Roadshow Presentation April / 2012
Roadshow PresentationApril / 2012
Disclaimer
This presentation may contain certain forward-looking statements and information relating to Companhia de Locação das Américas (“Locamerica” or the
“Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan. Forward-looking
statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may
contain words like “believe”, “anticipate”, “expect”, “envisage”, “will likely result”, or any other words or phrases of similar meaning. Such statements are
subject to a number of significant risks, uncertainties and assumptions. We caution that a number of important factors could cause actual results to differ
materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In any event, neither the Company nor any of
its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision
made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages.
The Company does not intend to provide eventual holders of shares with any revised forward-looking statements of analysis of the differences between
any forward-looking statements and actual results. There can be no assurance that the estimates or the underlying assumptions will be realized and that
actual results of operations or future events will not be materially different from such estimates.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without
Locamerica‟s prior written consent.
This presentation does not constitute an offer of securities for sale or a solicitation for an offer to buy securities in the United States. Please consult the
offering documents the Company has prepared, which contains detailed information about the Company, its management and other additional information.
Investors should review the offering documents, including the risk factors associated with an investment in the securities of Locamerica, before making any
investment decisions.
Presenters
Graduated in business administration by
FUMEC University and specialization in
Business by Fundação Dom Cabral.
Founded Locarvel, in 1993, when he was
22 years old.
Advisor of ANAV (National Association of
Car Rental Companies).
Vice-President of SINDILOC-MG (Car
Rental Association of Minas Gerais).
One of the founder-partners of Via Jap and
Via Natsu, car dealerships.
Luis Fernando Porto
Founder and CEO
Graduate in engineering from Instituto
Militar de Engenharia and master in
Systems Management by Rensselaer
Polytechnic Institute.
Acted as a Venture Capital Fund Banker
Manager of Banco Modal S.A.
Worked as Commercial Officer of Banco
Itaú S.A. and Director of Corporate
Relations at Banco Itaú BBA.
Acted as Director of Corporate Relations of
Banco Votorantim S.A. and later as Private
Equity Director of Banco Votorantim.
Former President and former member of the
board of CFA Society of Brasil.
Joel Kos
CFO
Graduated in Economics from the London
School of Economics with a masters degree
in Management by the same institution.
Currently attending an MBA in Finance by
the IBMEC Business School.
Worked as a Director and Senior Equity
Research Analyst (sell-side) at Deutsche
Bank and UBS Warburg in New York and
London, responsible for the coverage of the
Telecommunications sector for 7 years.
Acted as Investor Relations Officer for VIVO
S/A. in São Paulo and IR manager for
Minerva S/A.
Ronald Aitken
IR General Manager
SECTION 1
Company Overview
A History of Entrepreneurship and Growth
A history of success, growth and profitability
5
Post-IPO
3rd Largest company
in the Sector 2nd Largest Company in
the Sector 1st Largest Company
in the Sector
Scale gains at operational and financial levels
Capital structure optimization
Founding shareholders and management commitment for the long run
5
Inception with
16 cars
1993 Private Equity:
greater financial
discipline and
focus on
profitability
2008Growth even
during crisis
2009Consolidation of
corporate
governance and
managerial best
practices
2010
IPO: seek of
new partners for
the next growth
phase
2012
The fastest
growing
company in the
last 5 years
2011
Total Fleet
(‘000s)
Rental Revenues
(R$ mm)
CAGR 06-11
37.5%
CAGR 06-11
37.1%
62.8 88.5
135.3
162.8
216.6
304.0
2006 2007 2008 2009 2010 2011
5.5
10.5
14.9 16.5
21.9
27.3
Business Model
Exclusive focus on fleet outsourcing, with greater predictability on revenues, expenses and sales
of used vehicles
6
Purchase -
Sale =
Depreciation
Predictable
Revenues
Long-term contracts (24 months )
Long-term relationships (average 3.7 years)
Differentiated Pricing Policy ensuring average IRR of 20.5%
High levels of contract renewal (90% of the target clients)
Purchase of more cars at higher discounts
Expansion of the retails sales channels (direct sales and web) with increasing margins
EarningsCost of
Capital
SG&A +
Operational
Costs
Optimization of capital structure
Less leverage
Improved debt maturity
Better rating
Lower funding costs
Strict control of expenses
Low cost culture “Orçamento Base Zero”
Lean corporate structure
- - - =
High EBITDA and EBIT margins
High and resilient ROE
High and resilient ROIC
17.3% 48.2% 34.5%
Note:
1 Proportion of all three cost centers
1 1 1
Market Overview: Fleet Outsourcing
Fast growing market
Fleet outsourcing boasts great growth potential, having grown 2,7 times the GDP in the last 5 years 1
Source: Denatran, Fenabrave, Associação Brasileira de Locadoras de Automóveis (ABLA), Data Monitor (1) Growth of 161.2% of the sector during the period 2006-2010 versus
growth of the Brazilian GDP in nominal conditions of 59.1% in the period of 2006-2010. Source: ABLA and IPEA (2) Penetration in the fleet outsourcing market. Consider
data from Data Monitor in a study of 2007. (3) IBGE. (4)Yearbook ABLA 2011 and Auto Rental News (Factbook 2012)
% of corporate fleet
11.2%
CAGR
(05-10)
Low penetration
Brazil vs. Mature Markets
Highly fragmented market with
consolidation opportunities
CAR RENTAL MARKET
94%
6%Others
4 largest
companies
Others
3 largest
companies
30%
70%
MARKET PENETRATION (2) MARKET SHARE (4)
7
Rent a car Fleet („000 vehicles)
Fleet Outsourcing („000 vehicles)
Car Rental Revenues (R$ bn)
12.5%
13.4%
MARKET POTENTIAL (3)
# of Companies
# of employees
+ +
156.2 175.5 188.8232.4
135.0123.8
182.6
174.2
143.6
127.8
115.0101.3
225.1250.0
284.0
319.1
363,0
415.0
2005 2006 2007 2008 2009 2010
5.1
4.44.0
3.53.23.0
5.4%
46.6%
37.4%
24.5%
16.5%
58.3%
5,2345,991
17,685
34,673
63,538
50-99 100-249 250-499 500+ Total
8
Significant Growth Potential in Fleet Outsourcing
We are the first derived from the target sectors
26%
20%
8%
13%
21%
5%
Food1
Health/Pharmaceutical2
Financial3Beverages4
Techonolgy6
Oil and Gas5Company Focus
Source: BM&FBOVESPA, IBGE and Bloomberg
Note:
1 Average among Minerva, BR Foods, Marfrig and GPA
2 Average among Amil, Cremer, Dasa, Drogasil, Fleury, Odontoprev and Profarma
3 Average among ABC Brasil, BB, Bradesco, BicBanco, BMF Bovespa, Cielo, Cetip e
Santander
4 Ambev
5 Petrobras
6 Totvs
Locamerica boasts strong performance in sectors with high growth potential of corporate fleet
Solid Economic Fundamentals
RETAIL GROWTH
Source: BNDES and Ipeadata
178176160
146140127119114
103
2003 2004 2005 2006 2007 2008 2009 2010 2011
(Nominal Retail Sales with seasonality adjustment; end of period;
indexed base 100 = average 2003)
CAGR6.3%
INVESTMENTS IN BRAZIL
(R$ billion)
533
886
CAGR (10-12E) of Net Revenues of Listed Companies on the BM&FBOVESPA (%)
196337
131
210206
339
2006 - 2009 2011 - 2014
Homebuilding Infrastructure Industrial
Market Overview: Used Vehicles
Growth of the used vehicles market in Brazil supported by solid economic fundamentals coupled with
a buoyant dynamics in the sector
Source: Denatran, Fenabrave, Associação Brasileira de Locadoras de Automóveis (ABLA); (1) Automotive News, Revista Exame, BNDES, Portal Brasil and Banco Central; (2)
Tabela Fipe; (3) Automakers website, Kelley Blue Book, companies‟ website and Locamerica
9
VEHICLE DEPRECIATION
Zero Km x 2010 (2)
Zero Km x 2010 (3)
USED VEHICLES‟ MARKET(1)
Used Vehicles sold in Brazil (million)
CAGR5.8%
NEW VEHICLES MARKET
New Vehicles sold in Brazil (milllion)
CAGR14.8%
3.9 2.9
Used Vehicles Negotiated / New Vehicles Registered
3.3 2.6 2.5 2.6
% of Locamerica sales of used vehicles in Brazil ACCESSIBILITY – CAR MARKET
NUMBER OF HABITANTS PER CAR
Minimum Wage (R$)
Minimum Wage Available for Purchase of
New Car
Ratio between the sales of new and used vehicles similar to the U.S.
Purchasing power increase positively contributes to greater vehicle
penetration in Brazil
Vehicle depreciation similar to the U.S.+ +
0.04%0.04%
0.07% 0.08%
8.98.47.17.27.16.7
2006 2007 2008 2009 2010 2011
3.42.82.72.42.21.7
2006 2007 2008 2009 2010 2011
1.2
1.5
1.7
4.0
5.9
1.6
1.920%
15%
28%
19%
16%
Average
Civic LXS 1.8
Corolla Xli 1.8
Palio Fire 1.0 2P
Gol G4 1.0 2P
23%
13%
32%
30%
18%
Average
Dodge Charger
Chevrolet Malibu
Honda Civic
Toyota Corolla
10
Sales strategy based on our own integrated structure through different channels, allowing for
improving commercial conditions and increasing participation in the retail segment
Diversified
Sales
Channels
Increasing retail
platform
Planned
Growth
Wholesale, retail, direct sales, web and “car fairs”
Increase in sales through own stores
- Increase from 7 to 11 stores in 2012
Increase in sales force
- 69 employees in 2011 to 126 in 2012
Point of Sales oriented in accordance with fleet demobilization
and representativeness in the GDP
Significant Growth Potential in the Used Vehicle Market
11
Margin Improvement
Impact on Company’s Profitability
Financial
Costs
Depreciation
Price
Net
Margin
Financial
Costs
Depreciation
Adm/ Operational
Costs
Net
Margin
Price
Financial
Costs
Depreciation
Adm/
Operational
Costs
Price
Net
Margin
Current Post-IPO Current
Adm/ Operational
Costs
Locamerica looks to lead the fleet outsourcing market, through gains in scale and significantly
cheaper capital funding structure
Improving funding
conditionsLower financial
costs
Lower
Leverage
Rating
Improvement
Lower InvestmentsIncrease of ROE and
ROIC
Larger Purchase
of VehiclesHigher
Discounts
Cost of Capital
Purchase of
Vehicles
We estimate to purchase vehicles with discounts from 2 p.p. to 6 p.p lower than our main competitor
Purchase of New Vehicles Cycle
Financial Cost 5p.p. higher
Cost of Capital Cycle
Main Competitor
**
*
* Real Depreciation, includes gross result of the used vehicles‟ business unit
SECTION 2
Investment Highlights
Active administration and responsible governance
Integrated platform for the sale of used vehicles
History of high growth with a low cost corporate culture and
proven operational efficiency
Largest company focused on fleet outsourcing in Brazil
Business model of high predictability and low risk
Strong and diverse customer base with focus on high growth
sectors
13
1
3
4
5
6
Investment Highlights
2
14
CAGR08 – 11
3.4%
Evolution of the 2 largest companies focused on the fleet outsourcing segment in Brazil
Largest company focused on fleet outsourcing in Brazil 1
Source: Companies‟ reports and ABLA
Notes:
1 Considers consolidated fleet of Locamerica and Locarvel
2 Considers the CAGR of 2008 – 2010
3 Company‟s estimates
Locamerica is the largest company focused exclusively on fleet outsourcing in Brazil, besides being
the fastest growing company in the sector in the last years
15.1% 2
Market Share (%) Fleet (Base Date on 2008)
11
22.2%
10.6%
LCAM X 08 – 11
7.8x
2.5x2
-
2.3x
8.5%8.7%
9.4%
10.4%
13.3%
12.1%
11.5%
12.1%
2008 2009 2010 2011
Locamerica Main Competitor
100
110
147
182
97
114
135
108
132
100 107
111
2008 2009 2010 2011
Locamerica Main Competitor Market GDP
1515
Long term contracts
12 to 60 months
Focus on fleet outsourcing ensures Locamerica the following advantages:
Business model of high predictability and low risk
Acyclic: Growth also in moments of crisis when companies decide to
outsource
Constantly monitoring the profitability of contracts
Target IRR of 20.5%
Predictability of costs
Low cost corporate culture
Centralized cost structure
Costs inelastic with fleet expansion
Predictable cash flow
Scale
High and stable rate of fleet utilization
Fleet utilization rate of 96% in 2011
Activity less susceptible to seasonality
2
Operational efficiency
Predictability of sales of used veicles
Less need for fleet renewal
1616
Business model of high predictability and low risk2
Main Assumptions (Pricing Comittee Management )
Main
Assumptions
Description of the Process
(Pricing Committee)
Discount on the acquisition of vehicles from automakers
(Human Resources Department Input)
Pre-operational expenses with taxes such as IPVA,
DPVAT, Licensing (Logistics Department Input)
Cost of funding and leverage
(Financial Department Input)
General and administrative expenses and overhead
(Human Resources Department Input)
Costs of preventive and corrective maintenance
(After Sales Department Input)
Cost of preparing the car for sale
(Logistics Department Input)
Purchase Price – Sale Price
Sales value of the vehicle
(Used Vehicle Sales Department Input)
1
2
3
4
5
6
7
8
Esti
mate
d In
tern
al R
ate
of
Retu
rn (
IRR
)
Purchase price of the
vehicle and accessories
Pre-operational
expenses
Financial cost
Administrative
expenses
Maintenance
expense
Sale preparation
costs
Depreciation
Revenues
Year 1
Revenues
Year 2
Sale value of
the vehicle
2
3
4
5
6
7
8
Esti
mad
ed
IR
R
1
IRR
(Variation p.p.)
2
Internal Rate of Return – Main Impacts
(R$)
Variable PricedVariation
(+ 5%)
Variation
(- 5%)
Purchase 25,212 26,473 23,951
Sale 20,000 21,000 19,000
Maintenance 90 95 86
Administrative
Expenses175 184 166
Decommissioning
Expenses300 315 285
Business model of high predictability and low risk
With a business model of low-risk, high predictability, Locamerica projects itself as one of the main
companies in sector
17
-4.0%
1.9%
-0.3%
-0.5%
0.0%
4.4%
-2.0%
0.3%
0.5%
0.0%
18
Strong and diverse customer base with focus on high growth sectors
Main Clients Low Customer Concentration
3
Source: Company
Locamerica has a strong and diverse customer base focused on growth with long-term relationships
Largest customer accounts for 7.5% of total sales
Provision for Bad Debt (PBD) of 1.3% in 2011
Average relationship with customers of 3.7 years
Foods Beverages2
Oil and Gas3 Financial4
Healthcare5 Technology6
1
Other Clients7
Contract renewal rate of target customers of 90%
Customer base with R$514.8 mm in contracts that
are protected by break-up fees of R$175.3 mm
4T09 4T10 4T11
62.0% 59.8%48.1%
38.0% 40.2%51.9%
10 Largest Clients Others
Used Vehicles Sales Strategy
2011 2012E
69
126
19
2 – Gestão e Governança
Strategy
Sale planned in advance
Diversified range of distribution channels and
active marketing
Points of sale defined according to the
demobilization of the fleet and representation in
GDP
Sales Channels
Sales strategy based on its own integrated structure through different channels, enabling the best
trading conditions and increasing participation in retail
Integrated platform for the sale of used vehicles4
Source: Company
Notes:
1 Percentage of total sales
2 Considers 1 Wholesale point in Recife, 2 Retail points in Rio de Janeiro and 1 Retail point in Sao Paulo
• Megastores
• Clients and users (drivers)
• Active marketing with drivers / clients
• Savings with freight and demobilization
• Tools for balancing vehicle stock
• Shared auto markets to minimize costs
• Retailers and car dealershipsWholesale
Sales
Retail
Sales
Direct
Sales (Driver)
Auto Markets
Sales Force
National Footprint
(No of Employees)
Wholesale Sales Point
Belo Horizonte
Cuiabá
Rio de Janeiro
CuritibaSão Paulo
Northeast
13,.%
Southeast
56.0%South
16.6%
Midwest
9.2%
North
5.1%
Retail Sales Point
New Sales Point in 2012 2
Representativeness of the Region in the GDP (IBGE 2000)
4T111 20111
82.7%74.2%
15.4%22.0%
1.9%3.8%
0.0%0.0%
2009 2010 2011
25.0
35.0
41.6
20
History of high growth with a low cost corporate culture and proven operational efficiency
Significant expansion of the Company’s
fleet allowed for a greater geographic
reach and market share growth
5
Source: Company
1 Considers Locamerica and Locarvel
(000‟ of Cars)
High fleet utilization, generating
maximum yield on assets and dilution
of fixed costs
(Rented Fleet / Operational Fleet)
Current Infrastructure with capacity to
increase the number of cars without the
need of expansion in fixed costs
(Nº of Cars)
Locamerica presents a high level of operational efficiency, leveraging its growing operations
Fleet Fleet / Employee Fleet Utilization Rate
2009 2010 2011
16.5
21.9
27.3
2009 2010 2011
95.4%96.0% 95.9%
1
21
After Sales Director
Fernando Aguiar
CFO and IR
Joel Kos
Human Resources Director
Neide Ramos
Used Vehicles Director
Luciano Moreira
IT Director
Artur Paoletti
Commercial Director
Sérgio Sampaio
72 Employees 11 Employees 35 Employees 69 Employees
CEO
Luis Fernando Porto
656 Employees (Dec/2011)
126 Employees 343 Employees
Francisco Nuno Pontes
Correia NevesLuis Fernando Porto Sérgio Augusto Guerra
de ResendeValter Pasquini Mario Antonio Thomazi
Quarterly discuss succession plans,
positions and Wages and Code of Ethical
Conduct
Members
CEO
Human Resources Director
Adviser
Human Resources
Assessment of market conditions, analysis
of used cars indicators, pricing and sales
strategies
Members
CEO
Used Vehicles Director
Adviser
Used Vehicles
Assessment of conditions and market trends
and definition of assumptions made
independently by each one of the departments
Members
CEO
CFO, Human Resources Director, Commercial Director, After Sales Director, and Used Vehicles Director
Rental Pricing 2
Board of Directors
Notes:
1 Does not consider the Audit Committee which is totally independent, accountable directly to the Board of Directors
2 Rental Pricing Committee is not statutory
Committees 1
Active administration and responsible governance6
Organizational Structure
SECTION 3
Financial Highlights
Gross Revenues
(R$ mm)
23
History of Consistent Growth and Profitability
Fleet
(000‟ Vehicles)
Source: Company
Note:
1 Considers Locamerica and Locarvel
CAGR28.5%
Among the industry leaders, we are the fastest growing company
Net Rental Revenues
(R$ mm)
CAGR35.9%
CAGR41.4%
2009 2010 2011
16.5
21.9
27.3
2009 2010 2011
227.3
329.0
419.7
2009 2010 2011
147.6
213.3
295.0
1
2009 2010 2011 4T11
42.9
63.0
113.7
31.2
24
EBITDA (R$ mm) and EBITDA Margin (%)
CAGR44.5%
EBIT (R$ mm) e EBIT Margin (%)
EBITDA Margin 1
50.5% 51.0% 52.7%
EBIT Margin 2
29.0% 30.0% 38.5%
Source: Company
Notes:
1 Considers EBITDA Margin as EBITDA / Net Rental Revenues
2 Considers EBIT Margin as EBIT / Net Rental Revenues
3 Considers PPR proportional for the quarter
CAGR62.8%
53.0% 39.7%
3 3
History of Consistent Growth and Profitability
2009 2010 2011 4T11
74.5
108.8
155.6
41.6
2009 2010 2011
-8.5
11.6
22.6
25
Net Income (R$ mm) and Net Margin (%)
Net Margin (%) 1
n.m. 5.4% 7.7%
Source: Company
Notes:
1 Considers Net Margin as Net Income / Net Rental Revenues
2 Reclassification of redeemable preferred shares in 2009 from Capital Equity to Liability, recognized in financial expenses, as CPC 39 / IAS 32
CAGR95.4%
History of Consistent Growth and Profitability
ROE (%)
CAGR80.7%
ROIC (%)
CAGR30.5%
2009 2010 2011
-2.4%
8.4%
15.2%
2009 2010 2011
7.4%9.2%
12.6%
2 2
2
2009 2010 2011
31.6%27.1% 28.2%
Cash Dec 2011
Ano 1 Ano 2 Ano 3 Ano 4 Ano 5
196.7 243.3
165.9 127.8
212.4
1.0
2009 2010 2011
18,4% 16,8% 17,3%
Financial Expense / Average Gross Debt
2009 2010 2011
243,9
393,4
523,9
3,3x3,6x 3,4x
26
Source: Company
Notes;
1 Reclassification of redeemable preferred shares in 2009 from Capital Equity to Liability, recognized in financial expenses, as CPC 39 / IAS 32
2 Considers capitalization of R$121,7 mm on January 4th, 2012
Net Debt (R$ mm) and Net Debt / EBITDA
Improvement of the debt profile and an expected increase in the Company’s rating after the offering
Debt Amortization Schedule – Pro Forma2
(R$ 000‟)
1
Net Financial Expenses / Net Rental Revenues
1
1
History of Consistent Growth and Profitability
Conclusion
Conclusion
Only company in the
country that is 100%
focused on fleet
outsourcing
Average growth of 40% over the
past 5 years and 19% estimated
for the next 5 years
Differentiated
business model
focused on growth
with results
Predictable cash flow, low
cost culture and strong
financial and operational
discipline
Business platform
tested and
prepared for strong
growth
Future growth without
significant increases in
fixed cost
Rapidly growing
market
Growth of 13.4% over the past
5 years and 10% estimated for
the next 5 years
High rates of returnHigh and strong
ROE and ROIC
Founding partners
and administration
with vast market
knowledge
Long-term commitment
with a focus on value
creation for shareholders
28
IPO
Reduction in financial costs
Improvement of the
discount on the
purchase of vehicles
29
Net Income Growth
Net Income
Growth 2012
Net Income
Growth 2013
Net Income 2011 Contracted
Net Income
2012
Net Income 2012
not considering
new contracts
Decrease in
Financial
Expenses
2012 Expected Net
Income
52.9
22.630.0
42.2
12.2
Decrease in
Financial
Expenses
88.4
38.7
51.6
73.6
22.0
Net Income 2012
not considering
primary proceeds
Contracted
Net Income
2013
2013 Expected Net
Income
10.7
Earnings
With
Growth
Earnings
With
Growth
14.8Net Income
R$4.3 mm
(annualized 4Q
average)
X
12 months
R$51.6 mm
Net Income
R$2.5 mm
(annualized 4Q
average)
X
12 months
R$30.0 mm
20.1%
25.4%
Net Income 2013
not considering
new contracts