1
Localiza Rent a Car S.A.1Q10 Results - R$ millions, USGAAP
May, 2010
Goldman Sachs: “The BRICs Nifty 50: The EM and DM winners”, November, 2009
2
Localiza started its business in 1973…
…with 6 used beetles, 100% financed.
3
Timeline: growth by adjacencies
IPO
79.858 cars9 countries
449 locations
79.858 cars9 countries
449 locations
19991973 1984 1990 1997 200720062005 2008 2009
Private Equity
DLJ
US$ 100MM Bonds
R$ 350MM Debenture1st Localiza
Follow onR$ 200MM Debenture2nd Localiza
R$ 300MM Debenture3rd Localiza
R$ 400MM Debenture1st Total Fleet
1Q10
R$ 370MM Debenture4th Localiza
4
Ownership breakdown
* Includes 4.226.300 shares in Treasury
100%100%100%
EugenioMattar
AntonioClaudio Resende
FlavioResende Free-Float *
13.1% 8.6% 12.0% 8.6% 57.7%
SalimMattar
Founders
5
Company’s structure
BOARD OF DIRECTORS
CEO
COO
Car Acquisition
Legal
Financial ITHuman Resources Administration
Localiza has a very lean and efficient structure
The supporting areas assist all four businesses’ divisions.
Salim Mattar
Eugenio Mattar
The succession process is already planned.
6
Integrated business platform
This integrated business platform gives Localiza flexibility and superior performance
Synergies:bargaining powercost reductioncross selling
Revenue: 32.7%EBITDA: 52.2%Net income: 57.8%
Revenue: 16.9%EBITDA: 44.4%Net income.: 38.8%
Revenue: 0.6%EBITDA: 1.2%Net income: 3.4%
Revenue: 49.8%EBITDA: 2.3%Net income: -
9,250 cars166 locations in Brazil70 locations in South America26 employees
Capacity to sell 50,000 cars/yearAround 80% sold to final consumer48 stores617 employees
48,323 cars2.0 million clients213 locations2.844 employees
22,285 cars599 clients232 employees
7
Strategy by divisionC
ore
Bus
ines
ses
Supp
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
Add value to the businesses optimizing fleet renewal and reducing depreciation
8
Total1 year
R$ % R$ % R$Revenues 19.0 100.0% 27.6 100.0% 46.6 Cost (8.0) -42.1% (8.0) SG&A (2.8) -14.7% (2.0) -7.3% (4.8) Net car sale revenue 25.6 92.7% 25.6 Book value of car sale (25.1) -91.0% (25.1)
EBITDA 8.2 43.2% 0.5 1.7% 8.7 Depreciation (vehicle) (1.6) -5.8% (1.6) Depreciation (non-vehicle) (0.3) -1.6% (0.3) Interest on debt (1.9) -6.7% (1.9) Tax (2.4) -12.5% 0.9 3.3% (1.5)
NET INCOME 5.5 29.1% (2.1) -7.6% 3.4 ROIC 17.8%
Car rental Used car salesPer operational car Per operational car
Financial cycle – Car rental
$29.7Funding (FV)
Funding (PV)$26.6
Net car sale revenue$25.6
$26.6Car acquisition
1 2 3 4 5 8 9 10 11 12Expenses: (10.8)
1-year cycle
Revenue: 19.0
9
Total2 years
R$ % R$ % R$Revenues 32.4 100.0% 30.7 100.0% 63.1 Cost (8.7) -26.7% (8.7) SG&A (1.8) -5.6% (2.1) -7.0% (4.0) Net car sale revenue 28.5 93.0% 28.5 Book value of car sale (28.0) -91.3% (28.0)
EBITDA 21.9 67.6% 0.5 1.7% 22.4 Depreciation (vehicle) (6.5) -21.2% (6.5) Depreciation (non-vehicle) (0.4) -1.2% (0.4) Interest on debt (4.9) -16.0% (4.9) Tax (6.5) -19.9% 3.3 10.6% (3.2)
NET INCOME 15.1 46.5% (7.6) -24.8% 7.4 NET INCOME per year 7.5 46.5% (3.8) -24.8% 3.7
ROIC 16.1%
Fleet rental Used car salesPer operational car Per operational car
33.8Car acquisition
42.0Funding (FV)
Funding (PV)33.8
Net car sale revenue 28.5
1 2 3 4 5 20 21 22 23 24
2-year cycle
Expenses: (10.5)
Revenue: 32.4
Financial cycle - Fleet rental
10
Growth opportunities
ConsolidationUS market: 4 players 95% BR market: 4 players 45% 1.893 players 55%
InfrastructurePre salt – R$30bn/year until 2015 Automakers R$23bn until 2013 World Cup 2014 – R$ 71bnOlympic Games in RJ – R$ 31bn
Income / ConsumptionAir traffic 2010: 12 to 18% Credit cards: 45 mm of holdersIncome growth:
Middle class in Brazil 2009 – 98MM
OutsourcingCorporate fleet : 2MM of carsTargeted market 500.000 cars
30% rented
Source: Auto Rental News and Company’s estimates
Source: Petrobras, Santander Equity Market
Source: Gol, Tam, Abecs and Company’s estimates
Source: Company’s estimates
Strong drivers of growth
11
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
P I B Loc a l i z a S e c t or
GDP annual growth estimated for the next 5 years between 4 and 5% (Brazilian Central Bank)
Source: Central Bank, Localiza and ABLA
Growth opportunities: GDP
6.5x
Localiza
GDP
Sector
3.3x
Rental revenues accumulated growth rate – rentals
12
Hertz73
Avis 53
Unidas 74
Localiza290
Others*1951
Others49Hertz
28
Unidas28
Avis30
Localiza89
Growth opportunities: consolidation
Airport locations Off-airport locations
Brazilian car rental agencies
*Source: ABLA, 2009Source: Each company website as of March 31th , 2010
Off-airport market is an opportunity to Localiza since it is still fragmented
13
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 circle
14
37 years of experience…
Raising money
Buyingcars
Renting cars
Selling cars
Competitive advantages
…gives Localiza know-how and superior performance in all chains of the business process
15
Competitive advantages in funding
Raising money
Buyingcars
Renting cars
Selling cars
Moody’s corporate rating as of Mar/10 (Local Currency)
Localiza Rent a Car S.A Aa2.br
Braskem S.A. Aa2.br
Cyrela Brazil Realty Aa2.br
CEMIG Aa2.br
Duke Energy Aa2.br brATam
brAA-Duke EnergybrAACEMIG
brA+Cyrela Brazil RealtybrAA+Braskem S.AbrAA-Localiza Rent a Car S.A
Standard & Poors as of Mar/10 (Local Currency)
Rating
Localiza raises money with lower spreads
16
Competitive advantages in buying cars
Raising money
Buyingcars
Renting cars
Selling cars
* Includes Localiza, Total Fleet and Franchisees purchases.
Localiza2.3%
Localiza’ share in national sales ofFiat, GM, VW and Renault*
GM44%
FIAT33%
VW16%
Others1%
RENAULT6%
Purchases by brand
Localiza purchases cars with better prices and conditions
17
Competitive advantages in renting cars
Raising money
Buyingcars
Renting cars
Selling cars
Strong brand Geographical footprint Scale
102
101
71
Localiza Unidas Hertz Avis
Locations in Brazil
379274
*Source: Each company website as of March 31th , 2010
18
Competitive advantages: network footprint
Airport and off airport branches located in easy-access and intense traffic places
19
Competitive advantages in used car sales
Raising money
Buyingcars
Rentingcars
Sellingcars
Footprint
Pre owned cars
Low mileage
Pre-owned cars
Automaker warranty
Cars financed through third-party financial institutions
Unique product Selling directly to final consumer
Cash generated in used car sales is used to renew the fleet
48 stores
Selling directly to final consumer reduces depreciation
20
Competitive advantages: used car sales network
Around 80% of used cars are sold directly to final consumers
21
Competitive advantages: additional fleet
Cars available for sale are used by car rental division in peaks of demand
22
Salim Mattar - 37y
Eugênio Mattar – 37y
Roberto Mendes – 25y
Gina Rafael – 29y
Daltro Leite – 25y
Marco Antônio Guimarães – 20y
Bruno Andrade – 18y
BOARD OF DIRECTORS
CEO
COO
Car Acquisition
Legal
Financial ITHuman Resources Administration
Helvia Barcelos – 23y
Competitive advantages: stable management
23
Execution
Management by results: execution with meritocracy
Competitive advantages:management model
Mgt.contract
Action plan Evaluation Reward
Yearlybonus
StockOptions
Variable
Actions
Objectives
Mission
Business
Values
Vision
Planning
24
Results
25
1,856.31,855.71,531.7
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
Net revenues consolidated
CAGR: 16.5%
CAGR: 30.8%
GDP 3.4 0.0 0.3 4.3 1.3 2.7 1.1 5.7 2.9 3.7 4.6 5.1 -0.2
Average 1.9 4.4 -0.2
Results: growth with profitability
504.1 469.7
134.3 154.0 149.9 152.1197.8
278.1 311.4403.5
85.262.042.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
CAGR: 26.3%
CAGR: 23.9%
EBITDA consolidated
26
18.9%20.6% 20.8% 21.8% 21.4%
2005 2006 2007 2008 2009
17.9%20.5%
22.1%24.8% 24.2%
2005 2006 2007 2008 2009
Fleet - consolidated Revenues - consolidated
Source: ABLA, 2009
Fleet
30.4% 13.2%
Results: market share
27
2009Localiza
24.2%
Unidas7.7%Others
68.1%
2008Localiza
24.8%
Unidas7.1%Others
68.1%
Localiza Unidas
Rental and franchised revenues 988.6 1,057.6 308.3 325.3 376.3 84.9
2008 2009 1Q10 2009 1Q10
36,000 33,029
(32.2)(31.6)
78,664
48.8
77,880
116.3
2008
Consolidated fleet 69,460 37,982
Net income 127.4 (17.4)
Revenues
Results: consolidated market share
28
Elected twice the best company in corporate governance(Capital Aberto Magazine)
Elected “the most shareholder-friendly” company(Institutional Investor Magazine - 2008)
Corporate governance
Recognitions & Rewards
47th most valuable brand in Brazil among listed companies(Brand Analytics, May 2010)
The best in the transportation sector(Exame Magazine, July 2009)
Elected twice the best CEO of a small-cap(Institutional Investor Magazine)
29
Financials1Q10
30
1Q10 Highlights
Localiza is back to high levels of growth
R$ millions 1Q09 1Q10 Variation
Net revenue 446.1 563.9 26.4%
Rental net revenues 229.4 268.5 17.0%
EBITDA 115.4 132.1 14.5%
Net income 30.2 48.8 61.6%
Net income / Rental net revenues 13.2% 18.2% 5.0p.p.
Quantity 1Q09 1Q10 Variation
Purchased cars 387 11,486 11,099
Sold cars 7,828 10,948 3,120
End of period fleet 54,817 70,608 15,791
31
Car Rental Division
181.4151.1
607.8585.7
442.7357.2
271.3
2005 2006 2007 2008 2009 1Q09 1Q10
Net revenue (R$ million)
CAGR: 29.2% 3.8%
20.1%
3,4114,668
5,793
7,940 8,062
1,952 2,369
2005 2006 2007 2008 2009 1Q09 1Q10
CAGR: 32.5% 1.5%
21.4%
# daily rentals (thousand)
32
jan feb mar apr may jun jul aug sep oct nov dec
2005 2006 2007 2008 2009 2010
Growth resumption
# daily rentals
# daily rentals (thousand)
711.2591.6 649.2
835.4 722.1 811.3
Jan Feb Mar
2009 2010
17.5%25.0%
22.1%
Car Rental Division
33
The average age of the operating fleet is returning to pre-crisis levels…
6.39.5
6.9
2008 2009 1Q10
Average age of operational fleet (month)
12.316.6 18.7
2008 2009 1Q10
Average age of sold cars (month)
Car Rental Division
34
Depreciation per car
1,318.0
332.9
2,546.0 2,577.0
939.1492.3
2005 2006 2007 2008 2009 1Q10
Car Rental Division
…resulting in lower depreciation
-51.1%
35
3,3514,188
5,1446,437
7,099
1,780 1,890
2005 2006 2007 2008 2009 1Q09 1Q10
CAGR: 24.3%
# daily rentals (thousand)
6.2%
Fleet Rental Division
149.2190.2
228.2
276.9 313.4
75.9 84.4
2005 2006 2007 2008 2009 1Q09 1Q10
CAGR: 22.9%
11.2%
Net revenue (R$ million)
13.2%
10.3%
Revenues grew above volume, due to an increase of 4.9% in the average rental rate
36
Depreciation per car
Average depreciation per car decreased again in the 1Q10
3,254.42,981.32,383.3
4,371.75,083.1
2,395.8
2005 2006 2007 2008 2009 1Q10
Fleet Rental Division
-25.6%
37
Used car sales
Sale’s volumes are back to pre-crisis levels
18,76323,174
30,09334,281 34,519
7,828 10,948
2005 2006 2007 2008 2009 1Q09 1Q10
CAGR: 22.3%
39.9%
0.7%
# of sold cars
# of sold cars
2,521 2,471 2,8363,577 3,158
4,213
Jan Feb Mar
2009 2010
41.9%27.8% 48.6%
38
Consolidated net revenuesR$ million
Consolidated net revenues grew 26.4% in the 1Q10
876.91,145.4
1,531.71,855.7 1,856.3
446.1 563.9
2005 2006 2007 2008 2009 1Q09 1Q10
CAGR: 28.4%
26.4%
39
277.9 311.3403.5
504.1 469.7
115.4 132.1
2005 2006 2007 2008 2009 1Q09 1Q10
- 6.8%
Consolidated EBITDA marginsR$ million
Divisions 2005 2006 2007 2008 2009 1Q09 1Q10
44.3%
67.0%
51.5%
5.5%
40.8% 40.6%
64.5%
Rental consolidated 51.0% 51.2% 52.6% 49.3% 49.0% 48.3%
65.2%
0.8%1.4%
40.3%
66.5%
1.1%
42.0%
69.1%
4.6%
44.5%
68.7%
5.4%
Car rental 45.3%
Fleet rental 62.3%
Used car sales 13.2%
CAGR: 22.0%
Consistent EBITDA margins
14.5%
40
Net incomeR$ million
48.830.2
106.5138.2
190.2
127.4 116.3
2005 2006 2007 2008 2009 1Q09 1Q10
61.6%
Net income grew 61.6% in the 1Q10
Reconciliation of EBITDA x Net Income 2008 2009 Var. R$ Var. R$
17.3
(0.6)
16.7
(0.8)
0.2
10.6
(8.1)
18.6
449.6
54.5
504.1
(178.5)
(18.3)
(133.3)
1Q09 1Q10
EBITDA - Car rental and fleet rental
(46.6)
127.4
112.3 129.6
EBITDA - Used car sales
9.5459.1
10.6
469.7
(172.3)
(21.0)
(112.9)
3.1 2.5
EBITDA Consolidated
(47.2)
(43.9)
(34.4)
6.2
(2.7)
20.4
(0.6)
115.4 132.1
116.3
Depreciation of revenue-earning vehicles (29.9) (30.7)
Other depreciation (5.3) (5.1)
Financial expenses, net (38.8) (28.2)
Income tax and social contribution (11.2) (19.3)
Net income (11.1) 30.2 48.8
41
2005 2006 2007 2008 2009 1Q10a
Rental revenues 428,703 555,115 678,507 872,486 931,832 1,073,840
NOPAT 151,059 185,189 241,724 279,674 196,461 269,640
NOPAT margin 35.2% 33.4% 35.6% 32.1% 21.1% 25.1%
Invested capital turnover 0.71 x 0.56 x 0.60 x 0.53 x 0.55 x 0.57 x
ROIC 24.9% 18.8% 21.3% 17.0% 11.5% 14.3%
Average CDI 19.1% 15.3% 12.0% 11.6% 10.0% 10.1%
Spread (ROIC – CDI) p.p. 5.8 3.5 9.3 5.4 1.5 4.3
Spread: ROIC x CDI
4.31.55.43.55.89.3
24.9%
18.8%21.3%
17.0%14.3%
11.5%
19.1%
10.1%
15.3%
10.0%11.6%12.0%
0.0%
3 0.0%
2005 2006 2007 2008 2009 1Q10annualized
0.0%
3 0.0%
Spread (p.p.) ROIC Average CDI
5 p.p. average spread
42
Free cash flow - FCF
Free cash flow - R$ million 2005 2006 2007 2008 2009 1Q10
277.9
(448.2)
361.2
190.9
(32.7)
(24.2)
134.0
448.2
(496.0)
-
(47.8)
(28.0)
58.2
(194.0)
(25.5)
(161.3)
Fleet increase (quantity) 7,342 10,346 7,957 9,930
504.1
8,642 538
132.1469.7403.5 311.3
(590.3)
530.4
251.4
(42.7)
(4.8)
203.9
590.3
(643.3)
-
(983.2)
(53.0)
(32.7)
118.2
(295.4)
(287.0)
(924.5)
222.0
(853.2)
760.0
310.3
(63.4)
13.3
260.2
853.2
(839.0)
874.5
-
14.2
395.4
(23.7)
250.7
275.3
(221.9)
(51.0)
855.1
400.3
(49.0)
(11.5)
339.8
924.5
(963.1)
15.2
(23.4)
(21.0)
(52.8)
295.4
(241.1)
241.1
112.0
(15.6)
1.7
98.1
295.4
(297.1)
Change in amounts payable to car suppliers (capex) - (15.2)
(22.2) 295.453.2
(16.9)
(7.7)
(44.8)
297.8
983.2
(1,035.4)
(52.2)
(39.9)
205.7 73.5
(14.6)
(8.7)
(299.9)
(188.9)
(283.1) 50.2
EBITDA
Used car sales revenues
Cost of used car sales
EBITDA without used car sales revenues and costs
(-) Income tax and social contribution – current
Working capital variation
Cash provided before capex
Used car sales revenues
Capex of car – renewal
Net capex for renewal
Capex - Property and equipment, net
Free cash flow before growth
Capex of car – growth
Change in amounts payable to car suppliers (capex)
Free cash flow
The Company generated R$50.2 million of free cash flow in the 1Q10, even with a small increase in the fleet
43
Debt – profile and costsR$ million
Debt profile was extended
Gross debt - principal Average effective cost 2010 2011 2012 2013 2014 2015 Total
Working Capital CDI + 1.25%pa - 204.5 58.0 73.0 45.0 60.0 440.5
Debentures - 2nd Issuance CDI + 0.59%pa - - 66.6 66.6 66.8 - 200.0
Commercial Papers 108.9% of CDI 200.0 - - - - - 200.0
Debentures - 1st Issuance, Total Fleet CDI +2.02%pa - - 100.0 100.0 100.0 100.0 400.0
BNDES TJLP + 3.80%pa 0.7 0.9 0.4 - - - 2.0
Total gross debt - principal - 200.7 205.4 225.0 239.6 211.8 160.0 1,242.5
Cash and cash equivalents (250.8) - - - - - (250.8)
Total net debt - principal - (50.1) 205.4 225.0 239.6 211.8 160.0 991.7
*Stand by refers to R$100 MM limit with BNDES, with term of drawing until sept/2010
Debt profile (principal) on 03/31/10
200.7 205.4 225.0 239.6 211.8160.0
250.8Cash
2010 2011 2012 2013 2014 2015
Stand by*
44
Debt – ratiosR$ million
Indebtedness ratios have improved and remain comfortable
535.8 440.4765.1
1,254.5 1,078.6 1,062.1900.21,247.7
1,492.91,752.6 1,907.8 1,907.7
2005 2006 2007 2008 2009 1Q10
Net debt Fleet value
BALANCE AT THE END OF THE PERIOD 2005 2006 2007 2008 2009 1Q10
Net debt / Fleet value (USGAAP) 60% 36% 51% 72%
2.5x
1.8x
2.0x
56%
Net debt / EBITDA (USGAAP) 1.9x 1.4x 1.9x
57%
2.3x
1.7x
2.0x*
Net debt / EBITDA (BRGAAP) 1.5x 1.0x 1.3x 1.3x*
Net debt / Equity (USGAAP) 1.4x 0.7x 1.3x 1.5x 1.4x
* annualized
45
Funding
Equity
DebtProfitability comes from
rental divisionsCash to renew the fleet
Pricing strategy• Operating costs• Depreciation• Financial expenses• Taxes• Spread
Managing assets
Flexible and liquid assets
Ass
ets
(car
s)
46
RENT3 Performance
RENT3 X IBOVESPA
0
5
10
15
20
25
23-M
ay5-J
ul16
-Aug
28-S
ep11
-Nov
26-D
ec8-F
eb24
-Mar
10-M
ay22
-Jun
3-Aug
15-S
ep30
-Oct
14-D
ec31
-Jan
16-M
ar30
-Apr
13-Ju
n26
-Jul
6-Sep
22-O
ct6-D
ec23
-Jan
10-M
ar23
-Apr
6-Jun
21-Ju
l1-S
ep13
-Oct
25-N
ov12
-Jan
25-Feb8-A
pr25
-May
7-Jul
19-A
ug1-O
ct16
-Nov
4-Jan
18-Feb
Pric
e
0
20
40
60
80
100
120
140
160
180
200
Volume
RENT3 Volume RENT3 IBOVESPA
390%
191%
2005 2006 2007 2008 2009
Average daily volume negotiated of R$11.9 million in 1Q10
Up to March 31, 2010
47
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 to be 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 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 predictions 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’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 in the 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, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.