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Localiza institucional inglês

Localiza is a Brazilian car rental company founded in 1973. It has grown to become the market leader through strategic acquisitions and expanding into new business divisions over time, including fleet rental, used car sales, and franchising. It has an integrated business platform with synergies across divisions. Localiza has several competitive advantages including its scale in purchasing cars, brand recognition, distribution network, and operational excellence. It aims to continue its strategy of innovation and providing higher value services to customers.

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INVESTOR RELATIONS PRESENTATION July, 2018. ,
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 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 1985 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$4.1 Billion (06/30/18) 2006 50.000 cars 2011 100.000 cars 150.000 cars 200.000 cars
INTEGRATED BUSINESS PLATFORM THIS INTEGRATED PLATFORM GIVES LOCALIZA FLEXIBILITY AND SUPERIOR PERFORMANCE 4 • 145.837 CARS • 8,0 MILLION CLIENTS • 391 LOCATIONS • 4,636 EMPLOYEES CAR RENTAL FLEET RENTAL •48,056 CARS • 1,308 CLIENTS • 301 EMPLOYEES USED CAR SALES • 46.7% SOLD TO FINAL CONSUMER • 100 STORES • 66 CITIES • 1,212 EMPLOYEES FRANCHISING • 14,659 CARS • 131 LOCATIONS IN BRASIL • 67 LOCATIONS IN SOUTH AMERICA • 34 EMPLOYEES SYNERGIES: BARGAINING POWER COST REDUCTION CROSS SELLING OVERHEAD AND SUPPORT: 1,253 EMPLOYEES 2Q18
COMPANY:BUSINESS PLATFORM DIVISIONS CAR RENTAL FRANCHISING FLEET RENTAL USED CAR SALES 5 • HIGH FIXED COST STRUCTURE • STANDARDIZED FLEET • 1 YEAR CYCLE • HIGHER ENTRY BARRIERS • GAINS OF SCALE • CAPITAL INTENSIVE • CONCENTRATED AIRPORT MARKET • FRAGMENTED OFF AIRPORT MARKET RENTS TO INDIVIDUALS AND COMPANIES AT AIRPORTS AND OFF AIRPORT LOCATIONS. CONTRIBUTES TO EXPAND LOCALIZA’S NETWORK. • HIGH PROFITABILITY • LOW CONTRIBUTION TO EARNINGS • RESPONSIBLE TO DEVELOP NEW MARKETS • LOW FIXED COST STRUCTURE • CUSTOMIZED FLEET • 2-3 YEARS CYCLE • LOWER ENTRY BARRIERS • CAPITAL INTENSIVE OUTSOURCES FLEET FOR 2-3 YEARS’ TERM CONTRACTS. SELLS THE USED CARS MAINLY TO FINAL CONSUMERS AFTER THE RENTAL AND ESTIMATES THE RESIDUAL VALUES. • EFFICIENCY AREA RESPONSIBLE TO SELL CARS FROM RAC AND FLEET DIVISIONS • KNOW HOW OF USED CARS MARKET • LOW DEPENDENCE OF INTERMEDIATES • ALLOWING FOR LOWER DEPRECIATION
6 BIG NUMBERS ✓ Market leader with market cap of R$ 15.8 billion (US$ 4.1 bn) in June 30, 2018 ✓ End of period fleet of 208,552 cars in 1H18 ✓ R$3.6 billion in net revenues in 1H18 ✓ Volume growth of 50.6% in the Car Rental Division in 1H18 ✓ ROIC of 13.2%, spread of 8.1 p.p in relation to cost of debt after taxes
Net Revenues R$3,563 EBITDA R$745 EBIT* R$607 Consolidated breakdown – 1H18 R$ million 7 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions COMPANY’S PROFITABILITY COMES FROM CAR RENTAL AND FLEET RENTAL DIVISIONS 93 13% 256 34% 396 53% 203 33% 404 67% 1,991 56% 407 11% 1,165 33%
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 8 COMPETITIVE ADVANTAGES2
COMPETITIVE ADVANTAGES PROFITABILITY COMES FROM RENTAL DIVISIONS CASH TO RENEW THE FLEET OR PAY DEBT RAISING MONEY BUYING CARS ALUGUEL DE CARS SELLING CARS 9 RENTING CARS 45 YEARS OF EXPERIENCE IN MANAGING ASSETS AND GENERATING VALUE.
COMPETITIVE ADVANTAGES RAISING MONEY INVESTMENT GRADE: LOWER SPREADS AND LONGER TENORS Source: Bloomberg July, 2018. BB Fitch Ba2 Moody’s BB+ S&P B+ S&P 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.
COMPETITIVE ADVANTAGES 11 RAISING MONEY 2018 Bonds - R$ million Player C R$411 114.7% Player C R$88 113.2% Player C R$350 119.0% Player A R$138 118.4% Player A R$182 123.1% Player A R$130 119.9% Player A R$250 121.0% Player B R$500 117.5% Localiza R$300 108.0% Localiza Fleet R$300 112.0% 90% 95% 100% 105% 110% 115% 120% 125% 130% 135% 140% 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 % CDI Years RAISING MONEY BUYING CARS SELLING CARS RENTING CARS
Number of cars purchased - 2017 Localiza’s share in the internal sales of the OEMs* - 2017 Source: website of each company and ANFAVEA. 12 COMPETITIVE ADVANTAGES BUYING CARS 140,751 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
Most recognized and desired 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 522 218 186 404 Localiza Competitors 362 144 96 Localiza Player B Player A RAISING MONEY BUYING CARS SELLING CARS RENTING CARS Source: Locations: Localiza 2Q18 results and 1Q18 results for its competitors; Number of cities: each company website on 07/26/18
COMPETITIVE ADVANTAGENS 14 RAINSING MONEY BUYING CARS SELLING 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 Distribution in Brazil Digital Sale 100 points of sale 66 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 demandSales 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 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 repair • 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 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
R$38.2 Average car price (2 years) 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
1 2 3 4 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
ROIC versus COST OF DEBT AFTER TAXES 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 2013 2014 2015 2016 2017 1H18 ROE 29.0% 30.6% 24.3% 21.1% 25.6% 24.4% 20 16.7% 17.8% 17.0% 15.4% 15.6% 13.2% 6.0% 8.0% 9.5% 10.2% 7.6% 5.1% 2013 2014 2015 2016 2017 1H18 ROIC Cost of debt after taxes 9.8p.p.10.7p.p. 7.5p.p. 5.2p.p. 8.0p.p. * 8.1p.p. STABLE SPREAD WITH STRONG PACE OF GROWTH
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 21 COMPETITIVE ADVANTAGES2
22 MARKET SIZE 2016: R$5.8 BILLION OTHERS MARKET SIZE 2017: R$6.5 BILLION CAR RENTAL: MARKET SHARE GROSS REVENUE - CAR RENTAL Source: ABLA, considering the breakdown reported applied on the revenues OTHERS 29.3%* 11.8% 6.7% 52.2% 32.3%* 13.9% 7.8% 46.0% PLAYER B PLAYER A PLAYER B PLAYER A *Localiza’s market share includes revenues from franchisees in Brazil. There are no public data on the revenue of other players’ franchisees.
CAR RENTAL LOCATIONS IN BRAZIL AIRPORT LOCATIONS OFF – AIRPORT LOCATIONS Localiza 423 Player B 154 Player E 26 Player A 100 Others 7,856 23Source: ABLA, each company’s website on 07/26/2018 and Localiza’s 2Q18 Earnings Release. 1/3 OF CAR RENTAL’S REVENUES COMES FROM AIRPORT LOCATIONS OFF -AIRPORT LOCATIONS AIRPORT LOCATIONS OFF – AIRPORT MARKET IS STILL FRAGMENTED Localiza 99 Player A 51 Player B 49 Player E 33 Others 38 Localiza Player A Player B Player E Others
180 200 240 260 300 350 380 415 465 510 545 622 678 724 788 880 937 38% 37% 35% 31% 27% 22% 20% 18% 16% 15% 15% 13% 13% 12% 11% 9% 8% -50 50 150 250 350 450 550 650 750 850 950 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Monthly minimun salary (R$) 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 8.0 2012 2013 2014 2015 2016 2017 1S18 LOCALIZA RAC USERS (MILLION) 84.0 64.0 8.0 Adult population (age>20 years) Class A+B+C Credit Card owners Users In million *considering only the individual segment.
CAR RENTAL: DRIVERS 25 * 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 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
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 26 COMPETITIVE ADVANTAGES2
FLEET RENTAL: MARKET SHARE GROSS REVENUE - FLEET RENTAL 27Source: ABLA, considering the breakdown reported applied on the revenues MARKET SIZE 2017: R$9 BILLION MARKET SIZE 2016: R$8 BILLION 8.4% 2.6% 3.6% 7.6% 77.9%OUTROS PLAYER B PLAYER C PLAYER A 8.3% 2.6% 4.4% 5.5% 79.1%OTHERS PLAYER B PLAYER C PLAYER A
FLEET RENTAL: DRIVERS 28 Corporate fleet: 5,000,000* Rented fleet: 440,737** 39,738 BRAZILIAN MARKET *Frost&Sullivan research **Localiza estimates WORLD 8.8% 8.9% 13.3% 16.5% 24.5% 37.4% 46.9% 58.3% Source: Datamonitor for European countries and Localiza’s estimate for Brazil LOW PENETRATION OF RENTED FLEET IN BRAZIL
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 29 COMPETITIVE ADVANTAGES2
SEMINOVOS: NEW vs USED CAR MARKET (BRAZIL) Source: Fenabrave (light and commercial cars) August 31,2018. 30 New cars Used cars TOTAL MARKET OF 13.0 MILLION CARS. 8.4 8.9 9.0 9.4 10.1 9.9 10.0 10.7 10.6 3.3 3.5 3.6 3.6 3.3 2.5 2.0 2.2 2.4 2010 2011 2012 2013 2014 2015 2016 2017 until August 2018 Carros usados Carros novos * * (*)Annualized 2.5x 2.5x2.6x 2.6x 3.1x 4.0x 5.0x 4.9x 4.4x
SEMINOVOS: DRIVERS # OF INHABITANTS PER CAR – BRAZIL 2005 - 2016 AFFORDABILITY TO BUY CARS – AVERAGE PUBLIC PRICE OF ECONOMIC CARS AFFORDABILITY AND PENETRATION 7.9 7.7 7.3 6.9 6.5 6.0 5.7 5.3 5.0 4.9 4.8 4.8 4.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 DEVELOPED COUNTRIES MAINTAIN A RATIO BETWEEN 2-1 INHABITANTS PER CAR Source: Sindipeças – Current Fleet Report 2018, as of April 2018. Source: BCB and Localiza Reference: for calculation was considered the cheapest car in our fleet 31 300 350 380 415 465 510 545 622 678 724 788 880 934 95484 71 69 61 55 51 49 43 43 43 41 41 47 47 - 10 20 30 40 50 60 70 80 90 -100 100 300 500 700 900 1,100 20052006200720082009201020112012201320142015201620172018 Minimum wage (R$) Minimum wages needed to buy a new car
30.5% Up to 2 years - 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) • +137 (Unidas, Movida, Locamerica) Source: Anfavea 2018 e Fenabrave / Unidas, Locamerica e Movida 1Q18. 32 Brand new- 2017 2,172,235
AGENDA COMPANY OVERVIEW1 MAIN BUSINESS DIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 33 COMPETITIVE ADVANTAGES2
OPERATING CONTEXT – 2Q18 34 ➢Company overcame the mark of 200 k cars, ending 2Q18 with 208,552 cars in its fleet ➢47.9% growth in RAC and 21.4% in Fleet Rental volumes ➢Short term cash management for reduction of its carrying cost ➢Spread (ROIC – Kd after income tax) of 8.1 p.p. ➢Truck drivers’ strike and payroll estimated impact in EBITDA by roughly R$39 million and net income by around R$29 million ➢Excluding those effects EBITDA would have grown roughly 30% and net income 32%
35 # of cars sold # of rental days (thousand)– Car Rental Fleet at end of the period # of rental days (thousand) – Fleet Rental 2Q18 OPERATING HIGHLIGHTS 100,578 145,837 38,388 48,056 12,784 14,659 151,750 208,552 2Q17 2Q18 Car rental Fleet rental Franchising 20,201 23,626 2Q17 2Q18 5,566 8,234 2Q17 2Q18 3,012 3,658 2Q17 2Q18 >200 K
36 Net revenues (R$ million) Net income (R$ million)EBIT (R$ million) EBITDA (R$ million) 2Q18 FINANCIAL HIGHLIGHTS 298.7 347.6 2Q17 2Q18 129.3 141.9 2Q17 2Q18 235.6 276.9 2Q17 2Q18 +38,0% 4T/4T +38,6% 4T/4T 577.9 769.3 767.8 970.9 1,345.7 1,740.2 2Q17 2Q18 Rental Seminovos
CAR RENTAL 1,163.5 1,284.4 1,258.0 1,428.0 1,848.5 800.9 1,156.3 397.4 561.7 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Number of rental days (thousand) STRONG VOLUME AND REVENUE GROWTH IN 2Q18 14,241.7 15,416.0 15,566.1 18,662.4 25,263.6 10,874.0 16,373.4 5,565.5 8,234.0 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Net revenues (R$ million) 37
38 CAR RENTAL Average daily rental rate (in R$) Utilization rate (%) VOLUME, DAILY RATES AND UTILIZATION WERE IMPACTED BY THE TRUCK DRIVERS’ STRIKE 79.3 74.1 74.1 74.0 74.7 69.5 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 75.8% 79.0% 81.0% 78.5% 78.7% 77.0% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
CAR RENTAL NETWORK EVOLUTION Number of car rental locations Brazil and abroad 286 304 320 333 384 391 193 172 174 158 133 131 63 64 70 70 71 67 542 540 564 561 588 589 2013 2014 2015 2016 2017 2Q18 Localiza's branches - Brazil Franchisees' branches - Brazil Franchisees' branches - abroad +7 7 CORPORATE LOCATIONS WERE ADDED TO THE NETWORK 39
FLEET RENTAL Number of daily rentals and average rented fleet 21.4% VOLUME GROWTH IN 2Q18 40 575.9 571.9 608.5 651.8 742.1 349.7 406.8 176.4 203.5 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Net revenues (R$ million) 10,843.7 10,363.3 10,900.9 11,240.0 12,752.7 5,942.6 7,234.0 3,012.4 3,657.6 30,121 28,787 30,280 31,222 35,424 33,014 40,189 33,471 40,640 - 5,000.0 10,000.0 15,000.0 20,000.0 25,000.0 30,000.0 35,000.0 40,000.0 45,000.0 - 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0 14,000.0 2013 2014 2015 2016 2017 1S17 1S18 2T17 2T18 Daily rentals Average rented fleet
NET INVESTMENT Car purchase and sales (quantity) STRONG GROWTH IN RENTAL VOLUMES REQUIRED FLEET GROWTH 41 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 51,058 63,388 35,935 39,541 62,641 70,621 64,305 68,449 90,554 40,510 48,914 20,201 23,626 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 7,103 9,183 (273) 19,384 88,619 1,935 135,252 8,162 10,548 52,860 15,734 2,026.2 2,483.2 2,278.4 3,289.6 5,754.4 2,107.7 2,577.1 1,489.5 1,643.31,747.3 2,018.2 2,044.9 2,342.6 3,451.2 1,526.3 1,991.2 767.8 970.9 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 465.0 278.9 233.5 947.0 61.9 5,467.9 286.5 3,389.3 581.4 2,303.2 721.7 * It does not consider theft / crashed cars written off. 14,474 15,915 585.9 672.4
42 NUMBER OF POINTS OF SALE 74 75 77 84 99 91 100 91 100 62,641 70,621 64,305 68,449 90,554 40,510 48,914 20,201 23,626 - 20,000 40,000 60,000 80,000 100,000 120,000 0 20 40 60 80 100 120 140 160 180 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Points of sale Cars sold STORES WILL BE OPENED THROUGHOUT THE 2ND HALF TO SUPPORT FUTURE FLEET RENEWAL
43 END OF PERIOD FLEET 45.0% GROWTH OF THE RAC FLEET (Quantity) 70,717 77,573 76,755 94,156 135,578 100,578 145,837 32,809 34,312 33,948 34,960 44,877 38,388 48,056 14,233 13,339 13,992 14,015 13,824 12,784 14,659 117,759 125,224 124,695 143,131 194,279 151,750 208,552 2013 2014 2015 2016 2017 1H17 1H18 Car Rental Fleet Rental Franchising >200 K
44 CONSOLIDATED NET REVENUES (R$ million) 29.3% INCREASE IN CONSOLIDATED NET REVENUES IN 2Q18 1,758.9 1,874.0 1,883.1 2,096.8 2,607.1 1,159.1 1,571.7 577.9 769.3 1,747.3 2,018.2 2,044.9 2,342.5 3,451.2 1,526.3 1,991.2 767.8 970.9 3,506.2 3,892.2 3,928.0 4,439.3 6,058.3 2,685.4 3,562.9 1,345.7 1,740.2 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Rental Used car sales
45 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 1H17 1H18 2Q17 2Q18 Car Rental 36.8% 38.7% 31.8% 32.3% 34.9%** 35.3% 33.9% 34.0% 32.0% Fleet Rental 65.5% 60.0% 62.2% 64.5% 61.9%** 62.4% 62.9% 61.8% 64.6% Rental Consolidated 46.5% 45.3% 41.7% 42.3% 42.6%** 43.4% 41.5% 42.4% 40.7% Used Car Sales 5.7% 6.0% 7.3% 5.5% 5.9% 6.0% 4.7% 7.0% 3.5% EBITDA margin: 916.5 969.8 934.8 1,015.6 1,314.2 595.6 745.0 298.7 347.6 2013 2014 2015 2016 2017 Adjusted 1H17 1H18 2Q17 2Q18 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation 74.0 EXCLUDING THE STRIKE AND PAYROLL IMPACTS, ESTIMATED EBITDA WOULD HAVE BEEN APPROXIMATELY R$387 MILLION
46 AVERAGE ANNUALIZED DEPRECIATION PER CAR (In R$) Fleet Rental Car Rental EFFICIENCY ON SELLING COUPLED WITH CAR PRICE INCREASE CONTRIBUTED FOR LOWER DEPRECIATION IN RAC 1,452.4 1,270.0 622.1 1,251.2 1,250.1 1,427.7 758.5 2013 2014 2015 2016 2017 1H17 1H18 4,592.3 4,202.1 3,935.2 3,714.0 3,104.3 3,156.7 3,329.4 2013 2014 2015 2016 2017 1H17 1H18
47 CONSOLIDATED EBIT (R$ million) 652.1 726.7 735.5 771.1 1,043.1 465.6 606.8 235.6 276.9 2013 2014 2015 2016 2017 Adjusted 1H17 1H18 2Q17 2Q18 Divisions 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Car Rental 32.8% 36.2% 34.3% 30.2% 35.5%* 34.9% 34.6% 35.1% 30.2% Fleet Rental 45.1% 44.3% 48.9% 51.2% 51.4%* 52.4% 49.9% 54.0% 51.8% Consolidated 37.1% 38.8% 39.1% 36.8% 40.0%* 40.2% 38.6% 40.8% 36.0% 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 17.5% INCREASE IN EBIT IN THE 2Q18
48 CONSOLIDATED NET INCOME (R$ million) 384.3 410.6 402.4 409.3 563.4 249.5 317.9 129.3 141.9 2013 2014 2015 2016 2017 Adjusted 1H17 1H18 2Q17 2Q18 Reconciliation EBITDA x Net income 2013 2014 2015 2016 2017* Var. R$ Var. % 1H17 1H18 Var. R$ Var. % 2Q17 2Q18 Var. R$ Var. % Consolidated EBITDA 916.5 969.8 934.8 1,015.6 1,314.2 298.6 29.4% 595.6 745.0 149.4 25.1% 298.7 347.6 48.9 16.4% Cars depreciation (229.0) (207.4) (163.6) (206.3) (232.0) (25.7) 12.5% (112.0) (116.7) (4.7) 4.2% (54.1) (59.8) (5.7) 10.5% Other property depreciation and amortization (35.4) (35.7) (35.7) (38.2) (39.1) (0.9) 2.4% (18.0) (21.5) (3.5) 19.4% (9.0) (10.9) (1.9) 21.1% EBIT 652.1 726.7 735.5 771.1 1,043.1 272.0 35.3% 465.6 606.8 141.2 30.3% 235.6 276.9 41.3 17.5% Financial expenses, net (110.6) (151.1) (202.7) (243.5) (315.0) (71.5) 29.4% (142.0) (177.6) (35.6) 25.1% (67.2) (88.7) (21.5) 32.0% Income tax and social contribution (157.2) (165.0) (130.4) (118.3) (164.7) (46.4) 39.2% (74.1) (111.3) (37.2) 50.2% (39.1) (46.3) (7.2) 18.4% Net income of the period 384.3 410.6 402.4 409.3 563.4 154.1 37.6% 249.5 317.9 68.4 27.4% 129.3 141.9 12.6 9.7% 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 9.7% INCREASE IN THE QUARTER’S NET INCOME, IMPACTED BY AROUND R$ 29 MILLION
FREE CASH FLOW 49 Free cash flow - R$ million 2013 2014 2015 2016 2017 1H18 EBITDA 916.5 969.8 934.8 1,015.60 1314.2 745.0 Used car sale revenue, net from taxes (1,747.3) (2,018.2) (2,044.9) (2,342.5) (3,451.2) (1,991.2) Depreciated cost of cars sold 1,543.8 1,777.0 1,769.1 2,102.5 3,106.6 1,820.0 (-) Income tax and social contribution (108.5) (113.1) (110.7) (93.3) (108.3) (79.3) Change in working capital 2.9 (27.1) (30.0) (40.8) (47.9) (63.7) Cash generated by rental operations 607.4 588.4 518.3 641.5 813.4 430.8 Used car sale revenue, net from taxes – fleet renewal 1,747.3 2,018.2 2,036.3 2,342.5 3,451.2 1,991.2 Fleet renewal investment (1,819.7) (2,197.7) (2,278.4) (2,563.6) (3,660.9) (1,988.6) Change in accounts payable to car suppliers – renewal 144.3 120.0 (25.4) 219.9 227.6 (167.4) Net investment for fleet renewal 71.9 (59.5) (267.5) (1.2) 17.9 (164.8) Fleet renewal – quantity 62,641 70,621 64,032 68,449 90,554 48,914 (47.5) (46.3) (29.7) (42.2) (48.8) (20.5) 631.8 482.6 221.1 598.1 782.5 245.5 Fleet (growth) investment / Used car sale revenue, net from taxes – fleet reduction (209.4) (286.8) 8.6 (726.0) (1,807.0) (588.5) Change in accounts payable to car suppliers – growth (54.6) 214.4 (23.9) 26.8 168.7 101.0 Hertz Brazil acquisition - fleet - - - - (286.5) - Fleet growth capex (264.0) (72.4) (15.3) (699.2) (1,924.8) (487.5) Fleet increase / (reduction) – quantity 7,103 9,183 (273) 19,384 52,860 14,474 367.8 410.2 205.8 (101.1) (1,142.3) (242.0) Hertz Acquisition (Except fleet) / Incurred one-time costs effect - - - - (120.7) - New headquarters construction and furniture (6.5) (148.3) (30.7) (84.4) (126.2) - 361.3 261.9 175.1 (185.5) (1,389.2) (242.0) - - (71.9) 98.0 88.3 (260.2) 361.3 261.9 103.2 (87.5) (1,300.9) (502.2) OperationsCapex-renewal Investment, property and intangible Free cash flow from operations, before growth Capex-Growth Capex- non- recurring Free cash generated before the financial effects of discounts and prepayments Free cash flow after growth, interest and new HQ Cash effects of anticipation of credit card receivables and suppliers (**) Free cash flow before interest In the free cash flow, short-term financial assets were considered as cash equivalents since they have immediately liquidity (*) Adjusted by one-time costs incurred -Hertz Brasil acquisition and franchisees incorporation (**) Discount of credit card receivables and anticipation of accounts payable were demonstrated in a different line so that the Free Cash Flow From Operations, Before Growth considered only the contractual terms, reflecting the Company's operation
50 THE FLEET GROWTH INVESTMENT, TOGETHER WITH SHORT TERM CASH MANAGEMENT RESULTED IN THE INCREASE OF THE NET DEBT CHANGE IN NET DEBT (R$ million)
51 DEBT RATIOS EXCLUDING THE EFECT OF THE ANTICIPATION, NET DEBT/EBITDA RATIO WOULD BE 2.9X NET DEBT VERSUS FLEET VALUE BALANCE AT THE END OF PERIOD 2013 2014 2015 2016 2017 1H18 Net debt / Fleet value 48% 40% 44% 45% 55% 60% Net debt / annualized EBITDA 1.5x 1.4x 1.7x 2.1x 2.9x 3.1x Net debt / Equity 1.0x 0.8x 0.8x 0.9x 1.5x 1.6x EBITDA / Net financial expenses 8.3x 6.4x 4.6x 4.2x 4.2x 4.2x 1,332.8 1,322.3 1,588.6 2,084.0 3,864.7 4,628.2 2,797.9 3,296.3 3,642.7 4,623.6 7,038.1 7,681.1 2013 2014 2015 2016 2017 1H18 Net debt Fleet value (R$ million)
52 DEBT MATURITY PROFILE (PRINCIPAL) (R$ million) As of June 30, 2018 THE STRONG CASH BALANCE GUARANTEES FLEXIBILITY TO REDUCE THE AVERAGE COST AND INCREASE THE DURATION OF THE COMPANY’S DEBT 1,682.4 199.7 593.2 1,282.8 378.1 1,093.4 1,096.7 1,173.0 411.5 Cash and financial assets 2018 2019 2020 2021 2022 2023 2024 2025 + 2,075.7 Proforma considering the Fleet’s 5th issuance and CCBI prepayment 711.5 5th debentures issuance of Localiza Fleet 1,682.4 199.7 545.7 1,187.8 330.6 1,093.4 1,096.7 1,173.0 411.5 110.00 47.5 95.0 47.5 300.00 Cash and financial assets 2018 2019 2020 2021 2022 2023 2024 2025 + 1,792.4 1,282.8 378.1 CCBINet effect on cash 1,933.2 593.2
ROIC VERSUS COST OF DEBT AFTER TAXES STABLE SPREAD WITH STRONG PACE OF GROWTH 16.7% 17.8% 17.0% 15.4% 15.6% 13.2% 6.0% 8.0% 9.5% 10.2% 7.6% 5.1% 2013 2014 2015 2016 2017 1H18 ROIC Cost of debt after taxes 9.8p.p.10.7p.p. 7.5p.p. 5.2p.p. 8.0p.p. 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 8.1p.p. 53
54 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 inglês

  • 1.
  • 2.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 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 1985 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$4.1 Billion (06/30/18) 2006 50.000 cars 2011 100.000 cars 150.000 cars 200.000 cars
  • 4.
    INTEGRATED BUSINESS PLATFORM THIS INTEGRATED PLATFORM GIVESLOCALIZA FLEXIBILITY AND SUPERIOR PERFORMANCE 4 • 145.837 CARS • 8,0 MILLION CLIENTS • 391 LOCATIONS • 4,636 EMPLOYEES CAR RENTAL FLEET RENTAL •48,056 CARS • 1,308 CLIENTS • 301 EMPLOYEES USED CAR SALES • 46.7% SOLD TO FINAL CONSUMER • 100 STORES • 66 CITIES • 1,212 EMPLOYEES FRANCHISING • 14,659 CARS • 131 LOCATIONS IN BRASIL • 67 LOCATIONS IN SOUTH AMERICA • 34 EMPLOYEES SYNERGIES: BARGAINING POWER COST REDUCTION CROSS SELLING OVERHEAD AND SUPPORT: 1,253 EMPLOYEES 2Q18
  • 5.
    COMPANY:BUSINESS PLATFORM DIVISIONS CARRENTAL FRANCHISING FLEET RENTAL USED CAR SALES 5 • HIGH FIXED COST STRUCTURE • STANDARDIZED FLEET • 1 YEAR CYCLE • HIGHER ENTRY BARRIERS • GAINS OF SCALE • CAPITAL INTENSIVE • CONCENTRATED AIRPORT MARKET • FRAGMENTED OFF AIRPORT MARKET RENTS TO INDIVIDUALS AND COMPANIES AT AIRPORTS AND OFF AIRPORT LOCATIONS. CONTRIBUTES TO EXPAND LOCALIZA’S NETWORK. • HIGH PROFITABILITY • LOW CONTRIBUTION TO EARNINGS • RESPONSIBLE TO DEVELOP NEW MARKETS • LOW FIXED COST STRUCTURE • CUSTOMIZED FLEET • 2-3 YEARS CYCLE • LOWER ENTRY BARRIERS • CAPITAL INTENSIVE OUTSOURCES FLEET FOR 2-3 YEARS’ TERM CONTRACTS. SELLS THE USED CARS MAINLY TO FINAL CONSUMERS AFTER THE RENTAL AND ESTIMATES THE RESIDUAL VALUES. • EFFICIENCY AREA RESPONSIBLE TO SELL CARS FROM RAC AND FLEET DIVISIONS • KNOW HOW OF USED CARS MARKET • LOW DEPENDENCE OF INTERMEDIATES • ALLOWING FOR LOWER DEPRECIATION
  • 6.
    6 BIG NUMBERS ✓ Marketleader with market cap of R$ 15.8 billion (US$ 4.1 bn) in June 30, 2018 ✓ End of period fleet of 208,552 cars in 1H18 ✓ R$3.6 billion in net revenues in 1H18 ✓ Volume growth of 50.6% in the Car Rental Division in 1H18 ✓ ROIC of 13.2%, spread of 8.1 p.p in relation to cost of debt after taxes
  • 7.
    Net Revenues R$3,563 EBITDA R$745 EBIT* R$607 Consolidated breakdown– 1H18 R$ million 7 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions COMPANY’S PROFITABILITY COMES FROM CAR RENTAL AND FLEET RENTAL DIVISIONS 93 13% 256 34% 396 53% 203 33% 404 67% 1,991 56% 407 11% 1,165 33%
  • 8.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 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 45 YEARS OF EXPERIENCE IN MANAGING ASSETS AND GENERATING VALUE.
  • 10.
    COMPETITIVE ADVANTAGES RAISING MONEY INVESTMENTGRADE: LOWER SPREADS AND LONGER TENORS Source: Bloomberg July, 2018. BB Fitch Ba2 Moody’s BB+ S&P B+ S&P 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 2018Bonds - R$ million Player C R$411 114.7% Player C R$88 113.2% Player C R$350 119.0% Player A R$138 118.4% Player A R$182 123.1% Player A R$130 119.9% Player A R$250 121.0% Player B R$500 117.5% Localiza R$300 108.0% Localiza Fleet R$300 112.0% 90% 95% 100% 105% 110% 115% 120% 125% 130% 135% 140% 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 % 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 140,751 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 522 218 186 404 Localiza Competitors 362 144 96 Localiza Player B Player A RAISING MONEY BUYING CARS SELLING CARS RENTING CARS Source: Locations: Localiza 2Q18 results and 1Q18 results for its competitors; Number of cities: each company website on 07/26/18
  • 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 100 points of sale 66 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 demandSales 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 repair • 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 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 2013 2014 2015 2016 2017 1H18 ROE 29.0% 30.6% 24.3% 21.1% 25.6% 24.4% 20 16.7% 17.8% 17.0% 15.4% 15.6% 13.2% 6.0% 8.0% 9.5% 10.2% 7.6% 5.1% 2013 2014 2015 2016 2017 1H18 ROIC Cost of debt after taxes 9.8p.p.10.7p.p. 7.5p.p. 5.2p.p. 8.0p.p. * 8.1p.p. STABLE SPREAD WITH STRONG PACE OF GROWTH
  • 21.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 21 COMPETITIVE ADVANTAGES2
  • 22.
    22 MARKET SIZE 2016: R$5.8BILLION OTHERS MARKET SIZE 2017: R$6.5 BILLION CAR RENTAL: MARKET SHARE GROSS REVENUE - CAR RENTAL Source: ABLA, considering the breakdown reported applied on the revenues OTHERS 29.3%* 11.8% 6.7% 52.2% 32.3%* 13.9% 7.8% 46.0% PLAYER B PLAYER A PLAYER B PLAYER A *Localiza’s market share includes revenues from franchisees in Brazil. There are no public data on the revenue of other players’ franchisees.
  • 23.
    CAR RENTAL LOCATIONSIN BRAZIL AIRPORT LOCATIONS OFF – AIRPORT LOCATIONS Localiza 423 Player B 154 Player E 26 Player A 100 Others 7,856 23Source: ABLA, each company’s website on 07/26/2018 and Localiza’s 2Q18 Earnings Release. 1/3 OF CAR RENTAL’S REVENUES COMES FROM AIRPORT LOCATIONS OFF -AIRPORT LOCATIONS AIRPORT LOCATIONS OFF – AIRPORT MARKET IS STILL FRAGMENTED Localiza 99 Player A 51 Player B 49 Player E 33 Others 38 Localiza Player A Player B Player E Others
  • 24.
    180 200 240 260 300 350380 415 465 510 545 622 678 724 788 880 937 38% 37% 35% 31% 27% 22% 20% 18% 16% 15% 15% 13% 13% 12% 11% 9% 8% -50 50 150 250 350 450 550 650 750 850 950 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Monthly minimun salary (R$) 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 8.0 2012 2013 2014 2015 2016 2017 1S18 LOCALIZA RAC USERS (MILLION) 84.0 64.0 8.0 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 2Q185 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$8 BILLION 8.4% 2.6% 3.6% 7.6% 77.9%OUTROS PLAYER B PLAYER C PLAYER A 8.3% 2.6% 4.4% 5.5% 79.1%OTHERS PLAYER B PLAYER C PLAYER A
  • 28.
    FLEET RENTAL: DRIVERS 28 Corporatefleet: 5,000,000* Rented fleet: 440,737** 39,738 BRAZILIAN MARKET *Frost&Sullivan research **Localiza estimates WORLD 8.8% 8.9% 13.3% 16.5% 24.5% 37.4% 46.9% 58.3% Source: Datamonitor for European countries and Localiza’s estimate for Brazil LOW PENETRATION OF RENTED FLEET IN BRAZIL
  • 29.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 29 COMPETITIVE ADVANTAGES2
  • 30.
    SEMINOVOS: NEW vsUSED CAR MARKET (BRAZIL) Source: Fenabrave (light and commercial cars) August 31,2018. 30 New cars Used cars TOTAL MARKET OF 13.0 MILLION CARS. 8.4 8.9 9.0 9.4 10.1 9.9 10.0 10.7 10.6 3.3 3.5 3.6 3.6 3.3 2.5 2.0 2.2 2.4 2010 2011 2012 2013 2014 2015 2016 2017 until August 2018 Carros usados Carros novos * * (*)Annualized 2.5x 2.5x2.6x 2.6x 3.1x 4.0x 5.0x 4.9x 4.4x
  • 31.
    SEMINOVOS: DRIVERS # OFINHABITANTS PER CAR – BRAZIL 2005 - 2016 AFFORDABILITY TO BUY CARS – AVERAGE PUBLIC PRICE OF ECONOMIC CARS AFFORDABILITY AND PENETRATION 7.9 7.7 7.3 6.9 6.5 6.0 5.7 5.3 5.0 4.9 4.8 4.8 4.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 DEVELOPED COUNTRIES MAINTAIN A RATIO BETWEEN 2-1 INHABITANTS PER CAR Source: Sindipeças – Current Fleet Report 2018, as of April 2018. Source: BCB and Localiza Reference: for calculation was considered the cheapest car in our fleet 31 300 350 380 415 465 510 545 622 678 724 788 880 934 95484 71 69 61 55 51 49 43 43 43 41 41 47 47 - 10 20 30 40 50 60 70 80 90 -100 100 300 500 700 900 1,100 20052006200720082009201020112012201320142015201620172018 Minimum wage (R$) 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) • +137 (Unidas, Movida, Locamerica) Source: Anfavea 2018 e Fenabrave / Unidas, Locamerica e Movida 1Q18. 32 Brand new- 2017 2,172,235
  • 33.
    AGENDA COMPANY OVERVIEW1 MAIN BUSINESSDIVISIONS3 FINANCIALS4 APPENDIX: EARNINGS RELEASE 2Q185 CAR RENTAL FLEET RENTAL SEMINOVOS 1 2 3 33 COMPETITIVE ADVANTAGES2
  • 34.
    OPERATING CONTEXT –2Q18 34 ➢Company overcame the mark of 200 k cars, ending 2Q18 with 208,552 cars in its fleet ➢47.9% growth in RAC and 21.4% in Fleet Rental volumes ➢Short term cash management for reduction of its carrying cost ➢Spread (ROIC – Kd after income tax) of 8.1 p.p. ➢Truck drivers’ strike and payroll estimated impact in EBITDA by roughly R$39 million and net income by around R$29 million ➢Excluding those effects EBITDA would have grown roughly 30% and net income 32%
  • 35.
    35 # of carssold # of rental days (thousand)– Car Rental Fleet at end of the period # of rental days (thousand) – Fleet Rental 2Q18 OPERATING HIGHLIGHTS 100,578 145,837 38,388 48,056 12,784 14,659 151,750 208,552 2Q17 2Q18 Car rental Fleet rental Franchising 20,201 23,626 2Q17 2Q18 5,566 8,234 2Q17 2Q18 3,012 3,658 2Q17 2Q18 >200 K
  • 36.
    36 Net revenues (R$million) Net income (R$ million)EBIT (R$ million) EBITDA (R$ million) 2Q18 FINANCIAL HIGHLIGHTS 298.7 347.6 2Q17 2Q18 129.3 141.9 2Q17 2Q18 235.6 276.9 2Q17 2Q18 +38,0% 4T/4T +38,6% 4T/4T 577.9 769.3 767.8 970.9 1,345.7 1,740.2 2Q17 2Q18 Rental Seminovos
  • 37.
    CAR RENTAL 1,163.5 1,284.41,258.0 1,428.0 1,848.5 800.9 1,156.3 397.4 561.7 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Number of rental days (thousand) STRONG VOLUME AND REVENUE GROWTH IN 2Q18 14,241.7 15,416.0 15,566.1 18,662.4 25,263.6 10,874.0 16,373.4 5,565.5 8,234.0 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Net revenues (R$ million) 37
  • 38.
    38 CAR RENTAL Average dailyrental rate (in R$) Utilization rate (%) VOLUME, DAILY RATES AND UTILIZATION WERE IMPACTED BY THE TRUCK DRIVERS’ STRIKE 79.3 74.1 74.1 74.0 74.7 69.5 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 75.8% 79.0% 81.0% 78.5% 78.7% 77.0% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
  • 39.
    CAR RENTAL NETWORKEVOLUTION Number of car rental locations Brazil and abroad 286 304 320 333 384 391 193 172 174 158 133 131 63 64 70 70 71 67 542 540 564 561 588 589 2013 2014 2015 2016 2017 2Q18 Localiza's branches - Brazil Franchisees' branches - Brazil Franchisees' branches - abroad +7 7 CORPORATE LOCATIONS WERE ADDED TO THE NETWORK 39
  • 40.
    FLEET RENTAL Number ofdaily rentals and average rented fleet 21.4% VOLUME GROWTH IN 2Q18 40 575.9 571.9 608.5 651.8 742.1 349.7 406.8 176.4 203.5 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Net revenues (R$ million) 10,843.7 10,363.3 10,900.9 11,240.0 12,752.7 5,942.6 7,234.0 3,012.4 3,657.6 30,121 28,787 30,280 31,222 35,424 33,014 40,189 33,471 40,640 - 5,000.0 10,000.0 15,000.0 20,000.0 25,000.0 30,000.0 35,000.0 40,000.0 45,000.0 - 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0 14,000.0 2013 2014 2015 2016 2017 1S17 1S18 2T17 2T18 Daily rentals Average rented fleet
  • 41.
    NET INVESTMENT Car purchaseand sales (quantity) STRONG GROWTH IN RENTAL VOLUMES REQUIRED FLEET GROWTH 41 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 51,058 63,388 35,935 39,541 62,641 70,621 64,305 68,449 90,554 40,510 48,914 20,201 23,626 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 7,103 9,183 (273) 19,384 88,619 1,935 135,252 8,162 10,548 52,860 15,734 2,026.2 2,483.2 2,278.4 3,289.6 5,754.4 2,107.7 2,577.1 1,489.5 1,643.31,747.3 2,018.2 2,044.9 2,342.6 3,451.2 1,526.3 1,991.2 767.8 970.9 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 465.0 278.9 233.5 947.0 61.9 5,467.9 286.5 3,389.3 581.4 2,303.2 721.7 * It does not consider theft / crashed cars written off. 14,474 15,915 585.9 672.4
  • 42.
    42 NUMBER OF POINTSOF SALE 74 75 77 84 99 91 100 91 100 62,641 70,621 64,305 68,449 90,554 40,510 48,914 20,201 23,626 - 20,000 40,000 60,000 80,000 100,000 120,000 0 20 40 60 80 100 120 140 160 180 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Points of sale Cars sold STORES WILL BE OPENED THROUGHOUT THE 2ND HALF TO SUPPORT FUTURE FLEET RENEWAL
  • 43.
    43 END OF PERIODFLEET 45.0% GROWTH OF THE RAC FLEET (Quantity) 70,717 77,573 76,755 94,156 135,578 100,578 145,837 32,809 34,312 33,948 34,960 44,877 38,388 48,056 14,233 13,339 13,992 14,015 13,824 12,784 14,659 117,759 125,224 124,695 143,131 194,279 151,750 208,552 2013 2014 2015 2016 2017 1H17 1H18 Car Rental Fleet Rental Franchising >200 K
  • 44.
    44 CONSOLIDATED NET REVENUES (R$million) 29.3% INCREASE IN CONSOLIDATED NET REVENUES IN 2Q18 1,758.9 1,874.0 1,883.1 2,096.8 2,607.1 1,159.1 1,571.7 577.9 769.3 1,747.3 2,018.2 2,044.9 2,342.5 3,451.2 1,526.3 1,991.2 767.8 970.9 3,506.2 3,892.2 3,928.0 4,439.3 6,058.3 2,685.4 3,562.9 1,345.7 1,740.2 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Rental Used car sales
  • 45.
    45 CONSOLIDATED EBITDA (R$ 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 1H17 1H18 2Q17 2Q18 Car Rental 36.8% 38.7% 31.8% 32.3% 34.9%** 35.3% 33.9% 34.0% 32.0% Fleet Rental 65.5% 60.0% 62.2% 64.5% 61.9%** 62.4% 62.9% 61.8% 64.6% Rental Consolidated 46.5% 45.3% 41.7% 42.3% 42.6%** 43.4% 41.5% 42.4% 40.7% Used Car Sales 5.7% 6.0% 7.3% 5.5% 5.9% 6.0% 4.7% 7.0% 3.5% EBITDA margin: 916.5 969.8 934.8 1,015.6 1,314.2 595.6 745.0 298.7 347.6 2013 2014 2015 2016 2017 Adjusted 1H17 1H18 2Q17 2Q18 One-time costs incurred - Hertz Brasil acquisition and Franchisees incorporation 74.0 EXCLUDING THE STRIKE AND PAYROLL IMPACTS, ESTIMATED EBITDA WOULD HAVE BEEN APPROXIMATELY R$387 MILLION
  • 46.
    46 AVERAGE ANNUALIZED DEPRECIATIONPER CAR (In R$) Fleet Rental Car Rental EFFICIENCY ON SELLING COUPLED WITH CAR PRICE INCREASE CONTRIBUTED FOR LOWER DEPRECIATION IN RAC 1,452.4 1,270.0 622.1 1,251.2 1,250.1 1,427.7 758.5 2013 2014 2015 2016 2017 1H17 1H18 4,592.3 4,202.1 3,935.2 3,714.0 3,104.3 3,156.7 3,329.4 2013 2014 2015 2016 2017 1H17 1H18
  • 47.
    47 CONSOLIDATED EBIT (R$ million) 652.1726.7 735.5 771.1 1,043.1 465.6 606.8 235.6 276.9 2013 2014 2015 2016 2017 Adjusted 1H17 1H18 2Q17 2Q18 Divisions 2013 2014 2015 2016 2017 1H17 1H18 2Q17 2Q18 Car Rental 32.8% 36.2% 34.3% 30.2% 35.5%* 34.9% 34.6% 35.1% 30.2% Fleet Rental 45.1% 44.3% 48.9% 51.2% 51.4%* 52.4% 49.9% 54.0% 51.8% Consolidated 37.1% 38.8% 39.1% 36.8% 40.0%* 40.2% 38.6% 40.8% 36.0% 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 17.5% INCREASE IN EBIT IN THE 2Q18
  • 48.
    48 CONSOLIDATED NET INCOME (R$million) 384.3 410.6 402.4 409.3 563.4 249.5 317.9 129.3 141.9 2013 2014 2015 2016 2017 Adjusted 1H17 1H18 2Q17 2Q18 Reconciliation EBITDA x Net income 2013 2014 2015 2016 2017* Var. R$ Var. % 1H17 1H18 Var. R$ Var. % 2Q17 2Q18 Var. R$ Var. % Consolidated EBITDA 916.5 969.8 934.8 1,015.6 1,314.2 298.6 29.4% 595.6 745.0 149.4 25.1% 298.7 347.6 48.9 16.4% Cars depreciation (229.0) (207.4) (163.6) (206.3) (232.0) (25.7) 12.5% (112.0) (116.7) (4.7) 4.2% (54.1) (59.8) (5.7) 10.5% Other property depreciation and amortization (35.4) (35.7) (35.7) (38.2) (39.1) (0.9) 2.4% (18.0) (21.5) (3.5) 19.4% (9.0) (10.9) (1.9) 21.1% EBIT 652.1 726.7 735.5 771.1 1,043.1 272.0 35.3% 465.6 606.8 141.2 30.3% 235.6 276.9 41.3 17.5% Financial expenses, net (110.6) (151.1) (202.7) (243.5) (315.0) (71.5) 29.4% (142.0) (177.6) (35.6) 25.1% (67.2) (88.7) (21.5) 32.0% Income tax and social contribution (157.2) (165.0) (130.4) (118.3) (164.7) (46.4) 39.2% (74.1) (111.3) (37.2) 50.2% (39.1) (46.3) (7.2) 18.4% Net income of the period 384.3 410.6 402.4 409.3 563.4 154.1 37.6% 249.5 317.9 68.4 27.4% 129.3 141.9 12.6 9.7% 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 9.7% INCREASE IN THE QUARTER’S NET INCOME, IMPACTED BY AROUND R$ 29 MILLION
  • 49.
    FREE CASH FLOW 49 Freecash flow - R$ million 2013 2014 2015 2016 2017 1H18 EBITDA 916.5 969.8 934.8 1,015.60 1314.2 745.0 Used car sale revenue, net from taxes (1,747.3) (2,018.2) (2,044.9) (2,342.5) (3,451.2) (1,991.2) Depreciated cost of cars sold 1,543.8 1,777.0 1,769.1 2,102.5 3,106.6 1,820.0 (-) Income tax and social contribution (108.5) (113.1) (110.7) (93.3) (108.3) (79.3) Change in working capital 2.9 (27.1) (30.0) (40.8) (47.9) (63.7) Cash generated by rental operations 607.4 588.4 518.3 641.5 813.4 430.8 Used car sale revenue, net from taxes – fleet renewal 1,747.3 2,018.2 2,036.3 2,342.5 3,451.2 1,991.2 Fleet renewal investment (1,819.7) (2,197.7) (2,278.4) (2,563.6) (3,660.9) (1,988.6) Change in accounts payable to car suppliers – renewal 144.3 120.0 (25.4) 219.9 227.6 (167.4) Net investment for fleet renewal 71.9 (59.5) (267.5) (1.2) 17.9 (164.8) Fleet renewal – quantity 62,641 70,621 64,032 68,449 90,554 48,914 (47.5) (46.3) (29.7) (42.2) (48.8) (20.5) 631.8 482.6 221.1 598.1 782.5 245.5 Fleet (growth) investment / Used car sale revenue, net from taxes – fleet reduction (209.4) (286.8) 8.6 (726.0) (1,807.0) (588.5) Change in accounts payable to car suppliers – growth (54.6) 214.4 (23.9) 26.8 168.7 101.0 Hertz Brazil acquisition - fleet - - - - (286.5) - Fleet growth capex (264.0) (72.4) (15.3) (699.2) (1,924.8) (487.5) Fleet increase / (reduction) – quantity 7,103 9,183 (273) 19,384 52,860 14,474 367.8 410.2 205.8 (101.1) (1,142.3) (242.0) Hertz Acquisition (Except fleet) / Incurred one-time costs effect - - - - (120.7) - New headquarters construction and furniture (6.5) (148.3) (30.7) (84.4) (126.2) - 361.3 261.9 175.1 (185.5) (1,389.2) (242.0) - - (71.9) 98.0 88.3 (260.2) 361.3 261.9 103.2 (87.5) (1,300.9) (502.2) OperationsCapex-renewal Investment, property and intangible Free cash flow from operations, before growth Capex-Growth Capex- non- recurring Free cash generated before the financial effects of discounts and prepayments Free cash flow after growth, interest and new HQ Cash effects of anticipation of credit card receivables and suppliers (**) Free cash flow before interest In the free cash flow, short-term financial assets were considered as cash equivalents since they have immediately liquidity (*) Adjusted by one-time costs incurred -Hertz Brasil acquisition and franchisees incorporation (**) Discount of credit card receivables and anticipation of accounts payable were demonstrated in a different line so that the Free Cash Flow From Operations, Before Growth considered only the contractual terms, reflecting the Company's operation
  • 50.
    50 THE FLEET GROWTHINVESTMENT, TOGETHER WITH SHORT TERM CASH MANAGEMENT RESULTED IN THE INCREASE OF THE NET DEBT CHANGE IN NET DEBT (R$ million)
  • 51.
    51 DEBT RATIOS EXCLUDING THEEFECT OF THE ANTICIPATION, NET DEBT/EBITDA RATIO WOULD BE 2.9X NET DEBT VERSUS FLEET VALUE BALANCE AT THE END OF PERIOD 2013 2014 2015 2016 2017 1H18 Net debt / Fleet value 48% 40% 44% 45% 55% 60% Net debt / annualized EBITDA 1.5x 1.4x 1.7x 2.1x 2.9x 3.1x Net debt / Equity 1.0x 0.8x 0.8x 0.9x 1.5x 1.6x EBITDA / Net financial expenses 8.3x 6.4x 4.6x 4.2x 4.2x 4.2x 1,332.8 1,322.3 1,588.6 2,084.0 3,864.7 4,628.2 2,797.9 3,296.3 3,642.7 4,623.6 7,038.1 7,681.1 2013 2014 2015 2016 2017 1H18 Net debt Fleet value (R$ million)
  • 52.
    52 DEBT MATURITY PROFILE(PRINCIPAL) (R$ million) As of June 30, 2018 THE STRONG CASH BALANCE GUARANTEES FLEXIBILITY TO REDUCE THE AVERAGE COST AND INCREASE THE DURATION OF THE COMPANY’S DEBT 1,682.4 199.7 593.2 1,282.8 378.1 1,093.4 1,096.7 1,173.0 411.5 Cash and financial assets 2018 2019 2020 2021 2022 2023 2024 2025 + 2,075.7 Proforma considering the Fleet’s 5th issuance and CCBI prepayment 711.5 5th debentures issuance of Localiza Fleet 1,682.4 199.7 545.7 1,187.8 330.6 1,093.4 1,096.7 1,173.0 411.5 110.00 47.5 95.0 47.5 300.00 Cash and financial assets 2018 2019 2020 2021 2022 2023 2024 2025 + 1,792.4 1,282.8 378.1 CCBINet effect on cash 1,933.2 593.2
  • 53.
    ROIC VERSUS COSTOF DEBT AFTER TAXES STABLE SPREAD WITH STRONG PACE OF GROWTH 16.7% 17.8% 17.0% 15.4% 15.6% 13.2% 6.0% 8.0% 9.5% 10.2% 7.6% 5.1% 2013 2014 2015 2016 2017 1H18 ROIC Cost of debt after taxes 9.8p.p.10.7p.p. 7.5p.p. 5.2p.p. 8.0p.p. 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 8.1p.p. 53
  • 54.
    54 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