004/2009)
Approximately 25% rented Insurance 45 mm holders (estimated)
Source: Company estimates
replacement 13% growth for 2010
Source: Abecs and estimates
Around 10 million cars insured
Accident frequency of 15% p.a.
Source: Susep, Denatran and estimates
6
7. Growth opportunities: GDP
Rental revenues accumulated growth rate – rentals
Localiza
5.9x
Sector
2.6x
GDP
2005 2006 2007 2008
GDP (real) Localiza (real) Sector (real)
Localiza’s revenues have been growing 5.9x GDP.
Source: Central Bank, Localiza and ABLA 7
8. Growth opportunities: consolidation
Brazilian car rental agencies
Airport locations Off-airport locations
Localiza
Others Localiza 292 Unidas
36 89 73 Avis
44
Hertz
29 Hertz
65
Others*
Avis
Unidas 1889
30
29
Off-airport market is fragmented among almost 2,000 small local car rental companies
*Source: ABLA, 2008
Source: Each company website as of December 31th , 2009
8
9. Consistent market share evolution
38.0%
38.0% 29.4%
33.0%
25.8%
22.4%
2004 2005 2006 2007 2008
Strategy: increase market leadership maintaining high return
Source: ABLA, based on revenues 9
10. Consistent market share evolution
14.0%
14.0% 11.4%
13.0% 13.2%
10.2%
2004 2005 2006 2007 2008
Strategy: create value taking advantage of the integrated business platform synergies
Source: ABLA, based on revenues 10
11. Competitive advantages
Scale
Gains of Know-how Higher
scale Strong brand
Strong values
competitiveness
Integrated platform
Geographical footprint
High corporate governance standards
Used car sales network
Management model
Lower depreciation
Stable Management
Owners involved
Facilities
Rating
Market share
increase
Localiza reached the virtuous cycle
11
12. Competitive advantages
36 years of experience…
Raising Buying Renting Selling
money cars cars cars
…give Localiza superior performance in all chains
of the renting process
12
13. Competitive advantages: funding
Raising Buying Renting Selling
money cars cars cars
Rating
Moody’s corporate rating as of Mar/10 (Local Currency) Standard & Poors as of Mar/10 (Local Currency)
Localiza Rent a Car S.A Aa2.br Localiza Rent a Car S.A brAA-
Braskem S.A. Aa2.br Braskem S.A brAA+
Cyrela Brazil Realty brA+
Cyrela Brazil Realty Aa2.br
CEMIG brAA
CEMIG Aa2.br
Duke Energy brAA-
Duke Energy Aa2.br
Tam brA
High corporate governance standards
13
14. Competitive advantages: scale in buying cars
Raising Buying Renting Selling
money cars cars cars
Purchases from Fiat, GM, VW and Renault Purchased cars by brand
in Brazil*
Localiza
2.3% FIAT
GM
44% 33%
Others VW
RENAULT
1% 16%
6%
As the largest buyer in Brazil, Localiza gets better prices and conditions with the automakers
* Includes Localiza, Total Fleet and Franchisees purchases. 14
15. Competitive advantages: scale renting cars
Raising Buying Renting Selling
money cars cars cars
Geographical
Strong brand Scale
footprint
Locations in Brazil
381
34th 270
Most valuable brand
74
in Brazil 94
(Brand Analytics, May 2009) 102
Localiza Unidas Hertz Avis
Best of transportation sector
(Exame, Biggest & Best, July 2009) Localiza’s market share: 38%
15
18. Competitive advantages: selling cars
Raising Buying Renting Selling
money cars cars cars
49 stores in Brazil Car rental buffer
Logistics of distribution
Know-how of used car market
Selling to final consumers in order to
have higher revenue per sold car
18
19. Used car sales network
Localiza has a different brand and a special network to sell its cars to final consumers
19
20. Managing assets
Pricing strategy
• Operating costs
Equity • Depreciation
• Financial expenses
• Taxes
• Profitability
Assets (cars)
Funding
Debt
Profitability comes from Cash to renew the fleet
rental divisions
Flexible and liquid assets.
20
21. Liquid and flexible assets allow for fast adjustment
Scenario during crisis from Oct/08 to Jun/09
Brazil Localiza
Drop in the cars sales volumes Drop in used car sales volumes
Incentive: IPI reduction for new cars Loss in the fleet value and increase in depreciation rates
Credit restriction and increasing spreads Money available at shorter terms and higher spreads
Drop in the GDP from positive to negative Impact on car and fleet rental volumes
Localiza’s adjustment
1H09 Fleet adjustment: Localiza stop buying cars
Negative GDP Strong cash generation
Pre-payment of short term debt
2H09 Resume fleet renewal
Positive GDP Debt profile extension
after crisis Increase in used car sales investments
21
23. Consolidated results
2008 2009 Var.
Net revenue 1,855.7 1,856.3 0.0%
EBITDA 504.1 469.7 -6.8%
Net income 127.4 116.3 (R$11.1)
Net margin 6.9% 6.3% -
4Q08 4Q09 Var.
Net revenue 422.5 551.1 +30.4%
EBITDA 125.8 128.9 +2.5%
Net income (loss) (29.8) 38.4 R$68.2
Net margin -7.1% 7.0% -
Resumption of growth in net revenues and net income in 4Q09.
23
25. Car rental division
# daily rentals
- 3.3% 3%
9.1% 16. .5%
17
815 835
726 702 658 719 701
711
oct nov dec jan
2009 2010
2008 2009
Localiza is back to high growth.
jan feb mar apr may jun jul aug sep oct nov dec
2005 2006 2007 2008 2009
25
26. Car rental division
Net revenue breakdown – car rental
100% 100% 100% 100% 100%
41% 38% 34% 32%
46%
59% 62% 66% 68%
54%
2005 2006 2007 2008 2009
Off airport Airport
Localiza is already present in all airports
and therefore it has been concentrating its geographical expansion in new markets.
26
27. Car rental division
# of locations
199 214
178 +15
145 + 21
117
+ 33
+ 28
2005 2006 2007 2008 2009
It doesn’t include franchisees
Even during the crisis period Localiza has expanded its network distribution.
27
29. Fleet rental division
Net revenue (R$ millions)
%
: 22.9 13.2
%
CAGR 313.4
276.9
228.2
190.2
149.2
76.1 8.4% 82.5
2005 2006 2007 2008 2009 4Q08 4Q09
# of daily rentals (thousand)
10.3%
24.3%
C AGR: 7,099
6,437
5,144
4,188
3,351
1.3%
1,826 1,850
2005 2006 2007 2008 2009 4Q08 4Q09
Fleet rental division has kept a consistent growth even in a crisis scenario.
29
30. Used car sales division
# of sold cars
%
: 22.3 0.7%
CAGR
34,281 34,519
30,093
23,174
18,763
6%
70. 11,335
6,646
2005 2006 2007 2008 2009 4Q08 4Q09
% 9%
. 0% .9 41.
70 8.0
% 81 4,419
3,574 5 3,577
3,342
2,102 2,115 2,429 2,521
oct nov dec jan
2008 2009 2009 2010
The used car sales division has presented strong growth since 4Q09.
30
31. Used car sales division
# of stores
0%
40. 49
32 35
26
+3 +14
13
+6
+ 13
2005 2006 2007 2008 2009
In 2009, the used car sales division expanded its network.
31
32. Average operating fleet age – car rental
(in months)
Average operating fleet age
11.6
9.4 9.6
6.4 7.0 7.3
6.0 5.7
1Q 2Q 3Q 4Q
2008 2009
Average sold fleet age
15.4 16.7 16.3 17.5
12.6 12.6 11.6 12.7
1Q 2Q 3Q 4Q
2008 2009
The average operating fleet age is coming back to pre-crisis level.
32
33. Depreciation per car – car rental division
Average depreciation per car (R$) - year
2,546.0 2,577.0
939.1
492.3 332.9
2005 2006 2007 2008 2009
Average depreciation per car (R$) - quarter
7,379.3
3,763.3
2,599.7 2,209.2
1,798.6 1,133.4
729.7
418.8
1Q 2Q 3Q 4Q
2008 2009
With 2/3 of fleet renewed, average depreciation per car has already presented a significant drop.
33
34. Depreciation per car – fleet rental division
Average depreciation per car (R$) - year
5,083.1
4,371.7
2,981.3
2,383.3 2,395.8
2005 2006 2007 2008 2009
Average depreciation per car (R$) - quarter
11,572.0
6,238.6
4,557.6 3,652.0
2,894.3 2,670.1
2,048.0 3,064.5
1Q 2Q 3Q 4Q
2008 2009
The average depreciation per car has also presented a significant reduction in the fleet rental division.
34
35. Net revenues
Consolidated net revenues
(R$ million)
%
R: 30.8
CAG 1,855.7 1,856.3
1,531.7
CAGR: 16.5% 1,145.4
876.9
532.0 634.4
420.4 476.9
234.3 244.7 310.1
212.9
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
GDP 3.4 0.0 0.3 4.3 1.3 2.7 1.1 5.7 2.9 3.7 4.6 5.1 -0.2
Average 1.9 4.4 -0.2
From 2004 to 2008 Localiza’s revenues have grown 7x GDP.
35
37. Net income
Net income (R$ millions)
190.2 - 8.7%
138.2 127.4 116.3
106.5
.9%
- 228 38.4
-29.8
2005 2006 2007 2008 2009 4Q08 4Q09
Reconciliation of EBITDA x Net Income 2008 2009 Var. R$ 4Q08 4Q09 Var. R$
EBITDA - Car rental and fleet rental 449.6 459.1 9.5 122.7 127.7 5.0
EBITDA - Used car sales 54.5 10.6 (43.9) 3.1 1.2 (1.9)
EBITDA Consolidated 504.1 469.7 (34.4) 125.8 128.9 3.1
Depreciation of revenue-earning vehicles (178.5) (172.3) 6.2 (125.3) (40.2) 85.1
Other depreciation (18.3) (21.0) (2.7) (5.0) (5.1) (0.1)
Financial expenses, net (133.3) (112.9) 20.4 (44.5) (24.5) 20.0
Income tax and social contribution (46.6) (47.2) (0.6) 19.2 (20.7) (39.9)
Net income 127.4 116.3 (11.1) (29.8) 38.4 68.2
Main impact in results: decrease of used car sales EBITDA.
37
38. Free cash flow - FCF
Free cash flow - R$ millions 2005 2006 2007 2008 2009
EBITDA 277.9 311.3 403.5 504.1 469.7
Used car sales revenues (448.2) (590.3) (853.2) (983.2) (924.5)
Cost of used car sales 361.2 530.4 760.0 874.5 855.1
EBITDA without used car sales revenues and costs 190.9 251.4 310.3 395.4 400.3
(-) Income tax and social contribution – current (32.7) (42.7) (63.4) (52.8) (49.0)
Working capital variation (24.2) (4.8) 13.3 (44.8) (11.5)
Cash provided before capex 134.0 203.9 260.2 297.8 339.8
Used car sales revenues 448.2 590.3 853.2 983.2 924.5
Capex of car – renewal (496.0) (643.3) (839.0) (1,035.4) (963.1)
Change in amounts payable to car suppliers (capex) - - - - 15.2
Net capex for renewal (47.8) (53.0) 14.2 (52.2) (23.4)
Capex - Property and equipment, net (28.0) (32.7) (23.7) (39.9) (21.0)
Free cash flow before growth 58.2 118.2 250.7 205.7 295.4
Capex of car – growth (194.0) (287.0) (221.9) (299.9) (241.1)
Change in amounts payable to car suppliers (capex) (25.5) 222.0 (51.0) (188.9) 241.1
Free cash flow (161.3) 53.2 (22.2) (283.1) 295.4
Fleet increase (quantity) 7,342 10,346 7,957 9,930 8,642
38
39. Net debt
Free cash flow
295.4
Net debt Net debt
12/31/2008 12/31/2009
-1,254.5
-1,078.6
-39.4 -80.1
Dividends Interest and
others
Net debt was reduced by R$175.9 million.
39
40. Debt – profile and costs
Debt (principal) on 12/31/09 – R$ millions
423.1
225.0 239.6
205.4 211.8
160.0
2009
2010 2011 2012 2013 2014 2015
459.6
Cash
*Stand by refers to R$100 MM limit with BNDES, with term of drawing until sept/2010
Stand by*
Average effective
Gross debt - principal 2010 2011 2012 2013 2014 2015 Total
cost
Working Capital CDI + 1.25%pa - 204.5 58.0 73.0 45.0 60.0 440.5
Debentures - 1st Issuance 110.8% of CDI 222.2 - - - - - 222.2
Debentures - 2nd Issuance CDI + 0.59%pa - - 66.6 66.6 66.8 - 200.0
Commercial Papers 108.9% of CDI 200.0 - - - - - 200.0
Debentures - 1st Issuance, Total
CDI +2.02%pa - - 100.0 100.0 100.0 100.0 400.0
Fleet
BNDES TJLP + 3.80%pa 0.9 0.9 0.4 - - - 2.2
Total gross debt - principal - 423.1 205.4 225.0 239.6 211.8 160.0 1,464.9
Cash and cash equivalents (459.6) - - - - - (459.6)
Total net debt - principal - (36.5) 205.4 225.0 239.6 211.8 160.0 1,005.3
Debt profile was extended.
40
41. Debt - ratios
(R$ millions)
1,907.8
1,752.6
1,492.9
1,247.7 1,254.5
1,078.6
900.2
765.1
535.8 440.4
2005 2006 2007 2008 2009
Net debt Fleet value
BALANCE AT THE END OF THE PERIOD 2005 2006 2007 2008 2009
Net debt / Fleet value (USGAAP) 60% 36% 51% 72% 57%
Net debt / EBITDA (USGAAP) 1.9x 1.4x 1.9x 2.5x 2.3x
Net debt / EBITDA (BRGAAP) 1.5x 1.0x 1.3x 1.8x 1.7x
Net debt / Equity (USGAAP) 1.4x 0.7x 1.3x 2.0x 1.5x
Significant improvement in debt ratios.
41
42. Rewards and recognitions
Corporate governance:
Elected twice The Best Company In Corporate Governance (Capital Aberto Magazine)
Elected “The Most Shareholder-friendly” company (Institutional Investor Magazine)
Corporate reputation:
Elected twice The Best CEO of a small-cap (Institutional Investor Magazine)
Best of Transportation Sector (Exame Magazine)
One of The 100 Companies with Best Reputation in the Country (Consumidor Moderno Magazine)
Internationalization:
28th Most Internationalized Brazilian Company (Ranking Fundação Dom Cabral)
Franchising:
Franchisor of the Year (Brazilian Franchising Association)
Best Franchising of Brazil (Pequenas Empresas, Grandes Negócios Magazine)
Human resources:
One of The 50 Most Admired RHs (Gestão & RH Magazine)
RENT3:
34th Most Valuable Brand in Brazil (IstoÉ Dinheiro Magazine)
2nd Highest Profitability since the IPO (Ranking elaborated by Valor Newspaper)
42
43. RENT3 performance
Average daily volume (R$ millions) Average daily volume (# shares)
11.9
7%
41. 27.1% 824.2
8.4 648.7
2008 2009 2008 2009
Strong growth of traded volumes.
43
44. Referrals
TOP PICK from Itaú for March
Weekly portfolio from SLW broker
Citi – “Still Our Favorite Brazilian Transportation Name”
Goldman Sachs – BRIC’s EM Nifty 50
Santander – Shifting Into High Gear
BNP Paribas – Porfolio for March
Link Broker – Porfolio for March
Valor Econômico – Portfolio for March
RENT3 is well recommended.
44
45. Indexes
MSCI Brazil Index
Goldman Sachs GSSTEM50 – BRIC’s EM Nifty 50
Van Eck ETF - Market Vectors Brazil Small-Cap Index
IBrX 100
ITAG
IGC
RENT3 is present in various indexes.
45
