1
Localiza Rent a Car S.A.
Confins airport branch – Belo Horizonte
24h reservation0800 979 2000
www.localiza.com
May 2008
2
Agenda
1. Integrated business platform page 3
2. Growth opportunities page 7
3. Competitive advantages page 18
4. Financials page 31
3
Integrated business platform
Data-base: 12/31/2007
This integrated business platform gives Localiza superior performance
Synergies:
cost reduction
cross selling
bargaining power
7,602 cars134 agencies in Brazil203 agencies in 9 countries
30,093 cars sold84% sold to final consumer32 points of sale
35,686 cars1.3 million clients178 agencies
17,790 cars456 clients
2,186 employees 177 employees
416 employees25 employees
4
Cor
e B
usin
esse
sSu
ppor
t
Increase market leadership maintaining high return
Create value taking advantage of the integrated business platform synergies
Add value to the brand by expanding the network in Brazil and South America
Strategy by division
Add value to the businesses, reducing depreciation as a competitive advantage
5*Profit (loss) alocated in the rental divisions
Breakdown per division
Revenues EBITDA Profit
Car rental 29% 49% 54%
Fleet rental 15% 39% 45%
Used car sales 55% 11% *
Franchising 1% 1% 1%
Total 100% 100% 100%
Car rental29%
Fleet rental15%
Used car sales55%
Franchising1%
49%
39%
11%
Franchising1%
Car rental63%
Fleet rental36%
Franchising1%
ProfitRevenues EBITDA
6
Agenda
1. Integrated business platform page 3
2. Growth opportunities page 7
3. Competitive advantages page 18
4. Financials page 31
7
Growth opportunities
Air traffic
GDP elasticity
Consolidation
Credit cards
Replacement
Fleet outsourcing
8
Growth opportunities: GDP
Localiza’s average annual revenue growth was 5.9x the average annual GDP.The Brazilian car rental market grew 2.4x the GDP in the same period.
Source: Bacen, Abla and Localiza
Revenues accumulated growth rate – rentals
5.9x
2.4x
Localiza
2004 2005 2006 2007
Sector
GDP
9
Number of travelers has increased 10.2% CAGR
Localiza has strong leadership in airports
Localiza’s airport agencies has been grown in average 2 times faster than the number of passengers deplaned
Growth opportunities: Air traffic
Source: Infraero
Air traffic is an important driver for car rental industry
8396 102 111
2004 2005 2006 2007
Air traffic evolution(Millions of passengers per year)
CAGR: +10.2%
10
93 million credit cards
31 million credit cards holders
36.2% of car rental revenues were paid through credit card in 2007
Source: Abecs
# of credit cards (million)
Growth opportunities: Credit cards
Having a credit card is a requirement to rent a car in Brazil and in USA
5368
7993
2004 2005 2006 2007
CAGR: +20.6%
11
Localiza is very well positioned to capture this growth due to its geographic footprint
Growth opportunities: Replacement market
Source: Fenaseg and Denatran
Replacement is a growing market in Brazil
Brazil has 9.2 million insured cars
The accident rate is 16.5% / year
The potential market is 10.6 million of daily rentals (2.5 x thecar rental division in 2006)
12
Growth opportunities: Fleet outsourcing
Focus of corporations on their core businesses Focus of corporations on their core businesses
Fixed asset reduction by companies (increase their asset turnover)Fixed asset reduction by companies (increase their asset turnover)
Renting a fleet can be more economic than owning itRenting a fleet can be more economic than owning it
Large potential market with low penetration due to lack of culture Large potential market with low penetration due to lack of culture
Approximately 25% of the corporate fleet (500,000e cars) is rented
13Source: Auto Rental News
Revenues Number of agencies
USA: 4 companies hold 96% of market share (Auto Rental News)
US Market share 2007US$ 21.54 B
Growth opportunities: Consolidation
Enterprise40,5%
Hertz17,0%
Others26,6%
DTG3,6%
Avis Budget12,2%
Enterprise47,6%
Hertz18,8%
Avis Budget22,4%
DTG7,5%
Others3,7%
14
Growth opportunities: Consolidation
The main car rental networks are concentrated in airport market Off-airport market is fragmented among almost 2,000 small local car rental companies
Brazil Market 2007 (# of agencies)
Airport segment agencies Off-airport segment
agencies
Source: *Localiza as of 03/31/2008; **Each company website, 05/15/2008; *** Assuming that each local player has one agency
Localiza*83
Hertz**31
Unidas**30
Avis**33
Others***29
1901
Localiza*232
Hertz**64
Avis**49
Unidas**53
15
54% 59% 62% 64%
46% 41% 38% 36%
2005 2006 2007 1Q08
Off-airports Airports
100% 100% 100% 100%
Car rental revenues breakdown
Car rental division
2006 2007 1Q08
Airports 16.0% 13.8% 19.4%
Off-airport 46.7% 27.8% 41.3%
The geographical expansion strategy has reduced the share of airport market in car rental revenues
Car rental revenues growth
Growth opportunities: airport x off-airport markets
16Source: ABLA and Company, based on revenues
Consolidated Localiza’s market share
2004 2005 2006
Car rental market share
Feet rental market share
Localiza is increasing its market share
2007
22.4%
10.2%
15.5%
25.8% 29.4% 33.0%
11.4% 13.0% 13.2%
17.9% 20.5% 22.1%
17
Agenda
1. Integrated business platform page 3
2. Growth opportunities page 7
3. Competitive advantages page 18
4. Financials page 31
18
Pricingstrategy
Highercompetitiveness
Market shareincrease
Gains of scale
Integrated platformGeographical distribution
Lower interest rateKnow-how
Strong brandState of the art IT
Lower depreciationCar resale inventory as a buffer
Competitive advantages
19
International footprint
International footprint
Strategic locationsStrategic locations
Nationwidepresence
Nationwidepresence
Competitive Advantages: Largest distribution
387 agencies in 9 countries
20
223
62
59
52
Localiza Hertz Unidas Avis
315
95
83
82
Localiza Hertz Unidas Avis
Competitive Advantages: Largest distribution
Localiza network is larger than the second, the third and the fourth competitors combined in number of agencies and cities.
Agencies in Brazil Cities in Brazil
Source: Each company website as of May 15, 2008
260315
173
223
21
Curitiba - PR
22
Natal - RN
23
Belo Horizonte - MG
24
Competitive advantages: Rating
Enterprise Localiza Avis Budget Hertz Europcar DollarThrifty
Vanguard
Localiza has one the best rating among its international peers
Moody’s debt rating as of August, 2007 (Global scale)Baa2
Ba1Ba2
Ba3 Ba3
B1 B1
Standard & Poors’ corporate rating as of May, 2007 (Local Currency) Localiza Rent a Car S.A. brAA-/ Stable /--
CPFL Energia S.A brAA-/ Stable /--
Unibanco Asset Management brAA+/ Positive /brA-1
Gerdau S.A. brAAA/ Negative /--
Klabin S.A. brAA-/ Stable /--
Banco Citibank S.A. brAA+/ Positive /brA-1
Banco Votorantim S.A. brAA+/ Stable /brA-1
25
Competitive advantages: Car resale inventory as a buffer
32 stores in Brazil
1 6 1 1 1 6 2 1 2 6 3 1 5 1 0 1 5 2 0 2 5 2 7 1 2 1 7 2 2 2 7 1 6 1 1 1 6 2 1 2 6 1 6 1 1 1 6 2 1 2 6 3 1 5 1 0 1 5 2 0 2 5 3 0 5 1 0 1 5 2 0 2 5 3 0 4 9 1 4 1 9 2 4 2 9 3 8 1 3 1 8 2 3 2 8 3 8 1 3 1 8 2 3 2 8 2 7 1 2 1 7 2 2 2 7 2 7 1 2 1 7 2 2 2 7
Buffer
Buffer Buffer
Buffer
Jan Feb Marc Apr Mai Jun Jul Aug Sep Oct Nov Dec
Rented cars
Car resale inventory is used as a buffer during peaks of demand
26
Campinas - SP
27
Goiânia - GO
28
Rio de Janeiro / Barra - RJ
29
22,18026,100
33,52038,050
2004 2005 2006 2007
Localiza has better conditions due to its large scale
In 2007 Localiza purchased more than R$1.2 billion in cars
Localiza and its Franchisees represented in 2007
3.2% of GM internal car sales
1.8% of FIAT internal car sales
1.6% of the Brazilian internal car sales
Competitive Advantages: Strong ties with the automakers
Purchased cars
30
Agenda
1. Integrated business platform page 3
2. Growth opportunities page 7
3. Competitive advantages page 18
4. Financials page 31
31
Growth with profitability
134 154 150 152198
278311
403
856242
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
331 429 555 679191 251 303448
590853
127 145 160 221 270 286 281151898586 90
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
CAGR: 27.6%
CAGR: 23.9%
EBITDA evolution
Revenue evolution
CAGR: 16.5%CAGR: 30.3%
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007GDP % 3.4 0.0 0.3 4.3 1.3 2.7 1.1 5.7 2.9 3.7 5.4Average 1.9 4.4
32
Rental volume evolution
537.7761.0
1,085.21,317.4
1,820.9
1Q04 1Q05 1Q06 1Q07 1Q08
8,345 8,477
11,17413,325
15,720
1Q04 1Q05 1Q06 1Q07 1Q08
CAGR: +35.7%CAGR: +17.2%
Fleet rental – average rented fleet(quantity)
Car rental – daily rentals(quantity thousands)
18.0%
38.2%
33
53.545.4
1Q07 1Q08
120.998.1
1Q07 1Q08
159.4 201.6
244.2268.9
1Q07 1Q08
14,697 20,097
13,325
15,720
1Q07 1Q08
1Q08 highlights
Net revenue
403.6470.5
R$
mill
ion
Average rented fleet
28,02235,817
Qua
ntty
EBITDA Net income
36.7%
18.0%
27.8% 16.6%
10.1%
26.5%
23.2% 17.8%R
$ m
illio
n
R$
mill
ion
Car rental Fleet rental Rental and Franchising Used car sales
34
EBITDA margin per division
Divisions 2004 2005 2006 2007
Rental divisions, including Used car sales 2004 2005 2006 2007 1Q07 1Q08
Car Rental and Franchising + Seminovos/ car rental revenue 54.6% 63.5% 47.6% 53.7% 58.5% 57.3%
Fleet Rental + Seminovos/ fleet rental revenue 67.6% 67.4% 72.3% 70.9% 67.7% 66.1%
41.9%
69.1%
4.6%
1Q081Q07
44.5% 46.6%
65.4%
5.7%
68.7%
5.4%
Car Rental and Franchising 39.3% 45.0% 44.8%
Fleet Rental 63.4% 62.3% 62.0%
Used car sales – Seminovos 12.0% 13.2% 7.4%
1Q08 EBITDA breakdown
Fleet rental31.6%
Seminovos16.5%
Car rental e Franchising
51.9%
35
19,531 24,103 31,373 35,68623,825
32,6359,168
11,76214,630
17,790
14,938
18,604
2004 2005 2006 2007 1Q07 1Q08
Car rental Fleet rental
22,18226,105
33,52038,050
1,7477,213
15,71518,763
23,17430,093
8,870 9,292
2004 2005 2006 2007 1Q07 1Q08
493.1690.0
930.31,060.9
64.0224.6303.0
448.2590.3
853.2
244.2 268.9
2004 2005 2006 2007 1Q07 1Q08
Investment in fleet
* Includes accessoriesPurchased Sold
7,342
10,346
6,467
7,957
241.8340.0
190.1
207.7
Quantity Net investment *(R$ million)
CAGR: +23.1%
End of period fleet **
32.2%
(180.2)(44.3)
(7,123)(2,079)
28,69935,965
46,00353,476
38,763
51,239
28.3% 24.4%21.6%
24.5%
23.4% 30.2% 13.7% 37.0%
** Deductions for losses from theft and accidents are deducted from the fleet at end of period.
36
Net debt x fleet value
281.3539.3 443.1
767.9 838.6900.2
1,247.71,492.9 1,465.1
612.2
2004 2005 2006 2007 1Q08
Net debt Fleet value
END OF PERIOD BALANCE 2004 2005 2006 2007 1Q08
Net debt / fleet 46% 60% 36% 51% 57%
Net debt / EBITDA (USGAAP) 1.4x 1.9x 1.4x 1.9x 1.7x*
Net debt / EBITDA (BRGAAP) 1.1x 1.5x 1.0x 1.4x 1.2x*
Net debt / market cap 35% 30% 10% 20% 25%
* Annualized
37
Free cash flow before growth
30.1 32.7
340.2
-8.8
199.7
1.2p.p.0.6p.p.0.9p.p.3.7p.p.
9.8p.p.
-5 0
5 0
1 5 0
2 5 0
3 5 0
4 5 0
2004 2005 2006 2007 1Q08 -2 %
3 %
8 %
1 3 %
Free cash flow before growth Real increase in new car prices
Free cash flow - FCF
(89.3)
The negative FCF of R$ 8.8 million was impacted by the reduction of R$ 89.3 million in vehicle supplier account, compensated by the reduction of R$ 44.3 million in car-capex, what would result in a FCF of R$ 36.2 million
222.0(1)
118.2
Variation on vehicle supplier account (21.9) (25.5) 222.0 (51.0)
Free cash flow 2004 2005 2006 2007268.6 340.1
(37.7)
302.4(839.0)
760.0(79.0)
(23.7)
199.7(221.9)
(22.2)
217.2
485.8(643.3)
530.4(112.9)
(32.7)
340.2(287.0)
53.2
EBITDA after taxes 156.6 245.2
Working capital variation ‐ (increase) decrease (15.7) (49.7)
Cash provided before capex 140.9 195.5Capex of vehicle ‐ renovation (349.3) (496.0)
Cost of used car sales 248.7 361.2Net capex – for renovation (100.6) (134.8)
Capex – Property and equipment, net (10.2) (28.0)
Free cash flow before growth 30.1 32.7
Capex of vehicle – growth (143.8) (194.0)
Free cash flow (113.7) (161.3)
1Q08
100.6
(117.7)
(17.1)(224.6)
236.311.7
(3.4)
(8.8)‐
(8.8)
(1) Impact on cash flow due to the extraordinary increase in the vehicle supplier caption.
38
EVA
2004 2005 2006 2007
ROIC 24.6% 24.8% 18.7% 21.3%
11.2%
8.4%
11.5%
10.1
1,137,460
114,334
38,133
Nominal WACC 16.9% 15.7% 11.0%
Cost of debt (2) 11.6% 13.6% 10.9%
Cost of equity 20.0% 16.2% 11.0%
Spread (ROIC‐WACC) – p.p. 7.7 9.1 7.7
Capital investment – R$ thousand (1) 507,362 606,327 986,232
EVA – R$ thousand 39,198 55,530 76,201
EVA increase calculation – R$ thousand 16,332 20,671
25.935.4
114.3
55.576.2
39.25.2%
21.3%
24.6% 24.8%18.7%
5.6%2.7%2.8%
11.2%11.0%15.7%
16.9%
4 0
8 0
1 2 0
2004 2005 2006 2007 1Q07 1Q08
0 %
1 0 %
2 0 %
3 0 %
EVA ROIC Nominal WACC
(1) For EVA® calculus, it was used the average capital of the period. (2) Cost of debt after taxes
1Q07 1Q08 Variation
5.2%
2.8%.
8.8%
11.6%
2.4
1,095,637
25,862
0.4p.p.5.6%
2.7%
8.2%
11.2%
2.9
1,246,730
‐0.1p.p.
‐0.6p.p.
‐0.4p.p.
0.5
151,093
35,362 9,500
13.8%
39
RENT3 X IBOVESPA
0
5
10
15
20
25
23-M
ay
5-Jul
16-A
ug28
-Sep
11-N
ov26
-Dec
8-Feb
24-M
ar10
-May
22-Ju
n3-A
ug15
-Sep
30-O
ct14
-Dec
31-Ja
n16
-Mar
30-A
pr13
-Jun
26-Ju
l6-S
ep22
-Oct
6-Dec
23-Ja
n10
-Mar
23-A
pr
Pric
e
0
20
40
60
80
100
120
Volume
Volume RENT3 RENT3 IBOVESPA
RENT3: Performance
Performance RENT3 IBOV
2005 +149% +38%
2006 +124% +33%
2007 -12% +44%
2008 11% 9%
Since IPO +448% +186%
From IPO until 05/02/2008
Localiza was included in the MSCI Brazil Index beginning on March, 2008.
Average daily trade volume (R$ million)
4.57
10.5813.54
10.26
2005 2006 2007 1Q08
+196%
448%
186%
40
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’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. 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 the underwriters. 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 herein shall form the basis of any contract or commitment whatsoever.
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’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. 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 the underwriters. 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 herein shall form the basis of any contract or commitment whatsoever.
Disclaimer