institutional presentation - february/17
TRANSCRIPT
Institutional Presentation February, 2017
1. Company overview
2. Main business divisions
Car Rental
Fleet Rental
Seminovos
3. Financials
Appendix: Earnings release 4Q16
Agenda
2
Company: milestones
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 – Expansion strategy by
adjacencies: Fleet Rental
1997 – PE firm DL&J enters at a
market cap of US$ 150 mm
Phase III – Reaching Scale
2005 – IPO: market cap of US$ 295
mm
2011 – Rated as investment grade by
Moody’s, Fitch and S&P in 2012
2012 – ADR level I
12/31/2016 – Market cap of about
US$2.2 bi with ADTV of US$11.3
million
1973 1982 1983 2004 2005 2016
3
Company: integrated business platform
Synergies:
bargaining power
cost reduction
cross selling
14,015 cars
158 locations in Brazil
70 locations in South America
33 employees
49.8% sold to final consumer
84 stores
53 cities
1.029 employees
94,156 cars
6.4 million clients
333 locations
4,865 employees
34,948 cars
925 clients
397 employees
Based on the 4Q16 4
Car Rental Fleet Rental
Seminovos Franchising
This integrated business platform gives Localiza flexibility and superior performance.
5
High fixed cost
Standard fleet
1 year cycle
High entry barriers
Gains of scale
Intensive capital
Consolidated in airport
market
Fragmented off airport
market
Support area
Reduces depreciation
Know How of used cars
market
Low dependence on
intermediates
Supplementary
business
Important for
distribution
High profitability
Low contribution in
results
Company: Business platform divisions
Car Rental
Rents to individuals and
companies at airports
and off airport locations.
Franchising
Contributes to expand
the Localiza’s network.
Fleet Rental
Outsources fleet for 2-3
years term contracts.
Used Car Sales
Sells the used cars mainly
to final consumers after
the rental and estimates
the residual values.
Low fixed cost
Customized fleet
3 years cycle
Low entry barriers
Intensive capital
6
Net car sale
revenue
R$31.6 1 year cycle
Car Rental Division - 2016 Financial Cycle
Per car
R$35.2
Average car price
(past 2 years)
1 2 3 4 5 6 7 8 9 10 11 12 Expenses, interest and tax
Revenue
Total
1 year
R$ % R$ % R$
Net revenues 20.3 100.0% 34.6 100.0% 55.0
Costs - fixed and variable (10.1) -49.5% (10.1)
SG&A (3.7) -18.1% (3.1) -8.9% (6.8)
Net revenues of car sold 31.6 91.1% 31.6
Book value of car sold (30.0) -86.6% (30.0)
EBITDA 6.6 32.3% 1.6 4.6% 8.2
Cars Depreciation (1.3) -3.6% (1.3)
Others depreciation (0.3) -1.7% (0.1) -0.4% (0.5)
Financial expenses (2.5) -7.2% (2.5)
Taxes (1.9) -9.2% 0.7 2.0% (1.2)
Net Income (Loss) 4.4 21.5% (1.6) -4.6% 2.8
NOPAT 5.0
ROIC 14.2%
Cost of debt after taxes 10.2%
Car Rental Seminovos
Per car soldPer operating car
7
Net car sale
revenue
R$29.2 3 year cycle
Fleet Rental Division - 2016 Financial Cycle
Per car
1 2 3 4 5 6 31 32 33 34 35 36 Expenses, interest and tax
Revenue
R$42.9
Average car price
(past 2 years)
Total
3 years
R$ % Seminovos % R$
Net revenues 61.3 100.0% 32.0 100.0% 93.3
Costs - fixed and variable (18.2) -29.7% (18.2)
SG&A (3.6) -5.8% (2.9) -8.9% (6.4)
Net revenues of car sold 29.2 91.1% 29.2
Book value of car sold (25.7) -80.4% (25.7)
EBITDA 39.5 64.5% 3.4 10.7% 42.9
Cars Depreciation (11.1) -34.8% (11.1)
Others depreciation (0.3) -0.4% (0.2) -0.5% (0.4)
Financial expenses (6.5) -20.2% (6.5)
Taxes (11.8) -19.2% 4.3 13.5% (7.5)
Net Income (Loss) 27.5 44.8% (10.1) -31.4% 17.4
Net Income (Loss) - per year 9.2 44.8% (3.4) -31.4% 5.8
NOPAT 8.1
ROIC 18.9%
Cost of debt after taxes 10.2%
Per operating car
Fleet Rental Seminovos
Per car sold
8
2016 Consolidated breakdown R$ million
R$ 128 13%
R$ 420 41% R$ 468
46% R$ 334 43%
R$ 437 57%
Net Revenues R$4,439
EBITDA
R$1,016
R$ 2,343 53%
R$ 652 15% R$ 1,445
32%
EBIT*
R$771
*Seminovos results recorded in the Car Rental and Fleet Rental Divisions Company’s profitability comes from
Car Rental and Fleet Rental Divisions.
Raising money Buying
cars
Renting Cars Selling Cars
Cash to renew the fleet or pay debt
$
Profitability comes from rental divisions
Competitive advantages
$
9
43 years of experience in managing assets and generating value.
Competitive advantages: raising money
Global Scale
National Scale
As of February, 2017.
BB+ Fitch
Ba2 Moody’s
BB+ S&P Baa1 Moody´s B+ S&P
Ba3 Moody´s
BB- S&P
brAA+ S&P
Aa1.br Moody’s
AAA(bra) Fitch
brAA- S&P
AA- (bra) Fitch
A- (bra) Fitch
brA+ S&P AA- (bra) Fitch A(bra) Fitch
10
Investment grade: lower spreads and longer tenors
Source: Bloomberg .
Raising money Buying
cars
Renting Cars Selling Cars
$
Localiza raises money with better conditions then its competitors.
Raising money Buying
cars
Renting Cars Selling Cars
11
Competitive advantages: buying cars
Number of cars purchased
* Includes Franchising.
Source: each company website and ANFAVEA
Localiza’s share in the internal sales
of the OEMs - 2016
4.7%
$
Localiza buys cars with better conditions due to the volume of purchases.
* 92,671
68,319
37,444
19,357 13,068
Localiza Movida Unidas LocamericaLocaliza
2016 2015 2015 2015 2015
*
Localiza
Raising money Buying
cars
Renting Cars Selling Cars
360
150
6396
Localiza Unidas Hertz Movida
12
Competitive advantages: renting cars
Brand Brazilian distribution
# o
f b
ran
ch
es
#
of
cit
ies
Source: Each company website on 01/23/2017, 4Q16 Earnings Release for Localiza and 3Q16 Earnings Release for its competitors..
486
92
215
179
Localiza Competitors
491
$
The Company is present in 180 cities where the other largest networks do not operate.
Raising money Buying
cars
Renting Cars Selling Cars
13
Localiza Fast® Mobile-based counter bypass: Provides agility and control over the car rental experience. Customers can pick-up car bypassing our counter
Localiza Way® New platform to offer value-added services
Mobile Checklist More quality, control and agility in providing cars for rental
Fast Checkout More operational productivity and agility in returning the cars after rental
Connected Shuttle Optimization of customer shuttle service at airports
Anti fraud Taylor-made solution for fraud prevention in car rentals
Competitive advantages: Innovation
$
Constant innovations allow maintenance of the premium service.
14
Integrated technology solution that increases competitive intelligence and leverages productivity gains.
CONNECTED FLEET Integrated mobile solution to fleet rental services for drivers and contract manager.
MOBILE SOLUTION Rapid diagnosis and friendly vision of the fleet by the customer.
ONLINE FLEET RENTAL
Competitive advantages: Innovation
Raising money Buying
cars
Renting Cars Selling Cars
$
Differentiated offer with higher added value to the customer.
Raising money Buying
cars
Renting Cars Selling Cars
15
Sales to final consumer
Competitive advantages: selling cars
Buffer: additional fleet during
peaks of demand Large database
$
Deep know how of used car market: consumer preference, pricing and residual value
NPS of 70 (survey made 90 days after the purchase)
7.3%8.6%
6.3% 6.0%8.0%
9.5% 10.2%
16.9% 17.1%16.1% 16.5%
17.5% 17.0%15.4%
2010 2011 2012 2013 2014 2015 2016
16
ROIC versus cost of debt after taxes
ROIC Cost of debt after taxes
9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p.
7.5p.p. 5.2p.p.
2010 to 2014 ROIC considered income tax rate of 30% and effective income tax rate from 2015 on
Spread of 5.2p.p. in line with the Company's short-term strategy
and expectation of a sharp drop in interest in 2017
17
1. Company overview
2. Main business divisions
Car Rental
Fleet Rental
Seminovos
3. Financials
Appendix: Earnings release 4Q16
Agenda
18
Car Rental overview
Compact cars 55.9%
Others 44.1%
2016 Fleet composition
94,156 cars
Corporate fleet size
65,086 70,717
77,573 76,755 94,156
2012 2013 2014 2015 2016
Car rental distribution (Brazil)
474 479 476 494 491
2012 2013 2014 2015 2016
19
Drivers
Source: BCB and Localiza rates
Car rental affordability
Source: IPEADATA , Localiza’s loyalty program and SPC
Brasil research * jun/2013
6.4 million
84 million
Adult population
(age > 20 years)
Class A+B+C
65 million
Credit Card
Owners
Increasing affordability and low penetration in leisure trips brings growth opportunities.
180 200 240
260
300 350 380 415
465 510
545 622
678 724
788 880
38% 37% 35% 31%
27% 22% 20% 18% 16% 15% 15% 13% 13% 12%
11% 9%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Monthly minimum salary (R$) Daily rental price over minimum salary (%)
* The research indicated that 77% of the population owns at least one credit card. The population was 80% class A,B and C members and 20% class
D and E members.
20
Drivers
# domestic air traffic passengers
In million
Expected investment 2016-2019
(in R$ billion)
Source: Sectorial Analysis Committee / BNDES: 2016-2019 , as of February,
2016.
Source: ANAC up to 2016 and IATA-Air Passenger Forecast
Global Report, as of February, 2016.
The pipeline of investments tend to benefit
the corporate segment.
Expected annual traffic growth of 2.5% from 2017 to 2034
traffic.
70 82 89 90 96 96 89
2010 2011 2012 2013 2014 2015 2016
214.1
142.6
87.1
35.8
32.9
32.5
17.0
15.5
5.8
Energy
Telecoms
Highways
Sanitation
Railways
Urban mobility
Airports
Ports
Solid Residues
21
Source: ABLA, each company’s website on 01/23/2017 and Localiza´s 4Q16 Earnings Release
Airport locations Off-airport locations
Car Rental Locations in Brazil
Localiza388
Hertz55
Unidas175
Avis19
Movida101
Others7,888
Localiza103
Hertz37Unidas
49Avis31
Movida52
Outros35
Off-airport market is still fragmented.
22
Market Share – Car Rental 2015
Source: ABLA and Companies’ Financial Statements and estimates.
Localiza’s market share is higher than the 2nd and 3rd players together.
# of companies: 7,455
Fleet: 375.4k
Reference: ABLA increased data collection basis for mapping car rental market in 2015, the number of Car Rental Locations reached 7.455 from 5.624 in 2014 and fleet went to 375,4k from 332,5k in 2014.
20.4%
2.0%
6.0%
9.9%
61.7%
Movida
37.1k
Unidas
22.6k
Others
231.8k
22.4% 76.8k
7.2k
23
1. Company overview
2. Main business divisions
Car Rental
Fleet Rental
Seminovos
3. Financials
Appendix: Earnings release 4Q16
Agenda
24
Number of clients
Fleet Rental overview
Compact cars 33.8%
Others 66.2%
2016 Fleet composition
34,960 cars
729 760 798 849 925
2012 2013 2014 2015 2016
End of period fleet
32,104 32,809 34,312 33,948 34,960
2012 2013 2014 2015 2016
25 Source: ABLA, Datamonitor and Localiza
Rented fleet penetration
Corporate fleet:
4,000,000*
Rented fleet:
440,737
34,960
Brazilian Market World
11.0% 8.9% 13.3%
16.5%
24.5%
37.4%
46.9%
58.3%
Drivers
*Localiza estimates
Low penetration of rented fleet in Brazil.
Market Share – Fleet Rental 2015
26
Source: ABLA, Companies’ Financial Statements and estimates
Fragmented market with low entry barriers.
Reference: ABLA increased data collection basis for mapping car rental market in 2015, the number of Car Rental Locations reached 7,455 from 5,624 in 2014 and fleet went to 477.8k from 440.7k in 2014.
# of companies: 7,455
Fleet: 477.8k
33.9k 7.1% 1.7k
0.4% 20.8k 4.3%
16.3k 3.4%
23.8k 5.0%
31.2K 6.5%
350.1k 65.5%
Movida
Unidas
Others Ouro
Verde
Locamerica
7.5%
27
1. Company overview
2. Main business divisions
Car Rental
Fleet Rental
Seminovos
3. Financials
Appendix: Earnings release 4Q16
Agenda
28
# of points of sale
Car sales – operating data
5566
73 74 7577 84
2010 2011 2012 2013 2014 2015 2016
47,28550,772
56,66462,641
70,62164,305
68,449
2010 2011 2012 2013 2014 2015 2016
# Number of cars sold (quantity)
Efficiency gain on car sales.
29
Used car sales drivers:
affordability and penetration
Affordability to buy cars – Public Price of the most basic Gol
300 350 380
415
465 510
545 622
678 724
788 880
84
71 69 61
55 51 49
43 43 43 41 41
-
10
20
30
40
50
60
70
80
90
-100
-
100
200
300
400
500
600
700
800
900
200520062007200820092010201120122013201420152016
Minimum wage (R$) Minimum wages to buy a new car
7.9 7.7
7.3 6.9
6.5
6.0 5.7
5.3 5.0 4.9 4.8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
# of inhabitants per car – Brazil 2005 - 2015
Source: Sindipeças - Current Fleet Report 2016, as of April 2016.
Developed countries maintain a ratio between 1 - 2 cars per inhabitant.
Source: BCB and Localiza
Reference: to calculate the minimum wages to buy a new car we used
the public price of the Vehicle type Gol.
8.4 8.9 9.0 9.410.1 9.9 10.0
3.3 3.5 3.6 3.6 3.32.5
2.0
2010 2011 2012 2013 2014 2015 2016
30
Brazilian car market:
new x used car market and affordability
New cars
Used cars
Source: FENABRAVE (light and commercial cars)
In million of cars
Total market of 12.0 million cars.
2.5x 2.5x 2.6x 2.6x 3.1x 4.0x 5.0x
31
2015 Up to 2 years
419,085
2016 Brand new
1,986,362 2016 Used cars
10,008,769
0.7% 3.4% 15.3%
Car sales – operating data
Source: Anfavea and Fenabrave
Unidas, Locamerrica and Movida websites
Examples • Retailers • Dealers • Rental operators • “Auto malls”
Points of sale • 48,000 (Fenauto) • 4,364 (Anfavea) • +115 (Unidas,
Movida, Locamerica) • 71 (Fenauto)
Main players
32
1. Company overview
2. Main business divisions
Car Rental
Fleet Rental
Seminovos
3. Financials
Appendix: Earnings release 4Q16
Agenda
Message from the CEO – highlights
Financial discipline and strong balance sheet Cash position and debt profile to face the tough environment High credit ratings
The only company in the sector to create value for shareholders Focused on leadership, commercial and operational excellence and on active cost management
Long-term global strategic alliance agreement with The Hertz Corporation Expand its market share in inbound/outbound reservations Use the Localiza-Hertz brand through a co-brand agreement Exchange knowhow, technology and expertise
Indisputable leadership in quality and service Net Promoter Score of over 80 in 2016
The most visited site in its category, with more than 7.6 million visitors in 2016 195,000 downloads of its mobile app Facebook fan page with more than 515,000 followers and the highest engagement in the category
Protagonist on innovation Localiza FAST na app that allows clients to open the car door without going through the counter
Brand 25ª most valuable brand in Brazil , among other brands across different sectors
Highest standards of ethics and corporate governance Honored as the best company in Transparency and Ethics at the Revista Exame 2016 ranking
Car rental division with the biggest and most diversified fleet that is renewed yearly More than 50 models of cars, from compact to premium brands such as Audi, BMW and Volvo
33 Strong ambition towards growth and expanding its market leadership
3,812 3,780 3,871 4,111 4,242 4,308
4,846
5,266
1Q 2Q 3Q 4Q
76,755 94,156
33,948 34,960 13,992 14,015
124,695 143,131
2015 2016
Car Rental Fleet Rental Franchising 34
4Q16 and 2016 Operational Highlights
15,047 16,348 13,839
17,379 20,883
4Q15 1Q16 2Q16 3Q16 4Q16
Cars sold– consolidated
Rental days evolution (thousand)– Car Rental Average revenues per operating car (R$ thousand)
Fleet at end of the year
20.1 20.3
2015 2016
2015 2016 2015 2016 2015 2016 2015 2016
Net Revenues - (R$ million)
EBITDA - (R$ million)
Net Income (R$ million)
402.4 409.3
2015 2016
4Q16 and 2016 Financial Highlights
35
EBIT (R$ milhões)
338.7 402.2 155.6 170.5
499.2 733.3
993.5 1,306.0
4Q15 4Q16
Car Rental Fleet Rental Seminovos
228.0 270.9
4Q15 4Q16
175.0 202.0
4Q15 4Q16
36
Number of Daily Rentals (thousand)
28.1% increase in car rental volume and
19.0% growth in net revenue in 4Q16 versus 4Q15
10,734 12,794 13,749 14,242 15,416 15,566
18,662
4,111 5,266
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
Car Rental
802.2 980.7
1,093.7 1,163.5 1,284.4 1,258.0
1,428.0
334.5 398.0
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
Net Revenues (R$ million)
69.1% 68.9% 70.8%
66.8% 69.9% 69.3%
73.4%
2010 2011 2012 2013 2014 2015 2016
37
Utilization Rate Evolution – Car Rental
The increase in the utilization rate offset the drop in the average rate, keeping the
average revenue per operating car stable
Car Rental
Average daily rental – In R$
19.5 19.1
20.4 19.7
20.9 20.1
20.3
2010 2011 2012 2013 2014 2015 2016
78.07 79.68 82.36 84.85 87.71 84.56 79.67
2010 2011 2012 2013 2014 2015 2016
Average annual revenues per operating car
(R$ thousand)
38
Car Rental network evolution
Number of car rental locations (Brazil and abroad)
13 new corporate locations were added to the network
Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisees´ branches - abroad
234 247 272 286 304 320 333
181 202 202 193 172 174 158 61 47 50 63 64 70 70 476 496 524 542 540 564 561
2010 2011 2012 2013 2014 2015 2016
+13
39
Fleet Rental
361.1 455.0
535.7 575.9 571.9 608.5 651.8
155.6 170.5
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
8,044 9,603
10,601 10,844 10,363 10,901 11,240
2,702 2,922
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
Net Revenues (R$ million)
Number of Daily Rentals (thousand)
8.1% growth in daily volume and
9.6% in net revenue in 4Q16 versus 4Q15
Purchases (includes accessories) Used car sales net revenues
Cars purchased Cars sold
40
Net investment Fleet Expansion* (quantity)
Net Investment in Fleet (R$ million)
9,178 2,011 7,103 18,649
* It does not consider theft / crashed cars.
9,183
465
(273)
65,934 59,950 58,655
69,744 79,804
64,032
87,833
21,660 27,921
47,285 50,772 56,644 62,641
70,621 64,305 68,449
15,047 20,883
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
1,910 1,777 1,619 2,026
2,483 2,278
3,290
838 1,078 1,322 1,468 1,520 1,747
2,018 2,045 2,343
499 733
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
Strong growth in the fleet to support the Company's growth
309 99 588 279 233
6,613
339
19,384
7,038
R$947
345
41
Number of points of sale
New stores will be added to the network to support the renewal of the fleet due to
the strong growth of the Car Rental Division
55 66
73 74 75 77 84
2010 2011 2012 2013 2014 2015 2016
+7
42
Period-end fleet Quantity
61,445 64,688 65,086 70,717 77,573 76,755 94,156
26,615 31,629 32,104 32,809 34,312 33,948 34,960
10,652 12,958 14,545 14,233
13,339 13,992 14,015
98,712 109,275 111,735 117,759 125,224 124,695
143,131
2010 2011 2012 2013 2014 2015 2016
Car Rental Fleet Rental Franchising
The car rental fleet increased 17,401 cars to meet strong demand, maintaining the
utilization rate at a record level of 73.4%
+17,401
+1,012
1,175.3 1,450.0 1,646.7 1,758.9 1,874.0 1,883.1 2,096.8
494.3 572.7
1,321.9 1,468.1 1,520.0 1,747.3
2,018.2 2,044.9 2,342.5
499.2 733.3
2,497.2 2,918.1 3,166.7
3,506.2 3,892.2 3,928.0
4,439.3
993.5 1,306.0
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
43
Consolidated net revenues R$ million
Rental Used car sales
31.5% increase in consolidated revenue in 4Q16 versus 4Q15
The increase of 46.9% in 4Q16 in the revenue of the Seminovos is due to 5,836 cars sold more
than in 4Q15, and to the increase of 5.9% in the car prices
44
Consolidated EBITDA R$ million
(*)From 2012 onwards, accessories and freight of new cars have been accounted directly in the cost line, impacting EBITDA but
reducing depreciation costs.
(**) It considers the new appropriation criteria of the overhead, which is also appropriated to Seminovos.
Divisions 2010* 2011* 2012 2013 2014** 2015 2016 4Q15 4Q16
Car Rental 45.3% 46.9% 40.9% 36.8% 38.7% 31.8% 32.3% 30.2% 31.5%
Fleet Rental 68.0% 68.6% 66.4% 65.5% 60.0% 62.2% 64.5% 64.0% 63.8%
Rental Consolidated 52.3% 53.8% 49.3% 46.5% 45.3% 41.7% 42.3% 40.8% 40.8%
Used Car Sales 2.6% 2.8% 4.2% 5.7% 6.0% 7.3% 5.5% 5.2% 5.0%
Increase of R$42.9 million in EBITDA in 4Q16
649.5 821.3 875.6 916.5 969.8 934.8 1,015.6
228.0 270.9
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
+ R$42.9
45
Average depreciation per car (in R$)
Car Rental
1,536.0 1,683.9 1,895.8 1,452.4 1,270.0
622.1
1,251.2
2010 2011 2012 2013 2014 2015 2016
2,076.6 IPI Effect
3,972.4
Average Price of cars purchased In R$ Thousand
29.41 33.87 36.57 4.46 2.70
Price 2014 Increase Price 2015 Increase Price 2016
2015 2016
The increase in the average depreciation per car of the RAC is a reflection of the
slowdown of the increase of the new cars price that reflects in the seminovos cars
46
Average depreciation per car (in R$)
The drop in depreciation is due to a longer cycle
The depreciation of the cars in this division benefits from the price increase of
new cars that occurs over the life of the car
3,509.7 4,133.0
4,311.3
4,592.3 4,202.1 3,935.2 3,714.0
2010 2011 2012 2013 2014 2015 2016
1,096.9 IPI Effect
5,408.2
Fleet Rental
47
Consolidated EBIT R$ million
Divisions 2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
Car Rental 38.5% 38.8% 23.7% 32.8% 36.2% 34.3% 30.2% 28.7% 28.4%
Fleet Rental 46.2% 45.6% 36.9% 45.1% 44.3% 48.9% 51.2% 49.9% 52.4%
Consolidated 41.0% 41.1% 28.3% 37.1% 38.8% 39.1% 36.8% 35.4% 35.3%
Even with increased car depreciation of the Car Rental Division, EBIT Margin
remained stable in 4Q16
482.1 595.7
465.8
652.1 726.7 735.5 771.1
175.0 202.0
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
144.5 IPI Effect
610.3 + R$27.0
48
Consolidated net income R$ million
Increase of 1.7% in 2016 profit even with the increase of
interest and depreciation
250.5 291.6
240.9
384.3 410.6 402.4 409.3
105.9 104.4
2010 2011 2012 2013 2014 2015 2016 4Q15 4Q16
336.3 95.4
IPI Effect
Reconciliation EBITDA x Net income 2010 2011 2012 2013 2014 2015 2016 Var. R$ Var. % 4Q15 4Q16 Var. R$ Var. %
Consolidated EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 1,015.6 80.8 8.6% 228.0 270.9 42.9 18.8%
Cars depreciation (146.3) (201.5) (232.4) (229.0) (207.4) (163.6) (206.3) (42.7) 26.1% (44.0) (59.5) (15.5) 35.2%
Cars additional depreciation – IPI effect - - (144.5) - - - - - - - - - -
Other property depreciation and amortization (21.1) (24.1) (32.9) (35.4) (35.7) (35.7) (38.2) (2.5) 7.0% (9.0) (9.4) (0.4) 4.4%
EBIT 482.1 595.7 465.8 652.1 726.7 735.5 771.1 35.6 4.8% 175.0 202.0 27.0 15.4%
Financial expenses, net (130.1) (179.0) (138.7) (110.6) (151.1) (202.7) (243.5) (40.8) 20.1% (43.5) (72.7) (29.2) 67.1%
Income tax and social contribution (101.5) (125.1) (135.3) (157.2) (165.0) (130.4) (118.3) 12.1 -9.3% (25.6) (24.9) 0.7 -2.7%
Income tax and social contribution – IPI effect - - 49.1 - - - - - - - - - -
Net income of the period 250.5 291.6 240.9 384.3 410.6 402.4 409.3 6.9 1.7% 105.9 104.4 (1.5) -1.4%
49
Free cash flow - FCF Free cash flow
Free cash flow - R$ million 2010 2011 2012 2013 2014 2015 2016w
Op
era
tio
ns
EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 1,015.6
Used car sale revenue, net from taxes (1,321.9) (1,468.1) (1,520.0) (1,747.3) (2,018.2) (2,044.9) (2,342.5)
Depreciated cost of cars sold 1,203.2 1,328.6 1,360.2 1,543.8 1,777.0 1,769.1 2,102.5
(-) Income tax and social contribution (57.8) (83.0) (100.9) (108.5) (113.1) (110.7) (93.3)
Change in working capital 54.5 (83.9) 37.1 2.9 (27.1) (30.0) 113.2
Cash generated by rental operations 527.5 514.9 652.0 607.4 588.4 518.3 795.5
Ca
pe
x -
Re
ne
wa
ls
Used car sale revenue, net from taxes 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,036.3 2,342.5
Fleet renewal investment (1,370.1) (1,504.5) (1,563.3) (1,819.7) (2,197.7) (2,278.4) (2,563.6)
Net investment for fleet renewal (48.2) (36.4) (43.3) (72.4) (179.5) (242.1) (221.1)
Fleet renewal – quantity 47,285 50,772 56,644 62,641 70,621 64,032 68,449
Investment, other property and intangibles (50.6) (59.9) (77.8) (47.5) (46.3) (29.7) (42.2)
Free cash flow from operations, net of fleet renewal capex 428.7 418.6 530.9 487.5 362.6 246.5 532.2
Ca
pe
x -
Gro
wth Fleet growth (investment) (540.3) (272.0) (55.5) (209.4) (286.8) 8.6 (726.0)
Change in accounts payable to car suppliers 111.3 32.7 (116.9) 89.7 334.4 (121.2) 190.7
Net investment for fleet growth (429.0) (239.3) (172.4) (119.7) 47.6 (112.6) (535.3)
Fleet increase / (reduction) – quantity 18,649 9,178 2,011 7,103 9,183 (273) 19,384
Free cash flow after growth, and before interest and new HQ (0.3) 179.3 358.5 367.8 410.2 133.9 (3.1)
New headquarters construction (0.5) (3.1) (2.4) (6.5) (148.3) (30.7) (84.4)
Free cash flow before interest (0.8) 176.2 356.1 361.3 261.9 103.2 (87.5)
50
Changes in net debt R$ million
R$288.7 million of cash generation after interest was invested to increase the fleet
532.2
(243.5)
(726.0)
190.7
(84.4) (139.4)
(25.0)
(2,084.0)
Net Debt
12/31/2016
(1,588.6)
Net Debt
12/31/2015
Free cash flow after
fleet renewal and
before headquarters
Interest
Fleet
Increase of
19,384 cars
Increase in
accounts
payable to
cars
suppliers
New
headquarters
construction
Dividends
+288.7 (535.3) (248.8)
Treasury
Shares
51
Debt maturity profile (principal) R$ million
Strong cash position and comfortable debt profile to take advantage of growth
opportunities
As of December 31, 2016
-
558.4 335.7
620.8 770.0 672.5 750.0
2016 2017 2018 2019 2020 2021 2022
Cash 1,692.3
2016
1,514.9
52
Debt - ratios
Net debt vs. Fleet value
BALANCE AT THE END OF PERIOD 2010(*) 2011 2012 2013 2014 2015 2016
Net debt / Fleet value 52% 51% 48% 48% 40% 44% 45%
Net debt / EBITDA 2.0x 1.7x 1.4x 1.5x 1.4x 1.7x 2.1x
Net debt / Equity 1.4x 1.2x 0.9x 1.0x 0.8x 0.8x 0.9x
EBITDA / Net financial expenses 5.0x 4.6x 6.3x 8.3x 6.4x 4.6x 4.2x
(*) 2010 ratios based on USGAAP financial statements
Net debt Fleet value
Low leverage supports growth targets
1,281.1 1,363.4 1,231.2 1,332.8 1,322.3 1,588.6
2,084.0 2,446.7 2,681.7 2,547.6 2,797.9
3,296.3 3,642.7
4,623.6
2010 2011 2012 2013 2014 2015 2016
53
ROIC versus cost of debt after taxes
ROIC Cost of debt after taxes
7.3%8.6%
6.3% 6.0%8.0%
9.5% 10.2%
16.9% 17.1%16.1% 16.5%
17.5% 17.0%15.4%
2010 2011 2012 2013 2014 2015 2016
9.6p.p. 8.5p.p. 9.5p.p. 9.8p.p. 10.5p.p.
7.5p.p. 5.2p.p.
2010 to 2014 ROIC considered income tax rate of 30% and effective income tax rate from 2015 on
Spread of 5.2p.p. in line with the Company's short-term strategy
and expectation of a sharp drop in interest in 2017
54
Disclaimer
Website: www.localiza.com/ir E-mail: [email protected] Phone: 55 31 3247-7024
Roberto Mendes
CFO and IR
Nora Lanari
Head of IR Eugênio Mattar
CEO
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. 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 projections 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.
This presentation does not constitute an offer, invitation or solicitation of an offer to subscribe to or purchase any securities. Neither this presentation nor anything
contained herein shall form the basis of any contract or commitment whatsoever.
Maria Carolina Costa
IR Manager
Mariana Campolina
IR Manager