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Localiza institucional ingles 2018

The document provides an overview of Localiza, a car rental company based in Brazil. It discusses Localiza's business divisions including car rental, fleet rental, and used car sales. It highlights Localiza's competitive advantages such as its integrated business platform, leadership in loyalty and quality, efficient used car sales, and innovation in technology. Financial details are presented showing that profitability comes mainly from the car rental and fleet rental divisions.

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1 January 2018
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 2 COMPETITIVE ADVANTAGES2
3 1973 Founded in Belo Horizonte with 6 VW Beetles 1979 Expasion to 11 capital cities becoming market leader in 1981 1984 Expansion strategy by adjacencies: Franchising 1991 Expansion strategy by adjacencies: Seminovos 1992 Internationalization through Franchising 1997 PE firm DL&J enters at a market cap of US$150 mm 1999 Expansion strategy by adjacencies: Fleet Rental 2005 IPO with a Market Cap of US$295 mm 2014 Beginning of Digital Transformation 2017 Strategic partnership with Hertz - Market Cap US$4.4 Billion (12/31/17) Phase I: Rise to #1 Phase II: Expansion Phase III: Reaching Scale Phase IV: Digital Transformation COMPANY: MILESTONES
INTEGRATED BUSINESS PLATFORM THIS INTEGRATED PLATFORM GIVES LOCALIZA FLEXIBILITY AND SUPERIOR PERFORMANCE 4 • 127,221 CARS • 6,8 MILLION CLIENTS • 371 LOCATIONS • 4,294 EMPLOYEES CAR RENTAL FLEET RENTAL •44,655 CARS • 1,173 CLIENTS • 259 EMPLOYEES USED CAR SALES • 45.7% SOLD TO FINAL CONSUMER • 93 STORES • 60 CITIES • 1.080 EMPLOYEES FRANCHISING • 13,514 CARS • 136 LOCATIONS IN BRASIL • 70 LOCATIONS IN SOUTH AMERICA • 36 EMPLOYEES SYNERGIES: BARGAINING POWER COST REDUCTION CROSS SELLING • OPERATIONS: 514 EMPLOYEES • OVERHEAD: 463 EMPLOYEES
COMPANY: BUSINESS PLATFORM DIVISIONS CAR RENTAL FRANCHISING FLEET RENTAL USED CAR SALES 5 • HIGH FIXED COST STRUCTURE • STANDARDIZED FLEET • 1 YEAR CYCLE • HIGHER ENTRY BARRIERS • GAINS OF SCALE • CAPITAL INTENSIVE • CONCENTRATED AIRPORT MARKET • FRAGMENTED OFF AIRPORT MARKET RENTS TO INDIVIDUALS AND COMPANIES AT AIRPORTS AND OFF AIRPORT LOCATIONS. CONTRIBUTES TO EXPAND LOCALIZA’S NETWORK. • HIGH PROFITABILITY • LOW CONTRIBUTION TO EARNINGS • RESPONSIBLE TO DEVELOP NEW MARKETS • LOW FIXED COST STRUCTURE • CUSTOMIZED FLEET • 2-3 YEARS CYCLE • LOWER ENTRY BARRIERS • CAPITAL INTENSIVE OUTSOURCES FLEET FOR 2-3 YEARS’ TERM CONTRACTS. SELLS THE USED CARS MAINLY TO FINAL CONSUMERS AFTER THE RENTAL AND ESTIMATES THE RESIDUAL VALUES. • EFFICIENCY AREA RESPONSIBLE TO SELL CARS FROM RAC AND FLEET DIVISIONS • KNOW HOW OF USED CARS MARKET • LOW DEPENDENCE OF INTERMEDIATES • ALLOWING FOR LOWER DEPRECIATION
R$ 151 16% R$ 338 37% R$ 439 47% R$ 283 39% R$ 446 61% Net Revenues R$4.249 EBITDA R$928** R$ 2.425 57% R$ 538 13% R$ 1.286 30% EBIT* R$729** Consolidated breakdown – 9M17 R$ million 6 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions **9M17 adjusted financials COMPANY’S PROFITABILITY COMES FROM CAR RENTAL AND FLEET RENTAL DIVISIONS
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 7 COMPETITIVE ADVANTAGES2
COMPETITIVE ADVANTAGES PROFITABILITY COMES FROM RENTAL DIVISIONS CASH TO RENEW THE FLEET OR PAY DEBT 44 YEARS OF EXPERIENCE IN MANAGING ASSETS AND GENERATING VALUE. RAISING MONEY BUYING CARS ALUGUEL DE CARS SELLING CARS 8 RENTING CARS
COMPETITIVE ADVANTAGES RAISING MONEY INVESTMENT GRADE: LOWER SPREADS AND LONGER TENORS LOCALIZA RAISES MONEY WITH BETTER CONDITIONS THEN ITS COMPETITORS. Source: Bloomberg November, 2017. BB+ Fitch Ba2 Moody’s BB+ S&P Baa1 Moody´s B+ S&P Ba3 Moody´s BB S&P brAAA S&P Aa1.br Moody’s AAA(bra) Fitch A+(bra) Fitch AA- (bra) Fitch brA+ S&P AA- (bra) Fitch brA S&P A(bra) FitchNational scale Global scale 9 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
COMPETITIVE ADVANTAGES 10 RAISING MONEY R$869,0 109,35% 12/2017 R$700 107,25% 05/2017 R$650 104,66% 09/2017 R$500 107,00% 05/2017 Unidas R$500 113,97% - 10/2017 R$ 350 103,49% 10/2017 Unidas R$300 128,68% - 04/17 Locamerica R$300 130,00% - 08/2017 Movida R$250 131,42% - 07/2017 R$216 111,30% 12/2017 Movida R$150 119,00% - 07/2017 Locamerica R$100 113,15% - 11/2017 100% 105% 110% 115% 120% 125% 130% 135% 140% 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 2017 Bonds - R$ million RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
Number of cars purchased – 9M17 Localiza’s share in the internal sales of the OEMs - 9M17 LOCALIZA BUYS CARS WITH BETTER CONDITIONS DUE TO THE VOLUME OF PURCHASES. Source: website of each company and ANFAVEA.. 100.109 44.096 26.029 12.557 Localiza Movida Unidas Locamerica 6.4% 11 COMPETITIVE ADVANTAGES BUYING CARS RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
Most recognized and desired brand in the category 12 • Co-branding with Hertz, the most well-known brand, with presence in +150 countries • 24th most valuable brand in Brazil in 2017 (Interbrand ranking) • Brand with the largest awareness and preference in the sector • Presence online and offline • Winner of Época ReclameAqui award for the 3rd consecutive year • Customer superior satisfaction (NPS) • Culture of delighting • Modern and diversified fleet Leader in loyalty and superior quality COMPETITIVE ADVANTAGES RENTING CARS RAISING MONEY BUYING CARS SELLING CARS RENTING CARS BRAZILIAN DISTRIBUTION # OF LOCATIONS # OF CITIES 507 219 183 402 Localiza Competitors 400 149 96 Localiza Unidas Movida Source: website of each company on 07/31/2017
13 Sale to final consumer Digital Sale 93 points of sale 60 cities in Brazil EFFICIENCY AREA TO REDUCE DEPRECIATION COMPETITIVE ADVANTAGES SELLING CARS RAISING MONEY BUYING CARS SELLING CARS RENTING CARS Big data Best understanding of costumer preference Pricing estimate - Depreciation + Residual Value Input for car purchase Buffer: additional fleet during peaks of demand
14 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS COMPETITIVE ADVANTAGES WITH OPERATIONAL EXCELLENCE CAR PREPARATION • Quality control of the cars delivered by OEM’S • Car licensing DELIVERY IN THE BRANCHES • Transport tracking • Logistic management optimization OPERATING CAR • Maintanance and rapair • Traffic fines processing • Licensing renewal CAR DECOMISSIONING • Car checking • Preparation for sales • Transportation to Seminovos stores
15 Anti fraudLocaliza FastChatbot® Digital register and self check-in Taylor-made solution for fraud prevention in car rentals Mobile-based counter bypass. Customers can pick- up car bypassing our counter Facebook / messenger booking assistant Automatic capture of the driver’s license for new costumers and expedite check-in. Connected Fleet Mobile Solution Integrated mobile solution to fleet rental services for drivers and contract manager. Online Fleet Rental Fast diagnosis and friendly dashboard for fleet manager. Integrated technology solution that increases competitive intelligence and leverages productivity gains. RAISING MONEY BUYING CARS SELLING CARS RENTING CARS ... AND INOVATION
9.8p.p. 10.6p.p. 10.7p.p. 7.5p.p. 5.2p.p. 7.7p.p. 16.9% 16.7% 17.8% 17.0% 15.4% 15.9% 6.3% 6.0% 8.0% 9.5% 10.2% 8.2% 2012 2013 2014 2015 2016 9M17 ROIC Cost of debt after taxes ROIC versus COST OF DEBT AFTER TAXES ROIC considered effective income tax rate LOCALIZA IS COMMITED TO VALUE CREATION FOR ITS SHAREHOLDERS annualized 16
R$35.2 Average car price (past 2 years) Car sale revenue net of SG&A R$31.6 1 year cycle 1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax Revenue Financial Cycle RAC 2016 Per car 17 Total 1 year R$ % R$ % R$ Net revenues 20.3 100.0% 34.6 100.0% 55.0 Costs - fixed and variable (10.1) -49.5% (10.1) SG&A (3.7) -18.1% (3.1) -8.9% (6.8) Net revenues of car sold 31.6 91.1% 31.6 Book value of car sold (30.0) -86.6% (30.0) EBITDA 6.6 32.3% 1.6 4.6% 8.2 Cars Depreciation (1.3) -3.6% (1.3) Others depreciation (0.3) -1.7% (0.1) -0.4% (0.5) Financial expenses (2.5) -7.2% (2.5) Taxes (1.9) -9.2% 0.7 2.0% (1.2) Net Income (Loss) 4.4 21.5% (1.6) -4.6% 2.8 NOPAT 5.0 ROIC 14.2% Cost of debt after taxes 10.2% Car Rental Seminovos Per car soldPer operating car
1 2 3 4 5 6 31 32 33 34 35 36Expenses, interest and tax Revenue Car sale revenue net of SG&A R$29,2 R$42,9 Average car price (past 2 years) 3 year cycle Financial Cycle Fleet Rental 2016 Per car 18 Total 3 years R$ % Seminovos % R$ Net revenues 61.3 100.0% 32.0 100.0% 93.3 Costs - fixed and variable (18.2) -29.7% (18.2) SG&A (3.6) -5.8% (2.9) -8.9% (6.4) Net revenues of car sold 29.2 91.1% 29.2 Book value of car sold (25.7) -80.4% (25.7) EBITDA 39.5 64.5% 3.4 10.7% 42.9 Cars Depreciation (11.1) -34.8% (11.1) Others depreciation (0.3) -0.4% (0.2) -0.5% (0.4) Financial expenses (6.5) -20.2% (6.5) Taxes (11.8) -19.2% 4.3 13.5% (7.5) Net Income (Loss) 27.5 44.8% (10.1) -31.4% 17.4 Net Income (Loss) - per year 9.2 44.8% (3.4) -31.4% 5.8 NOPAT 8.1 ROIC 18.9% Cost of debt after taxes 10.2% Per operating car Fleet Rental Seminovos Per car sold
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 19 COMPETITIVE ADVANTAGES2
MARKET SHARE GROSS REVENUE - CAR RENTAL 2016 LOCALIZA’S MARKET SHARE IS HIGHER THAN THE 2ND AND 3RD PLAYERS TOGETHER 33,7% 13,5% 7,6% 45,2% MARKET SIZE: R$5.1 BILLION OTHERS UNIDAS MOVIDA 20
CAR RENTAL LOCATIONS IN BRAZIL OFF – AIRPORT MARKET IS STILL FRAGMENTED AIRPORT LOCATIONS OFF – AIRPORT LOCATIONS Localiza 98 Hertz 32 Unidas 50 Avis 32 Movida 51 Others 42 Localiza Hertz Unidas Avis Movida Others Localiza 409 Hertz 47 Unidas 156 Avis 21 Others 7.825 Movida 101 21Source: ABLA, each company’s website on 11/30/2017 and Localiza’s 3Q17 Earnings Release. 1/3 OF CAR RENTAL’S REVENUES COMES FROM AIRPORT LOCATIONS OFF -AIRPORT LOCATIONS AIRPORT LOCATIONS
84 million Adult population (age> 20 years) Class A+B+C 64 million Credit card owners* 6.8 million 180 200 240 260 300 350 380 415 465 510 545 622 678 724 788 880 38% 37% 35% 31% 27% 22% 20% 18% 16% 15% 15% 13% 13% 12% 11% 9% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Monthly minimun salary (R$) Daily rental price over minimum salary (%) CAR RENTAL AFFORDABILITY Source: BCB and Localiza rates Sources: IPEADATA, Localiza’s loyalty program and BCB (2016) INCREASING AFFORDABILITY AND LOW PENETRATION BRINGS GROWTH OPPORTUNITIES. *Was considered that each credit card owner owns 1,3 credit card, BCB estimated that were 84 million active credit cards in Brazil in 2016. DRIVERS 22
EVOLUTION IN AIRLINE MARKET BRINGS GROWTH OPPORTUNITIES DRIVERS 23 * 40,6 45,7 49,7 56,9 70,3 81,5 87,0 88,2 93,3 94,4 89,0 90,8 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AIRLINE MARKET EVOLUTION RPK (REVENUE SEAT KILOMETER) IN MILLION * Annualized with the available data until November/17 Sources: ANAC 201,3 267,8 401 201,3 241,4 700,5 2017 2027 2037 DEMAND FORECASTING PASSANGERS ESTIMATE (IN MILLION) Sources: Ministério dos Transportes / Transportation Ministry (september/2017) OPTIMISTIC CONSERVATIVE
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 24 COMPETITIVE ADVANTAGES2
MARKET SHARE GROSS REVENUE - FLEET RENTAL 2016 FRAGMENTED MARKET WITH LOW ENTRY BARRIERS MARKET SIZE: R$5.4 BILLION OTHERS UNIDAS LOCAMERICA 25 12,2% 3,8% 6,5% 8,1% 69,3% MOVIDA
DRIVERS 26 Corporate fleet: 5,000,000* Rented fleet: 440,737** 44,655 BRAZILIAN MARKET *Frost&Sullivan research **Localiza estimates WORLD 8,8% 8,9% 13,3% 16,5% 24,5% 37,4% 46,9% 58,3% Source: Datamonitor for European countries and Localiza’s estimate for Brazil LOW PENETRATION OF RENTED FLEET IN BRAZIL
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 27 COMPETITIVE ADVANTAGES2
8.4 8.9 9.0 9.4 10.1 9.9 10.0 10.6 3.3 3.5 3.6 3.6 3.3 2.5 2.0 2.1 2010 2011 2012 2013 2014 2015 2016 2017* BRAZILIAN CAR MARKET: new vs used car market Source: Fenabrrave (light and commercial cars) *9M17 anualizado 28 New cars Used cars 2.5x 2.5x2.6x 2.6x 3.1x 4.0x 5.0x 5.0x TOTAL MARKET OF 12.7 MILLION CARS. 10.7 2.2
DRIVERS SEMINOVOS # OF INHABITANTS PER CAR – BRAZIL 2005 - 2016 AFFORDABILITY TO BUY CARS – PUBLIC PRICE OF THE MODEL GOL IN THE MOST BASIC VERSION AFFORDABILITY AND PENETRATION 7,9 7,7 7,3 6,9 6,5 6,0 5,7 5,3 5,0 4,9 4,8 4,8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 300 350 380 415 465 510 545 622 678 724 788 880 84 71 69 61 55 51 49 43 43 43 41 41 - 10 20 30 40 50 60 70 80 90 -100 - 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Minimum wage (R$) Minimum wages needed to buy a new car DEVELOPED COUNTRIES MAINTAIN A RATIO BETWEEN 1-2 CARS PER INHABITANT Source: Sindipeças – Current Fleet Report 2016, as of April 2016. Source: BCB and Localiza 29
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 30 COMPETITIVE ADVANTAGES2
3Q17 OPERATIONAL HIGHLIGHTS 4.846 6.587 3Q16 3Q17 2.812 3.241 3Q16 3Q17 17,379 23,941 3Q16 3Q17 87.897 127.221 34.437 44.655 13.868 13.514 136.202 185.390 3Q16 3Q17 Franchising Fleet Rental Car Rental 31 # OF CARS SOLD RENTAL DAYS (THOUSAND)– CAR RENTAL RENTAL DAYS (THOUSAND) – FLEET RENTAL FLEET AT END OF THE PERIOD
3Q17 FINANCIAL HIGHLIGHTS 32 NET REVENUES (R$ MILLION) NET INCOME (R$ MILLION) 103,9 139,5 3Q16 3Q17 Adjusted EBIT (R$ MILHÕES) 592,9 898,4 366,8 476,5163,5 188,5 1.123,2 1.563,4 3Q16 3Q17 Seminovos RAC and frachising Fleet Rental 252,1 332,3 3Q16 3Q17 Adjusted 187,8 263,9 3Q16 3Q17 Adjusted 21.5 16.3 21.5 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation, after taxes One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation EBITDA (R$ MILLION)
HERTZ BRASIL – SUCESS OF THE INTEGRATION 33  Rebranding with the new brand Localiza Hertz  Fleet contracts transferred to Localiza Fleet  Integration of Hertz Brasil´s and Localiza´s locations  8.386 cars integrated to the Localiza´s fleet  Inbound/outbound reservation system already integrated  Localiza´s clients have acess to over 10,000 Hertz locations around the globe  Data and client base consolidation  Closing on 09/01/2017 NEXT STEPS: INCREASE OF THE COMMERCIAL OPPORTUNITIES, INBOUND OUTBOUND AND KNOW-HOW EXCHANGE
ONE TIME COSTS 3Q17 34 ONE-TIME COSTS 3Q17 Incurred 4Q17 Estimated Total Estimated RAC Costs: Hertz: rebrand, structure and networking reduction (2.1) (40.0) (42.1) Franchise integration (12.7) (12.7) RAC - Total costs (14.8) (40.0) (54.8) SG&A Hertz: structure and networking reduction (6.7) (20.0) (26.7) Total SG&A (6.7) (20.0) (26.7) Total One-time Costs (21.5) (60.0) (81.5) CONSOLIDATED RESULTS 3Q17 actual One-off 3Q17 Adjusted Net revenues 1,563.4 1,563.4 Total costs and expenses (1,252.6) 21.5 (1,231.1) EBITDA 310.8 21.5 332.3 Depreciation (68.4) (68.4) EBIT 242.4 21.5 263.9 Financial expenses, net (79.4) (79.4) Income tax and social contribution (39.8) (5.2) (45.0) Net income 123.2 16.3 139.5 3Q17 financial results were adjusted to exclude the impact of one-time costs resulting from the acquisition of Hertz´s operations in Brazil (R$8.8 million) and the integration of 17 franchised locations (R$12.7 million): Note: non-incurred one-time costs were not provisioned in 3Q17 because, on 09/30/2017, such expenses were not bound to be regarded as provision according to the rules imposed by Technical Pronouncement CPC # 25 – Provisions, Contingent Liabilities and Contingent Assets.
CAR RENTAL 1.093,7 1.163,5 1.284,4 1.258,0 1.428,0 1.030,0 1.273,6 362,5 472,6 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 NUMBER OF DAILY RENTALS (THOUSAND) 35.9% RAC DAILY RENTALS GROWTH AND 30.4% GROWTH IN NET REVENUES IN 3Q17 13.749 14.242 15.416 15.566 18.662 13.397 17.461 4.846 6.587 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 NET REVENUES (R$ MILLION) 35
36 UTILIZATION RATE – CAR RENTALAVERAGE DAILY RENTAL RATE – IN R$ 73,4% 73,7% 75,3% 71,5% 73,5% 74,7% 74,3% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 83,6 79,4 77,7 78,6 79,3 74,1 74,1 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 CAR RENTAL THE AVERAGE DAILY RENTAL RATE AND UTILIZATION RATE REMAINED FLATTISH IN 3Q17 WHEN COMPARED WITH 2Q17 .
CAR RENTAL NETWORK EVOLUTION Number of car rental locations Brazil and abroad (does not include Hertz Brasil) 272 286 304 320 333 371 202 193 172 174 158 136 50 63 64 70 70 70 524 542 540 564 561 577 2012 2013 2014 2015 2016 9M17* Localiza's branches - Brazil Franchisees' branches - Brazil Franchisees' branches - abroad +38 38 CORPORATE BRANCHES WERE ADDED TO THE NETWORK IN 9M17 37 * Does not include Hertz Brasil branches
FLEET RENTAL NUMBER OF DAILY RENTALS (THOUSAND) 15.3% GROWTH IN DAILY RENTALS AND NET REVENUES IN 3Q17 38 535,7 575,9 571,9 608,5 651,8 481,3 538,2 163,5 188,5 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 10.601 10.844 10.363 10.901 11.240 8.318 9.184 2.812 3.241 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 NET REVENUES (R$ MILLION)
NET INVESTMENT FLEET EXPANSION (REDUCTION)* (QUANTITY) 108,271 CARS PURCHASED IN 9M17, 57,213 OF WHICH WERE PURCHASED IN 3Q17, INCLUDING HERTZ BRASIL39 NET INVESTMENT IN FLEET (R$ MILLION) Cars purchased Cars sold 2,011 7,103 * It does not consider theft / crashed cars. 9,183 465.0 (273) 1.618,8 2.026,2 2.483,2 2.278,4 3.289,6 2.211,9 4.316,6 1.078,0 2.208,9 1.520,0 1.747,3 2.018,2 2.044,9 2.342,6 1.609,3 2.424,7 592,9 898,4 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 58.655 69.744 79.804 64.032 87.833 59.912 108.271 28.903 57.21356.644 62.641 70.621 64.305 68.449 47.566 64.451 17.379 23.941 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 98.8 278.9 233.5 19,384 947.0 12,346 602.6 485,1 43,820 33,272 1,891.9 1,310.5 11,524 267 100,109 8,162 8,162 49,051 267 64,184 23,674 9.04,030.1 286.5 286.5 1,922.4 9.02,415.7 889.4 Hertz Brasil Purchases (includes accessories) Used car sales net revenues Hertz Brasil
40 NUMBER OF POINTS OF SALE 73 74 75 77 84 79 93 56.644 62.641 70.621 64.305 68.449 47.566 64.451 -50.000 -30.000 -10.000 10.000 30.000 50.000 70.000 -10 10 30 50 70 90 110 130 150 2012 2013 2014 2015 2016 9M16 9M17 Points of sale Cars sold NEW POINTS OF SALE WILL BE ADDED TO SUPPORT THE FLEET RENEWAL.
41 END OF PERIOD FLEET 185,390 CARS AS OF 09/30/2017 INCREASE OF 39,324 CARS IN THE RENT A CAR DIVISION WITHOU IMPACTING UTILIZATION RATE Car Rental Fleet Rental Franchising +10,218 +39,324 Quantity
1,646.7 1,758.9 1,874.0 1,883.1 2,096.8 1,523.9 1,824.1 530.3 665.0 1,520.0 1,747.3 2,018.2 2,044.9 2,342.5 1,609.4 2,424.7 592.9 898.4 3,166.7 3,506.2 3,892.2 3,928.0 4,439.3 3,133.3 4,248.8 1,123.2 1,563.4 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 42 CONSOLIDATED NET REVENUES R$ million Rental Used car sales 39.2% INCREASE IN CONSOLIDATED REVENUES IN 3Q17
43 CONSOLIDATED EBITDA R$ million (*) It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos. (**)3Q17 and 9M17 adjusted financials Divisions 2012 2013 2014* 2015 2016 9M16 9M17 3Q16 3Q17 Car Rental 40.9% 36.8% 38.7% 31.8% 32.3% 32.7% 34.2%** 31.9% 32.2%** Fleet Rental 66.4% 65.5% 60.0% 62.2% 64.5% 64.7% 62.7% 64.5% 63.4% Rental Consolidated 49.3% 46.5% 45.3% 41.7% 42.3% 42.9% 42.6%** 42.1% 41.0%** Used Car Sales 4.2% 5.7% 6.0% 7.3% 5.5% 5.6% 6.2% 4.9% 6.6% EBITDA margin: 875,6 916,5 969,8 934,8 1.015,6 744,6 927,9 252,1 332,3 2012 2013 2014 2015 2016 9M16 9M17 Adjusted 3Q16 3Q17 AdjustedIncurred One-time costs acquisition Hertz Brasil and Franchisees 21.5 21.5 31.8% EBITDA INCREASE IN 3Q17
44 AVERAGE ANNUAL DEPRECIATION PER CAR In R$ 1.896 1.452 1.270 622 1.251 1.351 2012 2013 2014 2015 2016 9M17 annualized 3,972 5,408 4.311 4.592 4.202 3.935 3.714 3.105 2012 2013 2014 2015 2016 9M17 annualized 2,076 IPI effect 1,097 IPI Effect FLEET RENTAL CAR RENTAL DEPRECIATION IS IMPACTED BY THE NEW AND USED CAR MARKET, AS WELL BY THE COST TO SELL
45 CONSOLIDATED EBIT R$ million 465,8 652,1 726,7 735,5 771,1 569,1 729,4 187,8 263,9 2012 2013 2014 2015 2016 9M16 9M17 Adjusted 3Q16 3Q17 Adjusted 610.3 Divisions 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 Car Rental 23.7% 32.8% 36.2% 34.3% 30.2% 31.0% 34.8%* 28.1% 34.4%* Fleet Rental 36.9% 45.1% 44.3% 48.9% 51.2% 50.8% 52.7% 51.4% 53.1% Consolidated 28.3% 37.1% 38.8% 39.1% 36.8% 37.3% 40.0%* 35.4% 39.7%* 21.5 21.5 Incurred One-time costs acquisition Hertz Brasil and Franchisees 144.5 IPI Effect (*)3Q17 and 9M17 adjusted financials 40.5% EBIT GROWTH, WITH INCREASING MARGINS ON RAC AND FLEET RENTAL
46 CONSOLIDATED NET INCOME R$ million 240,9 384,3 410,6 402,4 409,3 304,9 389,0 103,9 139,5 2012 2013 2014 2015 2016 9M16 9M17 Adjusted 3Q16 3Q17 Adjusted 336.3 Reconciliation EBITDA x Net income 2012 2013 2014 2015 2016 9M16 9M17* Var. R$ Var. % 3Q16 3Q17* Var. R$ Var. % Consolidated EBITDA 875.6 916.5 969.8 934.8 1,015.6 744.6 927.9 183.3 24.6% 252.1 332.3 80.2 31.8% Cars depreciation (232.4) (229.0) (207.4) (163.6) (206.3) (146.8) (170.2) (23.4) 15.9% (54.7) (58.2) (3.5) 6.4% Cars additional depreciation – IPI effect (144.5) - - - - - - - - - - - - Other property depreciation and amortization (32.9) (35.4) (35.7) (35.7) (38.2) (28.7) (28.3) 0.4 -1.4% (9.6) (10.2) (0.6) 6.3% EBIT 465.8 652.1 726.7 735.5 771.1 569.1 729.4 160.3 28.2% 187.8 263.9 76.1 40.5% Financial expenses, net (138.7) (110.6) (151.1) (202.7) (243.5) (170.8) (221.3) (50.5) 29.6% (53.7) (79.4) (25.7) 47.9% Income tax and social contribution (135.3) (157.2) (165.0) (130.4) (118.3) (93.4) (119.1) (25.7) 27.5% (30.2) (45.0) (14.8) 49.0% Income tax and social contribution – IPI effect 49.1 - - - - - - - - - - - - Net income of the period 240.9 384.3 410.6 402.4 409.3 304.9 389.0 84.1 27.6.% 103.9 139.5 35.6 34.3% 16.3 16.3 Incurred one-time costs acquisition Hertz Brasil and Franchisees, after taxes 95.4 IPI Effect (*)3Q17 and 9M17 adjusted financials 34.3%NET INCOME INCREASE IN 3Q17
47 FREE CASH FLOW R$1 billion investment (64,451 cars) (35,658 cars) (includes 8,162 cars) R$ 1 BILLION INVESTED IN GROWTH
FREE CASH FLOW 48 Free cash flow - R$ million 2012 2013 2014 2015 2016 9M17 Adjusted Operations EBITDA 875.6 916.5 969.8 934.8 1,015.6 927.9 Used car sale revenue, net from taxes (1,520.0) (1,747.3) (2,018.2) (2,044.9) (2,342.5) (2,424.7) Depreciated cost of cars sold 1,360.2 1,543.8 1,777.0 1,769.1 2,102.5 2,178.8 (-) Income tax and social contribution (100.9) (108.5) (113.1) (110.7) (93.3) (81.7) Change in working capital 37.1 2.9 (27.1) (30.0) 113.2 (28.9) Cash generated by rental operations 652.0 607.4 588.4 518.3 795.5 571.4 Capex-renewal Used car sale revenue, net from taxes 1,520.0 1,747.3 2,018.2 2,036.3 2,342.5 2,424.7 Fleet renewal investment (1,563.3) (1,819.7) (2,197.7) (2,278.4) (2,563.6) (2,594.6) Net investment for fleet renewal (43.3) (72.4) (179.5) (242.1) (221.1) (169.9) Fleet renewal – quantity 56,644 62,641 70,621 64,032 68,449 64,451 Investment, other property and intangible investments (77.8) (47.5) (46.3) (29.7) (42.2) (35.1) Free cash flow from operations, before growth 530.9 487.5 362.6 246.5 532.2 366.4 Capex-Growth Fleet growth (investment) (55.5) (209.4) (286.8) 8.6 (726.0) (1,435.5) Change in accounts payable to car suppliers (116.9) 89.7 334.4 (121.2) 190.7 738.7 Fleet growth capex (172.4) (119.7) 47.6 (112.6) (535.3) (696.8) Fleet increase / (reduction) – quantity 2,011 7,103 9,183 (273) 19,384 35,658 Free cash flow after growth, and before interest and new HQ 358.5 367.8 410.2 133.9 (3.1) (330.4) Capex-non- recurring Hertz acquisition net of the acquired cash (R$360.1 million - R$22.4 cash) - - - - - (337.7) Incurred one-time costs effect - - - - - (21.5) New headquarters construction and furniture (2.4) (6.5) (148.3) (30.7) (84.4) (119.7) Free cash flow before interest 356.1 361.3 261.9 103.2 (87.5) (809.3)
49 CHANGE IN NET DEBT R$ million R$1.1 BILLION NET DEBT INCREASE DUE TO FLEET EXPANSION AND HERTZ BRASIL ACQUISITION R$1 billion investment
50 DEBT MATURITY PROFILE (PRINCIPAL) R$ million 1.939,4 111,3 435,6 685,6 1.420,0 672,5 500,0 500,0 700,0 350,0 350,0 Cash 2017 2018 2019 2020 2021 2022 2023 2024 1,232.5 2,289.4 Pro-Forma with 4th debentures issuance of Localiza Fleet, completed in October. 2017 1,050.0 As of September 30, 2017 Includes 4th issuance of Localiza Fleet completed in October 2017 STRONG CASH POSITION AND COMFORTABLE DEBT PROFILE
51 DEBT RATIOS THE COMPANY CONTINUES TO PRESENT SOLID DEBT RATIOS NET DEBT VERSUS FLEET VALUE BALANCE AT THE END OF PERIOD 2012 2013 2014 2015 2016 9M17 Net debt / Fleet value 48% 48% 40% 44% 45% 49% Net debt / EBITDA(*) 1.4x 1.5x 1.4x 1.7x 2.1x 2.6x Net debt / Equity 0.9x 1.0x 0.8x 0.8x 0.9x 1.3x EBITDA / Net financial expenses 6.3x 8.3x 6.4x 4.6x 4.2x 4.2x NET DEBT FLEET VALUE (*)Annualized 1,231.2 1,332.8 1,322.3 1,588.6 2,084.0 3,238.3 2,547.6 2,797.9 3,296.3 3,642.7 4,623.6 6,588.6 2012 2013 2014 2015 2016 9M17
52 Website: www.localiza.com/ir E-mail: ri@localiza.com Phone: 55 31 3247-7024 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. DISCLAIMER

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Localiza institucional ingles 2018

  • 1.
  • 2.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 2 COMPETITIVE ADVANTAGES2
  • 3.
    3 1973 Founded in Belo Horizontewith 6 VW Beetles 1979 Expasion to 11 capital cities becoming market leader in 1981 1984 Expansion strategy by adjacencies: Franchising 1991 Expansion strategy by adjacencies: Seminovos 1992 Internationalization through Franchising 1997 PE firm DL&J enters at a market cap of US$150 mm 1999 Expansion strategy by adjacencies: Fleet Rental 2005 IPO with a Market Cap of US$295 mm 2014 Beginning of Digital Transformation 2017 Strategic partnership with Hertz - Market Cap US$4.4 Billion (12/31/17) Phase I: Rise to #1 Phase II: Expansion Phase III: Reaching Scale Phase IV: Digital Transformation COMPANY: MILESTONES
  • 4.
    INTEGRATED BUSINESS PLATFORM THIS INTEGRATED PLATFORM GIVESLOCALIZA FLEXIBILITY AND SUPERIOR PERFORMANCE 4 • 127,221 CARS • 6,8 MILLION CLIENTS • 371 LOCATIONS • 4,294 EMPLOYEES CAR RENTAL FLEET RENTAL •44,655 CARS • 1,173 CLIENTS • 259 EMPLOYEES USED CAR SALES • 45.7% SOLD TO FINAL CONSUMER • 93 STORES • 60 CITIES • 1.080 EMPLOYEES FRANCHISING • 13,514 CARS • 136 LOCATIONS IN BRASIL • 70 LOCATIONS IN SOUTH AMERICA • 36 EMPLOYEES SYNERGIES: BARGAINING POWER COST REDUCTION CROSS SELLING • OPERATIONS: 514 EMPLOYEES • OVERHEAD: 463 EMPLOYEES
  • 5.
    COMPANY: BUSINESS PLATFORM DIVISIONS CARRENTAL FRANCHISING FLEET RENTAL USED CAR SALES 5 • HIGH FIXED COST STRUCTURE • STANDARDIZED FLEET • 1 YEAR CYCLE • HIGHER ENTRY BARRIERS • GAINS OF SCALE • CAPITAL INTENSIVE • CONCENTRATED AIRPORT MARKET • FRAGMENTED OFF AIRPORT MARKET RENTS TO INDIVIDUALS AND COMPANIES AT AIRPORTS AND OFF AIRPORT LOCATIONS. CONTRIBUTES TO EXPAND LOCALIZA’S NETWORK. • HIGH PROFITABILITY • LOW CONTRIBUTION TO EARNINGS • RESPONSIBLE TO DEVELOP NEW MARKETS • LOW FIXED COST STRUCTURE • CUSTOMIZED FLEET • 2-3 YEARS CYCLE • LOWER ENTRY BARRIERS • CAPITAL INTENSIVE OUTSOURCES FLEET FOR 2-3 YEARS’ TERM CONTRACTS. SELLS THE USED CARS MAINLY TO FINAL CONSUMERS AFTER THE RENTAL AND ESTIMATES THE RESIDUAL VALUES. • EFFICIENCY AREA RESPONSIBLE TO SELL CARS FROM RAC AND FLEET DIVISIONS • KNOW HOW OF USED CARS MARKET • LOW DEPENDENCE OF INTERMEDIATES • ALLOWING FOR LOWER DEPRECIATION
  • 6.
    R$ 151 16% R$ 338 37%R$ 439 47% R$ 283 39% R$ 446 61% Net Revenues R$4.249 EBITDA R$928** R$ 2.425 57% R$ 538 13% R$ 1.286 30% EBIT* R$729** Consolidated breakdown – 9M17 R$ million 6 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions **9M17 adjusted financials COMPANY’S PROFITABILITY COMES FROM CAR RENTAL AND FLEET RENTAL DIVISIONS
  • 7.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 7 COMPETITIVE ADVANTAGES2
  • 8.
    COMPETITIVE ADVANTAGES PROFITABILITY COMESFROM RENTAL DIVISIONS CASH TO RENEW THE FLEET OR PAY DEBT 44 YEARS OF EXPERIENCE IN MANAGING ASSETS AND GENERATING VALUE. RAISING MONEY BUYING CARS ALUGUEL DE CARS SELLING CARS 8 RENTING CARS
  • 9.
    COMPETITIVE ADVANTAGES RAISING MONEY INVESTMENTGRADE: LOWER SPREADS AND LONGER TENORS LOCALIZA RAISES MONEY WITH BETTER CONDITIONS THEN ITS COMPETITORS. Source: Bloomberg November, 2017. BB+ Fitch Ba2 Moody’s BB+ S&P Baa1 Moody´s B+ S&P Ba3 Moody´s BB S&P brAAA S&P Aa1.br Moody’s AAA(bra) Fitch A+(bra) Fitch AA- (bra) Fitch brA+ S&P AA- (bra) Fitch brA S&P A(bra) FitchNational scale Global scale 9 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
  • 10.
    COMPETITIVE ADVANTAGES 10 RAISING MONEY R$869,0109,35% 12/2017 R$700 107,25% 05/2017 R$650 104,66% 09/2017 R$500 107,00% 05/2017 Unidas R$500 113,97% - 10/2017 R$ 350 103,49% 10/2017 Unidas R$300 128,68% - 04/17 Locamerica R$300 130,00% - 08/2017 Movida R$250 131,42% - 07/2017 R$216 111,30% 12/2017 Movida R$150 119,00% - 07/2017 Locamerica R$100 113,15% - 11/2017 100% 105% 110% 115% 120% 125% 130% 135% 140% 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 2017 Bonds - R$ million RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
  • 11.
    Number of carspurchased – 9M17 Localiza’s share in the internal sales of the OEMs - 9M17 LOCALIZA BUYS CARS WITH BETTER CONDITIONS DUE TO THE VOLUME OF PURCHASES. Source: website of each company and ANFAVEA.. 100.109 44.096 26.029 12.557 Localiza Movida Unidas Locamerica 6.4% 11 COMPETITIVE ADVANTAGES BUYING CARS RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
  • 12.
    Most recognized anddesired brand in the category 12 • Co-branding with Hertz, the most well-known brand, with presence in +150 countries • 24th most valuable brand in Brazil in 2017 (Interbrand ranking) • Brand with the largest awareness and preference in the sector • Presence online and offline • Winner of Época ReclameAqui award for the 3rd consecutive year • Customer superior satisfaction (NPS) • Culture of delighting • Modern and diversified fleet Leader in loyalty and superior quality COMPETITIVE ADVANTAGES RENTING CARS RAISING MONEY BUYING CARS SELLING CARS RENTING CARS BRAZILIAN DISTRIBUTION # OF LOCATIONS # OF CITIES 507 219 183 402 Localiza Competitors 400 149 96 Localiza Unidas Movida Source: website of each company on 07/31/2017
  • 13.
    13 Sale to finalconsumer Digital Sale 93 points of sale 60 cities in Brazil EFFICIENCY AREA TO REDUCE DEPRECIATION COMPETITIVE ADVANTAGES SELLING CARS RAISING MONEY BUYING CARS SELLING CARS RENTING CARS Big data Best understanding of costumer preference Pricing estimate - Depreciation + Residual Value Input for car purchase Buffer: additional fleet during peaks of demand
  • 14.
    14 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS COMPETITIVE ADVANTAGES WITH OPERATIONALEXCELLENCE CAR PREPARATION • Quality control of the cars delivered by OEM’S • Car licensing DELIVERY IN THE BRANCHES • Transport tracking • Logistic management optimization OPERATING CAR • Maintanance and rapair • Traffic fines processing • Licensing renewal CAR DECOMISSIONING • Car checking • Preparation for sales • Transportation to Seminovos stores
  • 15.
    15 Anti fraudLocaliza FastChatbot®Digital register and self check-in Taylor-made solution for fraud prevention in car rentals Mobile-based counter bypass. Customers can pick- up car bypassing our counter Facebook / messenger booking assistant Automatic capture of the driver’s license for new costumers and expedite check-in. Connected Fleet Mobile Solution Integrated mobile solution to fleet rental services for drivers and contract manager. Online Fleet Rental Fast diagnosis and friendly dashboard for fleet manager. Integrated technology solution that increases competitive intelligence and leverages productivity gains. RAISING MONEY BUYING CARS SELLING CARS RENTING CARS ... AND INOVATION
  • 16.
    9.8p.p. 10.6p.p. 10.7p.p. 7.5p.p.5.2p.p. 7.7p.p. 16.9% 16.7% 17.8% 17.0% 15.4% 15.9% 6.3% 6.0% 8.0% 9.5% 10.2% 8.2% 2012 2013 2014 2015 2016 9M17 ROIC Cost of debt after taxes ROIC versus COST OF DEBT AFTER TAXES ROIC considered effective income tax rate LOCALIZA IS COMMITED TO VALUE CREATION FOR ITS SHAREHOLDERS annualized 16
  • 17.
    R$35.2 Average car price (past2 years) Car sale revenue net of SG&A R$31.6 1 year cycle 1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax Revenue Financial Cycle RAC 2016 Per car 17 Total 1 year R$ % R$ % R$ Net revenues 20.3 100.0% 34.6 100.0% 55.0 Costs - fixed and variable (10.1) -49.5% (10.1) SG&A (3.7) -18.1% (3.1) -8.9% (6.8) Net revenues of car sold 31.6 91.1% 31.6 Book value of car sold (30.0) -86.6% (30.0) EBITDA 6.6 32.3% 1.6 4.6% 8.2 Cars Depreciation (1.3) -3.6% (1.3) Others depreciation (0.3) -1.7% (0.1) -0.4% (0.5) Financial expenses (2.5) -7.2% (2.5) Taxes (1.9) -9.2% 0.7 2.0% (1.2) Net Income (Loss) 4.4 21.5% (1.6) -4.6% 2.8 NOPAT 5.0 ROIC 14.2% Cost of debt after taxes 10.2% Car Rental Seminovos Per car soldPer operating car
  • 18.
    1 2 34 5 6 31 32 33 34 35 36Expenses, interest and tax Revenue Car sale revenue net of SG&A R$29,2 R$42,9 Average car price (past 2 years) 3 year cycle Financial Cycle Fleet Rental 2016 Per car 18 Total 3 years R$ % Seminovos % R$ Net revenues 61.3 100.0% 32.0 100.0% 93.3 Costs - fixed and variable (18.2) -29.7% (18.2) SG&A (3.6) -5.8% (2.9) -8.9% (6.4) Net revenues of car sold 29.2 91.1% 29.2 Book value of car sold (25.7) -80.4% (25.7) EBITDA 39.5 64.5% 3.4 10.7% 42.9 Cars Depreciation (11.1) -34.8% (11.1) Others depreciation (0.3) -0.4% (0.2) -0.5% (0.4) Financial expenses (6.5) -20.2% (6.5) Taxes (11.8) -19.2% 4.3 13.5% (7.5) Net Income (Loss) 27.5 44.8% (10.1) -31.4% 17.4 Net Income (Loss) - per year 9.2 44.8% (3.4) -31.4% 5.8 NOPAT 8.1 ROIC 18.9% Cost of debt after taxes 10.2% Per operating car Fleet Rental Seminovos Per car sold
  • 19.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 19 COMPETITIVE ADVANTAGES2
  • 20.
    MARKET SHARE GROSS REVENUE- CAR RENTAL 2016 LOCALIZA’S MARKET SHARE IS HIGHER THAN THE 2ND AND 3RD PLAYERS TOGETHER 33,7% 13,5% 7,6% 45,2% MARKET SIZE: R$5.1 BILLION OTHERS UNIDAS MOVIDA 20
  • 21.
    CAR RENTAL LOCATIONSIN BRAZIL OFF – AIRPORT MARKET IS STILL FRAGMENTED AIRPORT LOCATIONS OFF – AIRPORT LOCATIONS Localiza 98 Hertz 32 Unidas 50 Avis 32 Movida 51 Others 42 Localiza Hertz Unidas Avis Movida Others Localiza 409 Hertz 47 Unidas 156 Avis 21 Others 7.825 Movida 101 21Source: ABLA, each company’s website on 11/30/2017 and Localiza’s 3Q17 Earnings Release. 1/3 OF CAR RENTAL’S REVENUES COMES FROM AIRPORT LOCATIONS OFF -AIRPORT LOCATIONS AIRPORT LOCATIONS
  • 22.
    84 million Adult population (age>20 years) Class A+B+C 64 million Credit card owners* 6.8 million 180 200 240 260 300 350 380 415 465 510 545 622 678 724 788 880 38% 37% 35% 31% 27% 22% 20% 18% 16% 15% 15% 13% 13% 12% 11% 9% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Monthly minimun salary (R$) Daily rental price over minimum salary (%) CAR RENTAL AFFORDABILITY Source: BCB and Localiza rates Sources: IPEADATA, Localiza’s loyalty program and BCB (2016) INCREASING AFFORDABILITY AND LOW PENETRATION BRINGS GROWTH OPPORTUNITIES. *Was considered that each credit card owner owns 1,3 credit card, BCB estimated that were 84 million active credit cards in Brazil in 2016. DRIVERS 22
  • 23.
    EVOLUTION IN AIRLINEMARKET BRINGS GROWTH OPPORTUNITIES DRIVERS 23 * 40,6 45,7 49,7 56,9 70,3 81,5 87,0 88,2 93,3 94,4 89,0 90,8 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AIRLINE MARKET EVOLUTION RPK (REVENUE SEAT KILOMETER) IN MILLION * Annualized with the available data until November/17 Sources: ANAC 201,3 267,8 401 201,3 241,4 700,5 2017 2027 2037 DEMAND FORECASTING PASSANGERS ESTIMATE (IN MILLION) Sources: Ministério dos Transportes / Transportation Ministry (september/2017) OPTIMISTIC CONSERVATIVE
  • 24.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 24 COMPETITIVE ADVANTAGES2
  • 25.
    MARKET SHARE GROSS REVENUE- FLEET RENTAL 2016 FRAGMENTED MARKET WITH LOW ENTRY BARRIERS MARKET SIZE: R$5.4 BILLION OTHERS UNIDAS LOCAMERICA 25 12,2% 3,8% 6,5% 8,1% 69,3% MOVIDA
  • 26.
    DRIVERS 26 Corporate fleet: 5,000,000* Rented fleet: 440,737** 44,655 BRAZILIANMARKET *Frost&Sullivan research **Localiza estimates WORLD 8,8% 8,9% 13,3% 16,5% 24,5% 37,4% 46,9% 58,3% Source: Datamonitor for European countries and Localiza’s estimate for Brazil LOW PENETRATION OF RENTED FLEET IN BRAZIL
  • 27.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 27 COMPETITIVE ADVANTAGES2
  • 28.
    8.4 8.9 9.09.4 10.1 9.9 10.0 10.6 3.3 3.5 3.6 3.6 3.3 2.5 2.0 2.1 2010 2011 2012 2013 2014 2015 2016 2017* BRAZILIAN CAR MARKET: new vs used car market Source: Fenabrrave (light and commercial cars) *9M17 anualizado 28 New cars Used cars 2.5x 2.5x2.6x 2.6x 3.1x 4.0x 5.0x 5.0x TOTAL MARKET OF 12.7 MILLION CARS. 10.7 2.2
  • 29.
    DRIVERS SEMINOVOS # OFINHABITANTS PER CAR – BRAZIL 2005 - 2016 AFFORDABILITY TO BUY CARS – PUBLIC PRICE OF THE MODEL GOL IN THE MOST BASIC VERSION AFFORDABILITY AND PENETRATION 7,9 7,7 7,3 6,9 6,5 6,0 5,7 5,3 5,0 4,9 4,8 4,8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 300 350 380 415 465 510 545 622 678 724 788 880 84 71 69 61 55 51 49 43 43 43 41 41 - 10 20 30 40 50 60 70 80 90 -100 - 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Minimum wage (R$) Minimum wages needed to buy a new car DEVELOPED COUNTRIES MAINTAIN A RATIO BETWEEN 1-2 CARS PER INHABITANT Source: Sindipeças – Current Fleet Report 2016, as of April 2016. Source: BCB and Localiza 29
  • 30.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 3Q175 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 30 COMPETITIVE ADVANTAGES2
  • 31.
    3Q17 OPERATIONAL HIGHLIGHTS 4.846 6.587 3Q163Q17 2.812 3.241 3Q16 3Q17 17,379 23,941 3Q16 3Q17 87.897 127.221 34.437 44.655 13.868 13.514 136.202 185.390 3Q16 3Q17 Franchising Fleet Rental Car Rental 31 # OF CARS SOLD RENTAL DAYS (THOUSAND)– CAR RENTAL RENTAL DAYS (THOUSAND) – FLEET RENTAL FLEET AT END OF THE PERIOD
  • 32.
    3Q17 FINANCIAL HIGHLIGHTS 32 NETREVENUES (R$ MILLION) NET INCOME (R$ MILLION) 103,9 139,5 3Q16 3Q17 Adjusted EBIT (R$ MILHÕES) 592,9 898,4 366,8 476,5163,5 188,5 1.123,2 1.563,4 3Q16 3Q17 Seminovos RAC and frachising Fleet Rental 252,1 332,3 3Q16 3Q17 Adjusted 187,8 263,9 3Q16 3Q17 Adjusted 21.5 16.3 21.5 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation, after taxes One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation EBITDA (R$ MILLION)
  • 33.
    HERTZ BRASIL –SUCESS OF THE INTEGRATION 33  Rebranding with the new brand Localiza Hertz  Fleet contracts transferred to Localiza Fleet  Integration of Hertz Brasil´s and Localiza´s locations  8.386 cars integrated to the Localiza´s fleet  Inbound/outbound reservation system already integrated  Localiza´s clients have acess to over 10,000 Hertz locations around the globe  Data and client base consolidation  Closing on 09/01/2017 NEXT STEPS: INCREASE OF THE COMMERCIAL OPPORTUNITIES, INBOUND OUTBOUND AND KNOW-HOW EXCHANGE
  • 34.
    ONE TIME COSTS3Q17 34 ONE-TIME COSTS 3Q17 Incurred 4Q17 Estimated Total Estimated RAC Costs: Hertz: rebrand, structure and networking reduction (2.1) (40.0) (42.1) Franchise integration (12.7) (12.7) RAC - Total costs (14.8) (40.0) (54.8) SG&A Hertz: structure and networking reduction (6.7) (20.0) (26.7) Total SG&A (6.7) (20.0) (26.7) Total One-time Costs (21.5) (60.0) (81.5) CONSOLIDATED RESULTS 3Q17 actual One-off 3Q17 Adjusted Net revenues 1,563.4 1,563.4 Total costs and expenses (1,252.6) 21.5 (1,231.1) EBITDA 310.8 21.5 332.3 Depreciation (68.4) (68.4) EBIT 242.4 21.5 263.9 Financial expenses, net (79.4) (79.4) Income tax and social contribution (39.8) (5.2) (45.0) Net income 123.2 16.3 139.5 3Q17 financial results were adjusted to exclude the impact of one-time costs resulting from the acquisition of Hertz´s operations in Brazil (R$8.8 million) and the integration of 17 franchised locations (R$12.7 million): Note: non-incurred one-time costs were not provisioned in 3Q17 because, on 09/30/2017, such expenses were not bound to be regarded as provision according to the rules imposed by Technical Pronouncement CPC # 25 – Provisions, Contingent Liabilities and Contingent Assets.
  • 35.
    CAR RENTAL 1.093,7 1.163,51.284,4 1.258,0 1.428,0 1.030,0 1.273,6 362,5 472,6 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 NUMBER OF DAILY RENTALS (THOUSAND) 35.9% RAC DAILY RENTALS GROWTH AND 30.4% GROWTH IN NET REVENUES IN 3Q17 13.749 14.242 15.416 15.566 18.662 13.397 17.461 4.846 6.587 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 NET REVENUES (R$ MILLION) 35
  • 36.
    36 UTILIZATION RATE –CAR RENTALAVERAGE DAILY RENTAL RATE – IN R$ 73,4% 73,7% 75,3% 71,5% 73,5% 74,7% 74,3% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 83,6 79,4 77,7 78,6 79,3 74,1 74,1 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 CAR RENTAL THE AVERAGE DAILY RENTAL RATE AND UTILIZATION RATE REMAINED FLATTISH IN 3Q17 WHEN COMPARED WITH 2Q17 .
  • 37.
    CAR RENTAL NETWORKEVOLUTION Number of car rental locations Brazil and abroad (does not include Hertz Brasil) 272 286 304 320 333 371 202 193 172 174 158 136 50 63 64 70 70 70 524 542 540 564 561 577 2012 2013 2014 2015 2016 9M17* Localiza's branches - Brazil Franchisees' branches - Brazil Franchisees' branches - abroad +38 38 CORPORATE BRANCHES WERE ADDED TO THE NETWORK IN 9M17 37 * Does not include Hertz Brasil branches
  • 38.
    FLEET RENTAL NUMBER OFDAILY RENTALS (THOUSAND) 15.3% GROWTH IN DAILY RENTALS AND NET REVENUES IN 3Q17 38 535,7 575,9 571,9 608,5 651,8 481,3 538,2 163,5 188,5 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 10.601 10.844 10.363 10.901 11.240 8.318 9.184 2.812 3.241 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 NET REVENUES (R$ MILLION)
  • 39.
    NET INVESTMENT FLEET EXPANSION(REDUCTION)* (QUANTITY) 108,271 CARS PURCHASED IN 9M17, 57,213 OF WHICH WERE PURCHASED IN 3Q17, INCLUDING HERTZ BRASIL39 NET INVESTMENT IN FLEET (R$ MILLION) Cars purchased Cars sold 2,011 7,103 * It does not consider theft / crashed cars. 9,183 465.0 (273) 1.618,8 2.026,2 2.483,2 2.278,4 3.289,6 2.211,9 4.316,6 1.078,0 2.208,9 1.520,0 1.747,3 2.018,2 2.044,9 2.342,6 1.609,3 2.424,7 592,9 898,4 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 58.655 69.744 79.804 64.032 87.833 59.912 108.271 28.903 57.21356.644 62.641 70.621 64.305 68.449 47.566 64.451 17.379 23.941 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 98.8 278.9 233.5 19,384 947.0 12,346 602.6 485,1 43,820 33,272 1,891.9 1,310.5 11,524 267 100,109 8,162 8,162 49,051 267 64,184 23,674 9.04,030.1 286.5 286.5 1,922.4 9.02,415.7 889.4 Hertz Brasil Purchases (includes accessories) Used car sales net revenues Hertz Brasil
  • 40.
    40 NUMBER OF POINTSOF SALE 73 74 75 77 84 79 93 56.644 62.641 70.621 64.305 68.449 47.566 64.451 -50.000 -30.000 -10.000 10.000 30.000 50.000 70.000 -10 10 30 50 70 90 110 130 150 2012 2013 2014 2015 2016 9M16 9M17 Points of sale Cars sold NEW POINTS OF SALE WILL BE ADDED TO SUPPORT THE FLEET RENEWAL.
  • 41.
    41 END OF PERIODFLEET 185,390 CARS AS OF 09/30/2017 INCREASE OF 39,324 CARS IN THE RENT A CAR DIVISION WITHOU IMPACTING UTILIZATION RATE Car Rental Fleet Rental Franchising +10,218 +39,324 Quantity
  • 42.
    1,646.7 1,758.9 1,874.01,883.1 2,096.8 1,523.9 1,824.1 530.3 665.0 1,520.0 1,747.3 2,018.2 2,044.9 2,342.5 1,609.4 2,424.7 592.9 898.4 3,166.7 3,506.2 3,892.2 3,928.0 4,439.3 3,133.3 4,248.8 1,123.2 1,563.4 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 42 CONSOLIDATED NET REVENUES R$ million Rental Used car sales 39.2% INCREASE IN CONSOLIDATED REVENUES IN 3Q17
  • 43.
    43 CONSOLIDATED EBITDA R$ million (*)It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos. (**)3Q17 and 9M17 adjusted financials Divisions 2012 2013 2014* 2015 2016 9M16 9M17 3Q16 3Q17 Car Rental 40.9% 36.8% 38.7% 31.8% 32.3% 32.7% 34.2%** 31.9% 32.2%** Fleet Rental 66.4% 65.5% 60.0% 62.2% 64.5% 64.7% 62.7% 64.5% 63.4% Rental Consolidated 49.3% 46.5% 45.3% 41.7% 42.3% 42.9% 42.6%** 42.1% 41.0%** Used Car Sales 4.2% 5.7% 6.0% 7.3% 5.5% 5.6% 6.2% 4.9% 6.6% EBITDA margin: 875,6 916,5 969,8 934,8 1.015,6 744,6 927,9 252,1 332,3 2012 2013 2014 2015 2016 9M16 9M17 Adjusted 3Q16 3Q17 AdjustedIncurred One-time costs acquisition Hertz Brasil and Franchisees 21.5 21.5 31.8% EBITDA INCREASE IN 3Q17
  • 44.
    44 AVERAGE ANNUAL DEPRECIATIONPER CAR In R$ 1.896 1.452 1.270 622 1.251 1.351 2012 2013 2014 2015 2016 9M17 annualized 3,972 5,408 4.311 4.592 4.202 3.935 3.714 3.105 2012 2013 2014 2015 2016 9M17 annualized 2,076 IPI effect 1,097 IPI Effect FLEET RENTAL CAR RENTAL DEPRECIATION IS IMPACTED BY THE NEW AND USED CAR MARKET, AS WELL BY THE COST TO SELL
  • 45.
    45 CONSOLIDATED EBIT R$ million 465,8 652,1726,7 735,5 771,1 569,1 729,4 187,8 263,9 2012 2013 2014 2015 2016 9M16 9M17 Adjusted 3Q16 3Q17 Adjusted 610.3 Divisions 2012 2013 2014 2015 2016 9M16 9M17 3Q16 3Q17 Car Rental 23.7% 32.8% 36.2% 34.3% 30.2% 31.0% 34.8%* 28.1% 34.4%* Fleet Rental 36.9% 45.1% 44.3% 48.9% 51.2% 50.8% 52.7% 51.4% 53.1% Consolidated 28.3% 37.1% 38.8% 39.1% 36.8% 37.3% 40.0%* 35.4% 39.7%* 21.5 21.5 Incurred One-time costs acquisition Hertz Brasil and Franchisees 144.5 IPI Effect (*)3Q17 and 9M17 adjusted financials 40.5% EBIT GROWTH, WITH INCREASING MARGINS ON RAC AND FLEET RENTAL
  • 46.
    46 CONSOLIDATED NET INCOME R$million 240,9 384,3 410,6 402,4 409,3 304,9 389,0 103,9 139,5 2012 2013 2014 2015 2016 9M16 9M17 Adjusted 3Q16 3Q17 Adjusted 336.3 Reconciliation EBITDA x Net income 2012 2013 2014 2015 2016 9M16 9M17* Var. R$ Var. % 3Q16 3Q17* Var. R$ Var. % Consolidated EBITDA 875.6 916.5 969.8 934.8 1,015.6 744.6 927.9 183.3 24.6% 252.1 332.3 80.2 31.8% Cars depreciation (232.4) (229.0) (207.4) (163.6) (206.3) (146.8) (170.2) (23.4) 15.9% (54.7) (58.2) (3.5) 6.4% Cars additional depreciation – IPI effect (144.5) - - - - - - - - - - - - Other property depreciation and amortization (32.9) (35.4) (35.7) (35.7) (38.2) (28.7) (28.3) 0.4 -1.4% (9.6) (10.2) (0.6) 6.3% EBIT 465.8 652.1 726.7 735.5 771.1 569.1 729.4 160.3 28.2% 187.8 263.9 76.1 40.5% Financial expenses, net (138.7) (110.6) (151.1) (202.7) (243.5) (170.8) (221.3) (50.5) 29.6% (53.7) (79.4) (25.7) 47.9% Income tax and social contribution (135.3) (157.2) (165.0) (130.4) (118.3) (93.4) (119.1) (25.7) 27.5% (30.2) (45.0) (14.8) 49.0% Income tax and social contribution – IPI effect 49.1 - - - - - - - - - - - - Net income of the period 240.9 384.3 410.6 402.4 409.3 304.9 389.0 84.1 27.6.% 103.9 139.5 35.6 34.3% 16.3 16.3 Incurred one-time costs acquisition Hertz Brasil and Franchisees, after taxes 95.4 IPI Effect (*)3Q17 and 9M17 adjusted financials 34.3%NET INCOME INCREASE IN 3Q17
  • 47.
    47 FREE CASH FLOW R$1billion investment (64,451 cars) (35,658 cars) (includes 8,162 cars) R$ 1 BILLION INVESTED IN GROWTH
  • 48.
    FREE CASH FLOW 48 Freecash flow - R$ million 2012 2013 2014 2015 2016 9M17 Adjusted Operations EBITDA 875.6 916.5 969.8 934.8 1,015.6 927.9 Used car sale revenue, net from taxes (1,520.0) (1,747.3) (2,018.2) (2,044.9) (2,342.5) (2,424.7) Depreciated cost of cars sold 1,360.2 1,543.8 1,777.0 1,769.1 2,102.5 2,178.8 (-) Income tax and social contribution (100.9) (108.5) (113.1) (110.7) (93.3) (81.7) Change in working capital 37.1 2.9 (27.1) (30.0) 113.2 (28.9) Cash generated by rental operations 652.0 607.4 588.4 518.3 795.5 571.4 Capex-renewal Used car sale revenue, net from taxes 1,520.0 1,747.3 2,018.2 2,036.3 2,342.5 2,424.7 Fleet renewal investment (1,563.3) (1,819.7) (2,197.7) (2,278.4) (2,563.6) (2,594.6) Net investment for fleet renewal (43.3) (72.4) (179.5) (242.1) (221.1) (169.9) Fleet renewal – quantity 56,644 62,641 70,621 64,032 68,449 64,451 Investment, other property and intangible investments (77.8) (47.5) (46.3) (29.7) (42.2) (35.1) Free cash flow from operations, before growth 530.9 487.5 362.6 246.5 532.2 366.4 Capex-Growth Fleet growth (investment) (55.5) (209.4) (286.8) 8.6 (726.0) (1,435.5) Change in accounts payable to car suppliers (116.9) 89.7 334.4 (121.2) 190.7 738.7 Fleet growth capex (172.4) (119.7) 47.6 (112.6) (535.3) (696.8) Fleet increase / (reduction) – quantity 2,011 7,103 9,183 (273) 19,384 35,658 Free cash flow after growth, and before interest and new HQ 358.5 367.8 410.2 133.9 (3.1) (330.4) Capex-non- recurring Hertz acquisition net of the acquired cash (R$360.1 million - R$22.4 cash) - - - - - (337.7) Incurred one-time costs effect - - - - - (21.5) New headquarters construction and furniture (2.4) (6.5) (148.3) (30.7) (84.4) (119.7) Free cash flow before interest 356.1 361.3 261.9 103.2 (87.5) (809.3)
  • 49.
    49 CHANGE IN NETDEBT R$ million R$1.1 BILLION NET DEBT INCREASE DUE TO FLEET EXPANSION AND HERTZ BRASIL ACQUISITION R$1 billion investment
  • 50.
    50 DEBT MATURITY PROFILE(PRINCIPAL) R$ million 1.939,4 111,3 435,6 685,6 1.420,0 672,5 500,0 500,0 700,0 350,0 350,0 Cash 2017 2018 2019 2020 2021 2022 2023 2024 1,232.5 2,289.4 Pro-Forma with 4th debentures issuance of Localiza Fleet, completed in October. 2017 1,050.0 As of September 30, 2017 Includes 4th issuance of Localiza Fleet completed in October 2017 STRONG CASH POSITION AND COMFORTABLE DEBT PROFILE
  • 51.
    51 DEBT RATIOS THE COMPANYCONTINUES TO PRESENT SOLID DEBT RATIOS NET DEBT VERSUS FLEET VALUE BALANCE AT THE END OF PERIOD 2012 2013 2014 2015 2016 9M17 Net debt / Fleet value 48% 48% 40% 44% 45% 49% Net debt / EBITDA(*) 1.4x 1.5x 1.4x 1.7x 2.1x 2.6x Net debt / Equity 0.9x 1.0x 0.8x 0.8x 0.9x 1.3x EBITDA / Net financial expenses 6.3x 8.3x 6.4x 4.6x 4.2x 4.2x NET DEBT FLEET VALUE (*)Annualized 1,231.2 1,332.8 1,322.3 1,588.6 2,084.0 3,238.3 2,547.6 2,797.9 3,296.3 3,642.7 4,623.6 6,588.6 2012 2013 2014 2015 2016 9M17
  • 52.
    52 Website: www.localiza.com/ir E-mail:ri@localiza.com Phone: 55 31 3247-7024 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. DISCLAIMER