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Institucional Presentation - May/16
The document provides an overview of Localiza, the 25th most valuable brand in Brazil. It summarizes the company's history since 1973, outlines its main business divisions of car rental, fleet rental, and used car sales. It highlights Localiza's competitive advantages such as scale in vehicle purchases, brand recognition, and innovation which allow it to raise funds at better rates and maintain high customer satisfaction. Financial information shows Localiza has leading profitability metrics like ROIC compared to competitors, demonstrating strong performance.
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Institucional Presentation - May/16
- 1. May, 2016 The 25thmost valuable brand in Brazil. Source:
- 2. 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 1Q16 Agenda 2
- 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 – Expansion strategy by adjacencies: Fleet Rental 1997 – PE firm DL&J enters at a market cap of US$ 150 mm 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 03/31/2016 – Market cap of about US$1.8 bi with ADTV of US$8.2 million 1973 1982 1983 2004 2005 2015 3
- 4. Company: integrated businessplatform Synergies: bargaining power cost reduction cross selling 14,037 cars 172 locations in Brazil 70 locations in South America 32 employees 47.3% sold to final consumer 78 stores 48 cities 995 employees 68,901 cars +5.7 million clients 323 locations 4,719 employees 32,228 cars 859 clients 386 employees Based on the 1Q16 4 Car Rental Fleet Rental SeminovosFranchising This integrated business platform gives Localiza flexibility and superior performance.
- 5. 5 High fixed cost Standardfleet 1 year cycle High entry barriers Gains of scale Intensive capital Consolidated in airport market Fragmented off airport market Support area Reduces depreciation Know How of used cars market Low dependence on intermediates Supplementary business Important for distribution High profitability Low contribution in results Company: Business platform divisions Car Rental Rents to individuals and companies at airports and off airport locations. Franchising Contributes to expand the Localiza’s network. Fleet Rental Outsources fleet for 2-3 years term contracts. Used Car Sales Sells the used cars mainly to final consumers after the rental and estimates the residual values. Low fixed cost Customized fleet 3 years cycle Low entry barriers Intensive capital
- 6. 6 Net car sale revenue R$28.51year cycle Car Rental Division - 2015 Financial Cycle Per car R$31.6 Average car price (past 2 years) 1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax Revenue Total 1 year R$ % R$ % R$ Net revenues 20.1 100.0% 31.9 100.0% 52.1 Costs - fixed and variable (9.9) -49.1% (9.9) SG&A (3.8) -19.1% (3.4) -10.7% (7.2) Net revenues of car sold 28.5 89.3% 28.5 Book value of car sold (26.6) -83.3% (26.6) EBITDA 6.4 31.8% 1.9 6.1% 8.3 Cars Depreciation (0.6) -1.9% (0.6) Others depreciation (0.4) -1.8% (0.1) -0.4% (0.5) Financial expenses (2.2) -6.9% (2.2) Taxes (1.8) -9.0% 0.3 1.0% (1.5) Net Income (Loss) 4.2 21.0% (0.7) -2.3% 3.5 NOPAT 5.0 ROIC 16.0% Cost of debt after taxes 9.5% Car Rental Seminovos Per car soldPer operating car
- 7. 7 Net car sale revenue R$28.4 3year cycle Fleet Rental Division - 2015 Financial Cycle Per car 1 2 3 4 5 6 31 32 33 34 35 36Expenses, interest and tax Revenue R$39.0 Average car price (past 3 years) Total 3 years R$ % Seminovos % R$ Net revenues 57.6 100.0% 31.2 100.0% 88.8 Costs - fixed and variable (17.9) -31.1% (17.9) SG&A (3.9) -6.7% (2.8) -9.1% (6.7) Net revenues of car sold 28.4 90.9% 28.4 Book value of car sold (24.3) -77.9% (24.3) EBITDA 35.8 62.2% 4.1 13.0% 39.9 Cars Depreciation (11.8) -37.8% (11.8) Others depreciation (0.2) -0.4% (0.2) -0.6% (0.4) Financial expenses (6.0) -19.4% (6.0) Taxes (10.7) -18.6% 4.2 13.4% (6.5) Net Income (Loss) 24.9 43.3% (9.8) -31.4% 15.2 Net Income (Loss) - per year 8.3 43.3% (3.3) -31.4% 5.1 NOPAT 6.5 ROIC (it considers the effect of the average book value of the car in its useful life) 16.6% Cost of debt after taxes 9.5% Per operating car Fleet Rental Seminovos Per car sold
- 8. 8 2015 Consolidated breakdown R$million R$ 150 16% R$ 378 40% R$ 407 44% R$ 297 40% R$ 438 60% Net Revenues R$3,928 EBITDA R$935 R$ 2,045 52% R$ 608 16% R$ 1,275 32% EBIT* R$735 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions Company’s profitability comes from Car Rental and Fleet Rental Divisions.
- 9. Raising money Buying cars Renting CarsSelling Cars Cash to renew the fleet or pay debt $ Profitability comes from rental divisions Competitive advantages $ 9 42 years of experience in managing assets and generating value.
- 10. Competitive advantages: raisingmoney Global Scale National Scale As of April, 2016. BBB- Fitch Ba2 Moody’s BB+ S&P Baa1 Moody´s BBB+ S&P B1 Moody´s B+ S&P Ba3 Moody´s BB- S&P BB- Fitch brAA+ S&P Aa2.br Moody’s AAA(bra) Fitch brA+ S&P A+ (bra) Fitch brA S&P A- (bra) Fitch brAA- S&P AA- (bra) Fitch A(bra) Fitch 10 Investment grade: lower spreads and longer tenors Source: Bloomberg and companies website Raising money Buying cars Renting Cars Selling Cars $ Localiza raises money with better conditions then its competitors.
- 11. 11 Competitive advantages: buyingcars Number of cars purchased – 2015 * Includes Franchising. 68,319 37,444 19,357 13,068 Localiza Movida Unidas Locamerica * Source: each company website and ANFAVEA Localiza’s share in the internal sales of the major OEMs - 2015 4.2% Raising money Buying cars Renting Cars Selling Cars $ Localiza buys cars with better conditions due to the volume of purchases. 7,600 75,919 Purchase antecipation of Dec/14
- 12. Raising money Buying cars Renting CarsSelling Cars 361 134 67 94 Localiza Unidas Hertz Movida 12 Competitive advantages: renting cars Brand Brazilian distribution #ofbranches#ofcities Source: Each company website on 04/28/2016, 1Q16 Earnings Release for Localiza and 4Q15 Earnings Release for Movida, Unidas and Hertz 452 100 196 156 Localiza Competitors 495 $ The Company is present in 180 cities where the other largest networks do not operate.
- 13. Raising money Buying cars Renting CarsSelling Cars 13 Localiza Express® Self-service that provides fast service, reducing queues and scalability to service. Localiza Way® New platform to offer value-added services Mobile Checklist More quality, control and agility in providing cars for rental Fast Checkout More operational productivity and agility in returning the cars after rental Connected Shuttle Optimization of customer shuttle service at airports Anti fraud Taylor-made solution for fraud prevention in car rentals Competitive advantages: Innovation $ Constant innovations allow maintenance of the premium service.
- 14. “In a scalefrom 0 (zero) to 10, how much would you recommend Localiza to a friend or colleague?” Competitive advantages: Client satisfaction 80.7% *Range of Net Promoter Scores (NPS) Across Industries in USA *Source:Temkin Group Q3 2015 Consumer benchmark Survey % of Promoters % de Detractors Score between 9 and 10 = 85.6% Score between 0 and 6 = 4.6% YTD December/2015 Satisfaction Index: NPS – Net Promoter Score Localiza: 1st place in the category Car rental. 14 Raising money Buying cars Renting Cars Selling Cars $ Low High NPS Avg. NPS As of December, 2015.
- 15. 15 Integrated technology solutionthat increases competitive intelligence and leverages productivity gains. CONNECTED FLEET Integrated mobile solution to fleet rental services for drivers and contract manager. MOBILE SOLUTION Rapid diagnosis and friendly vision of the fleet by the customer. ONLINE FLEET RENTAL Competitive advantages: Innovation Raising money Buying cars Renting Cars Selling Cars $ Differentiated offer with higher added value to the customer.
- 16. Raising money Buying cars Renting CarsSelling Cars 16 Sales to final consumer Competitive advantages: selling cars Buffer: additional fleet during peaks of demand Information/mobility: Ipad for Salesmen • Support sale • Access to the database • Customer registration • Agility in car sales $ Sales center: 20k incoming calls per month with 55% visits to stores scheduled. Distribution channel: 200 cities and 1,900 customers.
- 17. 17 ROIC versus costof debt after taxes The Company presented a positive spread of 5.7p.p. despite the adverse scenario and a significant increase in the interest rate 7.3% 8.6% 6.3% 6.0% 8.0% 9.5% 10.2% 16.9% 17.1% 16.1% 16.5% 17.5% 17.0% 15.9% 2010 2011 2012 2013 2014 2015 1Q16 ROIC Cost of debt after taxes 9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p. 7.5p.p. 5.7p.p. 2010 to 2014 ROIC considered income tax rate of 30.0% 2015 and 1Q16 ROIC considered income tax rate of 24.5% Annualized
- 18. Localiza vs. players Profitability Source:Companies’ Financial Statements 18 ROIC 2015 ROE 2015 Fleet RAC+Fleet Rental RAC+Fleet Fleet Rental Fleet Rental RAC+Fleet Rental 124,695 43,342 31,184 28,813 53,439 Reference ROIC = NOPAT (considering the effective tax rate) / (Average net debt + average equity) ROE = Net income / Equity at the beginning of the year 17.0% 9.3% 10.5% 6.5% 8.4% Localiza Unidas Locamerica Ouro Verde JSL Consolidada 24.3% 6.2% 6.0% 5.0% 4.5% Localiza Unidas Locamerica Ouro Verde JSL Consolidada
- 19. 19 Net Debt /EBITDA - 2015 Net Debt / Equity - 2015 Source: Companies’ Financial Statements. For Unidas and JSL Confirming is included in net debt. Localiza vs. players Debt ratios 1.7x 2.5x 2.9x 3.8x 4.3x Localiza Unidas Locamerica Ouro Verde JSL Consolidated 0.8x 1.1x 2.0x 9.7x 4.6x Localiza Unidas Locamerica Ouro Verde JSL Consolidated
- 20. 20 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 1Q16 Agenda
- 21. 21 Car Rental overview Compactcars 46.1%Others 53.9% 2015 Fleet composition 76,755 cars Corporate fleet size 65,086 70,717 77,573 76,755 68,901 2012 2013 2014 2015 1Q16 Car rental distribution (Brazil) 474 479 476 494 495 2012 2013 2014 2015 1Q16
- 22. 22 Drivers Source: BCB andLocaliza rates 151 180 200 240 260300 350 380 415 465 510 545 622 678 724 788 51% 38% 37% 35% 31% 27% 22% 20% 18% 16% 15% 15% 13% 13%12% 11% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Monthly minimum salary (R$) Daily rental price over minimum salary (%) Car rental affordability Source: IPEADATA and Localiza’s loyalty program. 6 million 84 million Adult population (age > 20 years) Class A+B+C 15 million Adult population (age > 20 years) Class A+B Increasing affordability and low penetration in leisure trips brings growth opportunities.
- 23. 23 Drivers # domestic airtraffic passengers In million Infrastructure investment prospects 2015-2018 (in US$ billion) Source: BNDES June, 2015. 70 82 89 90 96 122 2010 2011 2012 2013 2014 2017E Source: ANAC 2017 estimates: BOEING 89.4 57.9 27.2 21.3 17.0 16.6 12.3 6.8 Energy Telecoms Highways Urban Mobility Ports Sanitation Railways Airports The strong pipeline of investments tend to benefit the corporate segment. Air traffic growth supporting demand at the airports.
- 24. 24 Source: RAIS, eachcompany’s website on 04/28/2016 and Localiza´s 1Q16 Earnings Release Airport locations Off-airport locations Car Rental Locations in Brazil Off-airport market is still fragmented.
- 25. 25 Market Share –Car Rental 2015 Source: ABLA and Companies’ Financial Statements and estimates. Localiza’s market share is higher than the 2nd and 3rd players together. # of companies: 7,455 Fleet: 375.4k 20.4% 2.4% 6.0% 9.9% 49.9% 11.4% Movida 37.1k Unidas 22.6k Others 187.2k 22.8%New data basis 42.9k 76.8k 8.8k Reference: ABLA increased data collection basis for mapping car rental market in 2015, the number of Car Rental Locations reached 7.455 from 5.624 in 2014 and fleet went to 375,4k from 332,5k in 2014.
- 26. 26 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 1Q16 Agenda
- 27. 27 Number of clients FleetRental overview Compact cars 34.9% Others 65.1% 2015 Fleet composition 33,948 cars 729 760 798 849 859 2012 2013 2014 2015 1Q16 End of period fleet 32,104 32,809 34,312 33,948 32,228 2012 2013 2014 2015 1Q16
- 28. 28 Source: ABLA, Datamonitorand Localiza Rented fleet penetration Corporate fleet: 4,000,000* Rented fleet: 440,737 33,948 Brazilian Market World 11.0% 8.9% 13.3% 16.5% 24.5% 37.4% 46.9% 58.3% Drivers *Localiza estimates Low penetration of rented fleet in Brazil.
- 29. Market Share –Fleet Rental 2015 29 Source: ABLA, Companies’ Financial Statements and estimates Fragmented market with low entry barriers. Reference: ABLA increased data collection basis for mapping car rental market in 2015, the number of Car Rental Locations reached 7,455 from 5,624 in 2014 and fleet went to 477.8k from 440.7k in 2014. # of companies: 7,455 Fleet: 477.8k 33.9k 7.1% 20.8k 4.3% 16.3k 3.4% 23.8k 5.0% 31.2k 6.5% 314.7k 65.9% 37.1k 7.8% Movida Unidas Others Ouro Verde Locamerica New data basis
- 30. 30 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 1Q16 Agenda
- 31. 31 # of pointsof sale Car sales – operating data 55 66 73 74 75 77 78 2010 2011 2012 2013 2014 2015 1Q16 47,285 50,772 56,664 62,641 70,621 64,305 16,348 2010 2011 2012 2013 2014 2015 1Q16 # Number of cars sold (quantity) Efficiency gain on car sales.
- 32. 32 Source: O Estadode São Paulo newspaper, as of 08/16/13 (based on researches of Sindipeças) and Globo website, as of 03/10/2014. Used car sales drivers: affordability and penetration # of inhabitants per car 2012 – (Brazil 2014) 4.2 4.0 4.0 3.6 2.1 2.0 1.9 1.8 1.2 Argentina Brazil Russia South Korea Japan France Germany United Kingdon USA Affordability to buy cars – Public Price of the most basic Gol 300 350 380 415 465 510 545 622 678 724 78884 71 69 61 55 51 49 43 43 43 41 - 10 20 30 40 50 60 70 80 90 -100 - 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Minimum wage (R$) Minimum wages to buy a new car
- 33. 8.4 8.9 9.0 9.4 10.19.9 3.3 3.5 3.6 3.6 3.3 2.5 33 2.5x 2.5x 2010 2011 2012 2013 2014 2015 2.6x Brazilian car market: new x used car market and affordability New cars Used cars Source: FENABRAVE (light and commercial cars) 2.6x 3.1x 4.0x In million of cars Total market of 12.4 million cars.
- 34. 34 2014 Up to2 years 442,257 2015 Brand new 2,476,9042015 Used cars 9,987,711 0.6% 2.6% 16.0% Car sales – operating data Source: Anfavea and Fenabrave Unidas, Locamerrica and Movida websites Examples • Retailers • Dealers • Rental operators • “Auto malls” Points of sale • 48,000 (Fenauto) • 4,364 (Anfavea) • +78 (Unidas, Movida, Locamerica) • 71 (Fenauto) Main players
- 35. 35 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 1Q16 Agenda
- 36. 36 Highlights Net Revenues -Car Rental Division (R$ million) Net Revenues - Fleet Rental Division (R$ million) 310.1 339.7 1Q15 1Q16 148.9 158.4 1Q15 1Q16 186.3 202.5 1Q15 1Q16 100.3 103.0 1Q15 1Q16 Consolidated EBIT (R$ million) Consolidated Net Income (R$ million) Utilization rate evolution – Car Rental# Rented cars – Car Rental 66.3% 69.0% 70.7% 71.1% 73.4% 1Q15 2Q15 3Q15 4Q15 1Q16 43,025 42,250 42,709 45,277 47,139 1Q15 2Q15 3Q15 4Q15 1Q16
- 37. 37 Net Revenues (R$million) # Daily Rentals (thousands) Car Rental 802.2 980.7 1,093.7 1,163.5 1,284.4 1,258.0 310.1 339.7 2010 2011 2012 2013 2014 2015 1Q15 1Q16 10,734 12,794 13,749 14,242 15,416 15,566 3,812 4,242 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Volume growth of 11.3% even in an adverse macro scenario
- 38. Average daily rentalevolution and utilization rate Car Rental 38 Competitive and commercial intelligence to stimulate demand and increase utilization rate 78.07 79.68 82.36 84.85 87.71 84.56 85.26 83.61 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Average daily rental – In R$ 69.1% 68.9% 70.8% 66.8% 69.9% 69.3% 66.3% 73.4% 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Utilization rate
- 39. 39 Car Rental networkevolution # of car rental locations (Brazil and abroad) 3 new corporate locations were added to the network 234 247 272 286 304 320 323 181 202 202 193 172 174 172 61 47 50 63 64 70 70476 496 524 542 540 564 565 2010 2011 2012 2013 2014 2015 1Q16 +3 Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisses´ branches - abroad
- 40. 361.1 455.0 535.7 575.9 571.9608.5 148.9 158.4 2010 2011 2012 2013 2014 2015 1Q15 1Q16 8,044 9,603 10,601 10,844 10,363 10,901 2,746 2,746 2010 2011 2012 2013 2014 2015 1Q15 1Q16 40 Net Revenues (R$ million) # Daily Rentals (thousands) Fleet Rental 0.0% 6.4% increase in net revenues due to higher average rental rate
- 41. Purchases (includes accessories)Used car sales net revenues Cars purchased Cars sold 41 Net investment Fleet Expansion* (quantity) Net Investment in Fleet (R$ million) 9,178 2,011 7,103 18,649 308.4 98.8 588.5 278.9 * It does not include theft / crashed cars. 9,183 465.0 (273) 233.5 65,934 59,950 58,655 69,744 79,804 64,032 10,640 6,989 47,285 50,772 56,644 62,641 70,621 64,305 17,449 16,348 2010 2011 2012 2013 2014 2015 1Q15 1Q16 1,910.4 1,776.5 1,618.8 2,026.2 2,483.2 2,278.4 349.0 255.2 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,044.9 543.9 544.6 2010 2011 2012 2013 2014 2015 1Q15 1Q16 (6,809) (9,359) (194.9) (289.4) Fleet was adjusted after the summer vacation peak of demand
- 42. 42 End of periodfleet Quantity 61,445 64,688 65,086 70,717 77,573 76,755 71,343 68,901 26,615 31,629 32,104 32,809 34,312 33,948 33,500 32,228 10.652 12,958 14,545 14,233 13,339 13,992 13,272 14,03798,712 109,275 111,735 117,759 125,224 124,695 118,115 115,166 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Car Rental Fleet Rental Franchising RAC Productivity: • Rented fleet increased 9.6% • Fleet reduction of 3.1%
- 43. 1,175.3 1,450.0 1,646.71,758.9 1,874.0 1,883.1 463.1 502.4 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,044.9 543.9 544.6 2,497.2 2,918.1 3,166.7 3,506.2 3,892.2 3,928.0 1,007.0 1,047.0 2010 2011 2012 2013 2014 2015 1Q15 1Q16 43 Consolidated net revenues R$ million Rental Used car sales Good level of sales with 6.8% increase in average car sales price in 1Q16 x 1Q15 17,449 16,071 15,738 15,047 16,348 1Q15 2Q15 3Q15 4Q15 1Q16 # Cars sold 31.22 31.10 31.98 33.23 33.34 1Q15 2Q15 3Q15 4Q15 1Q16 Average price of cars sold
- 44. 44 Consolidated EBITDA R$ million 649.5 821.3875.6 916.5 969.8 934.8 245.0 258.4 2010 2011 2012 2013 2014 2015 1Q15 1Q16 (*)From 2012 on, accessories and freight of new cars have been accounted directly in the cost line, impacting EBITDA but reducing depreciation costs. (**) It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos. Divisions 2010* 2011* 2012 2013 2014** 2015 1Q15 1Q16 Car Rental 45.3% 46.9% 40.9% 36.8% 38.7% 31.8% 34.4% 34.5% Fleet Rental 68.0% 68.6% 66.4% 65.5% 60.0% 62.2% 59.3% 64.5% Rental Consolidated 52.3% 53.8% 49.3% 46.5% 45.3% 41.7% 42.5% 44.1% Used Car Sales 2.6% 2.8% 4.2% 5.7% 6.0% 7.3% 8.8% 6.8% EBITDA increased R$13.4 million in the 1Q16 x 1Q15
- 45. 45 Average depreciation percar (in R$) Car Rental Higher depreciation reflects the expectation of lower new car prices increases 1,536 1,684 1,896 1,452 1,270 622 836 2010 2011 2012 2013 2014 2015 1Q16 2,076 IPI Effect 3,972 * * Annualized 3,510 4,133 4,311 4,592 4,202 3,935 4,175 2010 2011 2012 2013 2014 2015 1Q16 1.097 Efeito IPI 5.408 * * Annualized Fleet Rental
- 46. 46 *2012 EBIT wasimpacted by R$144.5 million of additional depreciation related to IPI (sales tax) reduction. Consolidated EBIT R$ million Divisions 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Car Rental 38.5% 38.8% 23.7% 32.8% 36.2% 34.3% 38.7% 35.6% Fleet Rental 46.2% 45.6% 36.9% 45.1% 44.3% 48.9% 43.3% 50.3% Consolidated 41.0% 41.1% 28.3% 37.1% 38.8% 39.1% 40.2% 40.3% EBIT grew R$16.2 million in 1Q16 x 1Q15 482.1 595.7 465.8 652.1 726.7 735.5 186.3 202.5 2010 2011 2012 2013 2014 2015 1Q15 1Q16 610.3*
- 47. 250.5 291.6 240.9 384.3 410.6 402.4 100.3103.0 2010 2011 2012 2013 2014 2015 1Q15 1Q16 47 * Pro forma 2012 net income excluding additional depreciation related to the IPI tax reduction, net of income tax. Consolidated net income R$ million 336.3* Reconciliation EBITDA x Net income 2010 2011 2012 2013 2014 2015 1Q15 1Q16 Var. R$ Var. % Consolidated EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 245.0 258.4 13.4 5.5% Cars depreciation (146.3) (201.5) (232.4) (229.0) (207.4) (163.6) (49.9) (46.3) 3.6 -7.2% Cars additional depreciation – IPI effect - - (144.5) - - - - - - - Other property depreciation and amortization (21.1) (24.1) (32.9) (35.4) (35.7) (35.7) (8.8) (9.6) (0.8) 9.1% Financial expenses, net (130.1) (179.0) (138.7) (110.6) (151.1) (202.7) (48.0) (67.7) (19.7) 41.0% Income tax and social contribution (101.5) (125.1) (135.3) (157.2) (165.0) (130.4) (38.0) (31.8) 6.2 -16.3% Income tax and social contribution – IPI effect - - 49.1 - - - - - - - Net income of the period 250.5 291.6 240.9 384.3 410.6 402.4 100.3 103.0 2.7 2.7% Net income increased 2.7% despite the R$19.7 million increase in financial expenses
- 48. 48 Free cash flow- FCF Free cash flow - R$ million 2010 2011 2012 2013 2014 2015 1Q16 Operations EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 258.4 Used car sale revenue, net from taxes (1,321.9) (1,468.1) (1,520.0) (1,747.3) (2,018.2) (2,044.9) (544.6) Depreciated cost of cars sold (*) 1,203.2 1,328.6 1,360.2 1,543.8 1,777.0 1,769.1 477.3 (-) Income tax and social contribution (57.8) (83.0) (100.9) (108.5) (113.1) (110.7) (28.8) Change in working capital 54.5 (83.9) 37.1 2.9 (27.1) (30.0) (8.8) Cash generated by rental operations 527.5 514.9 652.0 607.4 588.4 518.3 153.5 Capex- Renewals Used car sale revenue, net from taxes 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,036.3 232.8 Fleet renewal investment (1,370.1) (1,504.5) (1,563.3) (1,819.7) (2,197.7) (2,278.4) (255.2) Net investment for fleet renewal (48.2) (36.4) (43.3) (72.4) (179.5) (242.1) (22.4) Fleet renewal – quantity 47,285 50,772 56,644 62,641 70,621 64,032 6,989 Investment, other property and intangibles investments (50.6) (59.9) (77.8) (47.5) (46.3) (29.7) (5.0) Free cash flow from operations, net of fleet renewal capex 428.7 418.6 530.9 487.5 362.6 246.5 126.1 Capex-Growth Fleet growth (investment) (540.3) (272.0) (55.5) (209.4) (286.8) 8.6 311.8 Change in accounts payable to car suppliers 111.3 32.7 (116.9) 89.7 334.4 (121.2) (255.6) Fleet growth (429.0) (239.3) (172.4) (119.7) 47.6 (112.6) 56.2 Fleet increase / (reduction) – quantity 18,649 9,178 2,011 7,103 9,183 (273) (9,359) Free cash flow after growth, and before interest and new HQ (0.3) 179.3 358.5 367.8 410.2 133.9 182.3 Capex– HQ Investment in the construction of the new HQ (0.5) (3.1) (2.4) (6.5) (55.7) (123.3) (3.6) Marketable securities – new HQ - - - - (92.6) 92.6 - New headquarters construction (0.5) (3.1) (2.4) (6.5) (148.3) (30.7) (3.6) Free cash flow before interest (0.8) 176.2 356.1 361.3 261.9 103.2 178.7 Free cash flow (*) without the technical discounts reduction up to 2010
- 49. 49 (1,510.8) Net debt 03/31/2016 Free cashflow before growth, interest and headquarters 126.1 (1,588.6) Net debt 12/31/2015 (33.2) Dividends (3.6) New headquarters construction (67.7) Interest Changes in net debt R$ million Reduction of R$77.8 million in net debt due to cash generation Fleet reduction 311.8 (255.6) Change in accounts payable to cars suppliers +58.4 +56.2 (36.8)
- 50. 50 Debt maturity profile(principal) R$ million Comfortable debt profile and strong cash position As of March 31, 2016 264.1 468.6 252.6 619.5 770.0 672.5 2016 2017 2018 2019 2020 2021 Cash 1,610.8 2016 1,604.8
- 51. 51 Debt - ratios Netdebt vs. Fleet value BALANCE AT THE END OF PERIOD 2010(*) 2011 2012 2013 2014 2015 1Q16 Net debt / Fleet value 52% 51% 48% 48% 40% 44% 45% Net debt / EBITDA(**) 2.0x 1.7x 1.4x 1.5x 1.4x 1.7x 1.5x Net debt / Equity 1.4x 1.2x 0.9x 1.0x 0.8x 0.8x 0.8x EBITDA / Net financial expenses 5.0x 4.6x 6.3x 8.3x 6.4x 4.6x 3.8x (*) 2010 ratios based on USGAAP financial statements (**) Annualized Net debt Fleet value Comfortable debt ratios 1,281.1 1,363.4 1,231.2 1,332.8 1,322.3 1,588.6 1,510.8 2,446.7 2,681.7 2,547.6 2,797.9 3,296.3 3,642.7 3,372.2 2010 2011 2012 2013 2014 2015 1Q16
- 52. 52 ROIC versus costof debt after taxes The Company presented a positive spread of 5.7p.p. despite the adverse scenario and a significant increase in the interest rate 7.3% 8.6% 6.3% 6.0% 8.0% 9.5% 10.2% 16.9% 17.1% 16.1% 16.5% 17.5% 17.0% 15.9% 2010 2011 2012 2013 2014 2015 1Q16 ROIC Cost of debt after taxes 9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p. 7.5p.p. 5.7p.p. 2010 to 2014 ROIC considered income tax rate of 30.0% 2015 and 1Q16 ROIC considered income tax rate of 24.5% Annualized
- 53. 53 Localiza Level IADR 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
- 54. 54 Disclaimer 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 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. 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. 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. Maria Carolina Costa IR Manager Mariana Campolina IR Manager