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Localiza institucional inglês
This document provides an overview of Localiza, a Brazilian car rental company. It discusses Localiza's business divisions including car rental, fleet rental, used car sales, and franchising. It highlights Localiza's competitive advantages such as its integrated business platform, leadership in car purchasing which allows better conditions, largest distribution network in Brazil, and innovation in digital technologies. Financial information is presented showing Localiza's profitability comes primarily from its car rental and fleet rental divisions. [/SUMMARY]
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- 2. AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 1Q185 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 - Phase I: Rise to #1 Phase II: Expansion Phase III: Reaching Scale Phase IV: Digital Transformation COMPANY HISTORY: MILESTONES 2018 Market Cap US$5.8 Billion (03/30/18)
- 4. INTEGRATED BUSINESS PLATFORM THIS INTEGRATED PLATFORM GIVESLOCALIZA FLEXIBILITY AND SUPERIOR PERFORMANCE 4 • 133,777 CARS • 7.9 MILLION CLIENTS • 390 LOCATIONS • 4,559 EMPLOYEES CAR RENTAL FLEET RENTAL •44,742 CARS • 1,240 CLIENTS • 284 EMPLOYEES USED CAR SALES • 45.7% SOLD TO FINAL CONSUMER • 99 STORES • 65 CITIES • 1,170 EMPLOYEES FRANCHISING • 14,741 CARS • 131 LOCATIONS IN BRASIL • 70 LOCATIONS IN SOUTH AMERICA • 36 EMPLOYEES SYNERGIES: BARGAINING POWER COST REDUCTION CROSS SELLING OVERHEAD AND SUPPORT: 1,027 EMPLOYEES
- 5. COMPANY:BUSINESS PLATFORM DIVISIONS CARRENTAL FRANCHISING FLEET RENTAL USED CAR SALES 5 • HIGH FIXED COST STRUCTURE • STANDARDIZED FLEET • 1 YEAR CYCLE • HIGHER ENTRY BARRIERS • GAINS OF SCALE • CAPITAL INTENSIVE • CONCENTRATED AIRPORT MARKET • FRAGMENTED OFF AIRPORT MARKET RENTS TO INDIVIDUALS AND COMPANIES AT AIRPORTS AND OFF AIRPORT LOCATIONS. CONTRIBUTES TO EXPAND LOCALIZA’S NETWORK. • HIGH PROFITABILITY • LOW CONTRIBUTION TO EARNINGS • RESPONSIBLE TO DEVELOP NEW MARKETS • LOW FIXED COST STRUCTURE • CUSTOMIZED FLEET • 2-3 YEARS CYCLE • LOWER ENTRY BARRIERS • CAPITAL INTENSIVE OUTSOURCES FLEET FOR 2-3 YEARS’ TERM CONTRACTS. SELLS THE USED CARS MAINLY TO FINAL CONSUMERS AFTER THE RENTAL AND ESTIMATES THE RESIDUAL VALUES. • EFFICIENCY AREA RESPONSIBLE TO SELL CARS FROM RAC AND FLEET DIVISIONS • KNOW HOW OF USED CARS MARKET • LOW DEPENDENCE OF INTERMEDIATES • ALLOWING FOR LOWER DEPRECIATION
- 6. 6 BIG NUMBERS Marketleader with market cap of R$ 18.6 billion (US$ 5.8 bn) in March 30, 2018 End of period fleet of 193,260 cars in 1Q18 R$1.8 billion in net revenues in 1Q18 Volume growth of 53.3% in the Car Rental Division in 1Q18 ROIC of 14.2%, spread of 9.0 p.p in relation to cost of debt after taxes
- 7. Net Revenues R$1,823 EBITDA R$398 EBIT* R$330 Consolidated breakdown– 1Q18 R$ million 7 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions COMPANY’S PROFITABILITY COMES FROM CAR RENTAL AND FLEET RENTAL DIVISIONS R$ 59 15% R$ 125 31% R$ 214 54% R$ 98 30% R$ 232 70% R$ 1,021 56% R$ 203 11% R$ 599 33%
- 8. AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 1Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 8 COMPETITIVE ADVANTAGES2
- 9. COMPETITIVE ADVANTAGES PROFITABILITY COMESFROM RENTAL DIVISIONS CASH TO RENEW THE FLEET OR PAY DEBT RAISING MONEY BUYING CARS ALUGUEL DE CARS SELLING CARS 9 RENTING CARS 44 YEARS OF EXPERIENCE IN MANAGING ASSETS AND GENERATING VALUE.
- 10. COMPETITIVE ADVANTAGES RAISING MONEY INVESTMENTGRADE: LOWER SPREADS AND LONGER TENORS Source: Bloomberg April, 2018. BB Fitch Ba2 Moody’s BB+ S&P B+ S&P Ba3 Moody´s BB S&P B1 Moody´s B+ S&P Player A Player B/C Player D brAAA S&P Aa1.br Moody’s AAA(bra) Fitch A+(bra) Fitch AA (bra) Fitch brAA- S&P A(bra) FitchNational scale Global scale 10 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS LOCALIZA RAISES MONEY WITH BETTER CONDITIONS THEN ITS COMPETITORS.
- 11. COMPETITIVE ADVANTAGES 11 RAISING MONEY 2017Bonds - R$ million R$869 109.35% - 12/2017 R$700 107.25% - 05/2017 R$650 104.66% - 09/2017 CRI - R$370 99.0% - 02/2018 R$500 107.00% - 05/2017 Player B R$500 113.97% - 10/2017 R$ 350 103.49% - 10/2017 Player B R$300 128.68% - 04/17 Player C R$300 130.00% - 08/2017 Player A R$250 131.42% - 07/2017 R$216 111.30% - 12/2017 Player A R$150 119.00% - 07/2017 Player C R$100 113.15% - 11/2017 90% 95% 100% 105% 110% 115% 120% 125% 130% 135% 140% -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 % CDI Years RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
- 12. Number of carspurchased - 2017 Localiza’s share in the internal sales of the OEMs* - 2017 Source: website of each company and ANFAVEA. 12 COMPETITIVE ADVANTAGES BUYING CARS 141,077 55,076 39,304 19,747 Localiza* Player A Player B* Player C *it includes 5,825 cars from Localiza´s and 1,944 from Unidas’ Brazilian Franchisees 8.4% LOCALIZA BUYS CARS WITH BETTER CONDITIONS DUE TO THE VOLUME OF PURCHASES. RAISING MONEY BUYING CARS SELLING CARS RENTING CARS *it considers the 12 OEMs listed above
- 13. Most recognized anddesired brand in the category 13 • 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 BRAZILIAN DISTRIBUTION # OF LOCATIONS # OF CITIES 521 216 183 399 Localiza 1Q18 Competitors 2017 362 150 96 Localiza 1Q18 Player B 2017 Player A 2017 Source: website of each company on 12/31/2017 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
- 14. COMPETITIVE ADVANTAGENS 14 RAINSING MONEY BUYING CARSSELLING CARSFLEET RENTAL New ways of developing technologies with agility and customer collaboration Innovations that generate strategic information for the customer´s business and added value for the business Good interaction with customers, facilitating the resolution of problems FLEET RENTAL
- 15. 15 Distribution in Brazil DigitalSale 99 points of sale 65 cities in Brazil COMPETITIVE ADVANTAGES SELLING CARS Big data Best understanding of costumer preference Pricing estimate - Depreciation + Residual Value Input for car purchase Buffer: additional fleet during peaks of demand Sales to final consumer Lower depreciation Loyalty of customers, generating good repurchase rates and indication EFFICIENCY AREA TO REDUCE DEPRECIATION RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
- 16. 16 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 RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
- 17. 17 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 INNOVATION DIFFERENTIATED OFFER WITH HIGHER VALUE ADDED TO CUSTOMERS
- 18. R$38.2 Average car price (2years) Car sale revenue net of SG&A R$36.0 1 year cycle 1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax Revenue CAR RENTAL: FINANCIAL CYCLE 2017 Per car 18 Total 1 year R$ % R$ % R$ Net revenues 19.6 100.0% 38.8 100.0% 58.4 Costs - fixed and variable (9.2) -47.1% (9.2) SG&A (3.5) -18.0% (2.9) -7.4% (6.4) Net revenues of car sold 36.0 92.6% 36.0 Book value of car sold (33.9) -87.2% (33.9) EBITDA 6.9 34.9% 2.1 5.4% 9.0 Cars Depreciation (1.2) -3.2% (1.2) Others depreciation (0.3) -1.3% (0.1) -0.3% (0.4) Financial expenses (2.4) -6.3% (2.4) Taxes (1.5) -7.6% 0.4 1.0% (1.1) Net Income (Loss) 5.1 26.0% (1.3) -3.4% 3.8 NOPAT 5.7 ROIC (it consideres only cars in capital invested) 14.9% Cost of debt after taxes 7.6% Car Rental Seminovos Per car soldPer operating car
- 19. 1 2 34 5 6 31 32 33 34 35 36Expenses, interest and tax Revenue Car sale revenue net of SG&A R$31.8 R$43.1 Average car price (3 years) 3 year cycle FLEET RENTAL: FINANCIAL CYCLE 2017 Per car 19 Total 3 years R$ % Seminovos % R$ Net revenues 60.5 100.0% 34.1 100.0% 94.6 Costs - fixed and variable (17.9) -29.7% (17.9) SG&A (5.1) -8.4% (2.4) -7.0% (7.5) Net revenues of car sold 31.7 93.0% 31.7 Book value of car sold (28.7) -84.1% (28.7) EBITDA 37.5 61.9% 3.0 8.9% 40.5 Cars Depreciation (9.3) -27.3% (9.3) Others depreciation (0.3) -0.5% (0.1) -0.4% (0.4) Financial expenses (6.5) -19.1% (6.5) Taxes (8.4) -13.9% 2.9 8.6% (5.5) Net Income (Loss) 28.8 47.6% (10.0) -29.4% 18.8 Net Income (Loss) - per year 9.6 47.6% (3.3) -29.4% 6.3 NOPAT 7.9 ROIC (it consideres only cars in capital invested) 18.4% Cost of debt after taxes 7.6% Per operating car Fleet Rental Seminovos Per car sold
- 20. ROIC versus COSTOF DEBT AFTER TAXES HIGHER SPREAD MEANS VALUE GENERATION FOR SHAREHOLDERS ROIC considered each year´s effective income tax and social contribution rate (*)Adjusted by the one-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation 16.7% 17.8% 17.0% 15.4% 15.6% 14.2% 6.0% 8.0% 9.5% 10.2% 7.6% 5.2% 2013 2014 2015 2016 2017 1Q18 ROIC Cost of debt after taxes 9.8p.p. 10.7p.p. 7.5p.p. 5.2p.p. 8.0p.p. * 9.0p.p. 2013 2014 2015 2016 2017 1Q18 ROE 29.0% 30.6% 24.3% 21.1% 25.6% 27.1% 20
- 21. AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 1Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 21 COMPETITIVE ADVANTAGES2
- 22. 22 MARKET SIZE 2016: R$5.8BILLION OTHERS MARKET SIZE 2017: R$6.5 BILLION CAR RENTAL: MARKET SHARE GROSS REVENUE - CAR RENTAL Source: ABLA, considering the breakdown reported applied on the revenues OTHERS 29.3%* 11.8% 6.7% 52.2% 32.3%* 13.9% 7.8% 46.0% PLAYER B PLAYER A PLAYER B PLAYER A *Localiza’s market share includes revenues from franchisees in Brazil. There are no public data on the revenue of other players’ franchisees.
- 23. CAR RENTAL LOCATIONSIN BRAZIL AIRPORT LOCATIONS OFF – AIRPORT LOCATIONS Localiza 422 Player B 161 Player E 26 Player A 100 Others 7,850 23Source: ABLA, each company’s website on 03/31/2018 and Localiza’s 1Q18 Earnings Release. 1/3 OF CAR RENTAL’S REVENUES COMES FROM AIRPORT LOCATIONS OFF -AIRPORT LOCATIONS AIRPORT LOCATIONS OFF – AIRPORT MARKET IS STILL FRAGMENTED Localiza 99 Player A 51 Player B 51 Player E 33 Others 38 Localiza Player A Player B Player E Others
- 24. 180 200 240 260 300 350380 415 465 510 545 622 678 724 788 880 937 38% 37% 35% 31% 27% 22% 20% 18% 16% 15% 15% 13% 13% 12% 11% 9% 8% -50 50 150 250 350 450 550 650 750 850 950 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Monthly minimun salary (R$) Daily rental price over minimum salary (%) CAR RENTAL AFFORDABILITY Source: BCB and Localiza rates Sources: IPEADATA, Localiza’s loyalty program and BCB as of 2016 *Considering that each credit card owner owns 1,3 credit cards, BCB estimated that were 84 million active credit cards in Brazil in 2016. CAR RENTAL: DRIVERS 24INCREASING AFFORDABILITY AND LOW PENETRATION BRINGS GROWTH OPPORTUNITIES. 3.1 3.8 4.3 5.7 6.4 7.6 7.9 2012 2013 2014 2015 2016 2017 1T18 LOCALIZA RAC USERS (MILLION) 84.0 64.0 7.9 Adult population (age>20 years) Class A+B+C Credit Card owners Users In million *considering only the individual segment.
- 25. CAR RENTAL: DRIVERS 25 * 40.6 45.7 49.7 56.9 70.3 81.5 87.088.2 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 Source: ANAC DEMAND FORECASTING PASSANGERS ESTIMATE (IN MILLION) Source: Ministério dos Transportes / Transportation Ministry (September/2017) EVOLUTION IN AIRLINE MARKET BRINGS GROWTH OPPORTUNITIES . 201.3 267.8 401 2017 2027 2037
- 26. AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 1Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 26 COMPETITIVE ADVANTAGES2
- 27. FLEET RENTAL: MARKETSHARE GROSS REVENUE - FLEET RENTAL 27Source: ABLA, considering the breakdown reported applied on the revenues MARKET SIZE 2017: R$9 BILLION MARKET SIZE 2016: R$8 BILLION 8.4% 2.6% 3.6% 7.6% 77.9%OUTROS PLAYER B PLAYER C PLAYER A 8.3% 2.6% 4.4% 5.5% 79.1%OTHERS PLAYER B PLAYER C PLAYER A
- 28. FLEET RENTAL: DRIVERS 28 Corporatefleet: 5,000,000* Rented fleet: 440,737** 39,738 BRAZILIAN MARKET *Frost&Sullivan research **Localiza estimates WORLD 8.8% 8.9% 13.3% 16.5% 24.5% 37.4% 46.9% 58.3% Source: Datamonitor for European countries and Localiza’s estimate for Brazil LOW PENETRATION OF RENTED FLEET IN BRAZIL
- 29. AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 1Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 29 COMPETITIVE ADVANTAGES2
- 30. SEMINOVOS: NEW vsUSED CAR MARKET (BRAZIL) Source: Fenabrave (light and commercial cars) may 30,2018. 30 New cars Used cars TOTAL MARKET OF 12.5 MILLION CARS. 8.4 8.9 9.0 9.4 10.1 9.9 10.0 10.7 10.3 3.3 3.5 3.6 3.6 3.3 2.5 2.0 2.2 2.2 2010 2011 2012 2013 2014 2015 2016 2017 May/2018 Carros usados Carros novos * * (*)Annualized 2.5x 2.5x2.6x 2.6x 3.1x 4.0x 5.0x 4.9x 4.7x
- 31. SEMINOVOS: DRIVERS # OFINHABITANTS PER CAR – BRAZIL 2005 - 2016 AFFORDABILITY TO BUY CARS – AVERAGE PUBLIC PRICE OF ECONOMIC CARS AFFORDABILITY AND PENETRATION 7.9 7.7 7.3 6.9 6.5 6.0 5.7 5.3 5.0 4.9 4.8 4.8 4.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 DEVELOPED COUNTRIES MAINTAIN A RATIO BETWEEN 2-1 INHABITANTS PER CAR Source: Sindipeças – Current Fleet Report 2018, as of April 2018. Source: BCB and Localiza Reference: for calculation was considered the cheapest car in our fleet 31 300 350 380 415 465 510 545 622 678 724 788 880 934 95484 71 69 61 55 51 49 43 43 43 41 41 47 47 - 10 20 30 40 50 60 70 80 90 -100 100 300 500 700 900 1,100 20052006200720082009201020112012201320142015201620172018 Minimum wage (R$) Minimum wages needed to buy a new car
- 32. 30.5% Up to 2years - 2017 296,756 SEMINOVOS: CARS SALES OPERATING DATA 0.8% Used cars – 2017 10,730,763 4.2% Main players Examples • Retailers • Dealers • Rental Operators Points of sale • 48,000 (Fenauto) • 5,535 (Anfavea) • +132 (Unidas, Movida, Locamerica) Source: Anfavea 2018 e Fenabrave / Unidas, Locamerica e Movida. 32 Brand new- 2017 2,172,235
- 33. AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 1Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 33 COMPETITIVE ADVANTAGES2
- 34. 34 # of carssold # of rental days (thousand)– Car Rental Fleet at end of the period # of rental days (thousand) – Fleet Rental 1Q18 OPERATING HIGHLIGHTS 87,508 133,777 36,080 44,742 14,019 14,741 137,607 193,260 1Q17 1Q18 Car rental Fleet rental Franchising 20,309 25,288 1Q17 1Q18 5,309 8,139 1Q17 1Q18 2,930 3,576 1Q17 1Q18
- 35. 35 Net revenues (R$million) Net income (R$ million)EBIT (R$ million) EBITDA (R$ million) 1Q18 FINANCIAL HIGHLIGHTS 297.0 397.4 1Q17 1Q18 120.3 176.0 1Q17 1Q18 230.1 329.9 1Q17 1Q18 758.5 1,020.5 407.8 599.0173.3 203.2 1,339.6 1,822.7 1Q17 1Q18 Seminovos RAC and Franchising Fleet Rental
- 36. CAR RENTAL 1,163.5 1,284.41,258.0 1,428.0 1,848.5 403.5 594.7 2013 2014 2015 2016 2017 1Q17 1Q18 Number of daily rentals (thousand) STRONG VOLUME AND REVENUE GROWTH IN 1Q18 14,241.7 15,416.0 15,566.1 18,662.4 25,263.6 5,308.5 8,139.4 2013 2014 2015 2016 2017 1Q17 1Q18 Net revenues (R$ million) 36
- 37. 37 CAR RENTAL Average dailyrental rate – in R$ Utilization rate OPERATIONAL EFFICIENCY AND PRICING MANAGEMENT STIMULATED DEMAND AND UTILIZATION 79.3 74.1 74.1 74.0 74.7 1Q17 2Q17 3Q17 4Q17 1Q18 75.8% 79.0% 81.0% 78.5% 78.7% 1Q17 2Q17 3Q17 4Q17 1Q18 New utilization rate presentation: considers only the period in which cars are available for rental at the locations
- 38. CAR RENTAL NETWORKEVOLUTION Number of car rental locations Brazil and abroad 286 304 320 333 384 390 193 172 174 158 133 131 63 64 70 70 71 70 542 540 564 561 588 591 2013 2014 2015 2016 2017 1Q18 Localiza's branches - Brazil Franchisees' branches - Brazil Franchisees' branches - abroad +6 6 CORPORATE LOCATIONS WERE ADDED TO THE NETWORK IN 1Q18 38
- 39. FLEET RENTAL Number ofdaily rentals (thousand) 22.1% GROWTH IN 1Q18 VOLUMES 39 575.9 571.9 608.5 651.8 742.1 173.3 203.2 2013 2014 2015 2016 2017 1Q17 1Q18 10,843.7 10,363.3 10,900.9 11,240.0 12,752.7 2,930.0 3,576.4 2013 2014 2015 2016 2017 1Q17 1Q18 Net revenues (R$ million)
- 40. NET INVESTMENT Fleet expansion(reduction)* (quantity) STRONG GROWTH IN RAC MITIGATED THE NEED TO REDUCE FLEET AFTER SEASONAL DEMAND PEAK 40 Net investment in fleet (R$ million) Cars purchased Cars sold Hertz Brasil Purchases (includes accessories) Used car sales net revenues Hertz Brasil 69,744 79,804 64,032 87,833 143,414 15,123 23,847 62,641 70,621 64,305 68,449 90,554 20,309 25,288 2013 2014 2015 2016 2017 1Q17 1Q18 7,103 9,183 (273) 19,384 88,619 1,935 135,252 8,162 (5,186) 52,860 (1,441) 2,026.2 2,483.2 2,278.4 3,289.6 5,754.4 618.2 933.8 1,747.3 2,018.2 2,044.9 2,342.6 3,451.2 758.5 1,020.5 2013 2014 2015 2016 2017 1Q17 1Q18 465.0 278.9 233.5 947.0 61.95.,467.9 286.5 3,389.3 (140.3) 2,303.2 (86.7) * It does not consider theft / crashed cars/written off.
- 41. 41 NUMBER OF POINTSOF SALE 74 75 77 84 99 88 99 62,641 70,621 64,305 68,449 90,554 20,309 25,288 -50,000 -30,000 -10,000 10,000 30,000 50,000 70,000 90,000 110,000 130,000 -10 10 30 50 70 90 110 130 150 2013 2014 2015 2016 2017 1Q17 1Q18 Points of sale Cars sold STORES WILL BE OPENED THROUGHOUT THE YEAR TO SUPPORT FUTURE RENEWAL OF FLEET
- 42. 42 END OF PERIODFLEET 52.9% GROWTH OF THE RAC FLEET, COMPARED WITH 1Q17 (Quantity) 70,717 77,573 76,755 94,156 135,578 87,508 133,777 32,809 34,312 33,948 34,960 44,877 36,080 44,742 14,233 13,339 13,992 14,015 13,824 14,019 14,741 117,759 125,224 124,695 143,131 194,279 137,607 193,260 2013 2014 2015 2016 2017 1Q17 1Q18 Car Rental Fleet Rental Franchising
- 43. 43 CONSOLIDATED NET REVENUES (R$million) 36.1% INCREASE IN CONSOLIDATED REVENUES IN 1Q18 1,758.9 1,874.0 1,883.1 2,096.8 2,607.1 581.1 802.2 1,747.3 2,018.2 2,044.9 2,342.5 3,451.2 758.5 1,020.5 3,506.2 3,892.2 3,928.0 4,439.3 6,058.3 1,339.6 1,822.7 2013 2014 2015 2016 2017 1Q17 1Q18 Rental Used car sales
- 44. 44 CONSOLIDATED EBITDA (R$ million) (*)It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos. (**) Adjusted by the one-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation Divisions 2013 2014* 2015 2016 2017 1Q17 1Q18 Car Rental 36.8% 38.7% 31.8% 32.3% 34.9%** 36.6% 35.7% Fleet Rental 65.5% 60.0% 62.2% 64.5% 61.9%** 63.0% 61.3% Rental Consolidated 46.5% 45.3% 41.7% 42.3% 42.6%** 44.5% 42.2% Used Car Sales 5.7% 6.0% 7.3% 5.5% 5.9% 5.0% 5.7% EBITDA margin: 916.5 969.8 934.8 1,015.6 1,314.2 297.0 397.4 2013 2014 2015 2016 2017 Adjusted 1Q17 1Q18 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation 74.0 33.8% GROWTH IN CONSOLIDATED EBITDA
- 45. 45 AVERAGE DEPRECIATION PERCAR (In R$) Fleet Rental Car Rental CAR PRICE INCREASES AND SALES EFFICIENCY CONTRIBUTED FOR LOWER DEPRECIATION ON RAC 1,452.4 1,270.0 622.1 1,251.2 1,250.1 1,484.8 715.9 2013 2014 2015 2016 2017 1Q17* 1Q18* 4,592.3 4,202.1 3,935.2 3,714.0 3,104.3 3,330.1 3,410.4 2013 2014 2015 2016 2017 1Q17* 1Q18* *Annualized
- 46. 46 CONSOLIDATED EBIT (R$ million) 652.1726.7 735.5 771.1 1,043.1 230.1 329.9 2013 2014 2015 2016 2017 Adjusted 1Q17 1Q18 Divisions 2013 2014 2015 2016 2017 1Q17 1Q18 Car Rental 32.8% 36.2% 34.3% 30.2% 35.5%* 34.8% 38.8% Fleet Rental 45.1% 44.3% 48.9% 51.2% 51.4%* 50.9% 48.0% Consolidated 37.1% 38.8% 39.1% 36.8% 40.0%* 39.6% 41.1% 74.0 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation (*) Adjusted by the one-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation LOWER DEPRECIATION PER CAR ON RAC SEGMENT CONTRIBUTED TO 4 P.P. GAIN IN EBIT MARGIN
- 47. 47 CONSOLIDATED NET INCOME (R$million) 384.3 410.6 402.4 409.3 563.4 120.3 176.0 2013 2014 2015 2016 2017 Adjusted 1Q17 1Q18 Reconciliation EBITDA x Net income 2013 2014 2015 2016 2017* Var. R$ Var. % 1Q17 1Q18 Var. R$ Var. % Consolidated EBITDA 916.5 969.8 934.8 1,015.6 1,314.2 298.6 29.4% 297.0 397.4 100.4 33.8% Cars depreciation (229.0) (207.4) (163.6) (206.3) (232.0) (25.7) 12.5% (57.9) (56.9) 1.0 -1.7% Other property depreciation and amortization (35.4) (35.7) (35.7) (38.2) (39.1) (0.9) 2.4% (9.0) (10.6) (1.6) 17.8% EBIT 652.1 726.7 735.5 771.1 1,043.1 272.0 35.3% 230.1 329.9 99.8 43.4% Financial expenses, net (110.6) (151.1) (202.7) (243.5) (315.0) (71.5) 29.4% (74.8) (88.9) (14.1) 18.9% Income tax and social contribution (157.2) (165.0) (130.4) (118.3) (164.7) (46.4) 39.2% (35.0) (65.0) (30.0) 85.7% Net income of the period 384.3 410.6 402.4 409.3 563.4 154.1 37.6% 120.3 176.0 55.7 46.3% 57.7 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation, after taxes (*)Adjusted by the one-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation NEW RECORD NET INCOME: 46,3% GROWTH
- 48. FREE CASH FLOW 48 Freecash flow - R$ million 2013 2014 2015 2016 2017 1Q18 Operations EBITDA 916.5 969.8 934.8 1,015.6 1,314.2* 397.4 Used car sale revenue, net from taxes (1,747.3) (2,018.2) (2,044.9) (2,342.5) (3,451.2) (1,020.5) Depreciated cost of cars sold 1,543.8 1,777.0 1,769.1 2,102.5 3,106.6 928.1 (-) Income tax and social contribution (108.5) (113.1) (110.7) (93.3) (108.3) (33.3) Change in working capital 2.9 (27.1) (30.0) 113.2 21.2 (49,0) Cash generated by rental operations 607.4 588.4 518.3 795.5 882.5 222.7 Capex-renewal Used car sale revenue, net from taxes – fleet renewal 1,747.3 2,018.2 2,036.3 2,342.5 3,451.2 962.4 Fleet renewal investment (1,819.7) (2,197.7) (2,278.4) (2,563.6) (3,660.9) (933.8) Change in accounts payable to car suppliers – renewal 144.3 120.0 (75.4) 174.1 247.8 71.0 Net investment for fleet renewal 71.9 (59.5) (317.5) (47.0) 38.1 99.6 Fleet renewal – quantity 62,641 70,621 64,032 68,449 90,554 23,847 Investment, property and intangible (47.5) (46.3) (29.7) (42.2) (48.8) (6.1) Free cash flow from operations, before growth 631.8 482.6 171.1 706.3 871.8 316.2 Capex-Growth Fleet growth investment (209.4) (286.8) - (726.0) (1,807.0) - Used car sale revenue, net from taxes – fleet reduction 8.6 58.1 Change in accounts payable to car suppliers – growth (54.6) 214.4 (45.8) 16.6 167.7 (364.9) Hertz Brazil acquisition - fleet (286.5) - Fleet growth capex (264.0) (72.4) (37.2) (709.4) (1,925.8) (306.8) Fleet increase / (reduction) – quantity 7,103 9,183 (273) 19,384 52,860 (1,441) Free cash flow after growth, and before interest and new HQ 367.8 410.2 133.9 (3.1) (1,054.0) 9.4 Capex- non- recurring Hertz Acquisition (Except fleet) - - - - (46.7) - Incurred one-time costs effect - - - - (74.0) - New headquarters construction and furniture (6.5) (148.3) (30.7) (84.4) (126.2) - Free cash flow before interest 361.3 261.9 103.2 (87.5) (1,300.9) 9.4 (*) Adjusted by one-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation In the free cash flow, short-term financial assets were considered as cash equivalents since they have immediately liquidity.
- 49. 49 NET DEBT INCREASEOF R$122 MILLION MAINLY DUE TO REDUCTION OF ACCOUNTS PAYABLE CHANGE IN NET DEBT (R$ million)
- 50. 50 DEBT RATIOS COMFORTABLE CAPITALSTRUCTURE NET DEBT DISCOUNTING CREDIT CARD RECEIVABLES VERSUS FLEET VALUE BALANCE AT THE END OF PERIOD 2013 2014 2015 2016 2017 1Q18 Net debt - credit card receivables / Fleet value 43% 35% 39% 44% 55% 57% Net debt - credit card receivables / annualized EBITDA 1.3x 1.2x 1,5x 2.0x 2.9x 2.5x Net debt - credit card receivables / Equity 0.9x 0.7x 0.7x 0.9x 1.5x 1.5x EBITDA / Net financial expenses 8.3x 6.4x 4.6x 4.2x 4.2x 4.5x 1,190.0 1,164.1 1,418.6 2,038.8 3,843.2 3,966.2 2,797.9 3,296.3 3,642.7 4,623.6 7,038.7 6,987.7 2013 2014 2015 2016 2017 1Q18 Net debt - credit card receivables Fleet value (R$ million)
- 51. 51 DEBT MATURITY PROFILE(PRINCIPAL) (R$ million) As of Mach 31, 2018 COMFORTABLE DEBT AND CASH PROFILE TO SUPPORT GROWTH 2,662.5 304.9 640.8 1,432.7 678.1 943.4 946.7 1,173.0 411.5 Cash and financial assets 2018 2019 2020 2021 2022 2023 2024 2025 - 2032 2,378.4
- 52. ROIC versus COSTOF DEBT AFTER TAXES HIGHER SPREAD MEANS VALUE GENERATION FOR SHAREHOLDERS ROIC considered each year´s effective income tax and social contribution rate (*)Adjusted by the one-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation 16.7% 17.8% 17.0% 15.4% 15.6% 14.2% 6.0% 8.0% 9.5% 10.2% 7.6% 5.2% 2013 2014 2015 2016 2017 1Q18 ROIC Cost of debt after taxes 9.8p.p. 10.7p.p. 7.5p.p. 5.2p.p. 8.0p.p. * 9.0p.p. 2013 2014 2015 2016 2017 1Q18 ROE 29.0% 30.6% 24.3% 21.1% 25.6% 27.1% 52
- 53. 53 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