2. 2
1. Company overview
2. Main business divisions
Car Rental
Fleet Outsourcing
Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
Earnings release 4Q13
Agenda
3. 3
Company: milestones
Phase I – Rise to #1
1973 – Founded in Belo Horizonte/MG
Late 70’s - Acquisitions in the
Northeast of Brazil
1981 – Brazilian car rental leader in #
of branches
Phase II – Expansion
1984 – Expansion strategy by
adjacencies: Franchising
1991 – Expansion strategy by
adjacencies: Seminovos
1997 – PE firm DL&J enters at a market
cap of US$ 150 mm
1997 – Expansion strategy by
adjacencies: Fleet Outsourcing
Phase III – Reaching Scale
2005 – IPO: market cap of US$ 295 mm
2011 – Rated as investment grade by
Moody’s, Fitch and S&P in 2012
2012 – ADR level I
12/31/2013 – Market cap of US$3.0 bi
with ADTV of R$40.8 million
1973 1982 1983 2004 2005 2013
4. 4
Company: integrated business platform
Synergies:
bargaining power
cost reduction
cross selling
14.233 cars
193 locations in Brazil
63 locations in South America
35 employees
61.6% sold to final consumer
74 stores
1,020 employees
70,717 cars
3.8 million clients
286 locations
4,394 employees
32,809 cars
760 clients
350 employees
This integrated business platform gives Localiza flexibility and superior performance.
Based on the 4Q13
5. 5
Company: Business platform divisions
Car Rental
Localiza car rental rents to
individuals or businesses
at airports and other
locations.
The traditional backbone of
Localiza. With its giant fleet
that gets renewed annually,
it lays the foundation for all
scale effects captured by
the group as a whole.
Fleet Outsourcing
Total Fleet, offering
customized fleet for 2-3
years terms.
Total Fleet is seen as an
additional business that
generates value by
leveraging synergies
created by the integrated
platform approach.
Used car sales
Support area, with the
objective to sell the
Company’s used cars and
add know-how in buying
cars and estimating the
residual value.
As a support business
activity, Seminovos enables
the sell roughly 65% of
used cars directly to the
final customer, thereby
maximizing the residual
value of used rental cars.
Franchising
Supplementary business,
with the purpose to expand
the brand’s network.
Franchising is seen as a
primarily strategic business
by management – the
revenues generated are
low, however brand and
network expand at
minimum capital
expenditure.
6. 6
Net car sale
revenue
R$25.51 year cycle
Car Rental Financial Cycle
R$27.0
Car acquisition
1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax
Revenue
Spread
11.1p.p.
Total
1 ano
R$ % Seminovos % R$
Net revenues 19,7 100,0% 28,1 100,0% 47,8
Costs - fixed and variable (9,1) -46,1% (9,1)
SG&A (3,3) -17,0% (2,6) -9,4% (6,0)
Net revenues of car sold 25,5 90,6% 25,5
Book value of car sold (24,1) -85,8% (24,1)
EBITDA 7,3 36,8% 1,4 4,9% 8,6
Cars Depreciation (1,5) -5,2% (1,5)
Others depreciation (0,4) -1,9% (0,2) -0,8% (0,6)
Financial expenses (1,3) -4,6% (1,3)
Taxes (2,1) -10,5% 0,5 1,7% (1,6)
Net Income (Loss) 4,8 24,5% (1,1) -4,0% 3,7
NOPAT 4,6
ROIC 17,1%
Cost of debt after taxes 6,0%
Car Rental Seminovos
Per car soldPer operating car
7. 7
Net car sale
revenue
R$24.42 year cycle
Fleet Outsourcing Financial Cycle
Spread
11.1p.p.
R$33.3
Car aquisiton
1 2 3 4 5 6 19 20 21 22 23 24Expenses, interest and tax
Revenue
Total
2 anos
R$ % Seminovos % R$
Net revenues 36,9 100,0% 26,7 100,0% 63,7
Costs - fixed and variable (10,3) -28,0% (10,3)
SG&A (2,4) -6,5% (2,4) -8,9% (4,8)
Net revenues of car sold 24,4 91,1% 24,4
Book value of car sold (23,1) -86,2% (23,1)
EBITDA 24,2 65,5% 1,3 4,9% 25,5
Cars Depreciation (9,2) -34,3% (9,2)
Others depreciation (0,1) -0,2% - 0,0% (0,1)
Financial expenses (2,2) -8,2% (2,2)
Taxes (7,2) -19,6% 3,0 11,3% (4,2)
Net Income (Loss) 16,9 45,7% (7,0) -26,3% 9,9
Net Income (Loss) - per year 8,4 45,7% (3,5) -26,3% 4,9
NOPAT 5,7
ROIC 17,1%
Cost of debt after taxes 6,0%
Per operating car
Fleet Rental Seminovos
Per car sold
8. 8
Spread (ROIC minus cost of debt after taxes)
(*) 2008 and 2012 ROIC were calculated excluding additional fleet depreciation that was treated as equity loss since they were
extraordinary non-recurring events caused by external factors (IPI reduction for new cars), following the concepts recommended
by Stern Stewart.
10.9% 8.4% 8.8% 7.6% 7.3% 8.6% 6.3% 6.0%
18.7%
21.3%
17.0%
11.5%
16.9% 17.1% 16.1% 16.5%
2006 2007 2008 2009 2010 2011 2012 2013
7.8p.p. 12.9p.p. 8.2p.p.
4.0p.p.
9.6p.p. 8.5p.p. 10.5p.p.9.8p.p.
ROIC Cost of debt after taxes
Financial crisis effect
9. 505.9 608.2
745.2
883.1
1,087.1 1,096.3
1,382.1
1,605.4 1,703.0
2004 2005 2006 2007 2008 2009 2010 2011 2012
9
Rental revenues evolution
3.585,6 3.520,6 3.510,5 3.659,4 3.884,6 4.045,4 4.381,8 4.433,3 4.527,0
2004 2005 2006 2007 2008 2009 2010 2011 2012
Localiza’s rental revenues at constant prices
Sector’s revenue at constant prices (ex- Localiza)
The Company grew at an average of 4.2x GDP and 5.5x the sector.
GDP 5.7% 3.2% 4.0% 6.1% 5.2% -0.3% 7.5% 2.7% 1.0%
Average GDP growth: 3.9%
Source: ABLA (Brazilian Car Rental Association) and Localiza.
11. 11
Competitive advantages: raising money
Global Scale
National Scale
Localiza raises money with lower spreads when compared to Brazilian competitors.
As of March, 2014.
BBB Fitch
Baa3 Moody’s
BBB- S&P
BBB+ S&P B+ S&P B+ Fitch B1 Moody's
brAAA S&P
Aa1.br Moody’s
AAA(bra) Fitch
brAA- S&P
A+ (bra) Fitch
brA S&P
A (bra) Fitch
brA+ S&P
A+ (bra) Fitch
A(bra) Fitch
Raising
money
Buying
cars
Renting Cars
Selling
Cars
12. 12
Competitive advantages: buying cars
Localiza buys cars with better conditions due to the volume of purchases.
Number of cars purchased - 2012
* Includes Franchising
Localiza Unidas Locamerica
67,492
15,376
9,522
*
Source: each company website
Localiza’s share in the internal sales of the major
OEMs - 2013
2.6%
Raising
money
Buying
cars
Renting Cars
Selling
Cars
13. 110
145
51
13
The Company is present in 254 cities where the other largest networks do not operate.
Competitive advantages: renting cars
Know HowBrand Brazilian distribution
#ofbranches#ofcities
Localiza Hertz Unidas Avis
Source: Brand Analytics and each company website (Localiza and Peers, as of September , 2013)
477
306
Raising
money
Buying
cars
Renting Cars
Selling
Cars
343
86 71
38
14. 14
Sales to final consumer
Competitive advantages: selling cars
Selling directly to final consumer reduces depreciation.
Cars available for sale are used by car rental division during peaks of demand.
Raising
money
Buying
cars
Renting Cars
Selling
Cars
Buffer: additional fleet
15. 2012 Industry overview
Source: ABLA, Companies’ Financial Statements. **Ouro Verde: Net Rental Revenue, operates only fleet rental
***Investiment = Average shareholders’ Equity + Average Net Debt 15
Gross Rental Revenues
(R$ million)
1,703.0 435.6 336.9 807.5 151.1**
Fleet (End of period ) 109,194 33,187 29,252 22,200 15,836
ROIC (NOPAT/
Investment***)
17.3% 3.9% 6.9% 6.9% 8.9%
Net Debt/ EBITDA 1.4x 1.7x 2.9x 3.7x 3.3x
Net Debt/ Equity 0.9x 0.6x 1.4x 2.3x 4.0x
16. 16
1. Company overview
2. Main business divisions
Car Rental
Fleet Outsourcing
Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
Earnings release 4Q13
Agenda
20. 20
Source: Abla and each company’s website (September, 2013)
Off-airport market is still fragmented.
Airport locations Off-airport locations
Car Rental Locations in Brazil
21. 2012 Share – Car Rental
Source: Euromonitor for revenue , ABLA for fleet and Companies’ Financial Statements.
21
Rental Revenues
R$2,781.2 million
Others
53.8%
30.9%
4.6%
6.5%
Unidas
Fleet
210,506 cars
Characteristics of Car Rental network in Brazil:
Complex chain management
High fixed-cost structure
Market consolidated in airports and fragmented in off-airport locations
High barrier to entry
Capital intensive
35.5%41.8%
2.5%
Hertz
Others
46.8%
2.8%
Avis
6.1%
Unidas
2.1%
Avis
2.1
Hertz
22. 22
1. Company overview
2. Main business divisions
Car Rental
Fleet Outsourcing
Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
Earnings release 4Q13
Agenda
24. 24
Source: ABLA 2012 Yearbook and Datamonitor
Approximately 50% of targeted fleet is not outsourced.
Outsourced fleet penetration
Corporate fleet:
5,000,000*
Rented (outsourced) fleet:
279,042
32,809
Brazilian Market World
5.4%
8.9%
13.3%
16.5%
24.5%
37.4%
46.9%
58.3%
B
razil
PolandC
zech
Republic
G
erm
any
France
Spain
U
k
H
olland
Drivers
*Estimated
25. 2012 Share – Fleet Outsourcing
25
Others
65.5%
16.0%
1.6%
Unidas
Locamérica
Rental Revenues
R$3,448.8 million
Others
70.1%
11.5% 0.9%
Unidas
Locamérica
Fleet
279,042 cars
Characteristics of the Fleet Outsourcing business in Brazil:
Scale of little relevance after initial scale (10,000 cars)
Risk of forecast of car residual value by the end of the contract (depreciation)
Low entry barrier
17.6%
12.4%
Source: Euromonitor for revenue , ABLA for fleet and Companies’ Financial Statements.
7.1%
9.8%
7.0%
10.5%
26. 26
1. Company overview
2. Main business divisions
Car Rental
Fleet Outsourcing
Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
Earnings release 4Q13
Agenda
27. 27
Combining Localiza’s brand with a growing network of stores
enables the Company to continuously sell thousands of cars at market prices.
# of points of sale
Car sales – operating data
26
32 35
49 55
66
73 74
2006 2007 2008 2009 2010 2011 2012 2013
+1
28. 28
Income increase and credit availability are the major drivers for car sales.
Source: O Estado de São Paulo, as of 08/16/13 (based on researches of Sindipeças).
Used car sales drivers: affordability and penetration
# of inhabitants per car (2012) # of inhabitants per car - Brazil
5.2
4.2
4.0
3.6
2.1
2.0
1.9
1.8
1.2
Brazil
Argentina
Russia
South Korea
Japan
France
Germany
United Kingdon
USA
8.0 7.9
7.4
6.9 6.5
5.9 5.5 5.2
2005 2006 2007 2008 2009 2010 2011 2012
29. 2.9
3.8
6.0 5.8
8.0
9.9
10.7
12.9
7.0
6.7
7.1 7.3 7.1
8.4
8.9 9.0
1.6 1.8
2.3
2.7
3.0
3.3 3.5 3.6
29
4.4x
3.7x
3.1x 2.7x
2.4x 2.5x 2.5x
2005 2006 2007 2008 2009 2010 2011 2012
2.6x
Brazilian car market: new x used car market and affordability
Individuals with
affordability to
buy a car*
New cars
Used cars
Source: FENABRAVE (Autos + light commercial) and Bradesco
* Population with affordability to buy a new compact car (R$25,000) with 20% downpayment, prices as of December 2012
30. 30
2012 Up to 2 years
409.121
2013 Brand new
3,579,903
2013 Used cars
9,434,225
0.7% 1.8% 13.9%
Car sales – operating data
Source: Anfavea and Fenabrave
23.174
30.093
34.281 34.519
47.285 50.772
56.644
62.641
12.764
17.999
2006 2007 2008 2009 2010 2011 2012 2013 4Q12 4Q13
# of cars sold (Quantity)
31. 31
Examples
• Dealers
• Fiat, VW, Ford, GM most
successful
• Auto Brasil
• Rental operators
• Locamerica, Hertz
• Retailers
• “Loja do carro”
• “Auto malls” and
“Cidade do
automóvel”
Strengths*
• Brand and perceived
image/ experience
• Support often directly
from the OEM’s
• Flexibility in trade-in cars
• Strong media presence
• Tailored to popular
customer demand at
purchase, hence likely
to be an attractive value
proposition when for
sale
• Often appeal to lower
income classes, with
older cars
• Occasionally
specialized in niches
• Comfort and
convenience
• Variety of models
and brands
• Flexibility in
exchange
Weaknesses*
• Used cars not a core
business
• Cars often older than 2
years
• Stigma about heavy
usage during rental car
years
• Weak retail network
• Geographical
concentration (SP)
• Lower media presence
• No brand recognition
(lower reputation
market)
• Financing options with
higher interest rates
• Lower media
presence
• Cars often older than
2 years
• It hasn’t been
successful
Points of sale • 3,714 (Anfavea)
• 25 (Unidas, Locamerica,
Avis and Hertz website).
• 45,600 (Fenauto) • 71 (Fenauto)
Main players
*Source: Roland Berger
32. 32
1. Company overview
2. Main business divisions
Car Rental
Fleet Outsourcing
Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
Earnings release 4Q13
Agenda
33. 33
2013 Consolidated breakdown
R$ million
Net Revenues EBITDA
11%
41%
48%
50%
16% 34%
Company’s profitability comes from Car Rental and Fleet Outsourcing Divisions.
EBIT*
40%
60%
Net revenues EBITDA EBIT Net income
1,183.0 440.0 392.3 225.3
575.9 377.3 259.8 159.0
1,747.3 99.2 * *
Consolidated 3,506.2 916.5 652.1 384.3
*Seminovos results recorded in the Car Rental and Fleet Outsourcing Division.
35. 35
Consolidated EBITDA
R$ million
311.3
403.5
504.1 469.7
649.5
821.3 875.6 916.5
226.3 236.0
2006 2007 2008 2009 2010 2011 2012 2013 4Q12 4Q13
Excluding accessories and freight for new cars, recorded in the cost line,
Car Rental EBITDA margin would be 39.9% in 4Q13 and 39.3% in 2013.
Divisions 2006 2007 2008 2009 2010 2011 2012 2013 4Q12 4Q13
Car Rental 43.4% 46.0% 45.9% 41.9% 45.3% 46.9% 42.7% 39.3% 43.1% 39,9%
Fleet Outsourcing 71.4% 71.3% 69.1% 68.7% 68.0% 68.6% 67.2% 65.9% 67.8% 65,2%
Rental Consolidated 52.9% 54.5% 53.3% 51.1% 52.3% 53.8% 50.8% 48.2% 51.2% 48,0%
Used Car Sales 4.6% 5.5% 5.6% 1.1% 2.6% 2.8% 4.2% 5.7% 3.9% 4.9%
EBITDA margin excluding accessories and freight for new cars in 2012 and 2013:
36. 2,383.3 2,395.8
5,083.1
4,371.7
3,509.7
4,133.0
4,311.3
4,592.31,096.9
2006 2007 2008 2009 2010 2011 2012 2013
939.1
332.9
2,546.0 2,577.0
1,536.0 1,683.9
1,895.8
1,452.4
2,076.6
2006 2007 2008 2009 2010 2011 2012 2013
36
Average depreciation per car
in R$
Robust used-car market
Financial crisis and
IPI reduction effect
Robust used-car market
Financial crisis and
IPI reduction effect
Depreciation Non recurring additional depreciation - IPI Effect
Depreciation Non recurring additional depreciation - IPI Effect
3,972.4
5,408.2
37. 138.2
190.2
127.4 116.3
250.5
291.6
240.9
384.3
86.1
90.0
2006 2007 2008 2009 2010 2011 2012 2013 4Q12 4Q13
37
Consolidated net income
R$ million
* Pro forma 2012 net income excluding additional depreciation, net of income tax.
336.3 *
Record
95.2 *
Strong net income growth even in lower-growth scenario.
38. 38
1. Company overview
2. Main business divisions
Car Rental
Fleet Outsourcing
Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
Earnings release 4Q13
Agenda
39. 3939
Free cash flow
(*) Without the technical discount up to 2010
Free cash flow - R$ million 2006 2007 2008 2009 2010 2011 2012 2013
EBITDA 311.3 403.5 504.1 469.7 649.5 821.3 875.6 916.5
Used car sale revenue, net from taxes (588.8) (850.5) (980.8) (922.4) (1,321.9) (1,468.1) (1,520.0) (1,747.3)
Depreciated cost of cars sold (*) 530.4 760.0 874.5 855.1 1,203.2 1,328.6 1,360.2 1,543.8
(-) Income tax and social contribution (42.7) (63.4) (52.8) (49.0) (57.8) (83.0) (100.9) (108.5)
Change in working capital (4.8) 13.3 (44.8) (11.5) 54.5 (83.9) 37.1 2.9
Cash provided before investment 205.4 262.9 300.2 341.9 527.5 514.9 652.0 607.4
Used car sale revenue, net from taxes 588.8 850.5 980.8 922.4 1,321.9 1,468.1 1,520.0 1,747.3
Car investment for renewal (643.3) (839.0) (1,035.4) (947.9) (1,370.1) (1,504.5) (1,563.3) (1,818.7)
Net investment for fleet renewal (54.5) 11.5 (54.6) (25.5) (48.2) (36.4) (43.3) (72.4)
Fleet renewal – quantity 23,174 30,093 34,281 34,519 47,285 50,772 56,644 62,641
Investment, other property and intangibles
investments
(32.7) (23.7) (39.9) (21.0) (51.1) (63.0) (80.2) (54.0)
Free cash flow before growth and before interest 118.2 250.7 205.7 295.4 428.2 415.5 528.5 481.0
Investment on cars for fleet (growth) /reduction (287.0) (221.9) (299.9) (241.1) (540.3) (272.0) (55.5) (209.4)
Change in accounts payable to car suppliers 222.0 (51.0) (188.9) 241.1 111.3 32.7 (116.9) 89.7
Fleet growth (65.0) (272.9) (488.8) 0.0 (429.0) (239.3) (172.4) (119.7)
Fleet increase / (reduction) – quantity 10,346 7,957 9,930 8,642 18,649 9,178 2,011 7,103
Free cash flow after growth and before interest 53.2 (22.2) (283.1) 295.4 (0.8) 176.2 356.1 361.3
40. 40
Changes in net debt
R$ million
- 1,332.8(110.6)
Financial
expenses
(65.5)
Dividends (*)
Net debt
12/31/2013
FCF
361,3
-1,231.2
Net debt
12/31/2012
FCF after financial
expenses
250.7
(36.8)
Company’s
share buybacks
(250.0)
Extraordinary
dividends
(*) Includes interest own capital paid in the period
R$250 million extraordinary dividend paid in 2013.
315,5
41. 41
Debt - ratios
Net debt vs. Fleet value
BALANCE AT THE END OF
PERIOD
2006(*) 2007(*) 2008(*) 2009(*) 2010(*) 2011 2012 2013
Net debt / Fleet value 36% 51% 72% 57% 52% 51% 48% 48%
Net debt / EBITDA 1.4x 1.9x 2.5x 2.3x 2.0x 1.7x 1.4x 1.5x
Net debt / Equity 0.7x 1.3x 2.0x 1.5x 1.4x 1.2x 0.9x 1.0x
EBITDA / Net financial expenses 4.8x 5.4x 3.8x 4.2x 5.0x 4.6x 6.3x 8.3x
(*) From 2006 to 2010, ratios based on USGAAP financial statements.
Net debt Fleet value
Comfortable debt ratios.
440.4
765.1
1,254.5
1,078.6
1,281.1 1,363.4 1,231.2 1,332.81,247.7
1,492.9
1,752.6 1,907.8
2,446.7
2,681.7 2,547.6 2,797.9
2006 2007 2008 2009 2010 2011 2012 2013
42. 42
Debt maturity profile (principal)
R$ million
The Company continues presenting a strong cash position and comfortable debt maturity profile.
-
245.9 185.7
641.4
511.0
221.0 247.0
100.0 100.0
2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash
1,010.7
1,073.0
43. 43
Localiza Level I ADR
Ticker Symbol: LZRFY
CUSIP: 53956W300
ISIN: US53956W3007
Ratio: 1 Common 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
44. 44
Disclaimer
Disclaimer
The 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 to
be 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 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.
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 in
the United States will be made by means of an offering memorandum that may be obtained from any underwriters we may appoint in connection with an offering of securities in future.
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 herein
shall form the basis of any contract or commitment whatsoever.
Website: www.localiza.com/ir E-mail: ri@localiza.com Phone: 55 31 3247-7024
Roberto Mendes
CFO and IR
Nora Lanari
Head of IR
Eugênio Mattar
CEO