1 October, 2012
1October, 2012
2
1. Company overview
2. Main business divisions
� Car rental
� Fleet rental
� Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
� Brazil – Macroeconomic scenario
� Earnings release 3Q12
Agenda
3
Company: milestones
1973 1982 1983 20041990 2005 2011
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 – PE firm DL&J enters at a market cap of US$ 150 mm
1997 – Expansion strategy by adjacencies: Fleet rental
Phase III – Reaching Scale
2005 – IPO: market cap of US$ 295 mm
2011 – Rated as investment grade by Moody’s, Fitch and more recently S&P
2012 – ADR level I
08/30/2012 – Market cap pf US$3.6 biwith ADTV of R$34.9 million
4
Company: integrated business platform
This integrated business platform gives Localiza flexibility and superior performance.
Synergies:
bargaining power
cost reduction
cross selling
� 13,982 cars
� 202 locations in Brazil
� 49 locations in South America
� 33 employees
� 67.4% sold to final consumer
� 73 stores
� 1,032 employees
� 61,303 cars
� 3.1 million clients
� 262 locations
� 4,228 employees
� 32,027 cars
� 716 clients
� 349 employees
Based on the 3Q12
5
Company: Business platform divisions
Car rental
Localiza car rental rents to individuals or businesses at airports and other locations.
The traditional backbone of Localiza. With its giant fleet that gets renewed annually, it lays the foundation for all scale effects captured by the group as a whole.
Fleet management
Total Fleet, offering customized fleet for terms of 2-3 years.
Total Fleet is seen as an additional business that generates value by leveraging synergies created by the integrated platform approach.
Used car sales
Support area, with the objective to sell the Company’s used cars and add know-how in buying cars and to estimate the residual value.
As a support business activity, Seminovos enables the sell 70% of used cars directly to the final customer, thereby maximizing the residual value of used rental cars.
Franchising
Supplementary business, with the purpose to expand the brand’s network.
Franchising is seen as a primarily strategic business by management – the revenues generated are low, however brand and network expand at minimum capital expenditure.
6
Total
per year
R$ % R$ % R$
Net Revenues 19,1 100,0% 29,2 100,0% 48,3
Cost s (7,4) -38,7% - 0,0% (7,4)
SG&A (2,7) -14,1% (2,8) -9,6% (5,5)
Net car sale revenue 26,4 90,4% 26,4
Book value of car sale (25,7) -90,0% (25,7)
EBITDA 9,0 47,2% 0,7 2,4% 9,7
Depreciation (vehicle) (2,0) -6,8% (2,0)
Depreciation (non-vehicle) (0,3) -1,6% (0,3)
Interest on debt (2,4) -8,2% (2,4)
Tax (2,7) -14,2% 1,1 3,8% (1,6)
NET INCOME 6,0 31,5% (2,6) -8,9% 3,4
NOPAT 5,2
ROIC 18,9%
Cost of debt after tax (CDI+1,5%) 8,6%
Fleet Rental Seminovos
per operating car per operating car
$27.5Car acquisition
Net car sale revenue
$26.4
1 2 3 4 5 8 9 10 11 12
1 - year cycle
Expenses, interest and tax
Revenue
Financial cycle
Spread10,3p.p.
2011
7
Total
per year
R$ % R$ % R$
Net Revenues 16,3 100,0% 28,6 100,0% 44,9
Costs (4,2) -25,8% - 0,0% (4,2)
SG&A (0,9) -5,5% (2,3) -8,0% (3,2)
Net car sale revenue 26,3 92,0% 26,3
Book value of car sale (24,9) -90,0% (24,9)
EBITDA 11,2 68,7% 1,4 4,9% 12,6
Depreciation (vehicle) (4,2) -14,7% (4,2)
Depreciation (non-vehicle) (0,1) -0,6% (0,1)
Interest on debt (2,0) -7,0% (2,0)
Tax (3,4) -20,6% 1,4 5,0% (1,9)
NET INCOME 7,7 47,5% (3,4) -11,7% 4,4
NOPAT 5,8
ROIC 16,1%
Cost of debt after tax (CDI+1,5%) 8,6%
Fleet Rental Seminovos
per operating car per operating car
$36.1Car acquisition
Net car sale revenue
$26.3
1 2 3 4 5 20 21 22 23 24Expenses, interest and tax
Revenue
Financial cycle
Spread7,5p.p.
2011
2 - year cycle
8
Rental revenues evolution
594.0 692.7 819.3 943.21,156.6 1,168.4
1,483.51,720.9
2004 2005 2006 2007 2008 2009 2010 2011
3,841.6 3,876.7 3,995.7 4,265.2 4,668.0 4,827.75,412.0 5,690.0
2004 2005 2006 2007 2008 2009 2010 2011
CAGR: 16.4%
CAGR: 5.8%
Localiza’s rental revenues at constant prices
Sector’s revenue at constant prices
In 2011 the Company grew 5,9x GDP and sector 1,9x.
16.0%
5.1%
CAGR:4.0%
GDP 2.7%7.5%-0.3%5.2%6.1%4.0%3.2%5.7%
9
Spread
8.5
8.60%
17.1%
0.59x
28.9%
2,445.3
2011
9.6
7.33%
16.9%
0.59x
28.6%
1,984.6
2010
8.2
8.84%
17.0%
0.53x
32.1%*
1,642.3
2008
4.0
7.59%
11.5%
0.53x
21.9%
1,702.3
2009
9.012.97.8Spread (ROIC – Interest after tax) - p.p.
6.67%8.40%10.90%Interest on debt after tax
15.7%21.3%18.7%ROIC
0.62x0.58x0.55xTurnover of average capital investment(over rental net revenues)
25.3%*36.9%34.5%NOPAT Margin(over rental net revenues)
2,613.21,137.5 986.2 Average capital investment - R$ million
9M12 a20072006
10.90%8.40% 8.84% 7.59% 7.33% 8.60%
6.67%
18.70%21.25%
17.03%
11.54%
16.94% 17.12% 15.70%
2006 2007 2008 2009 2010 2011 9M12
annualized
Cost of debt after tax ROIC
7.8p.p. 12.9p.p.8.2p.p.
4.0p.p.9.6p.p. 8.5p.p.
9.0p.p.
(*) 2008 and 2012 NOPAT were calculated excluding additional fleet depreciation that was treated as equity loss since they were extraordinary non-recurring events caused by external factors (IPI reduction for new cars), following the concepts recommended by Stern Stewart.
10
Raising money
Renting cars Selling carsBuying
cars
Cash to renew the fleet or pay debt
$
$
Profitability comes from rental divisions
Competitive advantages: 39 years of experience in managing assets
11
Competitive advantages: raising money
Global Scale
National Scale
Localiza raises money with lower spreads when compared to Brazilian competitors.
As of September, 2012.
Renting carsRaisingmoney
Sellingcars
Buyingcars
BBB- FitchBaa3 Moody’s
BBB- S&PBBB+ S&P B+ S&P B+ Fitch B2 Moody's
brA- S&P A- (bra) Fitch
brAAA S&P Aa1.br Moody’sAA+(bra) Fitch
A (bra) FitchbrA S&P
A- (bra) Fitch
12
Localiza Unidas Locamerica
59,950
15,34111,052 Fiat
39.3%GM
21.0%
Renault
9.9%Ford
11.0%
Others
1.3%
VW
17.5%
Competitive advantages: buying cars
Better conditions due to higher volumes
Localiza purchased 2.3% of the national production from the main automakers in 2011 .
Localiza - Purchases by brand in 2011
Renting carsRaisingmoney
Buyingcars
Sellingcars
Number of cars purchased - 2011
13
The Company is present in 213 cities where the other largest networks do not operate.
Competitive advantages: renting cars
Know HowBrand Brazilian distribution
120
107
62
# o
f b
ran
ch
es
# o
f cit
ies
452
289
Localiza Hertz Unidas Avis
Source: Brand Analytics and each company website (May, 2012)
Renting carsRaisingmoney
Buyingcars
Sellingcars
318
71 6032
14
Sales to final consumer
Competitive advantages: selling cars
Buffer: additional fleet
Selling directly to final consumer cutting the intermediaries reduces our depreciation.
Cars available for sale are used by the car rental division during peaks of demand.
Renting carsRaisingmoney
Buyingcars
Sellingcars
15
1. Company overview
2. Main business divisions
� Car rental
� Fleet rental
� Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
� Brazil – Macroeconomic scenario
� Earnings release 3Q12
Agenda
16
Car rental overview
Financial performance
428.0585.2
980.7
-5 0 0 .0 0
-3 0 0 .0 0
-1 0 0 .0 0
1 0 0 .0 0
3 0 0 .0 0
5 0 0 .0 0
7 0 0 .0 0
9 0 0 .0 0
1 ,1 0 0 .0 0
2007 2009 2011-1 0 .0 %
4 0 .0 %
9 0 .0 %
Car rental net revenues EBITDA margin (%)
*Source: each company website (May, 2012)
CAGR: 23.0%
46.0% 41.9%46.9%
63.1%Compact cars
Fleet composition – 64,688 cars
36.9%Others
Corporate fleet size
Satisfaction survey
96.0% 95.3% 95.9%
2007 2009 2011
35,68647,517
64,688
2007 2009 2011
17
71 6032
Distribution
Source: Each company’s website as of May, 2012.
Localiza holds an extraordinarily strong position in the Brazilian market, as over decades it has been successfully competing against major global players through local scale.
279 312 346 381 415 449 452 464
254
2005 2006 2007 2008 2009 2010 2011 1H12 9M12
Car rental distribution (Brazil)
120
107
62
# of branches # of cities
452
289
Localiza Hertz Unidas Avis
318
18Source: ABLA (Brazilian Car Rental Association) and each company’s website (May, 2012)
Off-airport market is still fragmented.
Airport locations Off-airport locations
Car rental locations in Brazil
Others
36Avis
35
Unidas
34
Localiza
101
Hertz
42
Avis
27
Unidas
73
Localiza
351 Hertz
78
Others
2079
Market share
36.5%
Car Rental market share - Brazil
(# of cars)
19
Main competitors
• Weak footprint in Brazil• Master franchisee in Brazil in
“Chapter 11”• Used car sales retail network
• International brand• Local expertise
27
35
3.1%
• International brand• Local expertise
• Capitalized by three Private Equity funds
• Local expertiseStrengths
Weaknesses
Off-airport locations
Airport locations
Market share (2010)*
• Weak footprint in Brazil• Used car sales retail network
78
42
2.8%
• Weak footprint• Relatively weak brand• Unclear priorities between
rental and fleet business• Used car sales retail
network
73
34
6.7%
*Source: Roland Berger report, as of June 21, 2012, based on 2010 figures
20
Drivers
71
128154
179
2003 2009 2010 2011
80.3%20.3% 16.2%
Air traffic passengers - million
GDP per capita
(R$ thousands)
6.9 7.5 8.4 9.510.7 11.7 12.8
14.216.0 16.6
19.0 21.3
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
151
260
465510
545
645
240180 200
350
415380
300
18% 16% 15% 13%
31%
35%
15%
37%38%
51%
22% 20%
27%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
Monthly minimum salary (R$) Daily rental price over minimum salary (%)
Car rental affordability
Investments in Brazil
679
343
182
85 83 107
Oil/
gas
Trans
port
atio
n
Energy
Wat
er/s
ewag
e
Indus
try
Oth
ers
21
1. Company overview
2. Main business divisions
� Car rental
� Fleet rental
� Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
� Brazil – Macroeconomic scenario
� Earnings release 3Q12
Agenda
22
Number of clients
Fleet rental overview
Financial performance
219.8303.2
455.0
0 .0 0
5 0 .0 0
1 0 0 .0 0
1 5 0 .0 0
2 0 0 .0 0
2 5 0 .0 0
3 0 0 .0 0
3 5 0 .0 0
4 0 0 .0 0
4 5 0 .0 0
5 0 0 .0 0
2007 2009 2011
5 0 .0 %
1 0 0 .0 %
Fleet rental net revenues EBITDA margin (%)
CAGR: 19.0%
71.3% 68.7% 68.6%
42.6%Compact cars
Fleet composition
57.4%Others
456
584687
2007 2009 2011
93.0%99.0%98.0%
Users VIP Users Contract
managers
Satisfaction survey
23Source: ABLA and Datamonitor
Less than 50% of targeted fleet is rented.
Outsourced fleet penetration
Corporate fleet:4,200,000
Targeted fleet:500,000
Rented fleet:245,000
31,629
Brazilian Market World
5.4%8.9%
13.3%16.5%
24.5%
37.4%
46.9%
58.3%
Bra
zil
Poland
Cze
ch R
epublic
Ger
man
y
France
Spain Uk
Holla
nd
Drivers
24
13.9%
Fleet Rental division - Brazil
(# of cars)
Source: based on ABLA 2012 yearbook
The business greatly profits from synergies with its car rental affiliate, and as the Brazilian economy matures, one can expect a higher percentage of companies to take advantage of fleet rental.
Market share
25
Main competitors
• Loss making in the last six years (competing on price in the pursuit of market share)
• Used car sales retail network
• Capitalized• Synergies with its rental car
business area
16,418
204.7
7.1%
• Brazil’s second player• Successful IPO 04/2012
Strengths
Weaknesses
Fleet size
Revenues (R$ million)
Market share*
• Low profitability (competing on price in the pursuit of market share)
• Depreciation calculus• Used car sales retail network
27,262
272.5
9.5%
*Source: Roland Berger report, as of June 21, 2012, based on 2011 figures.
26
1. Company overview
2. Main business divisions
� Car rental
� Fleet rental
� Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
� Brazil – Macroeconomic scenario
� Earnings release 3Q12
Agenda
27Source: Fenabrave 2011
Localiza launched Seminovos in 1993, a brand new concept featuring younger cars.
Combining the Localiza brand with a growing network of stores
enables the firm to continuously sell thousands of cars at market prices.
# of points of sale
Car sales – operating data
32 35
4955
6673
26
2006 2007 2008 2009 2010 2011 9M12
+7
28
8.0 7.9
7.4
6.9
6.5
5.9
5.5
2005 2006 2007 2008 2009 2010 2011
Income increase and credit availability are the major drivers for car sales.
Source: O Estado de São Paulo, as of 04/15/12 (based on researches of Sindipeças, Roland Berger and PWC).
Used car sales drivers: affordability and penetration
# of inhabitants per car (2011) # of inhabitants per car - Brazil
5.5
4.2
4.0
3.6
2.1
2.0
1.9
1.8
1.3
Brazil
Argentina
Russia
South Korea
Japan
France
Germany
United Kingdon
USA
29
7.9
8.9
11.9
15.8
17.4
1.82.3
2.73.0 3.3 3.5
6.8
5.6
7.0
8.98.4
7.17.37.1
6.7
1.6
Brazilian car market: new x used car market and affordability
Source: FENABRAVE (Autos + light commercial) and Bradesco
New cars4.4x
Individuals with affordability to buy a new car*
Used cars
3.7x 3.1x2.7x
2.4x2.5x 2.6x
2005 2006 2007 2008 2009 2010 2011
Used car market is currently 2.6x the new car market.
* Population with affordability to buy a new compact car (R$25,000) with 20% downpayment
30
2011 Up to 2 years2011 Up to 2 years
476,827476,827
2011 Brand news2011 Brand news
3,425,4993,425,499
2011 Used cars2011 Used cars8,862,9518,862,951
Used car sales net revenues Cars sold
850.5 922.4
1,468.1
-1 0 0 .0 0
1 0 0 .0 0
3 0 0 .0 0
5 0 0 .0 0
7 0 0 .0 0
9 0 0 .0 0
1 ,1 0 0 .0 0
1 ,3 0 0 .0 0
1 ,5 0 0 .0 0
1 ,7 0 0 .0 0
2007 2009 2011
0.6% 1.5% 10.6%
30,09334,519
50,772
0 .0 0
1 0 ,0 0 0 .0 0
2 0 ,0 0 0 .0 0
3 0 ,0 0 0 .0 0
4 0 ,0 0 0 .0 0
5 0 ,0 0 0 .0 0
6 0 ,0 0 0 .0 0
2007 2009 2011
Car sales – operating data
31
• 71 (Fenauto)• 45,600 (Fenauto)• 29*• 3,714 (Anfavea)Points of sale
• No brand recognition (lower reputation market)
• Financing options with higher interest rates
• Often appeal to lower income classes, with older cars
• Occasionally specialized in niches
• Retailers• “Loja do carro”
• Stigma about heavy usage during rental car years
• Weak retail network• Geographical
concentration (SP)• Lower media presence
• Tailored to popular customer demand at purchase, hence likely to be an attractive value proposition when for sale
• Rental operators• Locamerica, Hertz
• Comfort and convenience
• Variety of models and brands
• Flexibility in exchange
• Brand and perceived image/ experience
• Support often directly from the OEM’s
• Flexibility in trade-in cars• Strong media presence
Strengths
Weaknesses
Examples
• Lower media presence
• Cars often older than 2 years
• It hasn’t been successful
• “Auto malls” and “Cidade do automóvel”
• Used cars not a core business
• Cars often older than 2 years
• Dealers• Fiat, VW, Ford, GM most
successful• Auto Brasil
Main players
*Based on the main companies reports and websites.
32
Customers recognize our quality and recommend it!
94.0%92.3%94.0%
2009 2010 2011
Source: based on phone interviews made by the Company with customers started in 2009
2011 - Would you recommend Seminovos? YES!
94.0%
Satisfaction survey
33
1. Company overview
2. Main business divisions
� Car rental
� Fleet rental
� Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
� Brazil – Macroeconomic scenario
� Earnings release 3Q12
Agenda
34
38%57%
5%
2011 Consolidated overview
34%16%
50%
Revenues: R$2,918.1 million EBITDA: R$821.3 million
35
Consolidated net revenuesR$ million
Rental revenues grew 13.6% in the quarter. Seminovos revenues were impacted by the IPI reduction.
537,4 655,0 842,9 898,51.175,3
1.450,01.057,4 1.213,9
362,9 412,3
588,8850,5
980,8 922,4
1.321,91.088,0
1.157,3
394,6 394,7
1.468,1
2006 2007 2008 2009 2010 2011 9M11 9M12 3Q11 3Q12
Rental Seminovos
CAGR: 21.0%
1,126.2
1,505.5
1,823.72,145.4
2,371.2
2,918.1
757.5 807.0
10.5%
6.5%
13.6%14.8%
1,820.9
2,497.2
36
Consolidated EBITDA R$ million
EBITDA margin was impacted by the increase in properties rentals and personnel expenses.
2.6%
50.7%
66.7%
43.5%
2010
3.1%
51.1%*
67.0%*
43.8%*
9M11
4.2%
49.4%
66.3%
41.1%
9M12
2.8%
51.2%*
66.8%*
43.9%*
2011
5.6%
51.2%
67.5%
43.5%
2008
49.5%53.1%*49.3%53.6%52.4%Rental Consolidated
4.9%
66.7%
40.7%
3Q12
1.9%
68.3%*
45.7%*
3Q11
1.1%
67.5%
39.8%
2009
4.6%
70.7%
42.7%
2006
5.5%
70.3%
45.0%
2007
Used Car Sales
Fleet Rental
Car Rental
Divisions
*It considers not only the adjustment of the accessories but also the reversal of the non-recurring provisions of R$10.6 million in 3Q11.
223.7216.2
649.3603.0
821.3
649.5469.7504.1
403.5311.3
2006 2007 2008 2009 2010 2011 9M11 9M12 3Q11 3Q12
3.5%
CAGR: 21.4%7.7%
Proforma EBITDA margin for rental divisions:
37
Average depreciation per carin R$
1,683.90
4,647.40
3,084.40
939.10
332.90
1,536.00
2,577.002,546.00
2006 2007 2008 2009 2010 2011 9M12 3Q12* Annualized
* *
Hot used car market
Financial crisis effect
Reflex of the IPI reduction
4,133.00
5,549.30 5,831.20
2,383.30 2,395.80
3,509.704,371.70
5,083.10
2006 2007 2008 2009 2010 2011 9M12 3Q12 * Annualized* *
Hot used car market
Financial crisis effect
Reflex of the IPI reduction
38
Breakdown of the car depreciationin R$
Car rental
* Annualized depreciation of the cars purchased after the IPI reduction.
Average depreciation per car of the cars purchased after the IPI reduction is in line with previous years’ depreciation.
1,199.90 1,304.80
4,050.80
1,213.80
2010 2011 3Q12 3Q12*
1,536.00 1,683.90
Cars’ average depreciation Accessories’ average depreciation
*
Cars purchased after the IPI reduction
Cars purchased before the IPI reduction
39
Additional depreciation as a result of the IPI reduction R$ million
63,439 3,385 11,087 17,831 31,136 180.5 (*) 56.0 124.5 24.5 100.0 Consolidated
100.0%12.6%40.9%36.4%10.1%100.0%69.8%30.2%6.9%23.3%
26,810 3,381 10,954 9,772 2,703 64.5 (*) 45.0 19.5 4.5 15.0 Fleet rental
100.0%0.0%0.4%22.0%77.6%100.0%9.5%90.5%17.2%73.3%
36,629 4 133
8,059 28,433 116.0 (*) 11.0 105.0 20.0 85.0 Car rental
After 3Q12 Subtotal 3Q12 2Q12 Total 2015 2014 2013 2012 Total
Estimated Accounted
Cars by year of maturity of estimated useful life (quantity)Additional depreciation
Division
90.5% of the additional depreciation in car rental division was already accounted.
Fleet as of Sep/12
40
Consolidated net incomeR$ million
Excluding the additional depreciation of R$24.5 million, deduced of the income tax, 3Q12 net income would have reached R$87.6 million.
212.9
(91.4)
(137.8)
(17.4)
(143.5)
603.0
9M11
154.8
(52.6)
(108.2)
(23.9)
(309.8)
649.3
9M12
(58.1)
38.8
29.6
(6.5)
(166.3)
46.3
Var. R$
-27.3%
-42.5%
-21.5%
37.4%
115.9%
7.7%
Var. %
(3.9)
5.2
19.4
(3.4)
(32.6)
7.5
Var. R$
41.1
(23.6)
(48.9)
(3.0)
(55.2)
171.8
Var. R$
291.6
(125.1)
(179.0)
(24.1)
(201.5)
821.3
2011
16.4%
23.3%
37.6%
14.2%
37.7%
26.5%
Var. %
116.3
(47.2)
(112.9)
(21.0)
(172.3)
469.7
2009
250.5
(101.5)
(130.1)
(21.1)
(146.3)
649.5
2010
-5.2%
-16.1%
-39.0%
68.0%
60.5%
3.5%
Var. %
71.475.3Net income
(27.0)(32.2)Income tax and social contribution
(30.4)(49.8)Financial expenses, net
(8.4)(5.0)Other property and equipament depreciation
(86.5)(53.9)Cars depreciation
223.7216.2Consolidated EBITDA
3Q123Q11Reconciliation EBITDA x net income
71.475.3
154.8
212.9
291.6250.5
116.3127.4
190.2
138.2
2006 2007 2008 2009 2010 2011 9M11 9M12 3Q11 3Q12
16.4%
-5.2%
-27.3%
41
SWOT Analysis: Localiza business platform
• Unrivaled local scale
• Strong footprint in Brazil’s extreme traffic locations
• Vertical integration, creating synergies for all four businesses
• Strong business operating performance and experienced leadership
Strengths
Opportunities
Weaknesses
Threats
•Increase in market share through further consolidation of Brazilian rental car market
•Underdeveloped fleet outsorcing in Brazil
•Upcoming mega events in Brazil
•Positive outlook for Brazilian business and tourism
•Any measures of the Brazilian government which impact car sales prices, potentially lowering asset value (e.g. new car sales tax)
•New competitors entering the market (rental car or fleet management)
•Increasing fuel price
• Strong focus on airport locations
• Renewal of airport concessions costly
• Dependence on passengers travelling by air (growth limited by Brazilian infrastructure)
• Weak footprint outside of Brazil, resulting in exposure to national economic development
• Dependence on long-term capital to finance renewal of fleet
According to Roland Berger report as of June 21, 2012
Localiza’s brand is top of mind in Brazil.
Localiza doesn’t see it as a weakness or a threat
42
1. Company overview
2. Main business divisions
� Car rental
� Fleet rental
� Seminovos
3. Consolidated
4. Debt and cash
5. Appendix
� Brazil – Macroeconomic scenario
� Earnings release 3Q12
Agenda
4343
Free cash flow - FCF
(*) Without technical discount deduction up to 2010 (see item 17 – Glossary, page 23)
(24.3)(36.4)(48.2)(25.5)(54.6)11.5 (54.5)Net capex for renewal
(2,121)9,17818,6498,6429,9307,95710,346Fleet increase – quantity
(148.8)(239.3)(429.0)0.0(488.8)(272.9)(65.0)Net capex for fleet growth
(206.0)32.7111.3241.1(188.9)(51.0)222.0 Change in accounts payable to car suppliers (capex)
40,75950,77247,28534,51934,28130,09323,174Fleet renewal - quantity
Free cash flow - R$ million 2006 2007 2008 2009 2010 2011 9M12
EBITDA 311.3 403.5 504.1 469.7 649.5 821.3 649.3
Used car sales net revenues (588.8) (850.5) (980.8) (922.4) (1,321.9) (1,468.1) (1,157.3)
Depreciated cost of used car sales (*) 530.4 760.0 874.5 855.1 1,203.2 1,328.6 1,038.3
(-) Income tax and social contribution (42.7) (63.4) (52.8) (49.0) (57.8) (83.0) (77.7)
Working capital variation (4.8) 13.3 (44.8) (11.5) 54.5 (83.9) 0.4
Cash provided before capex 205.4 262.9 300.2 341.9 527.5 514.9 453.0
Used car sales net revenues 588.8 850.5 980.8 922.4 1,321.9 1,468.1 1,100.1
Capex of car - renewal (643.3) (839.0) (1,035.4) (947.9) (1,370.1) (1,504.5) (1,124.4)
Capex – other property and equipment (32.7) (23.7) (39.9) (21.0) (51.1) (63.0) (64.2)
Free cash flow before growth 118.2 250.7 205.7 295.4 428.2 415.5 364.5
Capex of car for fleet (growth) reduction (287.0) (221.9) (299.9) (241.1) (540.3) (272.0) 57.2
Free cash flow after growth 53.2 (22.2) (283.1) 295.4 (0.8) 176.2 215.7
44
Debt profileR$ million
Debt profile as of 09/30/2012- principal
The Company is still presenting strong cash position and comfortable debt profile.
The “all in” debt cost was CDI + 107 bps.
52.0
176.0 220.8 192.1
562.0432.0
26.012.7
2012 2013 2014 2015 2016 2017 2018 2019Cash
429.4
45
Debt - ratios
Net debt x Fleet value
4.6x
1.2x
1.7x
51%
2011 (**)
6.0x 5.0x 4.2x 3.8x 5.4x 4.8x EBITDA / Net financial expenses
1.4x
2.0x
52%
2010
1.5x
2.3x
57%
2009
2.0x
2.5x
72%
2008
1.1x1.3x0.7xNet debt / Equity
1.5x1.9x1.4xNet debt / EBITDA (*)
54%51%36%Net debt / Fleet value
UntilSep/12(**)20072006END OF PERIOD BALANCE
(*) annualized(**) From January 1st 2011, consider financial statements in IFRS
440.4765.1
1,254.51,078.6
1,281.1 1,363.4 1,326.11,247.71,492.9
1,752.61,907.8
2,446.7 2,681.7 2,447.1
2006 2007 2008 2009 2010 2011 Until set/12
Net debt Fleet value
Comfortable debt ratios.
46
IR Team
Disclaimer
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. This presentation is strictly confidential and may not be disclosed to any other person. 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 predictions 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’smanagement, 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. Any offering of securities to be made in the United States will be made by means of an offering memorandum that may be obtained from any underwriters we may appoint in connection with an offering of securities in future. Such offering memorandum will contain, or incorporate by reference, detailed information about LOCALIZA and its business and financial results, as well as its financial statements.This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained hereinshall form the basis of any contract or commitment whatsoever.
Nora LanariRoberto Mendes Silvio Guerra
CFO - RI RI RI
Website: www.localiza.com/ir E-mail: [email protected] Phone: 55 31 3247-7024