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Localiza institucional inglês
This presentation provides an overview of Localiza, a car rental company based in Brazil. It discusses Localiza's history and growth, integrated business platform consisting of car rental, fleet rental, franchising, and used car sales divisions. It highlights the company's competitive advantages including scale in purchasing cars, large network of locations, innovation, and expertise in managing assets and used car sales. Financial information is presented on the car rental and fleet rental divisions showing their profitability and returns above Localiza's cost of debt. The Brazilian car rental and fleet rental market is also summarized, noting the fragmented nature of off-airport locations and low penetration of fleet rentals as drivers of future growth opportunities.
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Localiza institucional inglês
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- 2. 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 4Q16 Agenda 2
- 3. Company: milestones Phase I– Rise to #1 1973 – Founded in Belo Horizonte/MG Late 70’s - Acquisitions in the Northeast of Brazil 1981 – Brazilian car rental leader in # of branches Phase II – Expansion 1984 – Expansion strategy by adjacencies: Franchising 1991 – Expansion strategy by adjacencies: Seminovos 1997 – Expansion strategy by adjacencies: Fleet Rental 1997 – PE firm DL&J enters at a market cap of US$ 150 mm Phase III – Reaching Scale 2005 – IPO: market cap of US$ 295 mm 2011 – Rated as investment grade by Moody’s, Fitch and S&P in 2012 2012 – ADR level I 12/31/2016 – Market cap of about US$2.2 bi with ADTV of US$11.3 million 1973 1982 1983 2004 2005 2016 3
- 4. Company: integrated businessplatform Synergies: bargaining power cost reduction cross selling 14,015 cars 158 locations in Brazil 70 locations in South America 33 employees 49.8% sold to final consumer 84 stores 53 cities 1.029 employees 94,156 cars 6.4 million clients 333 locations 4,865 employees 34,948 cars 925 clients 397 employees Based on the 4Q16 4 Car Rental Fleet Rental SeminovosFranchising This integrated business platform gives Localiza flexibility and superior performance.
- 5. 5 High fixedcost Standard fleet 1 year cycle High entry barriers Gains of scale Intensive capital Consolidated in airport market Fragmented off airport market Support area Reduces depreciation Know How of used cars market Low dependence on intermediates Supplementary business Important for distribution High profitability Low contribution in results Company: Business platform divisions Car Rental Rents to individuals and companies at airports and off airport locations. Franchising Contributes to expand the Localiza’s network. Fleet Rental Outsources fleet for 2-3 years term contracts. Used Car Sales Sells the used cars mainly to final consumers after the rental and estimates the residual values. Low fixed cost Customized fleet 3 years cycle Low entry barriers Intensive capital
- 6. 6 Net car sale revenue R$31.61 year cycle CarRental Division - 2016 Financial Cycle Per car R$35.2 Average car price (past 2 years) 1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax Revenue Total 1 year R$ % R$ % R$ Net revenues 20.3 100.0% 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
- 7. 7 Net car sale revenue R$29.2 3year cycle Fleet Rental Division - 2016 Financial Cycle Per car 1 2 3 4 5 6 31 32 33 34 35 36Expenses, interest and tax Revenue R$42.9 Average car price (past 2 years) Total 3 years R$ % 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
- 8. 8 2016 Consolidated breakdown R$million R$ 128 13% R$ 420 41% R$ 468 46% R$ 334 43% R$ 437 57% Net Revenues R$4,439 EBITDA R$1,016 R$ 2,343 53% R$ 652 15% R$ 1,445 32% EBIT* R$771 *Seminovos results recorded in the Car Rental and Fleet Rental Divisions Company’s profitability comes from Car Rental and Fleet Rental Divisions.
- 9. Raising money Buying cars Renting CarsSelling Cars Cash to renew the fleet or pay debt $ Profitability comes from rental divisions Competitive advantages $ 9 43 years of experience in managing assets and generating value.
- 10. Competitive advantages: raisingmoney Global Scale National Scale As of February, 2017. BB+ Fitch Ba2 Moody’s BB+ S&P Baa1 Moody´s B+ S&P Ba3 Moody´s BB- S&P brAA+ S&P Aa1.br Moody’s AAA(bra) Fitch brAA- S&P AA- (bra) Fitch A- (bra) Fitch brA+ S&P AA- (bra) Fitch brA S&P A(bra) Fitch 10 Investment grade: lower spreads and longer tenors Source: Bloomberg . Raising money Buying cars Renting Cars Selling Cars $ Localiza raises money with better conditions then its competitors.
- 11. Raising money Buying cars Renting CarsSelling Cars 11 Competitive advantages: buying cars Number of cars purchased - 2016 * Includes Franchising. Source: each company website and ANFAVEA Localiza’s share in the internal sales of the OEMs - 2016 4.7% $ Localiza buys cars with better conditions due to the volume of purchases. 92,671 45,114 26,709 9,122 Localiza Movida Unidas Locamerica *
- 12. Raising money Buying cars Renting CarsSelling Cars 12 Competitive advantages: renting cars Brand Brazilian distribution #ofbranches#ofcities Source: Each company website on 01/23/2017, 4Q16 Earnings Release.. $ The Company is present in 180 cities where the other largest networks do not operate. 502 92 227 183 Localiza Competitors 491 360 153 63 96 Localiza Unidas Hertz Movida
- 13. Raising money Buying cars Renting CarsSelling Cars 13 Localiza Fast® Mobile‐based counter bypass: Provides agility and control over the car rental experience. Customers can pick‐up car bypassing our counter Localiza Way® New platform to offer value‐added services Mobile Checklist More quality, control and agility in providing cars for rental Fast Checkout More operational productivity and agility in returning the cars after rental Connected Shuttle Optimization of customer shuttle service at airports Anti fraud Taylor‐made solution for fraud prevention in car rentals Competitive advantages: Innovation $ Constant innovations allow maintenance of the premium service.
- 14. 14 Integrated technology solution that increases competitive intelligence and leverages productivity gains. CONNECTED FLEET Integrated mobile solution to fleetrental services for drivers and contract manager. MOBILE SOLUTION Rapid diagnosis and friendly vision of the fleet by the customer. ONLINE FLEET RENTAL Competitive advantages: Innovation Raising money Buying cars Renting Cars Selling Cars $ Differentiated offer with higher added value to the customer.
- 15. Raising money Buying cars Renting CarsSelling Cars 15 Sales to final consumer Competitive advantages: selling cars Buffer: additional fleet during peaks of demand Large database $ Deep know how of used car market: consumer preference, pricing and residual value NPS of 70 (survey made 90 days after the purchase)
- 16. 7.3% 8.6% 6.3% 6.0% 8.0% 9.5% 10.2% 16.9%17.1% 16.1% 16.5% 17.5% 17.0% 15.4% 2010 2011 2012 2013 2014 2015 2016 16 ROIC versus cost of debt after taxes ROIC Cost of debt after taxes 9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p. 7.5p.p. 5.2p.p. 2010 to 2014 ROIC considered income tax rate of 30% and effective income tax rate from 2015 on Spread of 5.2p.p. in line with the Company's short-term strategy and expectation of a sharp drop in interest in 2017
- 17. 17 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 4Q16 Agenda
- 18. 18 Car Rental overview Compactcars 55.9% Others 44.1% 2016 Fleet composition 94,156 cars Corporate fleet size 65,086 70,717 77,573 76,755 94,156 2012 2013 2014 2015 2016 Car rental distribution (Brazil) 474 479 476 494 491 2012 2013 2014 2015 2016
- 19. 19 Drivers Source: BCB andLocaliza rates Car rental affordability Source: IPEADATA , Localiza’s loyalty program and SPC Brasil research * jun/2013 6.4 million 84 million Adult population (age > 20 years) Class A+B+C 65 million Credit Card Owners Increasing affordability and low penetration in leisure trips brings growth opportunities. 180 200 240 260 300350 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 minimum salary (R$) Daily rental price over minimum salary (%) * The research indicated that 77% of the population owns at least one credit card. The population was 80% class A,B and C members and 20% class D and E members.
- 20. 20 Drivers # domestic airtraffic passengers In million Expected investment 2016-2019 (in R$ billion) Source: Sectorial Analysis Committee / BNDES: 2016-2019 , as of February, 2016. Source: ANAC up to 2016 and IATA-Air Passenger Forecast Global Report, as of February, 2016. The pipeline of investments tend to benefit the corporate segment. Expected annual traffic growth of 2.5% from 2017 to 2034 traffic. 70 82 89 90 96 96 89 2010 2011 2012 2013 2014 2015 2016 214.1 142.6 87.1 35.8 32.9 32.5 17.0 15.5 5.8 Energy Telecoms Highways Sanitation Railways Urban mobility Airports Ports Solid Residues
- 21. 21 Source: ABLA, eachcompany’s website on 01/23/2017 and Localiza´s 4Q16 Earnings Release Airport locations Off-airport locations Car Rental Locations in Brazil Off‐airport market is still fragmented.
- 22. 22 Market Share Gross Revenue- Car Rental 2016 Source: ABLA and Companies’ Financial Statements. Localiza’s market share is higher than the 2nd and 3rd players together. 33.7% 13.5% 7.6% 45.2% Localiza (includes franchising) Movida Unidas Others Market size: R$5.1 billion
- 23. 23 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 4Q16 Agenda
- 24. 24 Number of clients FleetRental overview Compact cars 33.8% Others 66.2% 2016 Fleet composition 34,960 cars 729 760 798 849 925 2012 2013 2014 2015 2016 End of period fleet 32,104 32,809 34,312 33,948 34,960 2012 2013 2014 2015 2016
- 25. 25 Source: ABLA, Datamonitorand Localiza Rented fleet penetration Corporate fleet: 4,000,000* Rented fleet: 440,737 34,960 Brazilian Market World 11.0% 8.9% 13.3% 16.5% 24.5% 37.4% 46.9% 58.3% Drivers *Localiza estimates Low penetration of rented fleet in Brazil.
- 26. Market Share Gross Revenue- Fleet Rental 2016 26 Source: ABLA, Companies’ Financial Statements. Fragmented market with low entry barriers. 12.2% 3.8% 6.5% 8.1% 69.3% Localiza Movida Unidas Others Locamerica Market size: R$5.4 billion
- 27. 27 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 4Q16 Agenda
- 28. 28 # of pointsof sale Car sales – operating data 55 66 73 74 75 77 84 2010 2011 2012 2013 2014 2015 2016 47,285 50,772 56,664 62,641 70,621 64,305 68,449 2010 2011 2012 2013 2014 2015 2016 # Number of cars sold (quantity) Efficiency gain on car sales.
- 29. 29 Used car salesdrivers: affordability and penetration Affordability to buy cars – Public Price of the most basic Gol 300 350 380 415 465 510 545 622 678 724 788 880 84 71 69 61 55 51 49 43 43 43 41 41 ‐ 10 20 30 40 50 60 70 80 90 ‐100 ‐ 100 200 300 400 500 600 700 800 900 200520062007200820092010201120122013201420152016 Minimum wage (R$) Minimum wages to buy a new car 7.9 7.7 7.3 6.9 6.5 6.0 5.7 5.3 5.0 4.9 4.8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 # of inhabitants per car – Brazil 2005 ‐ 2015 Source: Sindipeças ‐ Current Fleet Report 2016, as of April 2016. Developed countries maintain a ratio between 1 ‐ 2 cars per inhabitant. Source: BCB and Localiza Reference: to calculate the minimum wages to buy a new car we used the public price of the Vehicle type Gol.
- 30. 8.4 8.9 9.09.4 10.1 9.9 10.0 3.3 3.5 3.6 3.6 3.3 2.5 2.0 2010 2011 2012 2013 2014 2015 2016 30 Brazilian car market: new x used car market and affordability New cars Used cars Source: FENABRAVE (light and commercial cars) In million of cars Total market of 12.0 million cars. 2.5x 2.5x2.6x 2.6x 3.1x 4.0x 5.0x
- 31. 31 2015 Up to2 years 419,085 2016 Brand new 1,986,3622016 Used cars 10,008,769 0.7% 3.4% 15.3% Car sales – operating data Source: Anfavea and Fenabrave Unidas, Locamerrica and Movida websites Examples • Retailers • Dealers • Rental operators • “Auto malls” Points of sale • 48,000 (Fenauto) • 5,592 (Anfavea) • +115 (Unidas, Movida, Locamerica) • 71 (Fenauto) Main players
- 32. 32 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 4Q16 Agenda
- 33. Message from theCEO – highlights Financial discipline and strong balance sheet Cash position and debt profile to face the tough environment High credit ratings The only company in the sector to create value for shareholders Focused on leadership, commercial and operational excellence and on active cost management Long‐term global strategic alliance agreement with The Hertz Corporation Expand its market share in inbound/outbound reservations Use the Localiza‐Hertz brand through a co‐brand agreement Exchange knowhow, technology and expertise Indisputable leadership in quality and service Net Promoter Score of over 80 in 2016 The most visited site in its category, with more than 7.6 million visitors in 2016 195,000 downloads of its mobile app Facebook fan page with more than 515,000 followers and the highest engagement in the category Protagonist on innovation Localiza FAST na app that allows clients to open the car door without going through the counter Brand 25ª most valuable brand in Brazil , among other brands across different sectors Highest standards of ethics and corporate governance Honored as the best company in Transparency and Ethics at the Revista Exame 2016 ranking Car rental division with the biggest and most diversified fleet that is renewed yearly More than 50 models of cars, from compact to premium brands such as Audi, BMW and Volvo 33Strong ambition towards growth and expanding its market leadership
- 34. 3,812 3,780 3,871 4,111 4,242 4,308 4,846 5,266 1Q 2Q 3Q 4Q 76,755 94,156 33,948 34,960 13,992 14,015 124,695 143,131 2015 2016 Car Rental Fleet Rental Franchising 34 4Q16 and 2016 Operational Highlights 15,047 16,348 13,839 17,379 20,883 4Q15 1Q16 2Q16 3Q16 4Q16 Cars sold– consolidated Rental days evolution (thousand)– Car Rental Average revenues per operating car (R$ thousand) Fleet at end of the year 20.1 20.3 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016
- 35. Net Revenues -(R$ million) EBITDA - (R$ million) Net Income (R$ million) 402.4 409.3 2015 2016 4Q16 and 2016 Financial Highlights 35 EBIT (R$ milhões) 338.7 402.2 155.6 170.5 499.2 733.3 993.5 1,306.0 4Q15 4Q16 Car Rental Fleet Rental Seminovos 228.0 270.9 4Q15 4Q16 175.0 202.0 4Q15 4Q16
- 36. 36 Number of DailyRentals (thousand) 28.1% increase in car rental volume and 19.0% growth in net revenue in 4Q16 versus 4Q15 10,734 12,794 13,749 14,242 15,416 15,566 18,662 4,111 5,266 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 Car Rental 802.2 980.7 1,093.7 1,163.5 1,284.4 1,258.0 1,428.0 334.5 398.0 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 Net Revenues (R$ million)
- 37. 69.1% 68.9% 70.8% 66.8% 69.9% 69.3% 73.4% 20102011 2012 2013 2014 2015 2016 37 Utilization Rate Evolution – Car Rental The increase in the utilization rate offset the drop in the average rate, keeping the average revenue per operating car stable Car Rental Average daily rental – In R$ 19.5 19.1 20.4 19.7 20.9 20.1 20.3 2010 2011 2012 2013 2014 2015 2016 78.07 79.68 82.36 84.85 87.71 84.56 79.67 2010 2011 2012 2013 2014 2015 2016 Average annual revenues per operating car (R$ thousand)
- 38. Car Rental networkevolution Number of car rental locations (Brazil and abroad) 13 new corporate locations were added to the network Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisees´ branches - abroad 234 247 272 286 304 320 333 181 202 202 193 172 174 15861 47 50 63 64 70 70476 496 524 542 540 564 561 2010 2011 2012 2013 2014 2015 2016 +13
- 39. 39 Fleet Rental 361.1 455.0 535.7 575.9571.9 608.5 651.8 155.6 170.5 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 8,044 9,603 10,601 10,844 10,363 10,901 11,240 2,702 2,922 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 Net Revenues (R$ million) Number of Daily Rentals (thousand) 8.1% growth in daily volume and 9.6% in net revenue in 4Q16 versus 4Q15
- 40. Purchases (includes accessories)Used car sales net revenues Cars purchased Cars sold 40 Net investment Fleet Expansion* (quantity) Net Investment in Fleet (R$ million) 9,178 2,011 7,10318,649 * It does not consider theft / crashed cars. 9,183 465 (273) 65,934 59,950 58,655 69,744 79,804 64,032 87,833 21,660 27,921 47,285 50,772 56,644 62,641 70,621 64,305 68,449 15,047 20,883 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 1,910 1,777 1,619 2,026 2,483 2,278 3,290 838 1,0781,322 1,468 1,520 1,747 2,018 2,045 2,343 499 733 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 Strong growth in the fleet to support the Company's growth 309 99 588 279 233 6,613 339 19,384 7,038 R$947 345
- 41. 41 Number of pointsof sale New stores will be added to the network to support the renewal of the fleet due to the strong growth of the Car Rental Division 55 66 73 74 75 77 84 2010 2011 2012 2013 2014 2015 2016 +7
- 42. 42 Period-end fleet Quantity 61,445 64,68865,086 70,717 77,573 76,755 94,156 26,615 31,629 32,104 32,809 34,312 33,948 34,960 10,652 12,958 14,545 14,233 13,339 13,992 14,015 98,712 109,275 111,735 117,759 125,224 124,695 143,131 2010 2011 2012 2013 2014 2015 2016 Car Rental Fleet Rental Franchising The car rental fleet increased 17,401 cars to meet strong demand, maintaining the utilization rate at a record level of 73.4% +17,401 +1,012
- 43. 1,175.3 1,450.0 1,646.71,758.9 1,874.0 1,883.1 2,096.8 494.3 572.7 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,044.9 2,342.5 499.2 733.3 2,497.2 2,918.1 3,166.7 3,506.2 3,892.2 3,928.0 4,439.3 993.5 1,306.0 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 43 Consolidated net revenues R$ million Rental Used car sales 31.5% increase in consolidated revenue in 4Q16 versus 4Q15 The increase of 46.9% in 4Q16 in the revenue of the Seminovos is due to 5,836 cars sold more than in 4Q15, and to the increase of 5.9% in the car prices
- 44. 44 Consolidated EBITDA R$ million (*)From2012 onwards, accessories and freight of new cars have been accounted directly in the cost line, impacting EBITDA but reducing depreciation costs. (**) It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos. Divisions 2010* 2011* 2012 2013 2014** 2015 2016 4Q15 4Q16 Car Rental 45.3% 46.9% 40.9% 36.8% 38.7% 31.8% 32.3% 30.2% 31.5% Fleet Rental 68.0% 68.6% 66.4% 65.5% 60.0% 62.2% 64.5% 64.0% 63.8% Rental Consolidated 52.3% 53.8% 49.3% 46.5% 45.3% 41.7% 42.3% 40.8% 40.8% Used Car Sales 2.6% 2.8% 4.2% 5.7% 6.0% 7.3% 5.5% 5.2% 5.0% Increase of R$42.9 million in EBITDA in 4Q16 649.5 821.3 875.6 916.5 969.8 934.8 1,015.6 228.0 270.9 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 + R$42.9
- 45. 45 Average depreciation percar (in R$) Car Rental 1,536.0 1,683.9 1,895.8 1,452.4 1,270.0 622.1 1,251.2 2010 2011 2012 2013 2014 2015 2016 2,076.6 IPI Effect 3,972.4 Average Price of cars purchased In R$ Thousand 29.41 33.87 36.57 4.46 2.70 Price 2014 Increase Price 2015 Increase Price 2016 2015 2016 The increase in the average depreciation per car of the RAC is a reflection of the slowdown of the increase of the new cars price that reflects in the seminovos cars
- 46. 46 Average depreciation percar (in R$) The drop in depreciation is due to a longer cycle The depreciation of the cars in this division benefits from the price increase of new cars that occurs over the life of the car 3,509.7 4,133.0 4,311.3 4,592.3 4,202.1 3,935.2 3,714.0 2010 2011 2012 2013 2014 2015 2016 1,096.9 IPI Effect 5,408.2 Fleet Rental
- 47. 47 Consolidated EBIT R$ million Divisions 20102011 2012 2013 2014 2015 2016 4Q15 4Q16 Car Rental 38.5% 38.8% 23.7% 32.8% 36.2% 34.3% 30.2% 28.7% 28.4% Fleet Rental 46.2% 45.6% 36.9% 45.1% 44.3% 48.9% 51.2% 49.9% 52.4% Consolidated 41.0% 41.1% 28.3% 37.1% 38.8% 39.1% 36.8% 35.4% 35.3% Even with increased car depreciation of the Car Rental Division, EBIT Margin remained stable in 4Q16 482.1 595.7 465.8 652.1 726.7 735.5 771.1 175.0 202.0 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 144.5 IPI Effect 610.3 + R$27.0
- 48. 48 Consolidated net income R$million Increase of 1.7% in 2016 profit even with the increase of interest and depreciation 250.5 291.6 240.9 384.3 410.6 402.4 409.3 105.9 104.4 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16 336.3 95.4 IPI Effect Reconciliation EBITDA x Net income 2010 2011 2012 2013 2014 2015 2016 Var. R$ Var. % 4Q15 4Q16 Var. R$ Var. % Consolidated EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 1,015.6 80.8 8.6% 228.0 270.9 42.9 18.8% Cars depreciation (146.3) (201.5) (232.4) (229.0) (207.4) (163.6) (206.3) (42.7) 26.1% (44.0) (59.5) (15.5) 35.2% Cars additional depreciation – IPI effect - - (144.5) - - - - - - - - - - Other property depreciation and amortization (21.1) (24.1) (32.9) (35.4) (35.7) (35.7) (38.2) (2.5) 7.0% (9.0) (9.4) (0.4) 4.4% EBIT 482.1 595.7 465.8 652.1 726.7 735.5 771.1 35.6 4.8% 175.0 202.0 27.0 15.4% Financial expenses, net (130.1) (179.0) (138.7) (110.6) (151.1) (202.7) (243.5) (40.8) 20.1% (43.5) (72.7) (29.2) 67.1% Income tax and social contribution (101.5) (125.1) (135.3) (157.2) (165.0) (130.4) (118.3) 12.1 -9.3% (25.6) (24.9) 0.7 -2.7% Income tax and social contribution – IPI effect - - 49.1 - - - - - - - - - - Net income of the period 250.5 291.6 240.9 384.3 410.6 402.4 409.3 6.9 1.7% 105.9 104.4 (1.5) -1.4%
- 49. 49 Free cash flow- FCFFree cash flow Free cash flow - R$ million 2010 2011 2012 2013 2014 2015 2016 w Operations EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 1,015.6 Used car sale revenue, net from taxes (1,321.9) (1,468.1) (1,520.0) (1,747.3) (2,018.2) (2,044.9) (2,342.5) Depreciated cost of cars sold 1,203.2 1,328.6 1,360.2 1,543.8 1,777.0 1,769.1 2,102.5 (-) Income tax and social contribution (57.8) (83.0) (100.9) (108.5) (113.1) (110.7) (93.3) Change in working capital 54.5 (83.9) 37.1 2.9 (27.1) (30.0) 113.2 Cash generated by rental operations 527.5 514.9 652.0 607.4 588.4 518.3 795.5 Capex- Renewals Used car sale revenue, net from taxes 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,036.3 2,342.5 Fleet renewal investment (1,370.1) (1,504.5) (1,563.3) (1,819.7) (2,197.7) (2,278.4) (2,563.6) Net investment for fleet renewal (48.2) (36.4) (43.3) (72.4) (179.5) (242.1) (221.1) Fleet renewal – quantity 47,285 50,772 56,644 62,641 70,621 64,032 68,449 Investment, other property and intangibles (50.6) (59.9) (77.8) (47.5) (46.3) (29.7) (42.2) Free cash flow from operations, net of fleet renewal capex 428.7 418.6 530.9 487.5 362.6 246.5 532.2 Capex-Growth Fleet growth (investment) (540.3) (272.0) (55.5) (209.4) (286.8) 8.6 (726.0) Change in accounts payable to car suppliers 111.3 32.7 (116.9) 89.7 334.4 (121.2) 190.7 Net investment for fleet growth (429.0) (239.3) (172.4) (119.7) 47.6 (112.6) (535.3) Fleet increase / (reduction) – quantity 18,649 9,178 2,011 7,103 9,183 (273) 19,384 Free cash flow after growth, and before interest and new HQ (0.3) 179.3 358.5 367.8 410.2 133.9 (3.1) New headquarters construction (0.5) (3.1) (2.4) (6.5) (148.3) (30.7) (84.4) Free cash flow before interest (0.8) 176.2 356.1 361.3 261.9 103.2 (87.5)
- 50. 50 Changes in netdebt R$ million R$288.7 million of cash generation after interest was invested to increase the fleet 532.2 (243.5) (726.0) 190.7 (84.4) (139.4) (25.0) (2,084.0) Net Debt 12/31/2016 (1,588.6) Net Debt 12/31/2015 Free cash flow after fleet renewal and before headquarters Interest Fleet Increase of 19,384 cars Increase in accounts payable to cars suppliers New headquarters construction Dividends +288.7 (535.3) (248.8) Treasury Shares
- 51. 51 Debt maturity profile(principal) R$ million Strong cash position and comfortable debt profile to take advantage of growth opportunities As of December 31, 2016 ‐ 558.4 335.7 620.8 770.0 672.5 750.0 2016 2017 2018 2019 2020 2021 2022 Cash 1,692.3 2016 1,514.9
- 52. 52 Debt - ratios Netdebt vs. Fleet value BALANCE AT THE END OF PERIOD 2010(*) 2011 2012 2013 2014 2015 2016 Net debt / Fleet value 52% 51% 48% 48% 40% 44% 45% Net debt / EBITDA 2.0x 1.7x 1.4x 1.5x 1.4x 1.7x 2.1x Net debt / Equity 1.4x 1.2x 0.9x 1.0x 0.8x 0.8x 0.9x EBITDA / Net financial expenses 5.0x 4.6x 6.3x 8.3x 6.4x 4.6x 4.2x (*) 2010 ratios based on USGAAP financial statements Net debt Fleet value Low leverage supports growth targets 1,281.1 1,363.4 1,231.2 1,332.8 1,322.3 1,588.6 2,084.0 2,446.7 2,681.7 2,547.6 2,797.9 3,296.3 3,642.7 4,623.6 2010 2011 2012 2013 2014 2015 2016
- 53. 53 ROIC versus costof debt after taxes ROIC Cost of debt after taxes 7.3% 8.6% 6.3% 6.0% 8.0% 9.5% 10.2% 16.9% 17.1% 16.1% 16.5% 17.5% 17.0% 15.4% 2010 2011 2012 2013 2014 2015 2016 9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p. 7.5p.p. 5.2p.p. 2010 to 2014 ROIC considered income tax rate of 30% and effective income tax rate from 2015 on Spread of 5.2p.p. in line with the Company's short-term strategy and expectation of a sharp drop in interest in 2017
- 54. 54 Disclaimer Website: www.localiza.com/ir E-mail:ri@localiza.com Phone: 55 31 3247-7024 Roberto Mendes CFO and IR Nora Lanari Head of IR Eugênio Mattar CEO The material presented is a presentation of general background information about LOCALIZA as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein. This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only projections and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of LOCALIZA and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. Although LOCALIZA believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to LOCALIZA’s management, LOCALIZA cannot guarantee future results or events. LOCALIZA expressly disclaims a duty to update any of the forward-looking statement. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the Securities Act of 1933. This presentation does not constitute an offer, invitation or solicitation of an offer to subscribe to or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Maria Carolina Costa IR Manager Mariana Campolina IR Manager