Download - ApresentaçãO Localiza Ndr E ConferêNcias Eng
1
Localiza’s flexible business model
proved to be effective during the crisis period.
Localiza Rent a Car S.A.4Q09 and 2009 Results - R$ million, USGAAP
March, 2010
2
Integrated business platform
This integrated business platform gives Localiza flexibility and superior performance
Synergies:
cost reduction
cross selling
bargaining power
� 8,791 cars� 238 locations in 9 countries
167 locations in Brazil 71 locations in South America
� 23 employees
� 34,519 cars sold� 78% sold to final consumer
� 49 stores� 588 employees
� 47,517 cars
�1.9 million clients�214 locations�2,768 employees
� 22,778 cars� 584 clients� 225 employees
As of 12/31/2009
3
Car rental financial cycle
$29.7Funding (FV)
Funding (PV)$26.6
Net car sale revenue$27.5
$26.6Car acquisition
1 2 3 4 5 8 9 10 11 12Expenses: (10.3)
1-year cycle
Revenue: 18.5
Total1 year
R$ % R$ % R$Revenues 19.0 100.0% 29.2 100.0% 48.2 Additional revenue 0.6 2.1% 0.6 Cost (8.0) -42.1% (8.0) SG&A (2.8) -14.7% (2.3) -7.8% (5.1)
Net car sale revenue 27.5 94.3% 27.5
Book value of car sale (27.0) -92.5% (27.0) EBITDA 8.2 43.2% 0.5 1.8% 8.7
Depreciation (non-vehicle) (0.3) -1.6% (0.2) -0.6% (0.5) Depreciation (vehicle) (1.6) -5.5% (1.6) Interest on debt (1.9) -6.3% (1.9) Tax (2.4) -12.5% 0.9 3.2% (1.4)
NET INCOME 5.5 29.1% (2.2) -7.4% 3.4
Return on asset 12.6%
Car rental Used car salesPer operational car Per operational car
4
33.8Car acquisition
42.0Funding (FV)
Funding (PV)33.8
Net car sale revenue 28.8
1 2 3 4 5 20 21 22 23 24
2-year cycle
Expenses: (10.5)
Revenue: 32.4
Fleet rental financial cycle
2 years 1 yearR$ % R$ % R$ R$
Revenues 32.4 100.0% 29.6 100.0% 62.0 31.0
Additional revenue 0.5 1.8% 0.5 0.3
Cost (8.7) -26.7% (8.7) (4.3) SG&A (1.8) -5.6% (1.4) -4.6% (3.2) (1.6) Net car sale revenue 28.8 97.2% 28.8 14.4 Book value of car sale (27.9) -94.2% (27.9) (13.9)
EBITDA 21.9 67.6% 0.9 3.0% 22.8 11.4 Depreciation (non-vehicle) (0.4) -1.2% (0.7) -2.3% (1.1) (0.5) Depreciation (vehicle) (6.5) -22.0% (6.5) (3.3) Interest on debt (4.9) -16.6% (4.9) (2.5) Tax (6.5) -19.9% 3.4 11.4% (3.1) (1.5)
NET INCOME 15.1 46.5% (7.8) -26.5% 7.2 3.6
Return on asset 10.7%
TotalFleet rental Used car salesPer operational car Per operational car
5
Co
re B
usin
esses
Su
pp
ort
� Increase market leadership maintaining high return
�Create value taking advantage of the fleet rental market, leveraging the synergies from the integrated business platform
�Add value to the brand by expanding the network in Brazil and South America, with profitability
Strategy by division
�Add value to the businesses, optimizing fleet renewal and reducing depreciation as a competitive advantage
6
Growth opportunities
Air traffic9.1% CAGR (2004/2009)
Growth forecast between 2% - 5%
GDP elasticityRental divisions 5.9x GDP
Sector: 2.6x GDP
ConsolidationUS market: 4 players 95% BR market: 4 players 40%
1,893 players 60%
Credit cards20.8% CAGR (2004/2009)
45 mm holders (estimated)13% growth for 2010
Insurancereplacement
Around 10 million cars insuredAccident frequency of 15% p.a.
Fleet outsourcingCorporate target fleet of 500,000 cars
Approximately 25% rented
Source: Localiza, ABLA and Central Bank
Source: Infraero, Gol and Tam
Source: Abecs and estimates
Source: Susep, Denatran and estimates
Source: Company estimates
Source: Auto Rental News and estimates
7
Localiza’s revenues have been growing 5.9x GDP.
Source: Central Bank, Localiza and ABLA
Growth opportunities: GDP
5.9x
Localiza
GDP
Sector 2.6x
2005 2006 2007 2008
GDP (real) Localiza (real) Sector (real)
Rental revenues accumulated growth rate – rentals
8
Others*1889
Localiza292 Unidas
73 Avis44
Hertz65
Growth opportunities: consolidation
Airport locations Off-airport locations
Brazilian car rental agencies
Off-airport market is fragmented among almost 2,000 small local car rental companies
*Source: ABLA, 2008Source: Each company website as of December 31th , 2009
Unidas29
Avis30
Hertz29
Others36
Localiza89
9
22.4%25.8%
29.4%33.0%
38.0%
2004 2005 2006 2007 2008
Consistent market share evolution
38.0%
Strategy: increase market leadership maintaining high return
Source: ABLA, based on revenues
10
Consistent market share evolution
14.0%
Strategy: create value taking advantage of the integrated business platform synergies
Source: ABLA, based on revenues
10.2%11.4%
13.0% 13.2% 14.0%
2004 2005 2006 2007 2008
11
Highercompetitiveness
Market shareincrease
Gains of scale
ScaleKnow-how
Strong brandStrong values
Integrated platformGeographical footprint
High corporate governance standardsUsed car sales network
Management model Lower depreciation Stable Management
Owners involvedFacilities
Rating
Competitive advantages
Localiza reached the virtuous cycle
12
36 years of experience…
Raising money
Buyingcars
Renting cars
Selling cars
Competitive advantages
…give Localiza superior performance in all chains of the renting process
13
Competitive advantages: funding
Raising money
Buyingcars
Renting cars
Selling cars
Aa2.brDuke Energy
Aa2.brCEMIG
Aa2.brCyrela Brazil Realty
Aa2.brBraskem S.A.
Aa2.brLocaliza Rent a Car S.A
Moody’s corporate rating as of Mar/10 (Local Currency)
brATam
brAA-Duke Energy
brAACEMIG
brA+Cyrela Brazil Realty
brAA+Braskem S.A
brAA-Localiza Rent a Car S.A
Standard & Poors as of Mar/10 (Local Currency)
Rating
High corporate governance standards
14
Competitive advantages: scale in buying cars
Raising money
Buyingcars
Renting cars
Selling cars
As the largest buyer in Brazil, Localiza gets better prices and conditions with the automakers
* Includes Localiza, Total Fleet and Franchisees purchases.
Localiza2.3%
Purchases from Fiat, GM, VW and Renault in Brazil*
GM44%
FIAT33%
VW16%
Others1%
RENAULT6%
Purchased cars by brand
15
Competitive advantages: scale renting cars
Raising money
Buyingcars
Renting cars
Selling cars
34th
Most valuable brand in Brazil
(Brand Analytics, May 2009)
Best of transportation sector(Exame, Biggest & Best, July 2009)
Strong brandGeographical
footprint
Locations in Brazil
Scale
102
94
74
Localiza Unidas Hertz Avis
381
270
Localiza’s market share: 38%
16
Car rental network
Localiza has the best located branches in Brazil and South America
17
Car rental network
18
Competitive advantages: selling cars
Raising money
Buyingcars
Renting cars
Selling cars
49 stores in Brazil
� Logistics of distribution
� Know-how of used car market
� Selling to final consumers in order to have higher revenue per sold car
Car rental buffer
19
Used car sales network
Localiza has a different brand and a special network to sell its cars to final consumers
20
Funding
Equity
Debt
Ass
ets
(car
s)
Profitability comes fromrental divisions
Cash to renew the fleet
Pricing strategy• Operating costs• Depreciation• Financial expenses• Taxes• Profitability
Managing assets
Flexible and liquid assets.
21
Liquid and flexible assets allow for fast adjustment
Scenario during crisis from Oct/08 to Jun/09
Impact on car and fleet rental volumesDrop in the GDP from positive to negative
Money available at shorter terms and higher spreadsCredit restriction and increasing spreads
Loss in the fleet value and increase in depreciation ratesIncentive: IPI reduction for new cars
Drop in used car sales volumesDrop in the cars sales volumes
LocalizaBrazil
� Resume fleet renewal
� Debt profile extension
� Increase in used car sales investments
2H09
Positive GDP
after crisis
� Fleet adjustment: Localiza stop buying cars
� Strong cash generation� Pre-payment of short term debt
1H09
Negative GDP
Localiza’s adjustment
22
Financials
23
Consolidated results
Resumption of growth in net revenues and net income in 4Q09.
(R$11.1)116.3127.4Net income
-6.3%6.9%Net margin
-6.8%469.7504.1EBITDA
0.0%1,856.31,855.7Net revenue
Var.20092008
R$68.238.4(29.8)Net income (loss)
-7.0%-7.1%Net margin
+2.5%128.9125.8EBITDA
+30.4%551.1422.5Net revenue
Var.4Q094Q08
24
Car rental division
167.0155.2
607.8585.7
442.7357.2
271.3
2005 2006 2007 2008 2009 4Q08 4Q09
Net revenues (R$ millions)
CAGR: 29.2% 3.8%
Revenues and daily rentals have grown in 4Q09.
7.6%
3,4114,668
5,793
7,940 8,062
2,085 2,236
2005 2006 2007 2008 2009 4Q08 4Q09
CAGR: 32.5% 1.5%
7.2%
# daily rentals (thousand)
25
Car rental division
jan feb mar apr may jun jul aug sep oct nov dec
2005 2006 2007 2008 2009
- 3.3% 9.1% 16.3%17.5%
# daily rentals
Localiza is back to high growth.
726 658 701702 719815
oct nov dec
2008 2009
711
835
jan
2009 2010
26
Car rental division
Net revenue breakdown – car rental
54% 59% 62% 66% 68%
46% 41% 38% 34% 32%
2005 2006 2007 2008 2009
Off airport Airport
100% 100% 100% 100% 100%
Localiza is already present in all airports and therefore it has been concentrating its geographical expansion in new markets.
27
117145
178 199 214
2005 2006 2007 2008 2009
# of locations
+ 28+ 33 + 21
+15
It doesn’t include franchisees
Car rental division
Even during the crisis period Localiza has expanded its network distribution.
28
Car rental division
67.9% 68.8% 68.6%67.6%
64.5%
76.2% 15.3
2.4
16.1
5 8 .0 %
6 0 .0 %
6 2 .0 %
6 4 .0 %
6 6 .0 %
6 8 .0 %
7 0 .0 %
7 2 .0 %
7 4 .0 %
7 6 .0 %
7 8 .0 %
2008 2009 1Q09 2Q09 3Q09 4Q09
-
2 .0
4 .0
6 .0
8 .0
1 0 .0
1 2 .0
1 4 .0
1 6 .0
1 8 .0
Utilization rate – car rental
Trade-off: lower depreciation despite its effect in a lower utilization rate.
Utilization rate # of purchased cars (thousand)
29
Fleet rental division
# of daily rentals (thousand)
149.2190.2
228.2276.9 313.4
76.1 82.5
2005 2006 2007 2008 2009 4Q08 4Q09
CAGR: 22.9%
Net revenue (R$ millions)
8.4%
13.2%
Fleet rental division has kept a consistent growth even in a crisis scenario.
3,3514,188
5,1446,437 7,099
1,826 1,850
2005 2006 2007 2008 2009 4Q08 4Q09
CAGR: 24.3% 10.3%
1.3%
30
Used car sales division
The used car sales division has presented strong growth since 4Q09.
18,76323,174
30,09334,281 34,519
6,64611,335
2005 2006 2007 2008 2009 4Q08 4Q09
CAGR: 22.3%
70.6%
0.7%
# of sold cars
2,102 2,115 2,4293,574 3,342
4,419
oct nov dec
2008 2009
70.0%
58.0% 81.9%
2,5213,577
jan
2009 2010
41.9%
31
1326
32 3549
2005 2006 2007 2008 2009
# of stores
+ 13+ 6
+ 3
In 2009, the used car sales division expanded its network.
40.0%
Used car sales division
+14
32
Average operating fleet age – car rental(in months)
The average operating fleet age is coming back to pre-crisis level.
6.0 6.4 5.7 7.09.4
11.69.6
7.3
1Q 2Q 3Q 4Q
2008 2009
Average operating fleet age
12.6 12.6 11.6 12.715.4 16.7 16.3 17.5
1Q 2Q 3Q 4Q
2008 2009
Average sold fleet age
33
Depreciation per car – car rental division
332.9
2,546.0 2,577.0
939.1492.3
2005 2006 2007 2008 2009
Average depreciation per car (R$) - year
With 2/3 of fleet renewed, average depreciation per car has already presented a significant drop.
Average depreciation per car (R$) - quarter
418.8
7,379.3
1,798.62,599.7
3,763.3
2,209.21,133.4729.7
1Q 2Q 3Q 4Q
2008 2009
34
Depreciation per car – fleet rental division
2,981.32,383.3
4,371.75,083.1
2,395.8
2005 2006 2007 2008 2009
The average depreciation per car has also presented a significant reduction in the fleet rental division.
Average depreciation per car (R$) - quarter
Average depreciation per car (R$) - year
2,048.0
11,572.0
3,064.54,557.6
6,238.63,652.02,894.3 2,670.1
1Q 2Q 3Q 4Q
2008 2009
35
Net revenues
1,856.31,855.7
1,531.7
1,145.4876.9
634.4532.0476.9234.3212.9 244.7 310.1 420.4
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Consolidated net revenues(R$ million)
CAGR: 16.5%
CAGR: 30.8%
4.4
5.7 2.9 3.7 4.6 5.1
-0.2
-0.2
1.9Average
1.12.71.34.30.30.03.4GDP
From 2004 to 2008 Localiza’s revenues have grown 7x GDP.
36
277.9 311.3403.5
504.1 469.7
125.8 128.9
2005 2006 2007 2008 2009 4Q08 4Q09
EBITDA margin
5.5%
51.5%
67.0%
44.3%
2008
50.6%52.5%49.3%52.6%51.2%51.0%Rentals consolidated
0.4%
65.9%
43.0%
4Q09
1.6%
68.9%
44.4%
4Q08
1.1%
66.5%
40.3%
2009
4.6%
69.1%
42.0%
2006
5.4%
68.7%
44.5%
2007
13.2%Used car sales
62.3%Fleet rental
45.3%Car rental
2005Divisions
EBITDA consolidated (R$ millions)
CAGR: 22.0%
EBITDA margins are still consistent.
- 6.8%
2.5%
37
Net income
38.4-29.8
106.5138.2
190.2
127.4 116.3
2005 2006 2007 2008 2009 4Q08 4Q09
- 228.9%
Net income (R$ millions)
Main impact in results: decrease of used car sales EBITDA.
- 8.7%
127.4
(46.6)
(133.3)
(18.3)
(178.5)
504.1
54.5
449.6
2008
116.3
(47.2)
(112.9)
(21.0)
(172.3)
469.7
10.6
459.1
2009
(11.1)
(0.6)
20.4
(2.7)
6.2
(34.4)
(43.9)
9.5
Var. R$
3.1128.9125.8EBITDA Consolidated
68.2
(39.9)
20.0
(0.1)
85.1
(1.9)
5.0
Var. R$
38.4(29.8)Net income
(20.7)19.2Income tax and social contribution
(24.5)(44.5)Financial expenses, net
(5.1)(5.0)Other depreciation
(40.2)(125.3)Depreciation of revenue-earning vehicles
1.23.1EBITDA - Used car sales
127.7122.7EBITDA - Car rental and fleet rental
4Q094Q08Reconciliation of EBITDA x Net Income
38
Free cash flow - FCF
8,6429,9307,95710,3467,342Fleet increase (quantity)
15.2----Change in amounts payable to car suppliers (capex)
295.4
241.1
(241.1)
295.4
(21.0)
(23.4)
(963.1)
924.5
339.8
(11.5)
(49.0)
400.3
855.1
(924.5)
469.7
2009
(283.1)
(188.9)
(299.9)
205.7
(39.9)
(52.2)
(1,035.4)
983.2
297.8
(44.8)
(52.8)
395.4
874.5
(983.2)
504.1
2008
(22.2)53.2 (161.3)Free cash flow
(51.0)222.0 (25.5)Change in amounts payable to car suppliers (capex)
(221.9)(287.0)(194.0)Capex of car – growth
250.7 118.2 58.2 Free cash flow before growth
(23.7)(32.7)(28.0)Capex - Property and equipment, net
14.2 (53.0)(47.8)Net capex for renewal
(839.0)(643.3)(496.0)Capex of car – renewal
853.2 590.3 448.2 Used car sales revenues
260.2 203.9 134.0 Cash provided before capex
13.3 (4.8)(24.2)Working capital variation
(63.4)(42.7)(32.7)(-) Income tax and social contribution – current
310.3 251.4 190.9 EBITDA without used car sales revenues and costs
760.0 530.4 361.2 Cost of used car sales
(853.2)(590.3)(448.2)Used car sales revenues
403.5 311.3 277.9 EBITDA
200720062005Free cash flow - R$ millions
39
Net debt
Net debt was reduced by R$175.9 million.
-39.4 -80.1
295.4
-1,254.5-1,078.6
Interest and others
Dividends
Net debt12/31/2008
Net debt12/31/2009
Free cash flow
40
Debt – profile and costsDebt (principal) on 12/31/09 – R$ millions
2009
423.1
205.4 225.0 239.6 211.8160.0
459.6Cash
2010 2011 2012 2013 2014 2015
Stand by*
Debt profile was extended.
(459.6)-----(459.6)Cash and cash equivalents
1,005.3 160.0 211.8 239.6 225.0 205.4 (36.5)-Total net debt - principal
1,464.9 160.0 211.8 239.6 225.0 205.4 423.1 -Total gross debt - principal
2.2 ---0.4 0.9 0.9 TJLP + 3.80%paBNDES
400.0 100.0 100.0 100.0 100.0 --CDI +2.02%paDebentures - 1st Issuance, Total Fleet
200.0 -----200.0 108.9% of CDICommercial Papers
200.0 -66.8 66.6 66.6 --CDI + 0.59%paDebentures - 2nd Issuance
222.2 -----222.2 110.8% of CDIDebentures - 1st Issuance
440.5 60.0 45.0 73.0 58.0 204.5 -CDI + 1.25%paWorking Capital
Total201520142013201220112010Average effective
costGross debt - principal
*Stand by refers to R$100 MM limit with BNDES, with term of drawing until sept/2010
41
Debt - ratios
Significant improvement in debt ratios.
535.8 440.4765.1
1,254.51,078.6
900.21,247.7
1,492.91,752.6 1,907.8
2005 2006 2007 2008 2009
(R$ millions)
Net debt Fleet value
2.0x
1.8x
2.5x
72%
2008
1.5x1.3x0.7x1.4xNet debt / Equity (USGAAP)
1.7x1.3x1.0x1.5xNet debt / EBITDA (BRGAAP)
2.3x1.9x1.4x1.9xNet debt / EBITDA (USGAAP)
57%51%36%60%Net debt / Fleet value (USGAAP)
2009200720062005BALANCE AT THE END OF THE PERIOD
42
Rewards and recognitions
Corporate governance:
� Elected twice The Best Company In Corporate Governance (Capital Aberto Magazine)
� Elected “The Most Shareholder-friendly” company (Institutional Investor Magazine)
Corporate reputation:
� Elected twice The Best CEO of a small-cap (Institutional Investor Magazine)
� Best of Transportation Sector (Exame Magazine)
� One of The 100 Companies with Best Reputation in the Country (Consumidor Moderno Magazine)
Internationalization:
� 28th Most Internationalized Brazilian Company (Ranking Fundação Dom Cabral)
Franchising:
� Franchisor of the Year (Brazilian Franchising Association)
� Best Franchising of Brazil (Pequenas Empresas, Grandes Negócios Magazine)
Human resources:
� One of The 50 Most Admired RHs (Gestão & RH Magazine)
RENT3:
� 34th Most Valuable Brand in Brazil (IstoÉ Dinheiro Magazine)
� 2nd Highest Profitability since the IPO (Ranking elaborated by Valor Newspaper)
43
RENT3 performance
Average daily volume (R$ millions) Average daily volume (# shares)
Strong growth of traded volumes.
648.7
824.2
2008 2009
8.4
11.9
2008 2009
41.7%27.1%
44
Referrals
� TOP PICK from Itaú for March
� Weekly portfolio from SLW broker
� Citi – “Still Our Favorite Brazilian Transportation Name”
� Goldman Sachs – BRIC’s EM Nifty 50
� Santander – Shifting Into High Gear
� BNP Paribas – Porfolio for March
� Link Broker – Porfolio for March
� Valor Econômico – Portfolio for March
RENT3 is well recommended.
45
Indexes
� MSCI Brazil Index
� Van Eck ETF - Market Vectors Brazil Small-Cap Index
� Goldman Sachs GSSTEM50 – BRIC’s EM Nifty 50
� IBrX 100
� ITAG
� IGC
RENT3 is present in various indexes.
46
Thank you!