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1August / 2012
Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials                                    ...
Company: integrated business platform   58,436 cars                                                   31,412 cars   3.1...
2011 Car rental financial cycle                                                 1-year cycle                              ...
2011 Fleet rental financial cycle                                               2-year cycle                              ...
Company: managing assets             Targeted spread Equity              Pricing strategy              Assets (cars)Fundin...
Company: stable management      BOARD OF DIRECTORS                                                      Salim Mattar – 39y...
Company: growth and profitability track record                                                                            ...
Company: GDP elasticity                            Rental revenues growth elasticity x GDP                                ...
Company: market share                Revenues - consolidated                                               Fleet - consoli...
Company: recognitions and rewards2011 - Would you recommend Localiza? YES!                 95.9%94.6%         94.8%       ...
Company: recognitions and rewards                                 2011 - Would you recommend Total Fleet? YES!            ...
Company: recognitions and rewards2011 - Would you recommend Seminovos? YES!              94.0%           94.0%            ...
Company: recognitions and rewards The Company was recognized by Exame Magazine - Best and Biggest (service sector):     ...
Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials                                    ...
Drivers and growth opportunities                                   16
Car rental drivers: investments                                                              Investments by sector 679    ...
Car rental drivers: income and affordability                                                             GDP per capita   ...
Car rental drivers: consumption                                      A and B classes - million                            ...
Car rental opportunities: consolidation                                       Car rental locations in Brazil          Airp...
Car rental strategy: organic growth                                    Brazilian distribution                             ...
Fleet rental drivers: outsourcing trend                       Outsourced fleet penetrationBrazilian Market                ...
Used car sales drivers: affordability and penetration                                      Middle class - million         ...
Used car sales drivers: affordability and penetration        # of inhabitants per car (2011)                              ...
Brazilian car market: new x used car market and affordability                                                             ...
Brazilian car market : 2011 market share                   Localiza used cars x Car market                       Used cars...
Brazilian car market: monthly sale per store                                                        Monthly sale per store...
Used car sales strategy: network expansion                                          Brazilian distribution                ...
Used car sales: sold cars evolution                    Monthly average of sold cars                                       ...
Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials                                    ...
Competitive advantages: 38 years of experience in managing assets                            Profitability comes from rent...
Competitive advantages: raising money      Raising     Buying                                                             ...
Competitive advantages: buying cars     Raising       Buying                                                              ...
Competitive advantages: renting carsRaising      Buying                                                                   ...
Competitive advantages: selling carsRaising      Buying                                                                Sel...
Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials                                    ...
Highlights   Reflexes of the tax reduction (IPI) for new cars from May 21, 2012 to    August 31, 2012 that might be exten...
Car Rental Division                                        # daily rentals (thousand)                                     ...
Fleet Rental Division                                       # daily rentals (thousand)                                    ...
Net Investment                     Fleet increase * (quantity)                                                            ...
Utilization rate – car rental division                  69.7%                                74.2%68.2%   68.9%           ...
End of period fleet                                                                                    Quantity           ...
Seminovos network increase                        # of points of sale                                                     ...
Car sales per street store                                                                                                ...
Consolidated net revenues                                                                                                 ...
EBITDA                                                                                                                    ...
Average depreciation per car          Hot used car market         Financial crisis effect                                 ...
Consolidated net income                                                                                                   ...
Free cash flow - FCFFree cash flow - R$ million                                   2005         2006        2007          2...
Changes in net debt in 1H12 (R$ million)             FCF             242.3 Net debt                                       ...
Debt profile                                                                                         R$ million           ...
Debt – ratios                                                                                                             ...
Spread                                                                               Spread     24.80%                    ...
Localiza ADR level ITicker Symbol: LZRFYCUSIP: 53956W300ISIN: US53956W3007Ratio: 1 Ordinary Share : 1 ADRExchange: OT...
2012 Macroeconomic scenario                             GDP evolution                                      4,25%          ...
IR Team                        Roberto Mendes                                                  Silvio Guerra              ...
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Localiza 2Q12

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Localiza 2Q12

  1. 1. 1August / 2012
  2. 2. Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials 2
  3. 3. 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. 3 Based on the 2Q12
  4. 4. 2011 Car rental financial cycle 1-year cycle Car sale revenue $26.2 Revenue 1 2 3 4 5 Expenses, interest and tax 8 9 10 11 12 $27.9Car acquisition Car Rental Seminovos Total per operating car per car sold 1 year R$ % R$ % R$ Revenues 19.9 100.0% 29.1 100.0% 48.9 Cost (8.2) -41.3% (8.2) SG&A (2.7) -13.5% (2.9) -9.9% (5.5) Net car sale revenue 26.2 90.1% 26.2 Book value of car sale (25.5) -90.0% (25.5) EBITDA 9.0 45.2% 0.7 2.4% 9.7 Depreciation (vehicle) (1.7) -5.8% (1.7) Depreciation (non-vehicle) (0.3) -1.7% (0.1) (0.5) Interest on debt (2.4) -8.2% (2.4) Tax (2.6) -13.0% 1.0 3.6% (1.5) NET INCOME 6.1 30.4% (2.4) -8.4% 3.6 NOPAT 5.3 ROIC * 17.5% Spread Cost of debt after tax 8.6% 8.9p.p. * Investment in cars and PP&E (8%) 4
  5. 5. 2011 Fleet rental financial cycle 2-year cycle Net car sale revenue $26.4 Revenue 1 2 3 4 5 Expenses, interest and tax 20 21 22 23 24 $33.8Car acquisition Fleet Rental Seminovos Total per operating car per car sold 2 years R$ % R$ % R$ Revenues 34.0 100.0% 28.7 100.0% 62.7 Cost (9.7) -28.7% (9.7) SG&A (1.8) -5.3% (2.3) -7.9% (4.1) Net car sale revenue 26.4 92.1% 26.4 Book value of car sale (25.0) -90.0% (25.0) EBITDA 22.4 66.0% 1.4 5.0% 23.8 Depreciation (vehicle) (8.3) -28.8% (8.3) Depreciation (non-vehicle) (0.1) -0.1% (0.1) Interest on debt (4.0) -14.1% (4.0) Tax (6.7) -19.8% 3.3 11.4% (3.5) NET INCOME 15.6 46.0% (7.6) -26.5% 8.0 NET INCOME per year 7.8 46.0% (3.8) -26.5% 4.0 NOPAT (annualized) 5.4 ROIC 16.1% Spread Cost of debt after tax 8.6% 7.5p.p. 5
  6. 6. Company: managing assets Targeted spread Equity Pricing strategy Assets (cars)Funding Assets (cash) Debt Profitability comes from Cash to renew the fleet rental divisions Flexible and liquid assets. 6
  7. 7. Company: stable management BOARD OF DIRECTORS Salim Mattar – 39y CEO Car Acquisition Legal COO Eugênio Mattar – 39y Human Administration Financial Resources ITGina Rafael – 31yBruno Roberto Mendes – 27y Daltro Leite – 27y Alberto Campos– 4yAndrade – 20yJoão Andrade – 8y Localiza has a lean and efficient structure.Marco Antônio The succession process is already planned.Guimarães – 22y 7
  8. 8. Company: growth and profitability track record Revenues consolidated 2,918.1 2,497.2 1,823.7 1,820.9 1,4 6 8 .1 1,505.5 1,3 2 1.9 1,126.2 9 2 2 .4 9 8 0 .8 854.9 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 EBITDA consolidated 821.3 649.5 504.1 469.7 403.5 278.1 311.4 154 152.1 197.8 134.3 149.9 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 roughly 25% p.a. in the last years. 8
  9. 9. Company: GDP elasticity Rental revenues growth elasticity x GDP Localiza 5.7x Sector GDP 2.9x 2005 2006 2007 2008 2009 2010 2011The drivers combined with Localiza’s competitive advantages resulted in a growth above the industry level. 9
  10. 10. Company: market share Revenues - consolidated Fleet - consolidated 30.4% 27.4% 24.8% 24.2% 22.1% 23.5% 24.1% 20.5% 20.6% 20.8% 21.8% 21.4%17.9% 18.9%2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 Fleet Car Rental division Fleet Rental division 36.5% 13.9% 10 Source: ABLA 2012 yearbook
  11. 11. Company: recognitions and rewards2011 - 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! 11Source: based on “Fale Fácil” satisfaction survey answered by more than 350,000 customers in 2011
  12. 12. Company: recognitions and rewards 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! 12Source: Users and VIP users based on phone interviews made by the Company with customers. Contract managers made by an independent research: Vox Populi
  13. 13. Company: recognitions and rewards2011 - Would you recommend Seminovos? YES! 94.0% 94.0% 92.3% 94.0% 2009 2010 2011 Customers recognize premium service and recommend it! 13 Source: based on phone interviews made by the Company with customers started in 2009
  14. 14. Company: recognitions and rewards The Company was recognized by Exame Magazine - Best and Biggest (service sector): 9th company in ROIC 7th in current liquidity 10th in wealth generated by employee IR Magazine 2012 Best IR executive Best IR department 2011 Valor 200  8th Company in growth and profitability Maiores e Melhores do Transporte 2011 (Biggest & Best of Transportation)  The best Company of the vehicle rental sector BRIC Breakout  One of the 5 top picks Brazil for 2012 Exame Magazine  Among the 5 best Companies of the consumer sector, in the article “Where to invest in 2012”Institutional Investor’s ranking:  Best CEO, CFO and IR executive and Best IR department 14
  15. 15. Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials 15
  16. 16. Drivers and growth opportunities 16
  17. 17. Car rental drivers: investments Investments by sector 679 343 182 85 83 51 17 15 14 10Oil/ g as T r ansp o r t at io n Ener g y W at er / sewag e Ind ust r y Ho t el/ R eso r t Ho using Ot her s Inf r ast r uct ur e Sho p p ing C ent er R$1.5 trillion to be invested until 2016. 17 Source: Valor Setorial Magazine, as of May 2012
  18. 18. Car rental drivers: income and affordability GDP per capita (R$ thousands) 19.0 21.3 16.0 16.6 14.2 11.7 12.8 10.7 8.4 9.5 6.9 7.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Car rental affordability 645 545 51% 510 465 415 38% 380 37% 35% 350 300 260 240 180 200 151 31% 27% 22% 20% 18% 16% 15% 15% 13% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e Monthly m inim um salary (R$) Daily rental price over m inim um salary (%)Income increase and stable daily rental rates increased car rental affordability. 18 Source: IPEADATA, IBGE and Valor website, Bradesco (2012: estimated)
  19. 19. Car rental drivers: consumption A and B classes - million 31 20 13 2003 2009 2014e Air traffic passengers - million Credit card holders - million 179 154 69 128 45 51 71 152003 2009 2010 2011 2003 2009 2010 2011 Strong domestic drivers leads to higher volumes. 19 Source: FGV, BCB, Infraero, Gol, Abecs and Exame (Dec/2011)
  20. 20. Car rental opportunities: consolidation Car rental locations in Brazil Airport locations Off-airport locations Localiza Others 351 HertzAvis Localiza Unidas 36 78 35 101 73 Avis 27 Others 2079Unidas Hertz 34 42 Off-airport market is still fragmented. 20 Source: Company as of May 2012, ABLA (Brazilian Car Rental Association) and each company website (May, 2012)
  21. 21. Car rental strategy: organic growth Brazilian distribution 415 449 346 381 279 3122542005 2006 2007 2008 2009 2010 2011 Localiza’s network is still being expanded. 21
  22. 22. Fleet rental drivers: outsourcing trend Outsourced fleet penetrationBrazilian Market World 58.3%Corporate fleet: 46.9% 4,200,000 37.4% 24.5% Targeted fleet: 16.5% 13.3% 500,000 5.4% 8.9% Rented fleet: nd l k n nd ce y lic zi U ai an ra la an la b Sp m pu ol B Po Fr 245,000 er H Re G ch ze C 31,629 Less than 50% of targeted fleet is rented. 22 Source: ABLA and Datamonitor
  23. 23. Used car sales drivers: affordability and penetration Middle class - million 113 94.9 66 2003 2009 2014e Car purchase affordability 148 128 645 115 510 104 465 545 97 93 415 80 380 350 75 300 68 240 260 58 56 52 151 180 200 44 * 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number of minimum w ages to buy a new car Monthly minimum salary (R$)Income increase and credit availability are the major drivers for car sales. Source: Bradesco (2012: estimated), ANFAVEA, Exame (Dec/2011). 23
  24. 24. Used car sales drivers: affordability and penetration # of inhabitants per car (2011) # of inhabitants per car - Brazil USA 1.3United Kingdon 1.8 8.0 7.9 Germany 1.9 7.4 France 2.0 6.9 Japan 2.1 6.5 South Korea 3.6 5.9 Russia 4.0 5.5 Argentina 4.2 Brazil 5.5 2005 2006 2007 2008 2009 2010 2011 Income increase and credit availability are the major drivers for car sales. Source: O Estado de São Paulo, as of 04/15/12 (based on researches of Sindipeças, Roland Berger and PWC). 24
  25. 25. Brazilian car market: new x used car market and affordability 17.4 Individuals with 15.8 affordability to buy a new car* 11.9 8.9 8.9 8.4 Used cars 7.97.0 7.3 7.1 6.8 7.1 5.6 6.7 2.5x 2.6x 2.4x 2.7x 3.7x 3.1x 4.4x New cars 3.3 3.5 3.0 2.7 2.31.6 1.82005 2006 2007 2008 2009 2010 2011 * Population with affordability to buy a new compact car (R$25,000) with 20% downpayment Used car market is currently 2.6x the new car market. 25 Source: FENABRAVE (Autos + light commercial) and Bradesco
  26. 26. Brazilian car market : 2011 market share Localiza used cars x Car market Used cars sold: 50,772 0.6% 1.5% 10.6% Used cars Brand new cars Up to 2 years 8,862,951 3,425,499 476,827Used Seminovos 0km Seminovos 2 years old Seminovos 26 Source: Fenabrave 2011
  27. 27. Brazilian car market: monthly sale per store Monthly sale per store 82 82 82 74 73 2008 2009 2010 2011 2011 Brazilian new car Dealership Seminovos: average sales per lots (excluding auto malls – 10 stores) Brazilian new car dealership: total sales (3,633,248) divided by the number of dealers (3,714)Localiza Seminovos monthly sale per store is in line with Brazilian new car dealership average. 27 Source: Anfavea 2012 yearbook (National OEM’s Association)
  28. 28. Used car sales strategy: network expansion Brazilian distribution 80 66 49 55 26 32 35132005 2006 2007 2008 2009 2010 2011 2012e The network is being expanded to support rentals’ growth. 28
  29. 29. Used car sales: sold cars evolution Monthly average of sold cars 4.835 3.940 4.231 2.857 2.877 2.508 2007 2008 2009 2010 2011 2Q12 Sales profile 45% 44% 42% 39% 48% 51% 55% 57% 58% 61% 52% 49% 2007 2008 2009 2010 2011 2Q12 Financed In cash The increase on sales was supported by the opening of new stores.The macro prudential measures impacted the sales profile in 2011 and 2012. 29
  30. 30. Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials 30
  31. 31. Competitive advantages: 38 years of experience in managing assets Profitability comes from rental divisions Renting cars SellingRaising Buying carsmoney cars $ $ Cash to renew the fleet or pay debt 31
  32. 32. Competitive advantages: raising money Raising Buying Selling Renting cars money cars carsNational Scale brAAA S&P brA- S&P Aa1.br Moody’s A (bra) Fitch A- (bra) Fitch A- (bra) Fitch AA+(bra) Fitch Global Scale BBB- Fitch Baa3 Moody’s BBB+ S&P B+ S&P B+ Fitch B2 Moodys BBB- S&P Localiza raises money with lower spreads when compared to Brazilian competitors. As of June, 2012. 32
  33. 33. Competitive advantages: buying cars Raising Buying Selling Renting cars money cars cars Better conditions due to higher volumesLocaliza’ share in national sales of the main Purchases by brand in 2011automakers in 2011: GM, FIAT, VW, Ford and Renault Renault Others Ford 9.9% 1.3% 11.0% 2.3% Fiat GM 39.3% 21.0% VW 17.5% Localiza announced the purchase of 100,000 cars for 2H11 and 2012. 33
  34. 34. Competitive advantages: renting carsRaising Buying Selling Renting carsmoney cars cars Brand Know How Brazilian distribution 452 # of branches 289 62 107 120 # of cities 318 49th most 71 60 32 valued brand in Brazil Localiza Hertz Unidas Avis The Company is present in 213 cities where the other largest networks do not operate. 34 Source: Brand Analytics and each company website (May, 2012)
  35. 35. Competitive advantages: selling carsRaising Buying Selling Renting carsmoney cars carsSales to final consumer Buffer: additional fleet Selling directly to final consumer cutting the intermediaries reduces our depreciation. Cars available for sale are used by the car rental division during peaks of demand. 35
  36. 36. Agenda1. The Company2. Drivers and opportunities3. Competitive advantages4. Financials 36
  37. 37. Highlights Reflexes of the tax reduction (IPI) for new cars from May 21, 2012 to August 31, 2012 that might be extended:  Drop in the residual value expected for cars after their useful life. In the 2Q12 an amount of R$100.1 million was recognized as additional depreciation  Increase of pre-owned car sales sold for fleet renewal: April: 3,876; May: 4,917 and June: 5,711 cars (all time high)  The Company expects that the reduction in sale prices will be offset by the reduction of purchase prices with the IPI reduction (with no impact on the CAPEX for fleet renewal) Utilization rate of 74.2% in the Car Rental division Free cash flow of R$242.3 million in the 1H12 37
  38. 38. Car Rental Division # daily rentals (thousand) 12,794 10,734 7,940 8,062 6,243 6,664 5,793 4,6683,411 3,179 3,3342005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Net revenues (R$ million) 980.7 802.2 565.2 585.2 532.3 428.0 472.4 346.1258.6 239.4 264.32005 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. 38
  39. 39. Fleet Rental Division # daily rentals (thousand) 9,603 8,044 6,437 7,099 5,144 4,625 5,248 4,1883,351 2,372 2,6372005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Net revenues (R$ million) 455.0 361.1 303.2 268.4 261.3 219.8 215.7 184.0142.0 131.8 111.02005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Revenues reflect the interest and depreciation assumptions at the time of the agreement. 39
  40. 40. Net Investment Fleet increase * (quantity) 18,649 9,178 9,930 8,642 65,934 10,346 7,957 59,950 7,342 4,608 44,211 47,285 50,772 (5,868) 43,161 8,124 38,050 34,281 34,519 (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. 41. Utilization rate – car rental division 69.7% 74.2%68.2% 68.9% 68.9% 68.2%1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 ...resulting in higher utilization rate. 41
  42. 42. End of period fleet Quantity 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. 42
  43. 43. Seminovos 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. 43
  44. 44. Car sales per street store Monthly average 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. 44
  45. 45. Consolidated net revenues R$ million 2,918.1 2,497.2 1,823.7 1,820.9 1,468.1 1,505.5 1,321.9 1,564.3 1,387.9 1,126.2 922.4854.9 980.8 762.7 850.5 693.3 706.4 789.6 588.8 1,450.0446.5 1,175.3 352.7 389.3 655.0 842.9 898.5 694.6 801.6408.4 537.4 353.7 400.32005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12 Rentals Seminovos In the 2Q12, net revenues grew due to the increase of 13.2% in rental revenues and 10.4% in Seminovos revenues 45
  46. 46. EBITDA R$ million 821.3 649.5 504.1 469.7 403.5 386.8 425.7 277.9 311.3 200.6 215.7 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12Divisions 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 non-recurring expenses. 46
  47. 47. Average depreciation per car Hot used car market Financial crisis effect 5,468.2 Reflex of the 2,546.0 2,577.0 1,683.9 2,062.3 IPI reduction 1,536.0 492.3 939.1 332.9 2005 2006 2007 2008 2009 2010 2011 Jan-Apr/12* 1H12* * Annualized 5,083.1 5,406.32,981.3 4,371.7 3,509.7 4,133.0 4,289.3 Reflex of the 2,383.3 2,395.8 IPI reduction 2005 2006 2007 2008 2009 2010 2011 Jan-Apr/12* 1H12* * Annualized Depreciation was impacted by the decrease in car prices due to the IPI reduction... 47
  48. 48. Consolidated net income R$ million 291.6 250.5 190.2 138.2 127.4 137.6 106.5 116.3 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% …reducing the net income of the period. Excluding the additional depreciation, 1H12 net income would have reached R$149.5 million. 48
  49. 49. Free cash flow - FCFFree cash flow - R$ 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 Company is still presenting strong cash generation. 49 (*) Without tecnical discount deduction up to 2010 (see item 18 – Glossary)
  50. 50. 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 (54.9) (78.9) Interest Dividends Net debt was reduced by R$108.5 million (-8.0%). 50
  51. 51. Debt profile R$ 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. 51
  52. 52. 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. 52
  53. 53. Spread Spread 24.80% 21.25% 18.70% 17.03% 16.94% 17.12% 11.2p.p. 15.10% 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. 54. Localiza ADR level ITicker Symbol: LZRFYCUSIP: 53956W300ISIN: US53956W3007Ratio: 1 Ordinary Share : 1 ADRExchange: OTCDepositary bank: Deutsche Bank Trust Company AmericasADR broker helpline: +1 212 250 9100 (New York) +44 207 547 6500 (London)E-mail: adr@db.comADR website: www.adr.db.comDepositary bank’s local custodian: Banco Bradesco S/A, Brazil 54
  55. 55. 2012 Macroeconomic scenario GDP evolution 4,25% Accumulated in 4 quarters2,70% 2,10% 1,90% 1,50% 1,30% 2011 1Q 12 2Q 12e 3Q 12e 4Q 12e 2013 Source: Department of Economics of Bradesco, as of 06/18/2012 Interest rate evolution End of period11,00% 9,75% 8,50% 7,50% 7,50% 7,50%4Q 11 1Q 12 2Q 12 3Q 12e 4Q 12e 1Q 13e 55 Source: BR Central Bank – Market forecast system as of 06/15/2012- Focus Bulletin
  56. 56. 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. 56

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