Institucional Presentation - May/16

54
May, 2016 The 25 th most valuable brand in Brazil. Source:

Transcript of Institucional Presentation - May/16

Page 1: Institucional Presentation - May/16

May, 2016

The 25th most valuable brand in Brazil .

Source:

Page 2: Institucional Presentation - May/16

1. Company overview

2. Main business divisions

� Car Rental

� Fleet Rental

� Seminovos

3. Financials

Appendix: Earnings release 1Q16

Agenda

2

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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

04/30/2016 – Market cap of about US$1.9 bi with ADTV of US$9.1 million

1973 1982 1983 2004 2005 2015

3

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Company: integrated business platform

Synergies:

bargaining power

cost reduction

cross selling

� 14,037 cars� 172 locations in Brazil� 70 locations in South America� 32 employees

� 47.3% sold to final consumer� 78 stores� 48 cities� 995 employees

� 68,901 cars� +5.7 million clients� 323 locations� 4,719 employees

� 32,228 cars� 859 clients� 386 employees

Based on the 1Q16 4

Car Rental Fleet Rental

SeminovosFranchising

This integrated business platform gives Localiza flexibility and superior performance.

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� 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

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Net car salerevenue R$28.51 year cycle

Car Rental Division - 2015 Financial CyclePer car

R$31.6Average car price(past 2 years)

1 2 3 4 5 6 7 8 9 10 11 12Expenses, interest and tax

Revenue

Total1 year

R$ % R$ % R$Net revenues 20.1 100.0% 31.9 100.0% 52.1Costs - fixed and variable (9.9) -49.1% (9.9)SG&A (3.8) -19.1% (3.4) -10.7% (7.2)Net revenues of car sold 28.5 89.3% 28.5Book value of car sold (26.6) -83.3% (26.6)EBITDA 6.4 31.8% 1.9 6.1% 8.3Cars Depreciation (0.6) -1.9% (0.6)Others depreciation (0.4) -1.8% (0.1) -0.4% (0.5)Financial expenses (2.2) -6.9% (2.2)Taxes (1.8) -9.0% 0.3 1.0% (1.5)Net Income (Loss) 4.2 21.0% (0.7) -2.3% 3.5

NOPAT 5.0ROIC 16.0%Cost of debt after taxes 9.5%

Car Rental SeminovosPer car soldPer operating car

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Net car salerevenue R$28.4

3 year cycle

Fleet Rental Division - 2015 Financial Cycle Per car

1 2 3 4 5 6 31 32 33 34 35 36Expenses, interest and tax

Revenue

R$39.0Average car price(past 3 years)

Total3 years

R$ % Seminovos % R$Net revenues 57.6 100.0% 31.2 100.0% 88.8Costs - fixed and variable (17.9) -31.1% (17.9)SG&A (3.9) -6.7% (2.8) -9.1% (6.7)Net revenues of car sold 28.4 90.9% 28.4Book value of car sold (24.3) -77.9% (24.3)EBITDA 35.8 62.2% 4.1 13.0% 39.9Cars Depreciation (11.8) -37.8% (11.8)Others depreciation (0.2) -0.4% (0.2) -0.6% (0.4)Financial expenses (6.0) -19.4% (6.0)Taxes (10.7) -18.6% 4.2 13.4% (6.5)Net Income (Loss) 24.9 43.3% (9.8) -31.4% 15.2

Net Income (Loss) - per year 8.3 43.3% (3.3) -31.4% 5.1

NOPAT 6.5ROIC (it considers the effect of the average book v alue of the car in its useful life) 16.6%Cost of debt after taxes 9.5%

Per operating carFleet Rental Seminovos

Per car sold

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2015 Consolidated breakdownR$ million

R$ 150 16%

R$ 378 40%

R$ 407 44% R$ 297

40%

R$ 438 60%

Net RevenuesR$3,928

EBITDAR$935

R$ 2,045 52%

R$ 608 16% R$ 1,275

32%

EBIT*R$735

*Seminovos results recorded in the Car Rental and Fleet Rental Divisions

Company’s profitability comes from

Car Rental and Fleet Rental Divisions.

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Raisingmoney Buying

cars

Renting Cars SellingCars

Cash to renew the fleet or pay debt

$

Profitability comes from rental divisions

Competitive advantages

$

9

42 years of experience in managing assets and gener ating value.

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Competitive advantages: raising money

Global Scale

National Scale

As of May, 2016.

BB+ FitchBa2 Moody’sBB+ S&P

Baa1 Moody ´sBBB+ S&P

B1 Moody ´sB+ S&P

Ba3 Moody ´sBB- S&PBB- Fitch

brAA+ S&P Aa1.br Moody’sAAA(bra) Fitch

brA+ S&PA+ (bra) Fitch

brA S&P A- (bra) Fitch

brAA- S&P AA- (bra) Fitch

A(bra) Fitch

10

Investment grade: lower spreads and longer tenors

Source: Bloomberg and companies website

Raisingmoney Buying

cars

Renting Cars SellingCars

$

Localiza raises money with better conditions then i ts competitors.

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Competitive advantages: buying cars

Number of cars purchased – 2015

* Includes Franchising.

68,319 37,444

19,357 13,068

Localiza Movida Unidas Locamerica

*

Source: each company website and ANFAVEA

Localiza’s share in the internal sales of themajor OEMs - 2015

4.2%

Raisingmoney Buying

cars

Renting Cars SellingCars

$

Localiza buys cars with better conditions due to th e volume of purchases.

7,600

75,919

Purchase antecipation of Dec/14

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Raisingmoney Buying

cars

Renting Cars SellingCars

361

13467 94

Localiza Unidas Hertz Movida

12

Competitive advantages: renting cars

Brand Brazilian distribution

# of

bra

nche

s#

of c

ities

Source: Each company website on 04/28/2016, 1Q16 Ea rnings Release .

467

100

204

163

Localiza Competitors

495

$

The Company is present in 180 cities where the othe r largest networks do not operate.

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Raisingmoney Buying

cars

Renting Cars SellingCars

13

Localiza Express®

Self-service that provides fast

service, reducing queues and

scalability to service.

Localiza Way®New platform to offer

value-added services

Mobile ChecklistMore quality, control and agility

in providing cars for rental

Fast CheckoutMore operational productivity

and agility in returning the cars

after rental

Connected ShuttleOptimization 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 premi um service.

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“In a scale from 0 (zero) to 10, how much would you recommend Localiza to a friend orcolleague?”

Competitive advantages: Client satisfaction

80.7%

*Range of Net Promoter Scores (NPS) Across Industries in USA

*Source:Temkin Group Q3 2015 Consumer benchmark Survey

% of Promoters % de Detractors

Score between 9 and 10 = 85.6% Score between 0 and 6 = 4.6%

YTD December/2015

Satisfaction Index: NPS – Net Promoter Score

Localiza: 1st place in the category Car rental.

14

Raisingmoney Buying

cars

Renting Cars SellingCars

$

Low High

NPS Avg. NPS

As of December, 2015.

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Integrated technology solution that

increases competitive intelligence

and leverages productivity gains.

CONNECTED FLEETIntegrated mobile solution to

fleet rental services for drivers

and contract manager.

MOBILE SOLUTIONRapid diagnosis and friendly

vision of the fleet by the

customer.

ONLINE FLEET RENTAL

Competitive advantages: Innovation

Raisingmoney Buying

cars

Renting Cars SellingCars

$

Differentiated offer with higher added value to the customer.

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Raisingmoney Buying

cars

Renting Cars SellingCars

16

Sales to final consumer

Competitive advantages: selling cars

Buffer: additional fleet during peaks of demand

Information/mobility: Ipad for Salesmen

• Support sale

• Access to the database

• Customer registration

• Agility in car sales

$

Sales center: 20k incoming calls per month with 55% visits to stores scheduled.

Distribution channel: 200 cities and 1,900 customer s.

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ROIC versus cost of debt after taxes

The Company presented a positive spread of 5.7p.p.despite the adverse scenario and a significant incr ease in the interest rate

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%15.9%

2010 2011 2012 2013 2014 2015 1Q16

ROIC

Cost of debt

after taxes

9.6p.p. 8.5p.p. 9.5p.p.9.8p.p. 10.5p.p.

7.5p.p.5.7p.p.

2010 to 2014 ROIC considered income tax rate of 30.0%2015 and 1Q16 ROIC considered income tax rate of 24.5%

Annualized

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Localiza vs. playersProfitability

Source: Companies’ Financial Statements18

ROIC 2015

ROE 2015

FleetRAC+Fleet Rental RAC+Fleet Fleet Rental Fleet Rental RAC+F leet Rental

124,695 43,342 31,184 28,813 53,439

ReferenceROIC = NOPAT (considering the effective tax rate) / (Average net debt + average equity)ROE = Net income / Equity at the beginning of the y ear

17.0%

9.3% 10.5%

6.5%8.4%

Localiza Unidas Locamerica Ouro Verde JSL Consolidada

24.3%

6.2% 6.0% 5.0% 4.5%

Localiza Unidas Locamerica Ouro Verde JSL Consolidada

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Net Debt / EBITDA - 2015

Net Debt / Equity - 2015

Source: Companies’ Financial Statements.For Unidas and JSL Confirming is included in net deb t.

Localiza vs. playersDebt ratios

1.7x 2.5x 2.9x

3.8x 4.3x

Localiza Unidas Locamerica Ouro Verde JSL

Consolidated

0.8x 1.1x 2.0x

9.7x

4.6x

Localiza Unidas Locamerica Ouro Verde JSL

Consolidated

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1. Company overview

2. Main business divisions

� Car Rental

� Fleet Rental

� Seminovos

3. Financials

Appendix: Earnings release 1Q16

Agenda

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Car Rental overview

Compact cars 46.1%Others 53.9%

2015 Fleet composition

76,755 cars

Corporate fleet size

65,08670,717 77,573 76,755

68,901

2012 2013 2014 2015 1Q16

Car rental distribution (Brazil)

474 479 476 494 495

2012 2013 2014 2015 1Q16

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Drivers

Source: BCB and Localiza rates

151180 200

240260300

350 380 415465

510 545622

678724

788

51%

38% 37% 35%

31%27%

22% 20% 18% 16% 15% 15% 13% 13%12% 11%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Monthly minimum salary (R$) Daily rental price over minimum salary (%)

Car rental affordability

Source: IPEADATA and Localiza’s loyalty program.

6 million

84 millionAdult population(age > 20 years)

Class A+B+C

15 millionAdult population(age > 20 years)

Class A+B

Increasing affordability and low penetration in lei sure trips brings growth opportunities.

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Drivers

# domestic air traffic passengersIn million

Expected investment 2015-2018(in R$ billion)

Source: Sectorial Analysis Committee / BNDES: 2015-2018 Sector Perspective and panorama, as of December, 2014.

Source: ANAC up to 2015 and IATA-Air Passenger Forecast Global Report, as of April, 2015.

The strong pipeline of investments tend to benefit the corporate segment.

Expected annual traffic growth of 4.4% from 2014 to 2034 traffic.

1,631

963

909

598

Agriculture and

services

Housing

Industry

Infrastructure

7082 89 90 96 96

2010 2011 2012 2013 2014 2015

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24Source: RAIS, each company’s website on 04/28/2016 and Localiza´s 1Q16 Earnings Release

Airport locations Off-airport locations

Car Rental Locations in Brazil

Off-airport market is still fragmented.

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Market Share – Car Rental 2015

Source: ABLA and Companies’ Financial Statements an d estimates.

Localiza’s market share is higher than the 2nd and 3rd players together.

# of companies: 7,455Fleet: 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%

50.3%

11.4%

Movida37.1k

Unidas22.6k

Others188.9k

22.4%New data basis42.8k

76.8k

7.2k

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1. Company overview

2. Main business divisions

� Car Rental

� Fleet Rental

� Seminovos

3. Financials

Appendix: Earnings release 1Q16

Agenda

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Number of clients

Fleet Rental overview

Compact cars 34.9%

Others 65.1%

2015 Fleet composition

33,948 cars

729 760 798 849 859

2012 2013 2014 2015 1Q16

End of period fleet

32,104 32,809 34,312 33,948 32,228

2012 2013 2014 2015 1Q16

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28Source: ABLA, Datamonitor and Localiza

Rented fleet penetration

Corporate fleet:4,000,000*

Rented fleet:440,737

33,948

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.

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Market Share – Fleet Rental 2015

29

Source: ABLA, Companies’ Financial Statements and e stimates

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: 7,455Fleet: 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%

313.0k

65.5%

37.1k

7.8%

Movida

Unidas

Others

Ouro Verde

Locamerica

New data basis

7.5%

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1. Company overview

2. Main business divisions

� Car Rental

� Fleet Rental

� Seminovos

3. Financials

Appendix: Earnings release 1Q16

Agenda

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# of points of sale

Car sales – operating data

5566 73 74 75 77 78

2010 2011 2012 2013 2014 2015 1Q16

47,285 50,77256,664

62,64170,621

64,305

16,348

2010 2011 2012 2013 2014 2015 1Q16

# Number of cars sold (quantity)

Efficiency gain on car sales.

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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 84

71 69

61

55 51 49

43 43 43 41

-

10

20

30

40

50

60

70

80

90

-100

-

100

200

300

400

500

600

700

800

900

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Minimum wage (R$) Minimum wages to buy a new car

7.97.7

7.36.9

6.5

6.05.7

5.35.0 4.9 4.8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

# of inhabitants per car – Brazil 2005 - 2015

Source: Sindipeças

Developed countries maintain a ratio between 1 - 2

cars per inhabitant.

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8.4 8.9 9.0 9.410.1 9.9

3.3 3.5 3.6 3.6 3.32.5

33

2.5x2.5x

2010 2011 2012 2013 2014 2015

2.6x

Brazilian car market: new x used car market and affordability

New cars

Used cars

Source: FENABRAVE (light and commercial cars)

2.6x 3.1x 4.0x

In million of cars

Total market of 12.4 million cars.

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2014 Up to 2 years442,257

2015 Brand new2,476,9042015 Used cars

9,987,711

0.6% 2.6% 16.0%

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)• +78 (Unidas, Movida,

Locamerica)• 71 (Fenauto)

Main players

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1. Company overview

2. Main business divisions

� Car Rental

� Fleet Rental

� Seminovos

3. Financials

Appendix: Earnings release 1Q16

Agenda

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Highlights

Net Revenues - Car Rental Division (R$ million) Net Revenues - Fleet Rental Division (R$ million)

310.1 339.7

1Q15 1Q16

148.9 158.4

1Q15 1Q16

186.3 202.5

1Q15 1Q16

100.3 103.0

1Q15 1Q16

Consolidated EBIT (R$ million) Consolidated Net Income (R$ million)

Utilization rate evolution – Car Rental# Rented cars – Car Rental

66.3%

69.0%70.7% 71.1%

73.4%

1Q15 2Q15 3Q15 4Q15 1Q16

43,025 42,250 42,709

45,277 47,139

1Q15 2Q15 3Q15 4Q15 1Q16

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Net Revenues (R$ million)

# Daily Rentals (thousands)

Car Rental

802.2 980.7 1,093.7 1,163.5 1,284.4 1,258.0

310.1 339.7

2010 2011 2012 2013 2014 2015 1Q15 1Q16

10,734 12,794 13,749 14,242 15,416 15,566

3,812 4,242

2010 2011 2012 2013 2014 2015 1Q15 1Q16

Volume growth of 11.3% even in an adverse macro sce nario

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Average daily rental evolution and utilization rate Car Rental

38

Competitive and commercial intelligence to stimulat e demand and increase utilization rate

78.0779.68

82.36

84.85

87.71

84.56 85.2683.61

2010 2011 2012 2013 2014 2015 1Q15 1Q16

Average daily rental – In R$

69.1%

68.9%

70.8%

66.8%

69.9%

69.3%66.3%

73.4%

2010 2011 2012 2013 2014 2015 1Q15 1Q16

Utilization rate

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Car Rental network evolution

# of car rental locations (Brazil and abroad)

3 new corporate locations were added to the network

234 247 272 286 304 320 323

181 202 202 193 172 174 17261 47 50 63 64 70 70476 496 524 542 540 564 565

2010 2011 2012 2013 2014 2015 1Q16

+3

Localiza´s branches - Brazil Franchisees´ branches - Brazil Fr anchisses´ branches - abroad

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361.1455.0

535.7 575.9 571.9 608.5

148.9 158.4

2010 2011 2012 2013 2014 2015 1Q15 1Q16

8,0449,603 10,601 10,844 10,363 10,901

2,746 2,746

2010 2011 2012 2013 2014 2015 1Q15 1Q16

40

Net Revenues (R$ million)

# Daily Rentals (thousands)

Fleet Rental

0.0%

6.4% increase in net revenues due to higher average renta l rate

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Purchases (includes accessories) Used c ar sales net revenues

Cars purchased Cars sold

41

Net investmentFleet Expansion* (quantity)

Net Investment in Fleet (R$ million)

9,178 2,0117,103

18,649

308.4 98.8588.5 278.9

* It does not include theft / crashed cars.

9,183

465.0

(273)

233.5

65,934 59,950 58,655

69,744 79,804

64,032

10,640 6,989

47,285 50,772 56,644

62,641 70,621

64,305

17,449 16,348

2010 2011 2012 2013 2014 2015 1Q15 1Q16

1,910.4 1,776.5 1,618.8

2,026.2

2,483.2 2,278.4

349.0 255.2

1,321.9 1,468.1 1,520.0 1,747.3

2,018.2 2,044.9

543.9 544.6

2010 2011 2012 2013 2014 2015 1Q15 1Q16

(6,809) (9,359)

(194.9) (289.4)

Fleet was adjusted after the summer vacation peak of demand

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End of period fleetQuantity

61,445 64,688 65,086 70,717 77,573 76,755 71,343 68,901

26,615 31,629 32,104 32,809 34,312 33,948 33,500 32,228 10.652 12,958 14,545 14,233 13,339 13,992 13,272 14,037 98,712

109,275 111,735 117,759 125,224 124,695 118,115 115,166

2010 2011 2012 2013 2014 2015 1Q15 1Q16

Car Rental Fleet Rental Franchising

RAC Productivity:• Rented fleet increased 9.6%

• Fleet reduction of 3.1%

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1,175.3 1,450.0 1,646.7 1,758.9 1,874.0 1,883.1 463.1 502.4

1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,044.9

543.9 544.6

2,497.2 2,918.1 3,166.7

3,506.2 3,892.2 3,928.0

1,007.0 1,047.0

2010 2011 2012 2013 2014 2015 1Q15 1Q16

43

Consolidated net revenuesR$ million

Rental Used car sales

Good level of sales with 6.8% increase in average car sales price in 1Q16 x 1Q15

17,449

16,071 15,738 15,047

16,348

1Q15 2Q15 3Q15 4Q15 1Q16

# Cars sold

31.22 31.1031.98

33.23 33.34

1Q15 2Q15 3Q15 4Q15 1Q16

Average price of cars sold

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Consolidated EBITDA R$ million

649.5821.3 875.6 916.5 969.8 934.8

245.0 258.4

2010 2011 2012 2013 2014 2015 1Q15 1Q16

(*)From 2012 on, accessories and freight of new car s have been accounted directly in the cost line, im pacting EBITDA but reducing depreciation costs.(**) It considers the new appropriation criteria of the overhead, which is also appropriated to Semino vos.

Divisions 2010* 2011* 2012 2013 2014** 2015 1Q15 1Q16

Car Rental 45.3% 46.9% 40.9% 36.8% 38.7% 31.8% 34.4% 34.5%

Fleet Rental 68.0% 68.6% 66.4% 65.5% 60.0% 62.2% 59.3% 64.5%

Rental Consolidated 52.3% 53.8% 49.3% 46.5% 45.3% 41.7% 42. 5% 44.1%

Used Car Sales 2.6% 2.8% 4.2% 5.7% 6.0% 7.3% 8.8% 6.8%

EBITDA increased R$13.4 million in the 1Q16 x 1Q15

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Average depreciation per car (in R$)

Car Rental

Higher depreciation reflects the expectation of low er new car prices increases

1,536 1,684 1,896 1,452

1,270

622 836

2010 2011 2012 2013 2014 2015 1Q16

2,076

IPI Effect

3,972

*

* Annualized

3,510 4,133

4,311

4,592 4,202 3,935 4,175

2010 2011 2012 2013 2014 2015 1Q16

1.097

Efeito IPI

5.408*

* Annualized

Fleet Rental

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*2012 EBIT was impacted by R$144.5 million of additional dep reciation related to IPI (sales tax) reduction.

Consolidated EBIT R$ million

Divisions 2010 2011 2012 2013 2014 2015 1Q15 1Q16

Car Rental 38.5% 38.8% 23.7% 32.8% 36.2% 34.3% 38.7% 35.6%

Fleet Rental 46.2% 45.6% 36.9% 45.1% 44.3% 48.9% 43.3% 50.3%

Consolidated 41.0% 41.1% 28.3% 37.1% 38.8% 39.1% 40.2% 40.3%

EBIT grew R$16.2 million in 1Q16 x 1Q15

482.1595.7

465.8

652.1726.7 735.5

186.3 202.5

2010 2011 2012 2013 2014 2015 1Q15 1Q16

610.3*

Page 47: Institucional Presentation - May/16

250.5 291.6

240.9

384.3 410.6 402.4

100.3 103.0

2010 2011 2012 2013 2014 2015 1Q15 1Q16

47

* Pro forma 2012 net income excluding additional depreciation related to the IPI tax reduction, net of income tax.

Consolidated net incomeR$ million

336.3*

Reconciliation EBITDA x Net income 2010 2011 2012 2013 2 014 2015 1Q15 1Q16 Var. R$ Var. %

Consolidated EBITDA 649.5 821.3 875.6 916.5 969.8 934.8 245.0 258.4 13.4 5.5%

Cars depreciation (146.3) (201.5) (232.4) (229.0) (207.4) (163.6) (49.9) (46.3) 3.6 -7.2%

Cars additional depreciation – IPI effect - - (144.5) - - - - - - -

Other property depreciation and amortization (21.1) ( 24.1) (32.9) (35.4) (35.7) (35.7) (8.8) (9.6) (0.8) 9.1%

Financial expenses, net (130.1) (179.0) (138.7) (110.6) (151.1) (202.7) (48.0) (67.7) (19.7) 41.0%

Income tax and social contribution (101.5) (125.1) (13 5.3) (157.2) (165.0) (130.4) (38.0) (31.8) 6.2 -16.3%

Income tax and social contribution – IPI effect - - 49. 1 - - - - - - -

Net income of the period 250.5 291.6 240.9 384.3 410.6 402.4 100.3 103.0 2.7 2.7%

Net income increased 2.7% despite the R$19.7 millio n increase in financial expenses

Page 48: Institucional Presentation - May/16

48

Free cash flow - FCFFree cash flow - R$ million 2010 2011 2012 2013 2014 2015 1Q16

Ope

ratio

nsEBITDA 649.5 821.3 875.6 916.5 969.8 934.8 258.4

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) (544.6)

Depreciated cost of cars sold (*) 1,203.2 1,328.6 1,360.2 1,543.8 1,777.0 1,769.1 477.3

(-) Income tax and social contribution (57.8) (83.0) (100.9) (108.5) (113.1) (110.7) (28.8)

Change in working capital 54.5 (83.9) 37.1 2.9 (27.1) (30.0) (8.8)

Cash generated by rental operations 527.5 514.9 652.0 607.4 588.4 518.3 153.5

Cap

ex -

Ren

ewal

s

Used car sale revenue, net from taxes 1,321.9 1,468.1 1,520.0 1,747.3 2,018.2 2,036.3 232.8

Fleet renewal investment (1,370.1) (1,504.5) (1,563.3) (1,819.7) (2,197.7) (2,278.4) (255.2)

Net investment for fleet renewal (48.2) (36.4) (43.3) (72.4) (179.5) (242.1) (22.4)

Fleet renewal – quantity 47,285 50,772 56,644 62,641 70,621 64,032 6,989

Investment, other property and intangibles investm ents (50.6) (59.9) (77.8) (47.5) (46.3) (29.7) (5.0)

Free cash flow from operations, net of fleet renewa l capex 428.7 418.6 530.9 487.5 362.6 246.5 126.1

Cap

ex -

Gro

wth Fleet growth (investment) (540.3) (272.0) (55.5) (209.4) (286.8) 8.6 311.8

Change in accounts payable to car suppliers 111.3 32.7 (116.9) 89.7 334.4 (121.2) (255.6)

Fleet growth (429.0) (239.3) (172.4) (119.7) 47.6 (112.6) 56.2

Fleet increase / (reduction) – quantity 18,649 9,178 2,011 7,103 9,183 (273) (9,359)

Free cash flow after growth, and before interest an d new HQ (0.3) 179.3 358.5 367.8 410.2 133.9 182.3

Cap

ex –

HQ

Investment in the construction of the new HQ (0.5) (3.1) (2.4) (6.5) (55.7) (123.3) (3.6)

Marketable securities – new HQ - - - - (92.6) 92.6 -

New headquarters construction (0.5) (3.1) (2.4) (6.5) (148.3) (30.7) (3.6)

Free cash flow before interest (0.8) 176.2 356.1 361.3 261.9 103.2 178.7

Free cash flow

(*) without the technical discounts reduction up to 2010

Page 49: Institucional Presentation - May/16

49

(1,510.8)

Net debt03/31/2016

Free cash flowbefore growth, interest and

headquarters

126.1

(1,588.6)

Net debt12/31/2015

(33.2)Dividends

(3.6)New

headquarters construction

(67.7)Interest

Changes in net debt R$ million

Reduction of R$77.8 million in net debt due to cash gener ation

Fleetreduction

311.8

(255.6)Change in accounts payable to

cars suppliers

+58.4 +56.2 (36.8)

Page 50: Institucional Presentation - May/16

50

Debt maturity profile (principal)R$ million

Comfortable debt profile and strong cash position

As of March 31, 2016

264.1 468.6

252.6 619.5

770.0 672.5

2016 2017 2018 2019 2020 2021Cash

1,610.8

2016

1,604.8

Page 51: Institucional Presentation - May/16

51

Debt - ratiosNet debt vs. Fleet value

BALANCE AT THE END OF PERIOD 2010(*) 2011 2012 2013 2014 2015 1Q16

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 1.5x

Net debt / Equity 1.4x 1.2x 0.9x 1.0x 0.8x 0.8x 0.8x

EBITDA / Net financial expenses 5.0x 4.6x 6.3x 8.3x 6.4x 4.6x 3.8x

(*) 2010 ratios based on USGAAP financial statemen ts(**) Annualized

Net debt Fleet value

Comfortable debt ratios

1,281.1 1,363.4 1,231.2 1,332.8 1,322.3 1,588.6 1,510.8

2,446.7 2,681.7 2,547.6 2,797.9 3,296.3 3,642.7 3,372.2

2010 2011 2012 2013 2014 2015 1Q16

Page 52: Institucional Presentation - May/16

52

ROIC versus cost of debt after taxes

The Company presented a positive spread of 5.7p.p.despite the adverse scenario and a significant incr ease in the interest rate

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%15.9%

2010 2011 2012 2013 2014 2015 1Q16

ROIC

Cost of debt

after taxes

9.6p.p. 8.5p.p. 9.5p.p.9.8p.p. 10.5p.p.

7.5p.p.5.7p.p.

2010 to 2014 ROIC considered income tax rate of 30.0%2015 and 1Q16 ROIC considered income tax rate of 24.5%

Annualized

Page 53: Institucional Presentation - May/16

53

Localiza Level I ADR

�Ticker Symbol: LZRFY

�CUSIP: 53956W300

�ISIN: US53956W3007

�Ratio: 1 Common Share : 1 ADR

�Exchange: OTC

�Depositary bank: Deutsche Bank Trust Company Americ as

�ADR broker helpline: +1 212 250 9100 (New York)

+44 207 547 6500 (London)

�E-mail: [email protected]

�ADR website: www.adr.db.com

�Depositary bank’s local custodian: Banco Bradesco S/ A, Brazil

Page 54: Institucional Presentation - May/16

54

Disclaimer

Website: www.localiza.com/ir E-mail: [email protected] m Phone: 55 31 3247-7024

Roberto MendesCFO and IR

Nora LanariHead of IR

Eugênio MattarCEO

The material presented is a presentation of general backgro und information about LOCALIZA as of the date of the presenta tion. 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. No represen tation or warranty, express orimplied, is made concerning, and no reliance should be place d on, the accuracy, fairness, or completeness of the informa tion presented herein.

This presentation contains statements that are forward-lo oking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of theSecurities Exchange Act of 1934. Such forward-looking stat ements 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 fac tors relating to the operations andbusiness environments of LOCALIZA and its subsidiaries tha t may cause the actual results of the companies to be material ly different from any future resultsexpressed or implied in such forward-looking statements.

Although LOCALIZA believes that the expectations and assum ptions reflected in the forward-looking statements are rea sonable based on informationcurrently available to LOCALIZA’s management, LOCALIZA ca nnot guarantee future results or events. LOCALIZA expressl y disclaims a duty to update any ofthe forward-looking statement.

Securities may not be offered or sold in the United States unl ess they are registered or exempt from registration under th e 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 anythingcontained herein shall form the basis of any contract or commitment whatsoever.

Maria Carolina CostaIR Manager

Mariana CampolinaIR Manager