apresentação institucional eng
TRANSCRIPT
1August, 2012
2
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
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
06/30/2012 – Market cap pf US$3.1 biwith ADTV of 37.1 million
4
100.0%100.0%100.0%
Company: Ownership breakdown
Salim Mattar Eugenio Mattar Antonio Claudio Resende
Flavio Resende Free-float
7.1% 66.3%10.5%7.1%9.0%
Founders
5
Company: integrated business platform
This integrated business platform gives Localiza flexibility and superior performance.
Synergies:bargaining powercost reduction cross selling
13,389 cars201 locations in Brazil 48 locations in South America34 employees
66.6% sold to final consumer71 stores951 employees
58,436 cars3.1 million clients253 locations4,057 employees
31,412 cars699 clients343 employees
Based on the 2Q12
6
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.
7
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
Agenda
8
Overview
64.688
47.517
35.686
2011
2009
2007
Corporate fleet size
247
214
178
2011
2009
2007
Corporate locations
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
36.9%Others
9
71 6032
Overview
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
254
2005 2006 2007 2008 2009 2010 2011 1H12
Car rental distribution (Brazil)
120
107
62
# of branches # of cities452
289
Localiza Hertz Unidas Avis
318
10Source: 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
Others36Avis
35
Unidas34
Localiza101
Hertz42
Avis27
Unidas73
Localiza351 Hertz
78
Others2079
Overview
36.5%
Car Rental market share - Brazil (# of cars)
11
Main competitors
Market share* 3.1%
35
27
• International brand• Local expertise
• Weak footprint in Brazil• Master franchisee in Brazil in
“Chapter 11”• Used car sales retail network
Airport locations
Off-airport locations
Strengths• Capitalized by three
Private Equity funds• Local expertise
• International brand• Local expertise
Weaknesses
6.7% 2.8%
42
78
• Weak footprint in Brazil• Used car sales retail network
34
73
• Weak footprint• Relatively weak brand• Unclear priorities between
rental and fleet business• Used car sales retail
network
*Source: Roland Berger report, as of June 21, 2012, based on 2010 figures
12
Drivers
71128 154 179
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 9.5 10.7 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
350415
380
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
18285 83 107
Oil/gas
Transp
ortatio
n
Energ
yWate
r/sew
age
Industry
Others
13
2011 - Would you recommend Localiza? YES!
Customers recognize premium service and recommend it!
94.6% 94.8% 96.0% 95.5% 95.3% 96.3% 95.9%
2005 2006 2007 2008 2009 2010 2011
Source: based on “Fale Fácil” satisfaction survey answered by more than 350,000 customers in 2011
95.9%
Satisfaction survey
14
$27.5Car acquisition
Net car sale revenue $26.4
1 2 3 4 5 20 21 22 23 24
1 - year cycle
Expenses, interest and tax
Revenue
Financial cycle
Spread10,3p.p.
Totalper year
R$ % R$ % R$Net Revenues 19,1 100,0% 29,2 100,0% 48,3 Cost s (7,4) - 0,0% (7,4) SG&A (2,7) -14,1% (2,8) -9,6% (5,5) Net car sale revenue 26,4 90,4% 26,4 Book value of car sale (25,7) -90,0% (25,7)
EBITDA 9,0 47,2% 0,7 2,4% 9,7 Depreciation (vehicle) (2,0) -6,8% (2,0) Depreciation (non-vehicle) (0,3) -1,6% (0,3) Interest on debt (2,4) -8,2% (2,4) Tax (2,7) -14,2% 1,1 3,8% (1,6)
NET INCOME 6,0 31,5% (2,6) -8,9% 3,4
NOPAT 5,2 ROIC 18,9%Cost of debt after tax (CDI+1,5%) 8,6%
Fleet Rental Seminovosper operating car per operating car2011
15
Figures
Renting cars 2010 2011
EBIT 282.2 356.9
EBT 195.1 233.1
Net revenues 802.2 980.7460.3
(103.4)
(123.8)
EBITDADepreciation
Financial expenses (87.1)
363.3(81.1)
2010 2011
9.5 10.1
4.5 4.5
18.7 19.19.0
(2.0)
(2.4)
8.5(1.9)
(2.0)
Selling cars 2010 2011
EBIT 27.0 23.9EBT 27.0 23.9
Net revenues 1,101.1 1,241.130.0(6.1)
EBITDADepreciation
32.1(5.1)
2010 2011
0.7 0.60.7 0.6
27.8 29.20.7
(0.1)0.8
(0.1)
Per operating car
Per car sold
End of period fleet 61,445 64,688
Average rented fleet 29,646 35,348Average operating fleet 42,903 51,285
- -
- -- -
Number of cars sold 39,658 42,483 - -
16
Net revenues (R$ million)
# daily rentals (thousand)
3,4114,668
5,7937,940 8,062
10,73412,794
6,243 6,664
3,179 3,334
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
CAGR: 24.6%
4.9%6.8%
258.6346.1
428.0565.2 585.2
802.2980.7
472.4 532.3
239.4 264.3
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
CAGR: 24.9%
10.4%12.7%
Volumes and revenues
Revenue grew above volume due to the increase in the average rental rate per car.
17
74.2%68.9%68.9%69.1%68.8%67.9%70.7%65.5%58.8%
2005 2006 2007 2008 2009 2010 2011 1Q11 1Q12
58,43663,50064,68861,44547,517
39,11235,68631,37324,103
2005 2006 2007 2008 2009 2010 2011 1H11 1H12
CAGR: 17.9% -8.0%
Utilization rate
Fleet
Fleet and utilization rate
18
Financial crisis effectHot used car market 5.468,2
2.062,31.683,91.536,0332,9
2.546,0 2.577,0939,1492,3
2005 2006 2007 2008 2009 2010 2011 Jan-Apr/12* 1H12** Annualized
Reflex of the
IPI reduction
Reflex of the
IPI reduction
Depreciation was impacted by the decrease in car prices due to the IPI reduction.
Average depreciation per car
Additional estimated depreciationDivision
2Q12
85 (*) 31 116
73%
After 2Q12 Total
Car rental27% 100%
Quantity of cars by year of maturity of estimated useful life
0%
5
2015
0%
143
2014
57,82112,18745,486
79%
2012 Total2013
100%21%
R$ million Fleet as of May, 2012
Additional depreciation related to the IPI reduction on May, 2012
(*) Additional estimated depreciation of R$31 million will be accounted prospectively in the next 12 months
19
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
Agenda
20
687
584
456
2011
2009
2007
Number of clients
Overview
31,629
22,778
17,790
2011
2009
2007
Fleet size
Financial performance
219.8303.2
455.0
0 .0 0
5 0 .0 0
1 0 0 .0 0
1 5 0 .0 0
2 0 0 .0 0
2 5 0 .0 0
3 0 0 .0 0
3 5 0 .0 0
4 0 0 .0 0
4 5 0 .0 0
5 0 0 .0 0
2007 2009 2011
5 0 .0 %
1 0 0 .0 %
Fleet rental net revenues EBITDA margin (%)
CAGR: 19.0%
71.3% 68.7% 68.6%
42.6%Compact cars
Fleet composition
57.4%Others
21
13.9%
Fleet Rental division - Brazil (# of cars)
Source: based on ABLA 2012 yearbook
The business greatly profits from synergies with its car rental affiliate, and as the Brazilian economy matures, one can expect a higher percentage of companies to take advantage of fleet rental.
Overview
22
Main competitors
Market share* 7.1%
204.7
16,418
• Capitalized• Synergies with its rental car
business area
• Loss making in the last six years (competing on price in the pursuit of market share)
• Used car sales retail network
Revenues (R$ million)
Fleet size
Strengths • Brazil’s second player• Successful IPO 04/2012
Weaknesses
9.5%
272.5
27,262
• Low profitability (competing on price in the pursuit of market share)
• Depreciation calculus• Used car sales retail network
*Source: Roland Berger report, as of June 21, 2012, based on 2011 figures.
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%
Brazil
Poland
Czech
Repu
blic
German
y
France
Spain Uk
Holland
Drivers
24
$36.1Car acquisition
Net car sale revenue $26.3
1 2 3 4 5 20 21 22 23 24Expenses, interest and tax
Revenue
Financial cycle
Spread7,6p.p.
Totalper year
R$ % R$ % R$Net Revenues 16,3 100,0% 28,6 100,0% 44,9 Costs (4,2) - 0,0% (4,2) SG&A (0,9) -5,5% (2,3) -8,0% (3,2) Net car sale revenue 26,3 92,0% 26,3 Book value of car sale (24,9) -90,0% (24,9)
EBITDA 11,2 68,7% 1,4 4,9% 12,6 Depreciation (vehicle) (4,2) -14,7% (4,2) Depreciation (non-vehicle) (0,1) -0,3% (0,1) Interest on debt (2,0) -7,0% (2,0) Tax (3,4) -20,6% 1,4 5,0% (1,9)
NET INCOME 7,8 47,8% (3,4) -11,7% 4,4
NOPAT 5,8 ROIC 16,2%Cost of debt after tax (CDI+1,5%) 8,6%
Fleet Rental Seminovosper operating car per operating car2011
2 - year cycle
25
Renting cars 2010 2011
EBIT 164.5 196.3
EBT 121.1 139.3
Net revenues 361.1 455.0312.1
(115.8)
(57.0)
EBITDADepreciation
Financial expenses (43.4)
245.6(81.1)
2010 2011
7.2 7.0
5.3 5.0
15.8 16.311.2(4.2)
(2.0)
10.7(3.5)
(1.9)
Selling cars 2010 2011
EBIT 2.2 11.4EBT 2.2 11.4
Net revenues 220.8 227.011.4
-EBITDADepreciation
2.3(0.1)
2010 2011
0.3 1.40.3 1.4
28.9 28.61.4
-0.3
(0.0)
Per car sold
End of period fleet 26,615 31,629
Average rented fleet 22,343 26,676Average operating fleet 22,916 27,858
- -
- -- -
Number of cars sold 7,627 7,929 - -
Figures
Per operating car
26
93.0%99.0%98.0%
Users VIP Users Contract managers
Customers recognize good service and recommend it!
Source: Users and VIP users based on phone interviews made by the Company with customers. Contract managers made by an independent research: Vox Populi
2011 - Would you recommend Total Fleet? YES!
98.0%
Satisfaction survey
27
Net revenues (R$ million)
# daily rentals (thousand)
3,351 4,1885,144
6,437 7,0998,044
9,603
4,625 5,248
2,372 2,637
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
CAGR: 19.2%
11.2%13.5%
142.0184.0
219.8268.4
303.2361.1
455.0
215.7261.3
111.0 131.8
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
CAGR: 21.4%
18.7%21.1%
Volumes and revenues
Revenues reflect the interest and depreciation assumptions at the time of the agreement.
28
97.7%96.1%95.8%97.5%96.8%94.0%96.1%96.5%96.9%
2005 2006 2007 2008 2009 2010 2011 1Q11 1Q12
31,41228,65431,629
26,61522,77823,403
17,79014,630
11,762
2005 2006 2007 2008 2009 2010 2011 1H11 1H12
CAGR: 17.9% 9.6%
Fleet
Fleet and utilization rate
Utilization rate
29
Average depreciation per car
5.406,34.289,34.133,0
3.509,7
2.395,8
5.083,14.371,7
2.383,32.981,3
2005 2006 2007 2008 2009 2010 2011 Jan-Apr/12* 1H12** Annualized
Reflex of the
IPI reduction
Additional estimated depreciationDivision
2Q12
15 (*) 49 64
23%
After 2Q12 Total
Fleet rental77% 100%
Quantity of cars by year of maturity of estimated useful life
13%
4,055
2015
37%
11,590
2014
31,28810,3035,340
17%
2012 Total2013
100%33%
R$ million Fleet as of May, 2012
Additional depreciation related to the IPI reduction on May, 2012
Depreciation was impacted by the decrease in car prices due to the IPI reduction.
(*) Additional estimated depreciation of R$49 million will be accounted prospectively throughout the prospective life of the cars
30
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
Agenda
31Source: Fenabrave 2011
Localiza launched Seminovos in 1993, a brand new concept featuring younger cars.
Overview
Combining the Localiza brand with a growing network of stores
enables the firm to continuously sell thousands of cars at market prices.
32
Used car sales net revenues
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
Overview
34.519
30.093
50.7722011
2009
2007
Cars sold
1.5% 10.6%
2011 Up to 2 years2011 Up to 2 years476,827476,827
2011 Brand news2011 Brand news3,425,4993,425,499
0.6%
2011 Used cars2011 Used cars8,862,9518,862,951
33
• Rental operators• Locamerica, Hertz
• Retailers• “Loja do carro”
• Often appeal to lower income classes, with older cars
• Occasionally specialized in niches
• No brand recognition (lower reputation market)
• Financing options with higher interest rates
Points of sale • 3,714 (Anfavea) • 95* • 45,600 (Fenauto) • 71 (Fenauto)
• Tailored to popular customer demand at purchase, hence likely to be an attractive value proposition when for sale
• Stigma about heavy usage during rental car years
• Weak retail network• Geographical
concentration (SP)• Lower media presence
Examples
Strengths
• Brand and perceived image/ experience
• Support often directly from the OEM’s
• Flexibility in trade-in cars• Strong media presence
• Comfort and convenience
• Variety of models and brands
• Flexibility in exchange
Weaknesses
• Dealers• Fiat, VW, Ford, GM most
successful
• “Auto malls” and “Cidade do automóvel”
• Lower media presence
• Cars often older than 2 years
• It hasn’t been successful
• Used cars not a core business
• Cars often older than 2 years
*Seminovos Localiza and main rentals, estimates
Main competitors
34
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
# of inhabitants per car (2011)8.0 7.9
7.4
6.96.5
5.9
5.5
2005 2006 2007 2008 2009 2010 2011
Drivers
# of inhabitants per car - Brazil
7.9 8.9
11.9
15.817.4
6.85.6
7.0 8.98.47.17.37.1
6.7
3.53.33.02.72.31.81.6
2005 2006 2007 2008 2009 2010 2011
Individuals with affordability to buy a new car*
* Population with affordability to buy a new compact car (R$25,000) with 20% downpayment
Brazilian car market: new x used car market and affordability
4.4x 3.7x 3.1x 2.7x 2.4x 2.5x 2.6xNew cars
Used cars
35
Customers recognize our quality and recommend it!
94.0%92.3%94.0%
2009 2010 2011
Source: based on phone interviews made by the Company with customers started in 2009
2011 - Would you recommend Seminovos? YES!
94.0%
Satisfaction survey
36
Network increase
Used car sales network has increased by 5 stores.
# of points of sale
26 32 3549 55
66 71
13
2005 2006 2007 2008 2009 2010 2011 1H12
+5
37
Car sales per street storeMonthly average
82 82 82
59
74 73 70 74
2008 2009 2010 2011 1Q12 Apr-12 May-12 Jun-12
Number of sold cars is weighed by number of opened stores in the period
Productivity has improved, contributing to the reduction of fixed cost per car sold.
Car sold per store/month
38
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
Agenda
39
38%57%
5%
2011 Consolidated P&L
P&L 2010 2011
EBIT 482.1 595.7
Net revenues 2,497.2 2,918.1
EBITDA 821.3
(225.6)
(179.0)
416.7
Depreciation
Financial expenses (130.1)
EBT
649.5
(167.4)
352.0
Operating dataAverage operating fleet 65,819 79,143
Cars purchased 59,950
50,772Cars sold
65,934
47,285
16% 34%
50%
Revenues
EBITDA
40
26,10533,520 38,050
44,211 43,161
20,60218,763 23,17430,093 34,281 34,519
27,789
13,198
28,667
59,950
21,921
65,934
12,478 14,50424,059
47,285 50,772
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
7,342 10,346 7,957
18,649
9,930 8,6424,608 (5,868)
9,178
8,124 (1,306)
690.0930.3 1,060.9
1,335.3 1,204.2
1,910.4 1,776.5
628.5 593.8379.0446.5 588.8
850.5 980.8 922.4
1,321.9 1,468.1
693.3 762.7
352.7 389.3
825.6
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
243.5341.5 210.4
308.4354.5 281.8
588.5
132.3 (134.2)241.1 (10.3)
Net Investment
Purchased cars Sold cars* It does not include theft / crashed cars.
Fleet increase * (quantity)
Net investment (R$ million)
Purchases (accessories included) Net used car sales revenues
Car purchases were adjusted to improve fleet productivity.
41
31,373 35,686 39,112 47,517 61,445 64,688 63,500 58,43611,76214,630 17,790 23,403 22,778
26,615 31,629 28,654 31,412
24,103
2005 2006 2007 2008 2009 2010 2011 1H11 1H12
CAGR: 17.9%
35,86546,003 53,476 62,515 70,295
88,060 89,84892,15496,317
-2.5%
End of period fleetQuantity
Car rental Fleet rental
Fleet is adjusted to demand.
42
408.4 537.4 655.0 842.9 898.5 1,175.3 1,450.0694.6 801.6
353.7 400.3446.5 588.8
850.5980.8 922.4
1,468.1
693.3 762.7
352.7 389.3
1,321.9
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
CAGR: 22.7%
854.91,126.2
1,505.51,823.7
2,918.1
1,820.9
2,497.2
706.4 789.6
1,387.9 1,564.3
15.4%
12.7%
13.2%
11.8%
Consolidated net revenuesR$ million
Rentals Seminovos
In the 2Q12, net revenues grew due to the increase of 13.2% in rental and 10.4% in Seminovos revenues
43
215.7200.6
425.7386.8
821.3649.5
469.7504.1403.5
311.3277.9
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
7.5%
CAGR: 19.8%
10.1%
Margin per division 2005 2006 2007 2008 2009 2010 2011 1H11 1H12
45.3%
68.0%
52.3%
2.6%
45.1%
67.1%
52.0%
3.7%
41.3%
66.0%
49.4%
3.9%
46.9%
68.6%
53.8%
2.8%
45.9%
69.1%
53.3%
5.6%
2Q11 2Q12
40.6%
65.8%
Rental consolidated 53.6% 52.9% 54.5% 51.1% 53.1% 48.9%
5.1%
46.1%
68.5%
3.6%
41.9%
68.7%
1.1%
43.4%
71.4%
4.6%
46.0%
71.3%
5.5%
Car rental 47.5%
Fleet rental 65.5%
Seminovos 13.2%
EBITDA R$ million
EBITDA margin in the 2Q12 was impacted by complement bonuses and accessories expenses.
44
10.7
74.083.4137.6
291.6250.5
116.3127.4190.2
138.2106.5
2005 2006 2007 2008 2009 2010 2011 1H11 1H12 2Q11 2Q12
16.4%
-39.4%-85.5%
Consolidated net incomeR$ million
EBITDA x net income Reconciliation 2009 2010 2011 Var. R$ 1H11 1H12 Var. R$ Var. % Var. R$
171.8 386.8
(89.7)
(12.3)
(88.0)
(59.2)
137.6
(55.2)
15.1 10.1%38.9425.7
(223.3) (122.0)
(15.6)
(77.7)
148.9%
(25.7)
(133.6)
(3.3)
10.3
33.5
26.8%
-11.7%
83.4 (54.2)
-56.6%
-39.4%
(1.8)
11.1
34.3
(63.3)
(3.0)
(48.9)
(23.6)
41.1
821.3
(201.5)
(24.1)
(179.0)
(125.1)
291.6
Var. %
26.5%
37.7%
14.2%
37.6%
23.3%
16.4%
469.7
(172.3)
(21.0)
(112.9)
(47.2)
116.3
649.5
(146.3)
(21.1)
(130.1)
(101.5)
250.5
2Q11 2Q12 Var. %
Consolidated EBITDA 200.6 215.7 7.5%
281.8%
28.6%
-24.6%
-107.9%
-85.5%
Car depreciation (43.3) (165.3)
Other property and equipment dep. (6.3) (8.1)
Financial expenses, net (45.2) (34.1)
Income tax and social contribution (31.8) 2.5
Net income 74.0 10.7
Excluding the additional depreciation, 1H12 net income would have reached R$149.5 million.
45
SWOT Analysis: Localiza business platform
• Unrivaled local scale
• Vertical integration, creating synergies for all four businesses
• Strong business operating performance and experienced leadership
• Strong footprint in Brazil’s extreme traffic locations
Strengths
Opportunities
Weaknesses
Threats
• Increase in market share through further consolidation of Brazilian rental car market
• Underdeveloped fleet outsorcing in Brazil
• Upcoming mega events in Brazil
• Positive outlook for Brazilian business and tourism
•Any measures of the Brazilian government which impact car sales prices, potentially lowering asset value (e.g. new car sales tax)
• New competitors entering the market (rental car or fleet management)
• Increasing fuel price
• Strong focus on airport locations
• Renewal of airport concessions costly
• Dependence on passengers travelling by air (growth limited by Brazilian infrastructure)
• Weak footprint outside of Brazil, resulting in exposure to national economic development
• Dependence on long-term capital to finance renewal of fleet
According to Roland Berger report as of June 21, 2012
Localiza’s brand is top of mind in Brazil.
Localiza doesn’t see it as a weakness or a threat
46
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
Agenda
4747
Free cash flow - FCF
Free cash flow - R$ million 2005 2006 2007 2008 2009 2010 2011 1H12
Change in accounts payable to car suppliers (capex) (25.5) 222.0 (51.0) (188.9) 241.1 111.3 32.7 (132.8)
Net capex for fleet growth (219.5) (65.0) (272.9) (488.8) 0.0 (429.0) (239.3) (132.8)Fleet increase – quantity 7,342 10,346 7,957 9,930 8,642 18,649 9,178 (5,868)
Net capex for renewal
EBITDA 277.9 311.3 403.5 504.1 469.7 649.5 821.3 425.7
Used car sales net revenues (446.5) (588.8) (850.5) (980.8) (922.4) (1,321.9) (1,468.1) (762.7)
Depreciated cost of used car sales (*) 361.2 530.4 760.0 874.5 855.1 1,203.2 1,328.6 687.7
(-) Income tax and social contribution (32.7) (42.7) (63.4) (52.8) (49.0) (57.8) (83.0) (54.9)
Working capital variation (24.2) (4.8) 13.3 (44.8) (11.5) 54.5 (83.9) (18.9)
Cash provided before capex 135.7 205.4 262.9 300.2 341.9 527.5 514.9 276.9
Used car sales net revenues 446.5 588.8 850.5 980.8 922.4 1,321.9 1,468.1 762.7
Capex of car - renewal (496.0) (643.3) (839.0) (1,035.4) (947.9) (1,370.1) (1,504.5) (628.5)
Capex – other property and equipment, net (28.0) (32.7) (23.7) (39.9) (21.0) (51.1) (63.0) (36.0)
Free cash flow before growth 58.2 118.2 250.7 205.7 295.4 428.2 415.5 375.1
Capex of car - growth (194.0) (287.0) (221.9) (299.9) (241.1) (540.3) (272.0) -
(49.5) (54.5) 11.5 (54.6) (25.5) (48.2) (36.4) 134.2
Free cash flow after growth (161.3) 53.2 (22.2) (283.1) 295.4 (0.8) 176.2 242.3
(*) Without tecnical discount deduction up to 2010 (see item 18 – Glossary)
48
Changes in net debt in 1H12 (R$ million)
Net debt was reduced by R$108.5 million (-8.0%).
- 1,254.9(78.9)
Interest
(54.9)
Dividends
Net debt 06/30/2012
FCF242.3
- 1,363.4
Net debt 12/31/2011
49
52.026.0
432.0562.0
303.5323.5161.8
16.5
2012 2013 2014 2015 2016 2017 2018 2019
Cash673,9
Debt profileR$ million
Debt profile in 06/30/2012- principal (R$ million)
Strong cash position and comfortable debt profile.
In the 1H12, all in spread was of 1.3p.p. above the Selic rate.
5050
END OF PERIOD BALANCE 2005 2006 2007 2008 2009 2010 2011(**) 1H12 (**)
Net debt / Fleet value 60% 36% 51% 72% 57% 52% 51% 52%
Net debt / EBITDA (*) 1.9x 1.4x 1.9x 2.5x 2.3x 2.0x 1.7x 1.5x
Net debt / Equity 1.4x 0.7x 1.3x 2.0x 1.5x 1.4x 1.2x 1.1x
EBITDA / Financial expenses, net 3.3x 4.8x 5.4x 3.8x 4.2x 5.0x 4.6x 5.5x
535.8 440.4765.1
1,254.5 1,078.61,281.1 1,363.4 1,254.9
900.21,247.7
1,492.91,752.6 1,907.8
2,446.7 2,681.7 2,391.2
2005 2006 2007 2008 2009 2010 2011 1H12
(*) annualized(**) From January 1st 2011, adress financial statements in IFRS
Debt – ratiosR$ million
Net debt Fleet value
The Company presents conservative indebtedness ratios.
51
1.Company overview
2.Main business divisionsCar rental
Fleet rental
Seminovos
3.Consolidated
4.Debt and cash
5.Key value drivers
Agenda
52
Adding value to shareholders
(1) (2) (3)(1)
Growth
(2)
Ability to sustain(competitive advantages)
(3)
1- Spread around 8p.p. on the invested capital above the cost of debt after taxes.
2- Growth: GDP elasticity has been 5.7x over the last 6 years.
3- Localiza’s competitive strengths: the competitive strengths in each step of the process allow the Company to grow profitably on a sustainable manner.
Key value drivers
SpreadROIC > DEBT COST
53
13,60%10,90%
8,40% 8,84% 7,59% 7,33% 8,60% 7,05%
24,80%
18,70%21,25%
17,03%
11,54%
16,94% 17,12%15,10%
2005 2006 2007 2008 2009 2010 2011 1H12annualized
Cost of debt after tax ROIC
Spread
2005 2006 2007 2008 2009 2010 2011
1,984.6 2,445.3
28.9%
0.59x
17.1%
8.60%
8.5
28.6%
0.59x
16.9%
7.33%
9.6
1,642.3
32.1%*
0.53x
17.0%
8.84%
Average capital investment - R$ million 606.3 986.2 1,137.5
8.2
1,702.3
21.9%
0.53x
11.5%
7.59%
4.0
2,645.6
NOPAT margin (over rental net revenues) 37.0% 34.5% 36.9% 24.9%*
Turnover of average capital investment (over rental net revenues) 0.67x 0.55x 0.58x 0.61x
ROIC 24.8% 18.7% 21.3% 15.1%
Interest on debt after tax 13.60% 10.90% 8.40% 7.05%
Spread (ROIC – Interest after tax) - p.p. 11.2 7.8 12.9 8.1
1H12 a
11.2p.p.7.8p.p. 12.9p.p.
8.2p.p.4.0p.p.
9.6p.p. 8.5p.p. 8.1p.p.
ROIC and spread reflect the Company’s competitive pricing strategy.
* Excludes additional fleet depreciation, following the concept recommended by Stern Stewart
54
2005 2006 2007 2008 2009 2010 2011
5.7x
Localiza
GDP
Sector
2.9x
GDP elasticity
Localiza’s competitive advantages resulted in a growth above the industry level.
Rental revenues real growth elasticity x GDP
55
331.4 408.4 537.4 655.0 842.9 898.5 1,175.3 1,450.0303.0 446.5
588.8850.5
980.8 922.4
1,321.91,468.1
515.7457.4402.7296.1234.1225.9212.9
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Average growth of EBITDA is in line with the average growth of rental revenues
Growth and profitability track record Consolidated revenues
Consolidated EBITDA
CAGR: 24.4%
CAGR: 15.9%
634.4854.9
1,126.21,505.5
1,823.7 1,820.9
2,497.22,918.1
Consolidated Rentals Used car sales
CAGR: 23.4%
4.3
42 62 85.2 134.3 154 149.9 152.1 197.8278.1 311.4
403.5504.1 469.7
649.5821.3
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
CAGR: 23.9%CAGR: 22.6%
-0.6 7.55.7 3.2 4.0 6.1 5.2
1.9Average
1.12.71.34.30.30.03.4GDP 2.9
56
Selling cars
Buying cars
Renting cars
Raising money
Ability to sustain: competitive advantages
brAAA
AA+ (bra)
Aa1.br
Localiza managed to close the cycle of the rental business through integration, capturing competitive advantages at every step.
Localiza’s bought 2.3% of the main automakers sales in 2011
452 locationsTop of Mind brandStrong know-howStable management
Sales to final consumer71 points of saleAdditional fleet during peaks of demand
57
IR Team
DisclaimerThe 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 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 hereinshall form the basis of any contract or commitment whatsoever.
Nora LanariRoberto Mendes Silvio GuerraCFO - RI RI RI
Website: www.localiza.com/ir E-mail: [email protected] Phone: 55 31 3247-7024
58
Localiza x Peers
59
2011 Consolidated P&L
Financial statements
EBIT 595.7 47.0 78.7
per operating car Adjusted
Net revenues 2,918.1 670.9 390.7
167.9
(89.2)
(83.2)
(4.5)
EBITDA 167.1
(120.0)
(111.1)
(64.1)
Depreciation
Financial expenses (179.0)
EBT
821.3
(225.6)
416.7
Operating data
Average operating fleet 63,206 24,455 21,590
11,052
5,489
Cars purchased 15,341
12,742Cars sold
59,950
50,412
60
Financial statements
EBIT 7.0 3.7 3.6
per operating car Adjusted
Net revenues 16.3 13.0 12.6
7.7
(4.1)
(3.9)
(0.2)
EBITDA 8.3
(4.6)
(3.9)
(0.2)
Depreciation
Financial expenses (2.0)
EBT
11.2
(4.2)
5.0
2011 Fleet Division P&L
Operating data
Average price of car sold 28.6 24.3 21.5
Average operating fleet 27,858 15,674 21,590
11,052
5,489
28.6
7.1
Cars purchased 15,341
12,742
27.5
3.2
Cars sold
Average price of cars purchased 33.9
Purchase price – sales price
13,204
7,929
5.3
61
$36.1Car acquisition
Net car sale revenue $26.3
1 2 3 4 5 20 21 22 23 24
2011-year cycle
Expenses, interest and tax
Revenue
Localiza - Fleet rental financial cycle
Spread7,6p.p.
Totalper year
R$ % R$ % R$Net Revenues 16,3 100,0% 28,6 100,0% 44,9 Costs (4,2) - 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) -0,3% (0,1) Interest on debt (2,0) -7,0% (2,0) Tax (3,4) -20,6% 1,4 5,0% (1,9)
NET INCOME 7,8 47,8% (3,4) -11,7% 4,4
NOPAT 5,8 ROIC 16,2%Cost of debt after tax (CDI+1,5%) 8,6%
Fleet Rental Seminovosper operating car per operating car
62
$29.4Car acquisition
Net car sale revenue $22.6
1 2 3 4 5 20 21 22 23 24
2011 - year cycle
Expenses, interest and tax
Revenue
Unidas - Fleet rental financial cycle
Spread-3,4p.p.
Totalper year
R$ % R$ % R$Net Revenues 13,0 100,0% 24,3 100,0% 37,3 Costs (2,6) - 0,0% (2,6) SG&A (2,1) -16,2% (1,7) -7,0% (3,8) Net car sale revenue 22,6 93,0% 22,6 Book value of car sale (23,1) -90,0% (23,1)
EBITDA 8,3 63,8% (0,5) -2,1% 7,8 Depreciation (vehicle) (4,6) -18,9% (4,6) Depreciation (non-vehicle) (0,1) -0,8% (0,1) Interest on debt (3,9) -16,0% (3,9) Tax (2,5) -19,2% 2,7 11,1% 0,2
NET INCOME 5,7 43,9% (6,3) -25,9% (0,6)
NOPAT 2,2 ROIC 7,4%Cost of debt after tax (CDI+4,7%) 10,8%
Fleet Rental Seminovosper operating car per operating car
63
$27.0Car acquisition
Net car sale revenue $19.2
1 2 3 4 5 20 21 22 23 24
2011- year cycle
Expenses, interest and tax
Revenue
Locamerica Adjusted - Fleet rental financial cycle
Spread-1,7p.p.
Totalper year
R$ % R$ % R$Net Revenues 12,6 100,0% 21,5 100,0% 34,1 Costs (3,4) - 0,0% (3,4) SG&A (1,5) -11,9% (2,3) -10,7% (3,8) Net car sale revenue 19,2 89,3% 19,2 Book value of car sale (19,2) -90,0% (19,2)
EBITDA 7,7 61,1% 0,0 0,0% 7,7 Depreciation (vehicle) (4,1) -19,1% (4,1) Depreciation (non-vehicle) * - 0,0% - Interest on debt (3,9) -18,1% (3,9) Tax (2,3) -18,3% 2,4 11,2% 0,1
NET INCOME 5,4 42,8% (5,6) -26,0% (0,2)
NOPAT 2,5 ROIC 9,3%Cost of debt after tax (CDI+5,1%) 11,0%
Fleet Rental Seminovosper operating car per operating car
64
Financial statements
EBIT 10.1 (0.2)
per operating carNet revenues 19.1 17.8
5.1
(5.3)
(5.4)
(5.6)
EBITDA
Depreciation
Financial expenses (2.4)
EBT
9.0
(2.0)
4.5
2011 Car Division P&L
Operating data
Average price of car sold 29,2 24.3
Consolidated
Average operating fleet 35,348 8,781
15,341
12,742
27.5
3.2
Cars purchased
Cars sold
Average price of cars purchased 28.4
Purchase price – sales price
46,746
42,483
(0.8)
65
$27.5Car acquisition
Net car sale revenue $26.4
1 2 3 4 5 20 21 22 23 24
2011 - year cycle
Expenses, interest and tax
Revenue
Localiza – Car Rental financial cycle
Spread10,3p.p.
Totalper year
R$ % R$ % R$Net Revenues 19,1 100,0% 29,2 100,0% 48,3 Cost s (7,4) - 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 Seminovosper operating car per operating car
66
$29.4Car acquisition
Net car sale revenue $22.6
1 2 3 4 5 20 21 22 23 24
2011 - year cycle
Expenses, interest and tax
Revenue
Unidas – Car Rental financial cycle
Spread-12,7p.p.
Totalper year
R$ % R$ % R$Net Revenues 17,8 100,0% 24,3 100,0% 42,1 Costs (5,7) - 0,0% (5,7) SG&A (7,0) -39,3% (1,7) -7,0% (8,7) Net car sale revenue 22,6 93,0% 22,6 Book value of car sale (23,1) -90,0% (23,1)
EBITDA 5,1 28,7% (0,5) -2,1% 4,6 Depreciation (vehicle) (5,3) -21,8% (5,3) Depreciation (non-vehicle) (0,1) -0,6% (0,1) Interest on debt (5,4) -22,2% (5,4) Tax (1,5) -8,6% 3,4 13,8% 1,8
NET INCOME 3,5 19,5% (7,8) -32,3% (4,4)
NOPAT (0,6) ROIC -1,9%Cost of debt after tax (CDI+4,7%) 10,8%
Car Rental Seminovosper operating car per operating car
67
Localiza consolidated
46,00353,476
70,295
96,317
62,515
88,060
138,200 127,400 116,300
250,500291,600
190,200
2006 2007 2008 2009 2010 2011
Fleet
Net income
CAGR: 16.1%
Fleet and net income evolution
68
23,204
29,790
36,000
30,882
28,005
37,982
-17,377 -17,377
-40,484
-116,847
-64,121
-9,1722006 2007 2008 2009 2010 2011
Unidas consolidated
Fleet
Net income
Fleet and loss evolution
69
Fleet and loss evolution
Fleet
Net income
Locamerica - Adjusted
15,335
21,913
27,262
-8,462
-5,534
-2,643
2009 2010 2011
70
Fleet
2006 2007 2008 2009 2010 2011
Consolidated
Consolidated
71
Rating evolution – Localiza x Competitors
2008 2009 2010 2011 2012
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
Rating
National scale
National scale
Source: Itaú/ Bloomberg, as of May, 2012
Localiza S&P
Competitors FITCH