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3T14
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Localiza Rent a Car S.A.3Q14 Results
R$ million
October 24, 2014
2
Highlights
289.6 325.1
3Q13 3Q14
Car Rental DivisionNet revenues
R$
mill
ion
438.6 471.5
497.3 535.9
3Q13 3Q14Car Rental Used car sales
Net revenues Consolidated
R$
mill
ion
1,007.4935.9
ROIC Cost of debt after taxes
Spread ROIC minus cost of debt after taxes
6.0%7.8%
16.5% 18.0%
2013 9M14
10.2p.p.10.5p.p.
Fleet renewal# Number of cars sold
Annualized
18,039 17,999 17,449 15,88918,815
3Q13 4Q13 1Q14 2Q14 3Q14
*
* 2Q14 was impacted by the world cup and less business days.
802.2980.7 1,093.7 1,163.5
853.1 953.1
289.6 325.1
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
3
Net Revenues (R$ million)
# Daily Rentals (thousands)
Car Rental Division
Car rental net revenues grew 12.3% in 3Q14 due to 7.5% in daily volumes and 6.0% increase in the average rental rate when compared with 3Q13.
10,734 12,794 13,749 14,242 10,528 11,518
3,608 3,880
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
234 247 272 286 302
181 202 202 193 16861 47 50 63 64
2010 2011 2012 2013 9M14
4
Car Rental network evolution
16 new owned rental locations were added to the network in the 9M14.
# of car rental locations (Brazil and abroad)
Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisses´ branches - abroad
476 496 524 542 534
+16
5
Utilization rate evolution – Car Rental Division
Higher utilization rate contributed to improve ROIC.
69.1% 68.9% 70.8%66.8% 66.4%
70.5%
2010 2011 2012 2013 9M13 9M14
361.1 455.0
535.7 575.9 432.9 425.2
144.1 142.0
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
8,0449,603
10,601 10,8448,175 7,720
2,700 2,567
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
6
Net Revenues (R$ million)
# Daily Rentals (thousands)
Fleet Rental Division
Contracted revenue went from R$647.3 million in 12/31/2013 to R$724.3 million in 30/09/2014.
1,910.4 1,776.5 1,618.8 2,026.2
1,472.4 1,605.8
528.1 584.2
1,321.9 1,468.1 1,520.0 1,747.3
1,241.8 1,465.2
497.3 535.9
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
Purchases (includes accessories) Used car sales net revenues
Cars purchased Cars sold
7
Net investmentFleet Expansion* (quantity)
Efficiency in managing car purchases aiming at optimizing utilization rate.
Net Investment in Fleet (R$ million)
65,934 59,950 58,655 69,744
51,156 52,738
17,569 17,674
47,285 50,772 56,644 62,641
44,642 52,153
18,039 18,815
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
9,178 2,0117,10318,649
6,514
(470)
308.4 98.8588.5 278.9230.6
* It does not include theft / crashed cars.
30.8
585
(1,141)
140.6
48.3
8
Sales by quarterQuantity
Higher sale volumes result in lower fixed costs per car sold.
# Number of cars sold
Result of the OEM’s delays in delivering cars
13,285 14,504 15,091 13,764 12,934 13,66918,039 17,999 17,449 15,889
18,815
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
9
End of period fleetQuantity
In the Car Rental Division, fleet was kept stable despite the rental volume growth, reflecting productivity gain thru better utilization.
61,445 64,688 65,086 70,717 70,406 70,491
26,615 31,629 32,104 32,809 32,809 33,072
2010 2011 2012 2013 9M13 9M14
Car Rental Fleet Rental
103,52696,31788,06097,190 103,215 103,563
The number of cars in the Fleet Rental Division totaled 33,072, on September 30, including 1,583 cars in preparation to be delivered to customers (444 cars on June 30, 2014).
1,175.3 1,450.0 1,646.7 1,758.9 1,300.6 1,391.8 438.6 471.5
1,321.9 1,468.1 1,520.0 1,747.3
1,241.8 1,465.2
497.3 535.9
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
10
Consolidated net revenuesR$ million
Consolidated net revenues increased by 12.4% in 9M14.
Car Rental Used car sales
2,918.1 3,506.22,542.42,497.2
3,166.7
935.9 1,007.4
2,857.0
11
Consolidated EBITDA R$ million
EBITDA grew 7.6% in the 9M14.
649.5821.3 875.6 916.5
680.5 732.2
238.2 241.5
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
(*) It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos.(**) Up to 2011, accessories and freight of new cars were recorded as permanent assets and depreciated over the cars’useful life. From 2012 on, such values have been accounted directly in the cost line, impacting EBITDA but reducingdepreciation costs.
Divisions 2010** 2011** 2012 2013 9M13 9M14* 3Q13 3Q14*
Car Rental 45.3% 46.9% 40.9% 36.8% 36.7% 39.3% 38.5% 39.6%
Fleet Rental 68.0% 68.6% 66.4% 65.5% 65.8% 61.5% 65.2% 61.1%
Rental Consolidated 52.3% 53.8% 49.3% 46.5% 46.6% 46.3% 47.5% 46.3%
Used Car Sales 2.6% 2.8% 4.2% 5.7% 6.0% 6.0% 6.0% 4.4%
Depreciation IPI Effect - Non recurring additional depreciation
3,509.7 4,133.0
4,311.3
4,592.3 4,054.8 3,954.0 1,096.9
2010 2011 2012 2013 9M14 3Q14
1,536.0 1,683.9
1,895.8 1,452.4 1,316.6 1,231.6
2,076.6
2010 2011 2012 2013 9M14 3Q14
12
Average depreciation per carin R$
3,972.4
5,408.2
Car Rental
Fleet Rental
*Annualized
Lower depreciation contributed to higher ROIC in the 9M14.
* *
* **Annualized
250.5 291.6
240.9
384.3294.4 308.3
102.1 101.9
2010 2011 2012 2013 9M13 9M14 3Q13 3Q14
13
Consolidated net incomeR$ million
* Pro forma 2012 net income excluding additional depreciation related to the IPI tax reduction, net of income tax.
336.3 *
Higher EBITDA and lower depreciation were offset by an increase of R$14.3 million in financial expenses.
14
Free cash flow - FCF (*) Without the technical discount up to 2010
Free cash flow - R$ million 2010 2011 2012 2013 9M14O
pera
tions
EBITDA 649.5 821.3 875.6 916.5 732.2
Used car sale revenue, net from taxes (1,321.9) (1,468.1) (1,520.0) (1,747.3) (1,465.2)
Depreciated cost of cars sold (*) 1,203.2 1,328.6 1,360.2 1,543.8 1,294.5
(-) Income tax and social contribution (57.8) (83.0) (100.9) (108.5) (89.9)
Change in working capital 54.5 (83.9) 37.1 2.9 (82.8)
Cash provided by rental operations 527.5 514.9 652.0 607.4 388.8
Cap
ex -
Ren
ewal
s
Used car sale revenue, net from taxes 1,321.9 1,468.1 1,520.0 1,747.3 1,465.2
Fleet renewal investment (1,370.1) (1,504.5) (1,563.3) (1,819.7) (1,589.3)
Net investment for fleet renewal (48.2) (36.4) (43.3) (72.4) (124.1)
Fleet renewal – quantity 47,285 50,772 56,644 62,641 52,153
Investment, other property and intangibles investments (50.6) (59.9) (77.8) (47.5) (36.0)
Free cash flow before growth, new HQ and interest 428.7 418.6 530.9 487.5 228.7
Cap
ex -
Gro
wth
Fleet growth investment (540.3) (272.0) (55.5) (209.4) (17.8)
Change in accounts payable to car suppliers 111.3 32.7 (116.9) 89.7 121.8
Fleet growth (429.0) (239.3) (172.4) (119.7) 104.0Fleet increase / (reduction) – quantity 18,649 9,178 2,011 7,103 585
Free cash flow after growth, and before interest and before new headquarters (0.3) 179.3 358.5 367.8 332.7
Cap
ex–
HQ
Investment in the construction of the new headquarters (0.5) (3.1) (2.4) (6.5) (28.9)
Marketable securities – new headquarters - - - - (90.0)
New headquarters construction (0.5) (3.1) (2.4) (6.5) (118.9)
Free cash flow before interest (0.8) 176.2 356.1 361.3 213.8
15
The strong cash generation allowed net debt to remain stable, even after investments in the new headquarters.
(*) Before new headquarters capex
Changes in net debt R$ million
Net debt as ofDec 31, 2013
1,332.8
FCF (*)
-332.7
Financial expenses
119.4
New HQ
118.9
Dividends
83.5
Net debt as ofSep 30, 2014
1,321.9
1,281.1 1,363.4 1,231.2 1,332.8 1,321.9
2,446.7 2,681.7 2,547.6 2,797.9 2,960.4
2010 2011 2012 2013 9M14
16
Debt - ratiosNet debt vs. Fleet value
BALANCE AT THE END OF PERIOD 2010(*) 2011 2012 2013 9M14
Net debt / Fleet value 52% 51% 48% 48% 45%
Net debt / EBITDA** 2.0x 1.7x 1.4x 1.5x 1.4%
Net debt / Equity 1.4x 1.2x 0.9x 1.0x 0.8%EBITDA / Net financial expenses 5.0x 4.6x 6.3x 8.3x 6.1x
(*) 2010 ratios based on USGAAP financial statements(**) Annualized
Net debt Fleet value
Comfortable debt ratios.
35.9 184.2 487.1 511.4
221.0 544.5 445.0
147.5
2014 2015 2016 2017 2018 2019 2020 2021
17
Debt maturity profile (principal)R$ million
The Company monitors the market on a regular basis and changes its debt portfolio to improve debt profile and/or reduce financial costs.
Cash1,291.4
707.2
As of September 30, 2014After 8th debenture issuance
7,3% 8,6%6,3% 6,0%
7,8%
16,9% 17,1% 16,1% 16,5% 18,0%
2010 2011 2012 2013 9M14
18
ROIC versus cost of debt after taxes
9.6p.p. 8.5p.p. 10.2p.p.9.8p.p.
ROIC increase was enough to offset higher basic interest rate.
ROIC Cost of debt after taxes
10.5p.p.
Annualized
Thank You!
The material presented is a presentation of general background information about LOCALIZA as of the date of the presentation. It is information in summaryform 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 andmay not be disclosed to any other person. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, theaccuracy, 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 theSecurities Exchange Act of 1934. Such forward-looking statements are only projections and are not guarantees of future performance. Investors are cautionedthat 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 andbusiness environments of LOCALIZA and its subsidiaries that may cause the actual results of the companies to be materially different from any future resultsexpressed 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 informationcurrently available to LOCALIZA’s management, LOCALIZA cannot guarantee future results or events. LOCALIZA expressly disclaims a duty to update any ofthe 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 offeringof 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 offeringmemorandum will contain, or incorporate by reference, detailed information about LOCALIZA and its business and financial results, as well as its financialstatements.
This presentation does not constitute an offer, invitation or solicitation of an offer to subscribe to or purchase any securities. Neither this presentation nor anythingcontained herein shall form the basis of any contract or commitment whatsoever.
www.localiza.com/riEmail: [email protected]: 55 31 3247‐7024
Disclaimer