5. Integrated business platform
41,091 cars 22,047 cars
1.8 million clients 593 clients
206 locations 225 employees
2,709 employees
Synergies:
cost reduction
cross selling
bargaining power
8,358 cars 23,184 cars sold
225 locations in 9 countries 79% sold to final consumer
160 locations in Brazil 42 stores
65 locations in South America 446 employees
16 employees
This integrated business platform gives Localiza flexibility and superior performance
As of 09/30/2009 5
6. Strategy by division
Increase market leadership maintaining high return
Core Businesses
Add value to the brand by expanding the network in Brazil
and South America
Create value taking advantage of the integrated business
platform synergies
Support
Add value to the businesses, reducing depreciation as a
competitive advantage
6
7. Breakdown
Rentals revenues
Revenues EBITDA Net Income
34%
46% 49%
54% 51%
66%
Car rental Fleet rental
Consolidated
Revenues EBITDA Net income
Car rental 34% 51% 55%
Fleet rental 17% 45% 41%
Used car sales 48% 3% *
Franchising 1% 1% 4%
Total 100% 100% 100%
* Used cars losses are allocated in the rental divisions
Date: 09/30/2009
7
8. Ownership breakdown
Founders
13.1% 8.6% 12.8% 8.6% 56.9%
Salim Eugenio Antonio Flavio
Claudio Resende Resende Free-Float
Mattar Mattar
100% 100% 100% 100% 100%
Localiza Rental
Car Rental International
8
9. Company’s structure
BOARD OF DIRECTORS
CEO
Car
Acquisition
Legal
COO
Human Administration
Financial Resources IT
Localiza has a very lean and efficient structure
The supporting areas assist all four businesses’ divisions.
9
10. Agenda
• Company
• Drivers of growth
• Competitive advantages
• Growth with profitability
• 3Q09 and 9M09 Financials
10
11. Growth opportunities
GDP elasticity
Rental divisions 5.9x GDP
Sector: 2.6x GDP
Source: Localiza, ABLA and Central Bank
Consolidation Air traffic
US market: 4 players 95%
BR market: 4 players 40% 8.7% CAGR (2004/2008)
1,893 players 60% Growth forecast between 2% - 5%
Source: Auto Rental News and estimates Source: Infraero, Gol and Tam
Fleet outsourcing Credit cards
Corporate target fleet of 500,000 cars 23.7% CAGR (2004/2008)
Approximately 25% rented 44 mm holders (estimated)
Replacement
Source: Company estimates Source: Abecs and estimates
Around 10 million cars insured
Accident frequency of 15% p.a.
Source: Susep, Denatran and estimates
11
12. Growth opportunities: GDP
Rental revenues accumulated growth rate – rentals
Localiza
5.9x
Sector
2.6x
GDP
2005 2006 2007 2008
GDP (real) Localiza (real) Sector (real)
Localiza’s revenues have been growing 5.9x GDP.
Source: Central Bank, Localiza and ABLA
12
13. Growth opportunities: consolidation
Brazilian car rental agencies
Airport locations Off-airport locations
Localiza
Others Localiza Unidas
277
36 89 72
Avis
63
Hertz
29 Hertz
54
Avis Others
29 Unidas 1889
30
Off-airport market is fragmented among almost 2,000 small local car rental companies
Source: Each company website as of September 30th , 2009
13
14. Consistent market share evolution
38.0%
38.0% 29.4%
33.0%
25.8%
22.4%
2004 2005 2006 2007 2008
Strategy: increase market leadership maintaining high return
Source: ABLA, based on revenues
14
15. Consistent market share evolution
14.0%
14.0% 11.4%
13.0% 13.2%
10.2%
2004 2005 2006 2007 2008
Strategy: create value taking advantage of the integrated business platform synergies
Source: ABLA, based on revenues
15
16. Agenda
• Company
• Drivers of growth
• Competitive advantages
• Growth with profitability
• 3Q09 and 9M09 Financials
16
17. Competitive advantages
Scale
Gains of Know-how Higher
scale Strong brand
Strong values
competitiveness
Integrated platform
Geographical footprint
High corporate governance standards
Used car sales network
Management model
Lower depreciation
Stable Management
Owners involved
Facilities
Rating
Market share
increase
Localiza reached the virtuous cycle
17
18. Competitive advantages: strong values
Mission Mission
To contribute to the success To contribute to the success
of our customers’ business and leisure, of our customers’ business
renting cars with efficiency and friendliness. through an efficient solution in fleet rental.
Principles:
Ethical behavior
Zeal for the image
Search for excellence
Customer valorization
Add value to the company
Recognition of employee performance
Mission Mission
To contribute to the success of our franchisees, To contribute for the success of our customers,
transferring know-how with efficiency and Selling quality pre-owned cars with transparency
promoting solid relationship. and friendliness.
18
19. Competitive advantages: owners involved in the business
BOARD OF DIRECTORS
CEO Salim Mattar
Car
Acquisition
Legal
COO Eugênio Mattar
Human Administration
Financial Resources IT
The succession process is already planned.
19
20. Competitive advantages: stable management
BOARD OF DIRECTORS
CEO Salim Mattar - 36y
Car
Acquisition
Legal
COO Eugênio Mattar – 36y
Human Administration
Financial Resources IT
Gina Rafael – 28y
Aristides
Roberto Mendes – 24y
Newton – 26y
Helvia Barcelos – 22y
Daltro Leite – 24y
Marco Antônio
Guimarães – 19y
20
21. Competitive advantages: know-how
36 years
Raising Buying Renting Selling
money cars cars cars
Since its beginning, Localiza always had strong focus in the business
21
22. Competitive advantages: management model
Business
Values Planning Execution
Vision Stock
Options
Mission Profit
sharing
Objectives Variable
Mgt. Action
Actions Evaluation Reward
contract plan
Management by results: execution with meritocracy
22
23. Competitive advantages: strong brand
34th
Most valuable brand
in Brazil
(Brand Analytics, May 2009)
Best
of transport sector
28 th (Exame, Biggest & Best, July 2009)
Brazilian international
company.
(Ranking FDC, August 2009)*
*by the Fundação Dom Cabral – FDC Index based on foreign sales, assets and employees over total sales, assets and employees 23
24. Competitive advantages: geographical footprint
Nationwide
Nationwide
presence
presence
Strategic
Strategic
locations
locations
International
International
footprint
footprint
431 locations in 9 countries in South America
As of 09/30/2009 24
27. Competitive advantages: used car sales network
42 stores in Brazil
Logistic of distribution
Know-how of used car market
Selling to final consumers in order to
have higher revenue per sold car
Strategy: To add value to the businesses, reducing depreciation as a competitive advantage
27
28. Competitive advantages: used car sales network
Localiza has special network to sell its cars to final consumers
28
29. Competitive advantages: used car sales network
Car sales inventory is used as a buffer for car rental division during peaks of demand
29
30. Localiza’s used car sale division share
2008 Brazilian car sales market
Localiza’s share Total market
0.3% of total car sale market 9,860,000 cars
34,281 0.5% of used car sale market 7,260,000 cars
Cars sold by Localiza in 2008
(Seminovos) 1.3% of new car sale market 2,600,000 cars
5.3% of up to 3-year old car market 644,000 cars
9M09 Brazilian car sales market
Localiza’s share Total market
23,184 0.3% of total car sale market 7,300,916 cars
Cars sold by Localiza in 9M09
0.5% of used car sale market 5,089,495 cars
(Seminovos)
1.0% of new car sale market 2,211,421 cars
4,5% of up to 3-year old car market 520,655 cars
30
31. Competitive advantages: lower depreciation
*
Average depreciation per car - Car rental division
4 ,
0 0 0 .
0
2,546.0
3 2
, 0 0 0
.
2,546.0 2,729.7
1,600.0 1,769.0
1,300.0
2 2
, 0 0 0
.
2 ,
0 0 0 .
0
939.1
492.3
1 2
, 0 0 0
.
322.9 332.9 777.0
2 0 0 0
.
180.0 -
2004 2005 2006 2007 2008 9M09
(190.0)
8
( 0 0 0
. )
1
( 8
, 0 0 0
. )
(1,390.0)
(
2 ,
0 0 0 .
0 )
(3,990.0)
2
( 8
, 0 0 0
. )
3
( 8
, 0 0 0
. ) (
4 ,
0 0 0 .
0 )
Average depreciation Used car gain (loss) + SG&A Impairment (IPI reduction)
2008 and 2009 depreciation were impacted by declining market conditions and IPI reduction.
Average per car 2004 2005 2006 2007 2008 9M09
(-)Purchase price in previous year 16,140 19,960 24,350 25,840 25,650 27,740
Selling price in the year 19,490 23,060 24,770 27,460 27,770 26,010
(-)Used car sales SG&A (7-9%) 1,750 1,800 1,810 1,810 1,940 2,260
(=)Gain (loss) 1,600 1,300 (1,390) (190) 180 (3,990)
In 2010 depreciation shall drop as we are renewing the fleet.
The depreciation is calculated using the estimated sale price in the future (mark to market), net of the sales expenses. 31
32. Competitive advantages: rating
Moody’s debt rating as of Jan/09 (Global scale) S&P corporate credit rating as of Jan/09 (Global scale)
Baa2
BBB
Ba1
Ba3 BB
B1
B3 B
B- B-
Enterprise Localiza Avis Hertz Dollar Thrifty
Enterprise Localiza Hertz Avis Dollar Thrifty
Moody’s corporate rating as of Dec/09 (Local Currency) Standard & Poors as of Dec/09 (Local Currency)
Localiza Rent a Car S.A Aa2.br Localiza Rent a Car S.A brAA-
Braskem S.A. Aa2.br Braskem S.A brAA+
Magnesita Refratários S.A. Ba2.br Magnesita Refratários S.A. brA-
Gafisa S.A. A1.br Gafisa S.A. brA-
CEMIG Aa1.br Brasil Telecom S.A brAAA
Duke Energy Aa2.br
Duke Energy brAA-
Brasil Telecom S.A Aa1.br
Lupatech brA-
Lupatech Baa3.br Tam brA
Localiza has one of the best ratings among its international peers
S&P and Moody’s reassured Localiza’s rating in 2009.
32
33. Competitive advantages: scale
Locations in Brazil Cities in Brazil
366
261
268
189
74
92 50
59
102
79
Localiza* Unidas Hertz Avis
Localiza Unidas Hertz Avis
Localiza network is larger than the second, the third and the fourth competitors combined
Source: Each company website as of September 30th , 2009
33
34. Competitive advantages: high standards of governance
Listed at “Novo Mercado” of Bovespa
Elected Excellence in Corporate Finance Company
(IBEF – Brazilian Institute of Finance Executives of Minas Gerais)
Elected “the most shareholder-friendly” company
(Institutional Investor Magazine - 2008)
Elected twice the best company in corporate governance
(Capital Aberto Magazine)
Elected twice the best CEO of a small-cap
(Institutional Investor Magazine)
34
35. Agenda
• Company
• Drivers of growth
• Competitive advantages
• Growth with profitability
• 3Q09 and 9M09 Financials
35
45. Depreciation per car
Car rental division (R$)
3,763.3
2,546.0 2,729.7
1,133.4
939.1 777.0
322.9 492.3 332.9
2004 2005 2006 2007 2008 9M08 9M09 3Q08 3Q09
annualized
Fleet rental division (R$)
6,238.6
5,083.1 4,622.9
2,981.3 2,552.1 2,670.1
2,383.3 2,395.8
1,845.5
2004 2005 2006 2007 2008 9M08 9M09 3Q08 3Q09
annualized
The launching of 2010 models impacted the 3Q09 depreciation.
45
46. Net income
Net income (R$ millions)
190.2
157.2 - 50
138.2 127.4 .4 %
106.5 - 58
90.6 .9%
78.0 50.1
20.6
2004 2005 2006 2007 2008 9M08 9M09 3Q08 3Q09
Reconciliation of EBITDA x Net Income 9M08 9M09 Var. R$ 3Q08 3Q09 Var. R$
EBITDA - Car rental and fleet rental 327.0 331.2 4.2 115.6 111.3 (4.3)
EBITDA - Used car sales 51.3 9.7 (41.6) 18.3 5.0 (13.3)
EBITDA Consolidated 378.3 340.9 (37.4) 133.9 116.3 (17.6)
Depreciation of revenue-earning vehicles (53.2) (132.2) (79.0) (22.9) (62.1) (39.2)
Other depreciation (13.3) (15.9) (2.6) (4.7) (5.3) (0.6)
Financial expenses, net (88.8) (88.3) 0.5 (36.1) (22.8) 13.3
Income tax and social contribution (65.8) (26.5) 39.3 (20.1) (5.5) 14.6
Net income 157.2 78.0 (79.2) 50.1 20.6 (29.5)
Main impacts on results: drop of Seminovos’ EBITDA and increase of fleet depreciation.
46
47. Free cash flow - FCF
FCF before growth (R$ million)
395.2
250.7 205.7
118.2
52.0 58.2
2004 2005 2006 2007 2008 9M09
Free cash flow - R$ millions 2004 2005 2006 2007 2008 9M09
EBITDA 197.5 277.9 311.3 403.5 504.1 340.9
Used car sales revenues (303.0) (448.2) (590.3) (853.2) (983.2) (625.6)
Cost of used car sales 248.7 361.2 530.4 760.0 874.5 576.9
EBITDA without used car sales revenues and costs 143.2 190.9 251.4 310.3 395.4 292.2
(-) Income tax and social contribution – current (40.9) (32.7) (42.7) (63.4) (52.8) (37.5)
Working capital variation 6.2 (24.2) (4.8) 13.3 (44.8) (32.7)
Cash provided before capex 108.5 134.0 203.9 260.2 297.8 222.0
Used car sales revenues 303.0 448.2 590.3 853.2 983.2 625.6
Capex of car – renewal (349.3) (496.0) (643.3) (839.0) (1.035.4) (625.7)
Change in amounts payable to car suppliers (capex) - - - - - 186.3
Net capex for renewal (46.3) (47.8) (53.0) 14.2 (52.2) 186.2
Capex - Property and equipment, net (10.2) (28.0) (32.7) (23.7) (39.9) (13.0)
Free cash flow before growth 52.0 58.2 118.2 250.7 205.7 395.2
Capex of car – growth (143.8) (194.0) (287.0) (221.9) (299.9) (36.0)
Change in amounts payable to car suppliers (capex) (21.9) (25.5) 222.0 (51.0) (188.9) 36.0
Free cash flow (113.7) (161.3) 53.2 (22.2) (283.1) 395.2
47
48. Net debt reconciliation
Free cash flow
395.2
Net debt Net debt
12/31/2008 -30.9 -58.5 09/30/2009
-1,254.5 -948.7
Dividends Interest
R$305.8 million net debt reduction YTD.
48
49. Debt ratios
(R$ million)
1,752.6 1,687.6
1,492.9
1,247.7 1.254,5
900,2 948.7
765.1
612,2 535,8 440.4
281,3
2004 2005 2006 2007 2008 9M09
Net debt Fleet value
BALANCE AT THE END OF THE PERIOD 2004 2005 2006 2007 2008 9M09
Net debt / Fleet value (USGAAP) 46% 60% 36% 51% 72% 56%
Net debt / EBITDA (USGAAP) 1.4x 1.9x 1.4x 1.9x 2.5x 2.1x(*)
Net debt / EBITDA (BRGAAP) 1.1x 1.5x 1.0x 1.3x 1.8x 1.5x(*)
Net debt / Equity (USGAAP) 1.0x 1.4x 0.7x 1.3x 2.0x 1.4x
(*) annualized
Indebtedness ratios have improved significantly on the 9M09 over 2008.
49
50. Debt profile
(Principal)
On 09/30/09 – R$ million
350.9
205.4 210.0 209.6
166.8
100.0
0.2
2010 2011 2012 2013 2014 2015
359.8
cash
200,0*
559.8
Proforma – R$ million
255.4 251.7
209.6
166.8
100.0
0.2 9.2
109.8
2010 2011 2012 2013 2014 2015
cash
100.0*
Pro forma considers the debentures’ early redemption and the fund raising of R$ 100 millions
209.8
* Limited amount approved by BNDES / PEC 50
51. RENT3 Performance
R E N T 3 X IB O V E SP A P e rf o rm a nc e
25
2005 2006 2007 2008 2009 200
180
20 160
140
15 120 362%
100
10 80
60 154%
5 40
20
0 0
Vo lume RENT3 RENT3 IB OVESP A
9M09: RENT3 +149% x +64% IBOV
Average daily volume (R$ millions) Average daily volume (# shares)
%
13,5 75.0 14,7
48.3
%
956,4 961,7
10,6 10,7 829,7
8,4 729,5 687,5 648,7
4,6 4% 385,4
3,1 37 0%
15
2005 2006 2007 2008 1Q09 2Q09 3Q09 2005 2006 2007 2008 1Q09 2Q09 3Q09
Record daily amount and number of shares traded in the 3Q09
51
52. Macroeconomic scenario
4.8% GDP growth in 2010 (Bacen/Focus, in 10/09/09)
5.6% real interest rate in 2010 (Bacen/Focus, in 10/09/09)
Strong infrastructure investments
Pre-salt oil exploration in the seashore
2014 Soccer World Cup in Brazil
2016 Olympic Games at Rio de Janeiro
52
53. Car market scenario
Car Market
2.000 1.997 1.925
1.991
1.818 1.808 1.754
1.675 1.707 1.671
1.600 1.624
1.494
1.200
781 852
689 721 758
624 617 668
800 559 575
469
400
-
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
Used car market New car market
The used car market is following the recovery trend of the new car market.
Source: Anfavea e Fenabrave 53
54. Managing the Company as an asset management business
Equity
Asset (cars)
Funding
Debt Profitability comes from Cash to renew fleet
rental divisions
54
56. 2010 Forecast - Car rental financial cycle
1-year cycle
Funding (PV) Net car sale revenue
$25.5 $24.0
Revenue: 19.0
1 2 3 4 5 Expenses: (11.3) 8 9 10 11 12
$25.5
Car acquisition
$28.3 Kd = $1.8
Ke = $1.0
Funding (FV)
$2.8
C ar renta l U se d ca rs T otal
Pe r o peratin g ca r P e r s o ld c ar 1 Y ear
R$ % R$ % R$
Re ven u es 19.0 100 .0% 25. 5 1 00.0 % 44. 5
Add iti o nal rev en u e 0. 5 2.0 % 0. 5
Co st (8.8 ) -46 .3% (8. 8)
SG & A (2.3 ) -12 .1% (2. 0) -7.8 % (4. 3)
Ne t car s ale rev enu e 24. 0 94.1 % 24. 0
Bo ok v alue o f ca r s ale (23. 5) -92.2 % (23. 5)
E B ITD A 7.9 41 .6% 0. 5 2.0 % 8. 4
De p recia tion (no n-ve h icle ) (0.5 ) -2 .4% (0. 5)
De p recia tion (v ehic le) (1. 1) -4.3 % (1. 1)
In teres t o n de bt (0.0 ) (1. 7) -6.7 % (1. 7)
Tax (2.2 ) -11 .7% 0. 7 2.7 % (1. 5)
N E T I NC O M E 5.2 27 .4% (1. 6) -6.3 % 3. 6
Re turn on a sse t 14.2 %
56
57. 2009 Forecast - Fleet rental financial cycle
Current Scenario
Funding (PV) Net car sale revenue
2-year cycle 26.6
33.8
Revenue: 29.8
1 2 3 4 5 Expenses: (10.3) 20 21 22 23 24
33.8
Car acquisition 40.6 Kd = $4.7
Ke = $2.1
Funding (FV)
$6.8
Fleet rental Used cars Total
Per operating car Per sold car 2 Years 1Year
R$ % R$ % R$ R$
Revenues 31,3 100,0% 28,1 100,0% 59,4 29,7
Additional revenue 0,6 2,2% 0,6 0,3
Cost (8,4) -27,0% (8,4) (4,2)
SG&A (2,0) -6,4% (2,1) -7,5% (4,1) (2,0)
Net car sale revenue 26,6 94,7% 26,6 13,3
Book value of car sale (26,0) -92,7% (26,0) (13,0)
EBITDA 20,8 66,6% 0,6 2,1% 21,4 10,7
Depreciation (non-vehicle) (0,2) -0,5% 0,0 (0,2) (0,1)
Depreciation (vehicle) (6,6) -23,5% (6,6) (3,3)
Interest on debt (4,7) -16,7% (4,7) (2,4)
Tax (6,2) -19,8% 3,2 11,4% (3,0) (1,5)
NET INCOME 14,5 46,3% (7,5) -26,7% 7,0 3,5
Return on asset 10,3%
57
