4. Ownership breakdown
Founders
11.1% 8.6% 12.0% 8.6% 59.7%
Salim Eugenio Antonio Flavio
Claudio Resende Resende Free-Float *
Mattar Mattar
100% 100% 100%
* Includes 4.226.300 shares in Treasury 4
5. Company’s structure
BOARD OF DIRECTORS
CEO Salim Mattar
Car
Acquisition
Legal
COO Eugenio Mattar
Human Administration
Financial Resources IT
Localiza has a very lean and efficient structure
The supporting areas assist all four businesses’ divisions.
The succession process is already planned.
5
6. Integrated business platform
47,727 cars 23,328 cars
2.1 million clients 614 clients
219 locations 242 employees
2,918 employees
Revenue: 15.2%
Revenue: 32.7% EBITDA: 39.4%
EBITDA: 56.2% Synergies: Net income: 28.5%
Net income: 68.6%
bargaining power
cost reduction
cross selling
9,777 cars
Capacity to sell 50,000 cars/year
168 locations in Brazil
73.4% sold to final consumer
71 locations in South America
48 stores
29 employees
650 employees
Revenue: 0.5% Revenue: 51.5%
EBITDA: 1.1% EBITDA: 3.3%
Net income: 2.8% Net income: -
This integrated business platform gives Localiza flexibility and superior performance
6
7. Strategy by division
Increase market leadership maintaining high return
Core Businesses
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
Support
Add value to the businesses optimizing fleet renewal and
reducing depreciation
7
8. Car rental financial cycle
1-year cycle
Funding (PV) Net car sale revenue
$26.6 $24.7
Revenue: 18.7
1 2 3 4 5 Expenses: (10.8) 8 9 10 11 12
$26.6 $29.7
Car acquisition Funding (FV)
Car rental Used car sales Total
Per operational car Per operational car 1 year
R$ % R$ % R$
Revenues 18.7 100.0% 26.8 100.0% 45.5
Cost (8.2) -43.8% (8.2)
SG&A (2.6) -13.6% (2.1) -7.9% (4.7)
Net car sale revenue 24.7 92.1% 24.7
Book value of car sale (24.1) -90.0% (24.1)
EBITDA 8.0 42.6% 0.6 2.1% 8.5
Depreciation (vehicle) (1.5) -5.6% (1.5)
Depreciation (non-vehicle) (0.4) -2.0% (0.4)
Interest on debt (1.7) -6.5% (1.7)
Tax (2.3) -12.2% 0.8 3.0% (1.5)
NET INCOME 5.3 28.4% (1.9) -7.0% 3.5
ROIC 17.5%
8
9. Fleet rental financial cycle
Funding (PV) 2-year cycle Net car sale revenue
33.8 26.6
Revenue: 32.0
1 2 3 4 5 Expenses: (11.5) 20 21 22 23 24
33.8 42.0
Car acquisition
Funding (FV)
Fleet rental Used car sales Total
Per operational car Per operational car 2 years
R$ % R$ % R$
Revenues 32.0 100.0% 28.8 100.0% 60.8
Cost (9.7) -30.4% (9.7)
SG&A (1.8) -5.5% (2.2) -7.6% (3.9)
Net car sale revenue 26.6 92.4% 26.6
Book value of car sale (25.9) -90.0% (25.9)
EBITDA 20.6 64.1% 0.7 2.4% 21.2
Depreciation (vehicle) (6.5) -22.6% (6.5)
Depreciation (non-vehicle) (0.1) -0.2% (0.1)
Interest on debt (4.6) -16.0% (4.6)
Tax (6.1) -19.2% 3.1 10.8% (3.0)
NET INCOME 14.3 44.8% (7.3) -25.3% 7.1
NET INCOME per year 7.2 44.8% (3.6) -25.3% 3.5
ROIC 15.2%
9
10. Growth opportunities
Consolidation
US market: 4 players 95%
BR market: 4 players 45%
1.951 players 55%
Source: Auto Rental News and Company’s estimates
Infrastructure
Outsourcing Pre salt – R$30bn/year until 2015
Corporate fleet : 2MM of cars
Automakers R$23bn until 2013
Targeted market 500.000 cars
World Cup 2014 – R$ 71bn
30% rented
Olympic Games in RJ – R$ 31bn
Source: Company’s estimates
Source: Petrobras, Santander Equity Market
Income / Consumption
Air traffic 2010: 12 to 18%
Credit cards: 45 mm of holders
Income growth:
Middle class in Brazil 2009 – 98MM
Source: Gol, Tam, Abecs and Company’s estimates
Strong drivers of growth
10
11. Growth opportunities: GDP
Rental revenues accumulated growth rate – rentals
Localiza
6.5x
Sector
3.3x
GDP
2005 2006 2007 2008 2009
PIB 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
11
12. Growth opportunities: consolidation
Brazilian car rental agencies
Airport locations Off-airport locations
Others Unidas Hertz
Hertz 49 74 73 Avis
53 Localiza
30 296
Unidas
29
Localiza
Avis 91
29 Others*
1,951
Off-airport market is an opportunity to Localiza since it is still fragmented
*Source: ABLA, 2009
Source: Each company website as of June 30th , 2010
12
14. Competitive advantages
Gains of Scale Higher
Know-how
scale Strong brand competitiveness
Strong values
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 circle
14
15. Competitive advantages
37 years of experience…
Raising Buying Renting Selling
money cars cars cars
…gives Localiza know-how and superior performance
in all chains of the business process
15
16. Competitive advantages in funding
Raising Buying Renting Selling
money cars cars cars
Rating
Moody’s corporate rating as of Mar/10 (Local Currency) Standard & Poors as of Mar/10 (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+
Cyrela Brazil Realty brA+
Cyrela Brazil Realty Aa2.br
CEMIG brAA
CEMIG Aa2.br
Duke Energy brAA-
Duke Energy Aa2.br
Tam brA
Localiza raises money with lower spreads
16
17. Competitive advantages in buying cars
Raising Buying Renting Selling
money cars cars cars
Localiza’ share in national sales of Purchases by brand
Fiat, GM, VW and Renault*
Localiza
2.3% GM FIAT
44% 33%
Others VW
RENAULT
1% 16%
6%
Localiza purchases cars with better prices and conditions
* Includes Localiza, Total Fleet and Franchisees purchases. 17
18. Competitive advantages in renting cars
Raising Buying Renting Selling
money cars cars cars
Geographical
Strong brand Scale
footprint
Locations in Brazil
387
275
70
102
103
Localiza Unidas Hertz Avis
*Source: Each company website as of June 30th , 2010
18
19. Competitive advantages: network footprint
Airport and off airport branches located in easy-access and intense traffic places
19
20. Competitive advantages in used car sales
Raising Buying Renting Selling
money cars cars cars
Unique product Selling directly to final consumer Footprint
Low mileage
Pre-owned cars 48 stores
Automaker warranty
Cars financed through third-party
financial institutions
Cash generated in used car sales is used to renew the fleet
Selling directly to final consumer reduces depreciation
20
28. Corporate governance
Elected twice the best company in corporate governance
(Capital Aberto Magazine)
Elected “the most shareholder-friendly” company
(Institutional Investor Magazine - 2008)
Recognitions & Rewards
Best IR officer – large cap
(IR Magazine Awards, July 2010)
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)
28
30. 2Q10 Highlights
R$ millions 2Q09 2Q10 Variation
Consolidated ret revenue 416.5 575.6 Record 38.2%
Net rental revenues 220.2 284.1 Record 29.0%
EBITDA 109.1 150.5 Record 37.9%
Net income 27.1 57.5 Record 112.2%
Net income / Net rental revenues 12.3% 20.2% 7.9p.p
Quantity 2Q09 2Q10 Variation
Purchased cars 4,946 11,323 128.9%
Sold cars 7,279 10,679 46.7%
End of period fleet 52,223 71,055 36.1%
Localiza is back to high levels of growth.
30
31. Car Rental Division
Net revenue (R$ million)
3.8%
.2 %
R: 29 585.7 607.8
CAG
442.7 27.7%
372.9 %
357.2 291.9 36.1
271.3
191.6
140.8
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
# daily rentals (thousand)
1.5%
%
: 32.5
CAGR 7,940 8,062 26.4 %
5,793
4,668 4,857 3 1 .7 %
3,411 3,841
2,488
1,889
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
In the 2Q10 revenue grew above volume due to an increase of 3.3% in the average daily rate.
31
32. Fleet Rental Division
Net revenue (R$ million)
13.2%
22.9%
CAGR: 276.9
313.4
%
228.2
14.1
%
190.2
152.1
173.5 16.9
149.2
76.2 89.1
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
# daily rentals (thousand)
10.3%
24.3%
CAGR: 6,437 7,099
5,144 9.3%
4,188 3,816
3,351 3,490 12.6%
1,710 1,926
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
In the 2Q10 revenue grew above volume due to an increase of 4.1% in the average daily rate.
32
33. Used car sales
# of sold cars
0.7%
22.3%
CAGR: 34,281 34,519
30,093
%
23,174 43.2 21,627
18,763 %
15,107 46.7
10,679
7,279
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
Sale’s volumes are still presenting strong growth.
33
34. Car Rental Division – Average age
Sold cars
(month)
16.6 15.3
12.3
2008 2009 2Q10
Operating fleet
(month)
9.5
6.3 6.6
2008 2009 2Q10
The average age of the operating fleet returned to pre-crisis levels.
34
35. Consolidated net revenues
R$ million
8.4%
R: 2
CAG 1,855.7 1,856.3
1,531.7
32.1%
1,145.4 1,139.4
876.9 862.7 38.2%
575.6 Record
416.5
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
Consolidated net revenues grew 38.2% in the 2Q10.
35
37. Average depreciation per car
R$
Car Rental
- 43
.8%
2,546.0 2,577.0
1,448.5
939.1
492.3 332.9
2005 2006 2007 2008 2009 1H10
annualized
Fleet Rental
- 20.5
5,083.1 %
4,371.7
3,475.8
2,981.3
2,383.3 2,395.8
2005 2006 2007 2008 2009 1H10
annualized
Average depreciation per car showed a strong drop when compared to the one in 2009.
37
38. Net income
R$ million
190.2
138.2 127.4 3%
116.3 85. 106.2
106.5
.2 %
1 12 57.5 Record
57.3
27.1
2005 2006 2007 2008 2009 1H09 1H10 2Q09 2Q10
Reconciliation of EBITDA x Net Income 2008 2009 Var. R$ 1H09 1H10 Var. R$ 2Q09 2Q10 Var. R$
EBITDA - Car rental and fleet rental 449.6 459.1 9.5 219.8 273.3 53.5 107.5 144.0 36.5
EBITDA - Used car sales 54.5 10.6 (43.9) 4.7 9.3 4.6 1.6 6.5 4.9
EBITDA Consolidated 504.1 469.7 (34.4) 224.5 282.6 58.1 109.1 150.5 41.4
Depreciation of revenue-earning vehicles (178.5) (172.3) 6.2 (70.0) (66.5) 3.5 (40.1) (35.8) 4.3
Other depreciation (18.3) (21.0) (2.7) (10.7) (10.2) 0.5 (5.4) (5.1) 0.3
Financial expenses, net (133.3) (112.9) 20.4 (65.5) (57.4) 8.1 (26.8) (29.2) (2.4)
Income tax and social contribution (46.6) (47.2) (0.6) (21.0) (42.3) (21.3) (9.7) (22.9) (13.2)
Net income 127.4 116.3 (11.1) 57.3 106.2 48.9 27.1 57.5 30.4
Record net income since IPO in 2005.
38
39. Free cash flow - FCF
Free cash flow - R$ million 2005 2006 2007 2008 2009 1H10
EBITDA 277.9 311.3 403.5 504.1 469.7 282.6
Used car sales revenues (448.2) (590.3) (853.2) (983.2) (924.5) (586.9)
Cost of used car sales 361.2 530.4 760.0 874.5 855.1 539.6
EBITDA without used car sales revenues and costs 190.9 251.4 310.3 395.4 400.3 235.3
(-) Income tax and social contribution – current (32.7) (42.7) (63.4) (52.8) (49.0) (31.0)
Working capital variation (24.2) (4.8) 13.3 (44.8) (11.5) (12.8)
Cash provided before capex 134.0 203.9 260.2 297.8 339.8 191.5
Used car sales revenues 448.2 590.3 853.2 983.2 924.5 586.9
Capex of car – renewal (496.0) (643.3) (839.0) (1,035.4) (963.1) (637.7)
Change in amounts payable to car suppliers (capex) - - - - 15.2 -
Net capex for renewal (47.8) (53.0) 14.2 (52.2) (23.4) (50.8)
Capex - Property and equipment, net (28.0) (32.7) (23.7) (39.9) (21.0) (12.8)
Free cash flow before growth 58.2 118.2 250.7 205.7 295.4 127.9
Capex of car – growth (194.0) (287.0) (221.9) (299.9) (241.1) (34.9)
Change in amounts payable to car suppliers (capex) (25.5) 222.0 (51.0) (188.9) 241.1 (8.3)
Free cash flow (161.3) 53.2 (22.2) (283.1) 295.4 84.7
Fleet increase (quantity) 7,342 10,346 7,957 9,930 8,642 1,182
Even with the addition of 1,182 cars, the Company still generated R$84.7 million in free cash flow in the 1H10.
39
40. Net debt reconciliation
R$ million
Free cash flow
84.7
Net debt Net debt
03/31/2010 06/30/2010
-1,078.6 -1,074.6
(15.0)
Interest on own
capital and (65.7)
dividends Interest
and
others
Net debt remained stable.
40
41. Debt – profile and costs
Principal on 6/30/10 - R$ million
268.6 284.8
264.0
249.0 238.0
122.0
0.4 0.9
2010 2011 2012 2013 2014 2015 2016 2017
396.5
Cash and cash
equivalents
Gross debt – principal Average effective cost 2010 2011 2012 2013 2014 2015 2016 2017 Total
111.1% a 115.0% of CDI
Working capital - - 58.0 78.0 55.0 75.0 190.0 - 456.0
and CDI + 1.50%pa
Debenture 2nd Issuance CDI + 0.59%pa - - 66.6 66.6 66.8 - - - 200.0
Debenture 4th Issuance 114.2% of CDI - - 24.0 24.0 63.0 63.0 74.0 122.0 370.0
Debenture 1st Issuance:Total Fleet CDI + 2.02%pa - - 100.0 100.0 100.0 100.0 - - 400.0
BNDES TJLP + 3.80%pa 0.4 0.9 0.4 - - - - - 1.7
Total gross debt – principal - 0.4 0.9 249.0 268.6 284.8 238.0 264.0 122.0 1,427.7
Cash and equivalents (396.5) - - - - - - - (396.5)
Total net debt – principal - (396.1) 0.9 249.0 268.6 284.8 238.0 264.0 122.0 1,031.2
Debt profile was stretched and the Company has enough cash to support its growth.
41
42. Debt – ratios
R$ million
1,907.8 1,963.8
1,752.6
1,492.9
1,247.7 1,254.5
1,078.6 1,074.6
900.2 765.1
535.8 440.4
2005 2006 2007 2008 2009 1H10
Net debt Fleet value
BALANCE AT THE END OF THE PERIOD 2005 2006 2007 2008 2009 1H10
Net debt / Fleet value (USGAAP) 60% 36% 51% 72% 57% 55%
Net debt / EBITDA (USGAAP)* 1.9x 1.4x 1.9x 2.5x 2.3x 1.9x
Net debt / EBITDA (BRGAAP)* 1.5x 1.0x 1.3x 1.8x 1.7x 1.3x
Net debt / Equity (USGAAP) 1.4x 0.7x 1.3x 2.0x 1.5x 1.3x
* annualized
Every indebtedness ratios improved and have remained comfortable.
42
43. Managing assets
Pricing strategy
• Operating costs
Equity • Depreciation
• Financial expenses
• Taxes
• Spread
Assets (cars)
Funding
Debt Cash to renew the fleet
Profitability comes from
rental divisions
Flexible and liquid assets
43
44. Price - R$
23
-M
0
5
10
15
20
25
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11 p
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2005
26 v
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30
2006
-O
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31
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16 n
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30 r
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13 r
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26
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6-
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22
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2007
ct
RENT3 Vloume
6-
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23 c
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10 n
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23 r
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RENT3
6-
Ju
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RENT3 X IBOVESPA
21
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1-
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13
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2008
25
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IBOVESPA
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25
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Average daily volume negotiated of R$13.3 million in 2Q10
O
c
16 t
2009
-N
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4-
Ja
18 n
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1-
Ap
17 r
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29 y
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20
40
60
80
100
120
140
160
180
200
152%
447%
Volume - R$ thousand
Up to June 30th, 2010
RENT3 Performance
44
45. Thank you!
Disclaimer
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’s
management, 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.
45