Download to read offline
Uploaded byLocaliza
Institutional Presentation - August/16
Localiza is a Brazilian car rental company founded in 1973. It has since grown to become the largest car rental company in Brazil through a strategy of expansion into adjacent businesses. It operates four main divisions: car rental, fleet rental, used car sales, and franchising. The presentation provides an overview of each division and highlights Localiza's competitive advantages in raising capital, purchasing vehicles, renting vehicles, and selling used vehicles. It also reviews the company's financial performance and profitability metrics compared to its main competitors in Brazil.
More Related Content
Institutional Presentation - August/16
- 1. July 22, 2016InstitutionalPresentation
- 2. 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q16 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 06/30/2016 – Market cap of about US$2.3 bi with ADTV of US$10.4 million 1973 1982 1983 2004 2005 2015 3
- 4. Company: integrated businessplatform Synergies: bargaining power cost reduction cross selling 13,695 cars 166 locations in Brazil 71 locations in South America 32 employees 46.7% sold to final consumer 78 stores 48 cities 984 employees 78,352 cars 6.0 million clients 328 locations 4,761 employees 32,726cars 880 clients 391 employees Based on the 2Q16 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 September, 2016. BB+ Fitch Ba2 Moody’s BB+ S&P Baa1 Moody´s B+ S&P Ba3 Moody´s BB- S&P brAA+ S&P Aa1.br Moody’s AAA(bra) Fitch BB S&P AA- (bra) Fitch A- (bra) Fitch AA- (bra) Fitch A(bra) Fitch 10 Investment grade: lower spreads and longer tenors Source: Bloomberg . 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 361 142 63 97 Localiza Unidas Hertz Movida 12 Competitive advantages: renting cars Brand Brazilian distribution #ofbranches#ofcities Source: Each company website on 06/30/2016 and 2Q16 Earnings Release . 470 93 211 166 Localiza Competitors 494 $ 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. 14 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.
- 15. Raising money Buying cars Renting CarsSelling Cars 15 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.
- 16. 16 ROIC versus costof debt after taxes The Company presented a positive spread of 5.2p.p. Despite the adverse scenario and the 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% 15.4% 2010 2011 2012 2013 2014 2015 1H16 ROIC Cost of debt after taxes 9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p. 7.5p.p. 5.2p.p. 2010 to 2014 ROIC considered income tax rate of 30.0% 2015 and 1Q16 ROIC considered income tax rate of 24.5% Annualized
- 17. Localiza vs. players Profitability Source:Companies’ Financial Statements 17 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
- 18. 18 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
- 19. 19 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q16 Agenda
- 20. 20 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 78,352 2012 2013 2014 2015 1H16 Car rental distribution (Brazil) 474 479 476 494 494 2012 2013 2014 2015 1H16
- 21. 21 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$) Daily rental price over minimum salary (%) Car rental affordability Source: IPEADATA and Localiza’s loyalty program. 6 million 84 million Adult population (age > 20 years) Class A+B+C 15 million Adult population (age > 20 years) Class A+B Increasing affordability and low penetration in leisure trips brings growth opportunities.
- 22. 22 Drivers # domestic airtraffic passengers In million Expected investment 2016-2019 (in R$ billion) Source: Sectorial Analysis Committee / BNDES: 2016-2019 , as of February, 2016. Source: ANAC up to 2015 and IATA-Air Passenger Forecast Global Report, as of April, 2015. The pipeline of investments tend to benefit the corporate segment. Expected annual traffic growth of 4.4% from 2014 to 2034 traffic. 70 82 89 90 96 96 2010 2011 2012 2013 2014 2015 214.1 142.6 87.1 35.8 32.9 32.5 17.0 15.5 5.8 Energia Telecomunicações Rodovias Saneamento Ferrovias Mobilidade Urbana Aeroportos Portos Resíduos Sólidos
- 23. 23 Source: RAIS, eachcompany’s website on 06/30/2016 and Localiza´s 2Q16 Earnings Release Airport locations Off-airport locations Car Rental Locations in Brazil Off-airport market is still fragmented.
- 24. 24 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 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. 20.4% 2.0% 6.0% 9.9% 61.7% Movida 37.1k Unidas 22.6k Others 231.8k 22.4%76.8k 7.2k
- 25. 25 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q16 Agenda
- 26. 26 Number of clients FleetRental overview Compact cars 34.9% Others 65.1% 2015 Fleet composition 33,948 cars 729 760 798 849 880 2012 2013 2014 2015 1H16 End of period fleet 32,104 32,809 34,312 33,948 32,726 2012 2013 2014 2015 1H16
- 27. 27 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.
- 28. Market Share –Fleet Rental 2015 28 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% 1.7k 0.4% 20.8k 4.3% 16.3k 3.4% 23.8k 5.0% 31.2K 6.5% 350.1k 65.5% Movida Unidas Others Ouro Verde Locamerica 7.5%
- 29. 29 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q16 Agenda
- 30. 30 # of pointsof sale Car sales – operating data 55 66 73 74 75 77 78 2010 2011 2012 2013 2014 2015 1H16 47,285 50,772 56,664 62,641 70,621 64,305 30,187 2010 2011 2012 2013 2014 2015 1H16 # Number of cars sold (quantity) Efficiency gain on car sales.
- 31. 31 Used car salesdrivers: affordability and penetration 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$) Minimum wages to buy a new car 7.9 7.7 7.3 6.9 6.5 6.0 5.7 5.3 5.0 4.9 4.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 # of inhabitants per car – Brazil 2005 - 2015 Source: Sindipeças - Current Fleet Report 2016, as of April 2016. Developed countries maintain a ratio between 1 - 2 cars per inhabitant. Source: BCB and Localiza Reference: to calculate the minimum wages to buy a new car we used the public price of the Vehicle type Gol.
- 32. 8.4 8.9 9.0 9.4 10.19.9 3.3 3.5 3.6 3.6 3.3 2.5 32 2.5x 2.5x 2010 2011 2012 2013 2014 2015 2.6x Brazilian car market: new x used car market and affordability New cars Used cars Source: FENABRAVE (light and commercial cars) 2.6x 3.1x 4.0x In million of cars Total market of 12.4 million cars.
- 33. 33 2015 Up to2 years 381,531 2015 Brand new 2,476,9042015 Used cars 9,987,711 0.6% 2.6% 16.9% Car sales – operating data Source: Anfavea and Fenabrave Unidas, Locamerrica and Movida websites Examples • Retailers • Dealers • Rental operators • “Auto malls” Points of sale • 48,000 (Fenauto) • 4,364 (Anfavea) • +78 (Unidas, Movida, Locamerica) • 71 (Fenauto) Main players
- 34. 34 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q16 Agenda
- 35. 35 Highlights Net Revenues -Car Rental Division (R$ million) Net Revenues - Fleet Rental Division (R$ million) 296.4 327.8 2Q15 2Q16 149.9 159.5 2Q15 2Q16 223.0 234.3 2Q15 2Q16 93.4 98.0 2Q15 2Q16 Consolidated EBITDA (R$ million) Consolidated Net Income (R$ million) Utilization rate evolution – Car RentalRental days evolution (thousand)– Car Rental 66.3% 69.0% 70.7% 71.1% 73.4% 73.7% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3,812 3,780 3,871 4,111 4,242 4,308 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
- 36. 36 Number of DailyRentals (thousands) The Company continued to perform strong volume growth in 2Q16 in an adverse macro and highly competitive environment. 802.2 980.7 1,093.7 1,163.5 1,284.4 1,258.0 606.4 667.5 296.4 327.8 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 10,734 12,794 13,749 14,242 15,416 15,566 7,584 8,550 3,780 4,308 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 Net Revenues (R$ million) Car Rental
- 37. Average daily rentalevolution and utilization rate Car Rental Division 37 In 2Q16, the average daily rental rate was adjusted to the post summer vacation mix. Demand stimulation resulted in higher utilization rate Average daily rental – In R$ Utilization rate 66.3% 69.0% 70.7% 71.1% 73.4% 73.7% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 85.26 81.85 85.93 85.11 83.61 79.41 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 -3.0%
- 38. 38 Car Rental networkevolution Number of car rental locations (Brazil and abroad) 8 new corporate locations were added to the network Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisees´ branches - abroad 234 247 272 286 304 320 328 181 202 202 193 172 174 16661 47 50 63 64 70 71476 496 524 542 540 564 565 2010 2011 2012 2013 2014 2015 1H16 +8
- 39. 39 Fleet Rental Division 6.4%increase in net revenues due to higher average rental rate 361.1 455.0 535.7 575.9 571.9 608.5 298.8 317.9 149.9 159.5 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 8,044 9,603 10,601 10,844 10,363 10,901 5,484 5,507 2,739 2,761 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 Net Revenues (R$ million) Number of Daily Rentals (thousands)
- 40. Purchases (includes accessories)Used car sales net revenues Cars purchased Cars sold 40 Net investment Fleet Expansion* (quantity) Net Investment in Fleet (R$ million) 9,178 2,011 7,10318,649 * It does not include theft / crashed cars. 9,183 465.0 (273) 65,934 59,950 58,655 69,744 79,804 64,032 26,851 31,009 16,211 24,020 47,285 50,772 56,644 62,641 70,621 64,305 33,520 30,187 16,071 13,839 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 (6,669) 822 140 10,181 1,910.4 1,776.5 1,618.8 2,026.2 2,483.2 2,278.4 901.3 1,133.9 552.3 878.7 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,044.9 1,043.2 1,016.4 499.2 471.7 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 In 2Q16, 24,020 new cars were bought and 13,839 cars were sold, resulting in an increase of 10,181 cars and net investment of R$407.0 million 308.4 98.8 588.5 278.9 233.5 (141.9) 117.5 53.1 407.0
- 41. 31.22 31.10 31.98 33.23 33.34 34.14 1Q152Q15 3Q15 4Q15 1Q16 2Q16 + 9.8% Average price of cars sold and purchased Consolidated Average price of cars sold - In R$ thousand 41 Average price of cars purchased - In R$ thousand 32.76 34.03 34.67 38.63 36.40 36.55 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 + 7.4% Change in the fleet composition Change in the fleet composition Period-end fleet Quantity 61,445 64,688 65,086 70,717 77,573 76,755 71,525 78,352 26,615 31,629 32,104 32,809 34,312 33,948 33,217 32,72610.652 12,958 14,545 14,233 13,339 13,992 12,934 13,69598,712 109,275 111,735 117,759 125,224 124,695 117,676 124,773 2010 2011 2012 2013 2014 2015 1H15 1H16 Car Rental Fleet Rental Franchising +7,097
- 42. 1,175.3 1,450.0 1,646.71,758.9 1,874.0 1,883.1 913.3 993.7 450.3 491.4 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,044.9 1,043.2 1,016.4 499.2 471.7 2,497.2 2,918.1 3,166.7 3,506.2 3,892.2 3,928.0 1,956.5 2,010.1 949.5 963.1 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 42 Consolidated net revenues R$ million Rental Used car sales Rental revenues grew 9.1% in 2Q16
- 43. Car sales Car saleswere impacted by the reduction of decommissioning cars for fleet renewal due to the car rental growth and delays in new cars deliveries 17,449 16,071 15,738 15,047 16,348 13,839 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Number of cars sold 43 5,296 7,428 8,534 7,253 5,355 3,662 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Cars in Seminovos stores (Average)
- 44. 44 Consolidated EBITDA R$ million (*)From2012 onwards, 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 1H15 1H16 2Q15 2Q16 Car Rental 45.3% 46.9% 40.9% 36.8% 38.7% 31.8% 32.4% 33.1% 30.3% 31.6% Fleet Rental 68.0% 68.6% 66.4% 65.5% 60.0% 62.2% 61.1% 64.8% 62.8% 65.0% Rental Consolidated 52.3% 53.8% 49.3% 46.5% 45.3% 41.7% 41.9% 43.3% 41.3% 42.6% Used Car Sales 2.6% 2.8% 4.2% 5.7% 6.0% 7.3% 8.2% 6.1% 7.5% 5.3% EBITDA grew R$11.3 million in the 2Q16 x 2Q15 649.5 821.3 875.6 916.5 969.8 934.8 467.8 492.7 223.0 234.3 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 + R$24.9 million + R$11.3 million
- 45. 45 Average depreciation percar (in R$) Car Rental Depreciation in 2Q16 reflects new car prices that are rising below inflation. 1,536 1,684 1,896 1,452 1,270 622 917 2010 2011 2012 2013 2014 2015 1H16 2,076 IPI Effect 3,972 * * Annualized 3,510 4,133 4,311 4,592 4,202 3,935 3,981 2010 2011 2012 2013 2014 2015 1H16 1,097 Efeito IPI 5,408 * * Annualized Fleet Rental
- 46. 46 *2012 EBIT wasimpacted by R$144.5 million due to the additional depreciation related to the reduction in IPI (sales tax). Consolidated EBIT R$ million Divisions 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 Car Rental 38.5% 38.8% 23.7% 32.8% 36.2% 34.3% 36.5% 32.5% 34.3% 29.3% Fleet Rental 46.2% 45.6% 36.9% 45.1% 44.3% 48.9% 47.1% 50.6% 50.7% 50.7% Consolidated 41.0% 41.1% 28.3% 37.1% 38.8% 39.1% 40.0% 38.4% 39.8% 36.4% The EBITDA increase was offset by higher depreciation, resulting in stable EBIT in 2Q16 482.1 595.7 465.8 652.1 726.7 735.5 365.5 381.5 179.4 179.0 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 610.3*
- 47. 47 * Pro forma2012 net income excluding additional depreciation related to the IPI tax reduction, net of income tax. Consolidated net income R$ million 4.9% increase in 2Q16 net income 250.5 291.6 240.9 384.3 410.6 402.4 193.6 201.0 93.4 98.0 2010 2011 2012 2013 2014 2015 1H15 1H16 2Q15 2Q16 336.3* Reconciliation EBITDA x Net income 2010 2011 2012 2013 2014 2015 1H15 1H16 Var. R$ Var. % 2Q15 2Q16 Var. R$Var. % Consolidated EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 467.8 492.7 24.9 5.3% 223.0 234.3 11.3 5.1% Cars depreciation (146.3) (201.5) (232.4) (229.0) (207.4) (163.6) (84.6) (92.1) (7.5) 8.9% (34.7) (45.8) (11.1) 32.0% Cars additional depreciation – IPI effect - - (144.5) - - - - - - - - - - - Other property depreciation and amortization (21.1) (24.1) (32.9) (35.4) (35.7) (35.7) (17.7) (19.1) (1.4) 7.9% (8.9) (9.5) (0.6) 6.7% Financial expenses, net (130.1) (179.0) (138.7) (110.6) (151.1) (202.7) (99.4) (117.2) (17.8) 17.9% (51.5) (49.5) 2.0 -3.9% Income tax and social contribution (101.5) (125.1) (135.3) (157.2) (165.0) (130.4) (72.5) (63.3) 9.2 -12.7% (34.5) (31.5) 3.0 -8.7% Income tax and social contribution – IPI effect - - 49.1 - - - - - - - - - - - Net income of the period 250.5 291.6 240.9 384.3 410.6 402.4 193.6 201.0 7.4 3.8% 93.4 98.0 4.6 4.9%
- 48. 48 Free cash flow- FCF Free cash flow - R$ million 2010 2011 2012 2013 2014 2015 1H16 w Operations EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 492.7 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) (1,016.4) Depreciated cost of cars sold (*) 1,203.2 1,328.6 1,360.2 1,543.8 1,777.0 1,769.1 901.4 (-) Income tax and social contribution (57.8) (83.0) (100.9) (108.5) (113.1) (110.7) (55.9) Change in working capital 54.5 (83.9) 37.1 2.9 (27.1) (30.0) (31.7) Cash generated by rental operations 527.5 514.9 652.0 607.4 588.4 518.3 290.1 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 1,016.4 Fleet renewal investment (1,370.1) (1,504.5) (1,563.3) (1,819.7) (2,197.7) (2,278.4) (1,103.8) Net investment for fleet renewal (48.2) (36.4) (43.3) (72.4) (179.5) (242.1) (87.4) Fleet renewal – quantity 47,285 50,772 56,644 62,641 70,621 64,032 30,187 Investment, other property and intangibles investments (50.6) (59.9) (77.8) (47.5) (46.3) (29.7) (19.9) Free cash flow from operations, net of fleet renewal capex 428.7 418.6 530.9 487.5 362.6 246.5 182.8 Capex-Growth Fleet growth (investment) (540.3) (272.0) (55.5) (209.4) (286.8) 8.6 (30.1) Change in accounts payable to car suppliers 111.3 32.7 (116.9) 89.7 334.4 (121.2) 19.7 Fleet growth (429.0) (239.3) (172.4) (119.7) 47.6 (112.6) (10.4) Fleet increase / (reduction) – quantity 18,649 9,178 2,011 7,103 9,183 (273) 822 Free cash flow after growth, and before interest and new HQ (0.3) 179.3 358.5 367.8 410.2 133.9 172.4 Capex– HQ Investment in the construction of the new HQ (0.5) (3.1) (2.4) (6.5) (55.7) (123.3) (21.4) Marketable securities – new HQ - - - - (92.6) 92.6 - New headquarters construction (0.5) (3.1) (2.4) (6.5) (148.3) (30.7) (21.4) Free cash flow before interest (0.8) 176.2 356.1 361.3 261.9 103.2 151.0 Free cash flow (*) without the technical discounts reduction up to 2010
- 49. 49 Changes in netdebt R$ million The increase of R$35.8 million in net debt was mainly due higher dividends distribution 182.8 (117.2) (30.1) 19.7 (21.4) (69.6) (1,624.4) Net Debt 06/30/2016 (1,588.6) Net Debt 12/31/2015 Free cash flow before growth, interest and headquarters Interest Fleet increase Increase in accounts payable to cars suppliers New headquarters construction Dividends +65.6 (10.4) (91.0)
- 50. 50 Debt maturity profile(principal) R$ million The Company is still presenting strong cash position and adequate debt profile for the current macro and growth landscape As of June 30, 2016 202.6 487.7 264.6 619.5 770.0 672.5 2016 2017 2018 2019 2020 2021 Cash 1,467.1 2016 954.9
- 51. 51 Debt - ratios Netdebt vs. Fleet value BALANCE AT THE END OF PERIOD 2010(*) 2011 2012 2013 2014 2015 1H16 Net debt / Fleet value 52% 51% 48% 48% 40% 44% 43% Net debt / EBITDA(**) 2.0x 1.7x 1.4x 1.5x 1.4x 1.7x 1.6x 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 4.2x (*) 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 1,624.4 2,446.7 2,681.7 2,547.6 2,797.9 3,296.3 3,642.7 3,784.1 2010 2011 2012 2013 2014 2015 1H16
- 52. 52 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
- 53. 53 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