This document summarizes Localiza Rent a Car's 2Q14 results. Key highlights include an 11.3% increase in consolidated net revenues to R$1.849 billion. EBITDA grew 7.3% in 2Q14 to R$241.6 million. Net income was impacted by higher interest rates but partially offset by increased EBITDA and lower car depreciation. Free cash flow was R$217.2 million in 1H14 and the strong cash generation allowed net debt to remain stable at R$1.332 billion despite investments in a new headquarters.
7. Cars purchased Cars sold
1,060.9
1,335.3
1,204.2
1,910.4 1,776.5
1,618.8
2,026.2
944.3 1,021.5
602.8
704.4
850.5
980.8 922.4
1,321.9 1,468.1 1,520.0
1,747.3
744.6
929.3
380.7 443.6
2007 2008 2009 2010 2011 2012 2013 1H13 1H14 2Q13 2Q14
7
Net investment
Fleet Expansion* (quantity)
24,184 cars were purchased and 15,889 were sold in 2Q14, witha net investment of R$260.8 million .
Net Investment (R$ million)
38,050
44,211 43,161
65,934
59,950 58,655
69,744
33,587 35,064
21,238 24,184
30,093
34,281 34,519
47,285 50,772
56,644
62,641
26,603
33,338
13,669 15,889
2007 2008 2009 2010 2011 2012 2013 1H13 1H14 2Q13 2Q14
7,957
9,930
8,642
9,178 2,011
7,10318,649
6,984
7,569
210.4
308.4
98.8
354.5 281.8
588.5 278.9
199.7
Purchases (includes accessories) Used car sales net revenues
* It does not include theft / crashed cars.
222.1
1,726
8,295
92.2
260.8
8. 8
Sales by quarter
Quantity
As expected, the World Cup impacted Seminovos car sales in June.
# Number of cars sold
Result of the OEM’s delays in
delivering cars
13,285
14,504 15,091
13,764 12,934 13,669
18,039 17,999 17,449
15,889
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
9. 9
End of period fleet
Quantity
Better utilization rate in the Car Rental Division allowed volumes growth of 10.4% in 1H14
and fleet to increase by only 3.3%.
35,686 39,112 47,517
61,445 64,688 65,086 70,717 70,971 73,281
17,790
23,403
22,778
26,615
31,629 32,104
32,809 32,489 31,814
2007 2008 2009 2010 2011 2012 2013 1H13 1H14
53,476
Car Rental Fleet Rental
62,515 70,295
103,526
96,317
88,060
97,190
103,460 105,095
10. 655.0 842.9 898.5 1,175.3 1,450.0 1,646.7 1,758.9
861.9 920.3
432.4 461.0
850.5
980.8 922.4
1,321.9
1,468.1
1,520.0 1,747.3
744.6 929.3
380.7 443.6
2007 2008 2009 2010 2011 2012 2013 1H13 1H14 2Q13 2Q14
10
Consolidated net revenues
R$ million
Consolidated net revenues increased by 11.3% in 2Q14.
Car Rental Used car sales
1,505.5
1,823.7
2,918.1 3,506.2
1,606.5
1,820.9
2,497.2
3,166.7
904.6
1,849.6
813.1
11. 11
Consolidated EBITDA
R$ million
EBITDA grew 7.3% in the 2Q14.
403.5 504.1 469.7
649.5
821.3 875.6 916.5
442.3 490.6
225.1 241.6
2007 2008 2009 2010 2011 2012 2013 1H13 1H14 2Q13 2Q14
(*)Up to 2011, accessories and freight of new cars were recorded as permanent assets and depreciated over the cars’ useful life.
From 2012 on, such values have been accounted directly in the cost line, impacting EBITDA but reducing depreciation costs.
Divisions 2007* 2008* 2009* 2010* 2011* 2012 2013 1H13 1H14 2Q13 2Q14
Car Rental 46.0% 45.9% 41.9% 45.3% 46.9% 40.9% 36.8% 35.7% 39.1% 35.9% 38.1%
Fleet Rental 71.3% 69.1% 68.7% 68.0% 68.6% 66.4% 65.5% 66.1% 61.7% 66.2% 61.5%
Rental Consolidated 54.5% 53.3% 51.1% 52.3% 53.8% 49.3% 46.5% 46.1% 46.3% 46.4% 45.4%
Used Car Sales 5.5% 5.6% 1.1% 2.6% 2.8% 4.2% 5.7% 6.0% 7.0% 6.4% 7.3%
12. 2,395.8
5,083.1
4,371.7
3,509.7 4,133.0
4,311.3
4,592.3 4,104.91,096.9
2007 2008 2009 2010 2011 2012 2013 1H14
332.9
2,546.0 2,577.0
1,536.0 1,683.9
1,895.8
1,452.4 1,360.9
2007 2008 2009 2010 2011 2012 2013 1H14
12
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
2,076.6
Average depreciation per car (R$) – Car Rental
Average depreciation per car (R$) – Fleet Rental
Annualized
Annualized
13. 190.2
127.4 116.3
250.5
291.6
240.9
384.3
192.3 206.4
103.4 100.6
2007 2008 2009 2010 2011 2012 2013 1H13 1H14 2Q13 2Q14
13
Consolidated net income
R$ million
* Pro forma 2012 net income excluding additional depreciation related to the IPI tax reduction, net of income tax.
336.3 *
2Q14 net income was impacted by higher interest rates,
partially offset by an increase in the EBITDA and a reduction in the car depreciation.
14. 14
Free cash flow - FCF (*) Without the technical discount up to 2010
Free cash flow - R$ million 2007 2008 2009 2010 2011 2012 2013 1H14
Operations
EBITDA 403.5 504.1 469.7 649.5 821.3 875.6 916.5 490.6
Used car sale revenue, net from taxes (850.5) (980.8) (922.4) (1,321.9) (1,468.1) (1,520.0) (1,747.3) (929.3)
Depreciated cost of cars sold (*) 760.0 874.5 855.1 1,203.2 1,328.6 1,360.2 1,543.8 818.4
(-) Income tax and social contribution (63.4) (52.8) (49.0) (57.8) (83.0) (100.9) (108.5) (72.7)
Change in working capital 13.3 (44.8) (11.5) 54.5 (83.9) 37.1 2.9 (70.5)
Cash provided before investment 262.9 300.2 341.9 527.5 514.9 652.0 607.4 236.5
Capex-
Renewals
Used car sale revenue, net from taxes 850.5 980.8 922.4 1,321.9 1,468.1 1,520.0 1,747.3 929.3
Car investment for renewal (839.0) (1,035.4) (947.9) (1,370.1) (1,504.5) (1,563.3) (1,819.7) (972.4)
Net investment for fleet renewal 11.5 (54.6) (25.5) (48.2) (36.4) (43.3) (72.4) (43.1)
Fleet renewal – quantity 30,093 34,281 34,519 47,285 50,772 56,644 62,641 33.338
Investment, other property and intangibles investments (23.7) (24.0) (20.8) (50.6) (59.9) (77.8) (47.5) (25.6)
Free cash flow before growth, new HQ and interest 250.7 221.6 295.6 428.7 418.6 530.9 487.5 167.8
Capex-
Growth
Investment on cars for fleet (growth) (221.9) (299.9) (241.1) (540.3) (272.0) (55.5) (209.4) (50.5)
Change in accounts payable to car suppliers (51.0) (188.9) 241.1 111.3 32.7 (116.9) 89.7 99.9
Fleet growth (272.9) (488.8) 0.0 (429.0) (239.3) (172.4) (119.7) 49.4
Fleet increase / (reduction) – quantity 7,957 9,930 8,642 18,649 9,178 2,011 7,103 1,726
Free cash flow after growth, and before interest and before
new headquarters
(22.2) (267.2) 295.6 (0.3) 179.3 358.5 357.8 217.2
Capex–
HQ
Investment in the construction of the new headquarters - (15.9) (0.2) (0.5) (3.1) (2.4) (6.5) (18.8)
Marketable securities – new headquarters - - - - - - - (87.5)
New headquarters construction - (15.9) (0.2) (0.5) (3.1) (2.4) (6.5) (106.3)
Free cash flow before interest (22.2) (283.1) 295.4 (0.8) 176.2 356.1 361.3 110.9
15. 15
Changes in net debt
R$ million
- 1,368.1
(76.9)
Financial
expenses
(106.3)
New headquarters
Net debt
06/30/2014
FCF(*)
217.2
-1,332.8
Net debt
12/31/2013
FCF after financial expenses
140.3
The strong cash generation allowed net debt to remain stable,
even after the investments in the new headquarters.
(69.3)
Dividends
(*) Before new headquarters capex
16. 184.7 238.6
488.8 511.0
221.0 294.5 195.0 147.5
2014 2015 2016 2017 2018 2019 2020 2021
245.9 185.7
641.4
511.0
221.0 247.0 100.0 100.0
2014 2015 2016 2017 2018 2019 2020 2021
16
Debt maturity profile (principal)
R$ million
The Company monitors the market on a regular basis and changes its debt portfolio
to improve its debt profile and/or reduce its financial costs.
Cash
935.1
912.1
At the end of the Semester – June 30, 2014
Cash
1,010.7
1,073.0
At the beginning of the Semester – January 1, 2014
17. 765.1
1,254.5 1,078.6
1,281.1 1,363.4 1,231.2 1,332.8 1,368.11,492.9
1,752.6 1,907.8
2,446.7
2,681.7 2,547.6
2,797.9 2,903.0
2007 2008 2009 2010 2011 2012 2013 1H14
17
Debt - ratios
Net debt vs. Fleet value
BALANCE AT THE END OF PERIOD 2007(*) 2008(*) 2009(*) 2010(*) 2011 2012 2013 1H14
Net debt / Fleet value 51% 72% 57% 52% 51% 48% 48% 47%
Net debt / EBITDA** 1.9x 2.5x 2.3x 2.0x 1.7x 1.4x 1.5x 1.4x
Net debt / Equity 1.3x 2.0x 1.5x 1.4x 1.2x 0.9x 1.0x 0.9x
EBITDA / Net financial expenses 5.4x 3.8x 4.2x 5.0x 4.6x 6.3x 8.3x 6.4x
(*) From 2007 to 2010, ratios based on USGAAP financial statements.
**Annualized
Net debt Fleet value
Comfortable debt ratios.
18. 18
ROIC versus cost of debt after taxes
8.4% 8.8% 7.6% 7.3% 8.6%
6.3% 6.0% 7.7%
21.3%
17.0%
11.5%
16.9% 17.1% 16.1% 16.5% 18.7%
2007 2008 2009 2010 2011 2012 2013 1H14
12.9p.p.
8.2p.p.
4.0p.p.
9.6p.p. 8.5p.p. 11.0p.p.
9.8p.p.
The Company focuses on adding value to shareholders.
ROIC Cost of debt after taxes
Financial
crisis effect
10.5p.p.
Annualized
19. Thank You!
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 projections 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 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, invitation or solicitation of an offer to subscribe to or purchase any securities. Neither this presentation nor anything
contained herein shall form the basis of any contract or commitment whatsoever.
www.localiza.com/ri
Email: ri@localiza.com
Tel: 55 31 3247-7024
Disclaimer