3Q13 Conference Call
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1 October 16, 2013 Localiza Rent a Car S.A. 3Q13 and 9M13 Earnings R$ million, IFRS
Transcript of 3Q13 Conference Call
1October 16, 2013
Localiza Rent a Car S.A.3Q13 and 9M13 Earnings
R$ million, IFRS
136.6 144.1
3Q12 3Q13
271.2 289.6
3Q12 3Q13
71.4102.1
3Q12 3Q13
2
Net Revenues – Car Rental Division
R$ m
illio
n
Net Revenues – Fleet Outsourcing Division
R$ m
illio
n
Net Income – Consolidated
Highlights
R$ m
illio
n412.3 438.6
394.7 497.3
3Q12 3Q13
R$ m
illio
n
Rentals Seminovos
807.0935.9
Consolidated Net Revenues
346.1 428.0
565.2 585.2
802.2
980.71,093.7
803.4 853.1
271.2 289.6
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
4,668 5,793
7,940 8,062
10,734
12,794 13,749
10,188 10,528
3,524 3,608
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
3
Net Revenues (R$ million)
# Daily Rentals (thousands)
Car Rental division
Car rental revenues grew 6.8% despite the scenario of lower macroeconomic activity growth.
4
Car Rental network evolution
14 new owned rental locations were added in the 9 months of 2013.
# of car rental locations (Brazil and abroad)
Localiza´s branches - Brazil Franchisees´ branches - Brazil Franchisses´ branches - abroad
145 178 199 214 234 247 272 286134134
147167
181 202202 191
4869
7671
6147
50 62
2006 2007 2008 2009 2010 2011 2012 9M13
327381
422452 476 496
524 539
+14
184.0 219.8 268.4 303.2 361.1
455.0 535.7
397.8 432.9
136.6 144.1
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
4,188 5,144
6,437 7,099 8,044
9,603 10,601
7,911 8,175
2,663 2,700
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
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Net Revenues (R$ million)
# Daily Rentals (thousands)
Fleet Outsourcing division
Net revenues grew 5.5%, presenting a growth of 1.4% in daily rental volume and 3.9% in the average rental rate.
33,520 38,050
44,211 43,161
65,934 59,950 58,655
40,759
51,156
18,838 17,569
23,174 30,093 34,281 34,519
47,285 50,772 56,644 42,880 44,642
15,091 18,039
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
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7,957 9,930 8,642
930.3 1,060.9
1,335.3 1,204.2
1,910.4 1,776.5 1,618.8
1,124.4
1,472.4
495.9 528.1 588.8 850.5
980.8 922.4
1,321.9 1,468.1 1,520.0
1,157.3 1,241.8
394.7 497.3
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
341.5 210.4
308.4 98.8
354.5 281.8
588.5
(32.9)230.6
101.2 30.8
Net investmentFleet Expansion* (quantity)
Cars purchased Cars sold * It does not include theft / crashed cars.
Lower car purchase level in 3Q13 compared with the 1H13 level, to adjust fleet size to demand.
Net Investment (R$ million)
Purchases (includes accessories) Used car sales net revenues
10,346
18,649 9,178 2,011
(2,121)6,514
3,747(470)
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Sales by quarterQuantity
The Company achieved record sales of 18,039 cars this quarter.
# Number of cars sold
13,28514,504 15,091
13,764 12,934 13,669
18,039
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Record
Result of the OEM’s delays in delivering cars
31,373 35,686 39,112 47,517 61,445 64,688 65,086 61,303 70,406 14,630
17,790 23,403
22,778
26,615 31,629 32,104 32,027
32,809
2006 2007 2008 2009 2010 2011 2012 9M12 9M13
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End of period fleetQuantity
Fleet grew 10.6% compared with September 30,2012.
46,00353,476
Car Rental Fleet Outsourcing
62,51570,295
93,33096,31788,060
97,190 103,215
Localiza´s fleet totaled 117,200 cars, including 13,985 cars from franchisees.
537.4 655.0 842.9 898.5 1,175.3 1,450.0 1,646.7 1,213.9 1,300.6
412.3 438.6
588.8 850.5
980.8 922.4
1,321.9
1,468.1 1,520.0
1,157.3 1,241.8
394.7 497.3
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
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Consolidated net revenuesR$ million
1,126.2
1,505.51,823.7
2,918.1
2,371.22,542.4
1,820.9
2,497.2
3,166.7
Rental Seminovos
Consolidated net revenues increased 16.0%.
807.0935.9
Divisions 2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
Car Rental 43.4% 46.0% 45.9% 41.9% 45.3% 46.9% 40.9% 41.1% 36.7% 40.7% 38.5%
Fleet Outsourcing 71.4% 71.3% 69.1% 68.7% 68.0% 68.6% 66.4% 66.3% 65.8% 66.7% 65.2%
Rental Consolidated 52.9% 54.5% 53.3% 51.1% 52.3% 53.8% 49.3% 49.4% 46.6% 49.5% 47.5%
Used Car Sales 4.6% 5.5% 5.6% 1.1% 2.6% 2.8% 4.2% 4.2% 6.0% 4.9% 6.0%
311.3 403.5504.1 469.7
649.5821.3 875.6
649.3 680.5
223.7 238.2
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
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Consolidated EBITDAR$ million
Excluding accessories and freight of new cars, recorded in the cost line,Car Rental EBITDA margin in 3Q13 would be 40.3%.
2,383.3 2,395.8
5,083.1 4,371.73,509.7 4,133.0
5,408.2 4,661.0
2006 2007 2008 2009 2010 2011 2012 9M13
939.1332.9
2,546.0 2,577.0
1,536.0 1,683.9
3,972.4
1,307.9
2006 2007 2008 2009 2010 2011 2012 9M13
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Average depreciation per carin R$
Annualized
Robust used-car market
Financial crisis and IPI reduction effect
IPI reduction effect
Annualized
Robust used-car market
IPI reduction effectFinancial crisis and IPI reduction effect
138.2
190.2
127.4 116.3
250.5
291.6
240.9
154.8
294.4
71.4
102.1
2006 2007 2008 2009 2010 2011 2012 9M12 9M13 3Q12 3Q13
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Consolidated net incomeR$ million
Excluding the effect of IPI tax reduction in 3Q12, net income increased 16.6% this quarter.
* Pro forma 2012 net income excluding additional depreciation, net of income tax.
336.3 *
87.6 *
237.0 *
Record
Net income for 9M13 was higher than the net income of all previous years.
1313
Free cash flow
(*) Without the technical discount up to 2010
Free cash flow - R$ million 2006 2007 2008 2009 2010 2011 2012 9M13
EBITDA 311.3 403.5 504.1 469.7 649.5 821.3 875.6 680.5
Used car sale revenue, net from taxes (588.8) (850.5) (980.8) (922.4) (1,321.9) (1,468.1) (1,520.0) (1,241.8)
Depreciated cost of cars sold (*) 530.4 760.0 874.5 855.1 1,203.2 1,328.6 1,360.2 1,091.7
(-) Income tax and social contribution (42.7) (63.4) (52.8) (49.0) (57.8) (83.0) (100.9) (73.2)
Change in working capital (4.8) 13.3 (44.8) (11.5) 54.5 (83.9) 37.1 (5.1)
Cash provided before investment 205.4 262.9 300.2 341.9 527.5 514.9 652.0 452.1
Used car sale revenue, net from taxes 588.8 850.5 980.8 922.4 1,321.9 1,468.1 1,520.0 1,241.8
Car investment for renewal (643.3) (839.0) (1,035.4) (947.9) (1,370.1) (1,504.5) (1,563.3) (1,284.9)
Net investment for fleet renewal (54.5) 11.5 (54.6) (25.5) (48.2) (36.4) (43.3) (43.1)
Fleet renewal – quantity 23,174 30,093 34,281 34,519 47,285 50,772 56,644 44,642
Investment,other property and intangibles investments
(32.7) (23.7) (39.9) (21.0) (51.1) (63.0) (80.2) (42.4)
Free cash flow before growth and before interest 118.2 250.7 205.7 295.4 428.2 415.5 528.5 366.6
Investment on cars for fleet (growth) /reduction (287.0) (221.9) (299.9) (241.1) (540.3) (272.0) (55.5) (187.5)
Change in accounts payable to car suppliers 222.0 (51.0) (188.9) 241.1 111.3 32.7 (116.9) (10.8)
Fleet growth (65.0) (272.9) (488.8) 0.0 (429.0) (239.3) (172.4) (198.3)
Fleet increase / (reduction) – quantity 10,346 7,957 9,930 8,642 18,649 9,178 2,011 6,514
Free cash flow after growth and before interest 53.2 (22.2) (283.1) 295.4 (0.8) 176.2 356.1 168.3
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Changes in net debt R$ million
Net debt was reduced by R$8.3 million in 9M13, even after theCompany’s share buybacks in the amount of R$ 36.8 million.
- 1,222.9
(72.2)
Financial expenses
(51.0)
Interest on own capital and dividends
Net debt 09/30/2013
FCF168.3
-1,231.2
Net debt12/31/2012
FCF after financial expenses
96.1
(36.8)
Company’s share buybacks
24.6 231.3 170.6
641.3 511.0
221.0 247.0 100.0 100.0
2013 2014 2015 2016 2017 2018 2019 2020 2021
54.6 270.3 209.6
592.3 462.0
146.0 172.0
2013 2014 2015 2016 2017 2018 2019 2020 2021
As of September 30,2013:
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Debt maturity profile (principal)R$ million
After 7th debenture issuance:
Cash
791.0
534.5
Cash
1,131.0
426.5
The Company continues presenting a strong cash position and comfortable debt maturity profile.
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Debt - ratios
Net debt vs. Fleet value
BALANCE AT THE END OF PERIOD
2006(*) 2007(*) 2008(*) 2009(*) 2010(*) 2011 2012Until
Sep/13
Net debt / Fleet value 36% 51% 72% 57% 52% 51% 48% 44%
Net debt / EBITDA (**) 1.4x 1.9x 2.5x 2.3x 2.0x 1.7x 1.4x 1,3x
Net debt / Equity 0.7x 1.3x 2.0x 1.5x 1.4x 1.2x 0.9x 0.8x
EBITDA / Net financial expenses 4.8x 5.4x 3.8x 4.2x 5.0x 4.6x 6.3x 9.4x
(*) From 2006 to 2010, ratios based on USGAAP financial statements.(**) Annualized
Net debt Fleet value
Comfortable debt ratios.
440.4 765.1
1,254.5 1,078.6
1,281.1 1,363.4 1,231.2 1,222.9 1,247.7 1,492.9
1,752.6 1,907.8
2,446.7 2,681.7 2,547.6 2,759.7
2006 2007 2008 2009 2010 2011 2012 9M13
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Spread (ROIC minus cost of debt after taxes)
10.9% 8.4% 8.8% 7.6% 7.3% 8.6% 6.3% 5.3%
18.7%21.3%
17.0%
11.5%
16.9% 17.1% 16.1% 16.2%
2006 2007 2008 2009 2010 2011 2012 9M13
7.8p.p. 12.9p.p.8.2p.p.
4.0p.p.9.6p.p. 8.5p.p.
10.9p.p.9.8p.p.
Adding value to shareholders is the Company’s main goal.
ROIC Cost of debt after taxes
Annualized
Financial crisis effect
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Disclaimer
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 summary form and does not purport tobe 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 representationor 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, asthe 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 resultsof 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 inthe 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, 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.
www.localiza.com/ir
E-mail: [email protected]
Tel: +55 31 3247-7024
