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Localiza institucional inglês
This presentation provides an overview of Localiza, a Brazilian car rental company. It discusses the company's history and milestones, integrated business platform consisting of car rental, fleet rental, franchising, and used car sales divisions, competitive advantages in raising money, buying cars, renting cars, innovation, and selling used cars. Financial information is presented on the car rental and fleet rental divisions. The presentation also reviews market drivers, locations, and Localiza's leading market share positions in both the car rental and fleet rental markets in Brazil.
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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 2Q17 Agenda 2
- 3. Company: milestones Phase I– Rise to #1 1973 – Founded in Belo Horizonte/MG Late 70’s - Acquisitions in the Northeast of Brazil 1981 – Brazilian car rental leader in # of branches Phase II – Expansion 1984 – Expansion strategy by adjacencies: Franchising 1991 – Expansion strategy by adjacencies: Seminovos 1997 – Expansion strategy by adjacencies: Fleet Rental 1997 – PE firm DL&J enters at a market cap of US$ 150 mm Phase III – Reaching Scale 2005 – IPO: market cap of US$ 295 mm 2011 – Rated as investment grade by Moody’s, Fitch and S&P in 2012 2012 – ADR level I 06/30/2017 – Market cap of about US$3.0 bi with ADTV of US$17.4 million 1973 1982 1983 2004 2005 2017 3
- 4. Company: integrated businessplatform Synergies: bargaining power cost reduction cross selling 12,784 cars 138 locations in Brazil 71 locations in South America 36 employees 45.5% sold to final consumer 91 stores 59 cities 1.036 employees 100.578 cars 6.7 million clients 368 locations 4,247 employees 38,388 cars 992 clients 262 employees Based on the 2Q17 4 Car Rental Fleet Rental SeminovosFranchising This integrated business platform gives Localiza flexibility and superior performance. Operations: 472 employees Overhead: 461 employees
- 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 May, 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 brA+ S&P AA- (bra) Fitch AA- (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. 92 227 182 Localiza Competitors Raising money Buying cars RentingCars Selling Cars 12 Competitive advantages: renting cars Brand Brazilian distribution #ofbranches#ofcities Source: Each company website on 05/03/2017 and 2Q17 Earnings Release for Localiza. $ The Company is present in 180 cities where the other largest networks do not operate. 501509 358 153 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. 16 ROIC versus costof debt after taxes ROIC considered effective income tax rate ROIC Cost of debt after taxes Localiza is committed to value creation for its shareholders 6.3% 6.0% 8.0% 9.5% 10.2% 8.8% 16.9% 16.7% 17.8% 17.0% 15.4% 15.7% 2012 2013 2014 2015 2016 1H17 6.9p.p.9.8p.p.10.6p.p. 10.7p.p. 7.5p.p. 5.2p.p. Annualized
- 17. 17 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q17 Agenda
- 18. 18 Car Rental overview Compact cars55.9% Others 44.1% 2016 Fleet composition 94,156 cars Corporate fleet size 65,086 70,717 77,573 76,755 94,156 100,578 2012 2013 2014 2015 2016 2Q17 Car rental distribution (Brazil) 474 479 476 494 491 506 2012 2013 2014 2015 2016 2Q17
- 19. 19 Drivers Source: BCB andLocaliza rates Car rental affordability Source: IPEADATA , Localiza’s loyalty program and SPC Brasil research * jun/2013 6.5 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 05/03/2017 and Localiza´s 2Q17 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 2Q17 Agenda
- 24. 24 Number of clients FleetRental overview Compact cars 33.8% Others 66.2% 2016 Fleet composition 34,960 cars 729 760 798 849 925 992 2012 2013 2014 2015 2016 2Q17 End of period fleet 32,104 32,809 34,312 33,948 34,960 38,388 2012 2013 2014 2015 2016 2Q17
- 25. 25 Rented fleet penetration Corporatefleet: 5,000,000* Rented fleet: 440,737** 38,388 Brazilian Market World 8.8% 8.9% 13.3% 16.5% 24.5% 37.4% 46.9% 58.3% Drivers Low penetration of rented fleet in Brazil. Source: Datamonitor for European countries and Localiza’s estimate for Brazil *Frost&Sullivan research **Localiza estimates
- 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$5.4 billion
- 27. 27 1. Company overview 2.Main business divisions Car Rental Fleet Rental Seminovos 3. Financials Appendix: Earnings release 2Q17 Agenda
- 28. 28 # of pointsof sale Car sales – operating data 73 74 75 77 84 91 2012 2013 2014 2015 2016 1H17 56,664 62,641 70,621 64,305 68,449 40,510 2012 2013 2014 2015 2016 1H17 # Number of cars sold (quantity) Efficiency gain on car sales.
- 29. 29 Used car salesdrivers: affordability and penetration Affordability to buy cars – Public Price of the most basic Gol 300 350 380 415 465 510 545 622 678 724 788 880 84 71 69 61 55 51 49 43 43 43 41 41 ‐ 10 20 30 40 50 60 70 80 90 ‐100 ‐ 100 200 300 400 500 600 700 800 900 200520062007200820092010201120122013201420152016 Minimum wage (R$) 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 2Q17 Agenda
- 33. 33 2Q17 Operational Highlights Cars sold– consolidated Rentaldays evolution (thousand)– Car Rental Rental days evolution (thousand)– Fleet Rental Fleet at end of the period 78,352 100,578 32,726 38,388 13,695 12,784 124,773 151,750 2Q16 2Q17 Car Rental Fleet Rental Franchising 13,839 20,201 2Q16 2Q17 4,308 5,566 2Q16 2Q17 2,761 3,012 2Q16 2Q17 151,750 cars on 06/30/2017
- 34. Net Revenues -(R$ million) EBITDA - (R$ million) Net Income (R$ million) 98.0 129.3 2Q16 2Q17 2Q17 Financial Highlights 34 EBIT (R$ milhões) 471.7 767.8 331.9 401.5 159.5 176.4 963.1 1,345.7 2Q16 2Q17 Seminovos RAC and frachising Fleet Rental 234.3 298.7 2Q16 2Q17 179.0 235.6 2Q16 2Q17 Record profit of R$129.3 millions in the 2Q17
- 35. 1,093.7 1,163.5 1,284.4 1,258.0 1,428.0 667.5 800.9 327.8 397.4 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 35 Number of Daily Rentals (thousand) Growth of 29.2% in daily rentals and of 21.2% in net revenues in 2Q17 13,749 14,242 15,416 15,566 18,662 8,550 10,874 4,308 5,566 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 Car Rental Net Revenues (R$ million)
- 36. 36 Utilization Rate Evolution– Car Rental The average daily rental rate decrease was offset by cost control, productivity gains and strong growth, increasing profitability. Car Rental Average daily rental rate – In R$ 73.4% 73.7% 75.3% 71.5% 73.5% 74.7% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 83.6 79.4 77.7 78.6 79.3 74.1 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
- 37. Car Rental networkevolution Number of car rental locations (Brazil and abroad) 35 corporate branches were added to the network in 1H17 Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisees´ branches - abroad 272 286 304 320 333 351 368 202 193 172 174 158 158 138 50 63 64 70 70 70 71 524 542 540 564 561 579 577 2012 2013 2014 2015 2016 1Q17 2Q17 +17+18
- 38. 38 Fleet Rental 535.7 575.9571.9 608.5 651.8 317.9 349.7 159.5 176.4 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 10,601 10,844 10,363 10,901 11,240 5,507 5,943 2,761 3,012 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 Net Revenues (R$ million) Number of Daily Rentals (thousand) 9.1% growth in daily rentals and 10.6% growth in net revenues in 2Q17
- 39. Purchases (includes accessories)Used car sales net revenues Cars purchased Cars sold 39 Net investment Fleet Expansion (reduction)* (quantity) Net Investment in Fleet (R$ million) 2,011 7,103 * It does not consider theft / crashed cars. 9,183 465.0 (273) 58,655 69,744 79,804 64,032 87,833 31,009 51,058 24,020 35,935 56,644 62,641 70,621 64,305 68,449 30,187 40,510 13,839 20,201 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 1,618.8 2,026.2 2,483.2 2,278.4 3,289.6 1,133.9 2,107.7 878.7 1,489.51,520.0 1,747.3 2,018.2 2,044.9 2,342.6 1,016.4 1,526.3 471.7 767.8 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 51,058 cars purchased in the 1H17 98.8 278.9 233.5 19,384 947.0 822 117.5 10,181 407.0 10,548 15,734 581.4 721.7
- 40. 40 Number of pointsof sale New points of sale will be added to support the strong growth of the Car Rental Division 73 74 75 77 84 91 2012 2013 2014 2015 2016 1H17
- 41. 41 Period-end fleet Quantity 65,086 70,71777,573 76,755 94,156 78,352 100,578 32,104 32,809 34,312 33,948 34,960 32,726 38,388 14,545 14,233 13,339 13,992 14,015 13,695 12,784 111,735 117,759 125,224 124,695 143,131 124,773 151,750 2012 2013 2014 2015 2016 1H16 1H17 Car Rental Fleet Rental Franchising Increase of 22,226 cars in the Car Rental Division without impacting the utilization rate +5,662 +22,226
- 42. 1,646.7 1,758.9 1,874.01,883.1 2,096.8 993.7 1,159.1 491.4 577.9 1,520.0 1,747.3 2,018.2 2,044.9 2,342.5 1,016.4 1,526.3 471.7 767.8 3,166.7 3,506.2 3,892.2 3,928.0 4,439.3 2,010.1 2,685.4 963.1 1,345.7 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 42 Consolidated net revenues R$ million Rental Used car sales 39.7% increase in consolidated revenue in 2Q17
- 43. 43 Consolidated EBITDA R$ million (*)It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos. The EBITDA margin of Fleet Rental reflects the context of lower basic interest rates and depreciation 875.6 916.5 969.8 934.8 1,015.6 492.7 595.6 234.3 298.7 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 + R$64.4 Divisions 2012 2013 2014* 2015 2016 1H16 1H17 2Q16 2Q17 Car Rental 40.9% 36.8% 38.7% 31.8% 32.3% 33.1% 35.3% 31.6% 34.0% Fleet Rental 66.4% 65.5% 60.0% 62.2% 64.5% 64.8% 62.4% 65.0% 61.8% Rental Consolidated 49.3% 46.5% 45.3% 41.7% 42.3% 43.3% 43.4% 42.6% 42.4% Used Car Sales 4.2% 5.7% 6.0% 7.3% 5.5% 6.1% 6.0% 5.3% 7.0% EBITDA margin:
- 44. 44 Average depreciation percar (in R$) Car Rental Depreciation is calculated based on the expectation of the future value of the car Fleet Rental 2,076 Efeito IPI 3,972 1,896 1,452 1,270 622 1,251 836 997 1,494 1,573 1,485 1,372 2012 2013 2014 2015 2016 1Q16* 2Q16* 3Q16* 4Q16* 1Q17* 2Q17* *annualized 1,097 Efeito IPI 5,408 4,311 4,592 4,202 3,935 3,714 4,175 3,786 3,550 3,364 3,330 2,989 2012 2013 2014 2015 2016 1Q16* 2Q16* 3Q16* 4Q16* 1Q17* 2Q17* *annualized
- 45. 45 Consolidated EBIT R$ million EBIT Marginincrease in the Car Rental and Fleet Rental Division 465.8 652.1 726.7 735.5 771.1 381.5 465.6 179.0 235.6 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 144.5 IPI Effect 610.3 + R$56.6 Divisions 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 Car Rental 23.7% 32.8% 36.2% 34.3% 30.2% 32.5% 34.9% 29.3% 35.1% Fleet Rental 36.9% 45.1% 44.3% 48.9% 51.2% 50.6% 52.4% 50.7% 54.0% Consolidated 28.3% 37.1% 38.8% 39.1% 36.8% 38.4% 40.2% 36.4% 40.8%
- 46. 240.9 384.3 410.6 402.4409.3 201.0 249.5 98.0 129.3 2012 2013 2014 2015 2016 1H16 1H17 2Q16 2Q17 46 Consolidated net income R$ million Growth of 31.9% of net income in the 2Q17 336.3 95.4 IPI Effect + R$31.3 Reconciliation EBITDA x Net income 2012 2013 2014 2015 2016 1H16 1H17 Var. R$ Var. % 2Q16 2Q17 Var. R$Var. % Consolidated EBITDA 875.6 916.5 969.8 934.8 1,015.6 492.7 595.6 102.9 20.9% 234.3 298.7 64.4 27.5% Cars depreciation (232.4) (229.0) (207.4) (163.6) (206.3) (92.1) (112.0) (19.9) 21.6% (45.8) (54.1) (8.3) 18.1% Cars additional depreciation – IPI effect (144.5) - - - - - - - - - - - - Other property depreciation and amortization (32.9) (35.4) (35.7) (35.7) (38.2) (19.1) (18.0) 1.1 -5.8% (9.5) (9.0) 0.5 -5.3% EBIT 465.8 652.1 726.7 735.5 771.1 381.5 465.6 84.1 22.0% 179.0 235.6 56.6 31.6% Financial expenses, net (138.7) (110.6) (151.1) (202.7) (243.5) (117.2) (142.0) (24.8) 21.2% (49.5) (67.2) (17.7) 35.8% Income tax and social contribution (135.3) (157.2) (165.0) (130.4) (118.3) (63.3) (74.1) (10.8) 17.1% (31.5) (39.1) (7.6) 24.1% Income tax and social contribution – IPI effect 49.1 - - - - - - - - - - - - Net income of the period 240.9 384.3 410.6 402.4 409.3 201.0 249.5 48.5 24.1% 98.0 129.3 31.3 31.9%
- 47. 47 Free cash flow R$161.2million of free cash flow
- 48. 48 Free cash flow- FCFFree cash flow Free cash flow - R$ million 2012 2013 2014 2015 2016 1H17 w Operations EBITDA 875.6 916.5 969.8 934.8 1,015.6 595.6 Used car sale revenue, net from taxes (1,520.0) (1,747.3) (2,018.2) (2,044.9) (2,342.5) (1,526.3) Depreciated cost of cars sold 1,360.2 1,543.8 1,777.0 1,769.1 2,102.5 1,378.7 (-) Income tax and social contribution (100.9) (108.5) (113.1) (110.7) (93.3) (59.0) Change in working capital 37.1 2.9 (27.1) (30.0) 113.2 (14.4) Cash generated by rental operations 652.0 607.4 588.4 518.3 795.5 374.6 Capex- Renewals Used car sale revenue, net from taxes 1,520.0 1,747.3 2,018.2 2,036.3 2,342.5 1,526.3 Fleet renewal investment (1,563.3) (1,819.7) (2,197.7) (2,278.4) (2,563.6) (1,672.3) Net investment for fleet renewal (43.3) (72.4) (179.5) (242.1) (221.1) (146.0) Fleet renewal – quantity 56,644 62,641 70,621 64,032 68,449 40,510 Investment, other property and intangibles investments (77.8) (47.5) (46.3) (29.7) (42.2) (45.2) Free cash flow from operations, net of fleet renewal capex 530.9 487.5 362.6 246.5 532.2 183.4 Capex-Growth Fleet growth (investment) (55.5) (209.4) (286.8) 8.6 (726.0) (435.4) Change in accounts payable to car suppliers (116.9) 89.7 334.4 (121.2) 190.7 476.1 Fleet growth (172.4) (119.7) 47.6 (112.6) (535.3) 40.7 Fleet increase / (reduction) – quantity 2,011 7,103 9,183 (273) 19,384 10,548 Free cash flow after growth, and before interest and new HQ 358.5 367.8 410.2 133.9 (3.1) 224.1 New headquarters construction (2.4) (6.5) (148.3) (30.7) (84.4) (62.9) Free cash flow before interest 356.1 361.3 261.9 103.2 (87.5) 161.2
- 49. 49 Changes in netdebt R$ million Fleet increase of 10,548 cars with no impact in the net debt 183.4 (142.0) (435.4) 476.1 (62.9) (86.6) (2,151.4) Net Debt 06/30/2017 (2,084.0) Net Debt 12/31/2016 Free cash flow from operations, net of fleet renewal capex Interest Increase in accounts payable to car suppliers Cash reduction by fleet increase New headquarters construction Interest on own capital +41.4 +40.7 (149.5)
- 50. 50 Debt maturity profile(principal) R$ million As of June 30, 2017 Comfortable debt profile and strong cash position 202.3 399.4 653.2 770.0 672.5 500.0 500.0 700.0 2017 2018 2019 2020 2021 2022 2023 2024 Cash 2,305.8 2017 2,024.9
- 51. 51 Debt - ratios Netdebt vs. Fleet value BALANCE AT THE END OF PERIOD 2012 2013 2014 2015 2016 1H17 Net debt / Fleet value 48% 48% 40% 44% 45% 41% Net debt / EBITDA(*) 1.4x 1.5x 1.4x 1.7x 2.1x 1.8x Net debt / Equity 0.9x 1.0x 0.8x 0.8x 0.9x 0.9x EBITDA / Net financial expenses 6.3x 8.3x 6.4x 4.6x 4.2x 4.2x Net debt Fleet value Low leverage supports growth targets 1,231.2 1,332.8 1,322.3 1,588.6 2,084.0 2,151.4 2,547.6 2,797.9 3,296.3 3,642.7 4,623.6 5,238.7 2012 2013 2014 2015 2016 1H17 (*)Annualized
- 52. 52 ROIC versus costof debt after taxes ROIC considered effective income tax rate ROIC Cost of debt after taxes Localiza is committed to value creation for its shareholders 6.3% 6.0% 8.0% 9.5% 10.2% 8.8% 16.9% 16.7% 17.8% 17.0% 15.4% 15.7% 2012 2013 2014 2015 2016 1H17 6.9p.p.9.8p.p.10.6p.p. 10.7p.p. 7.5p.p. 5.2p.p. Annualized
- 53. 53 Disclaimer Website: www.localiza.com/ir E-mail:ri@localiza.com Phone: 55 31 3247-7024 Roberto Mendes CFO and IR Nora Lanari Head of IR Eugênio Mattar CEO The material presented is a presentation of general background information about LOCALIZA as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein. This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are only projections and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of LOCALIZA and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. Although LOCALIZA believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to LOCALIZA’s management, LOCALIZA cannot guarantee future results or events. LOCALIZA expressly disclaims a duty to update any of the forward-looking statement. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the Securities Act of 1933. This presentation does not constitute an offer, invitation or solicitation of an offer to subscribe to or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Mariana Campolina IR Manager