Localiza Rent a Car S.A. Confins airport branch Belo Horizonte 24h reservation 0800 979 2000 www.localiza.com 1
Integrated business platform 28,080 cars 172 agencies 1.2 million clients 16,600 cars 405 clients 1.861 employees 173 employees Synergies: cost reduction cross selling bargaining power 24 employees 7, 102 cars 179 agencies in 9 countries 22,585 cars sold 32 points of sale 83% sold to final consumer 407 employees This integrated business platform gives Localiza superior performance Data-base: 9M07 2
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 3
Breakdown per division 2006 Revenue EBITDA Profit Seminovos 52% Franchising 1% Car rental 31% Fleet rental 17% Seminovos 9% Fleet rental 42% Franchising 1% Car rental 48% Fleet rental 45% Franchising 2% Car rental 54% Revenues Ebitda Profit Car rental 31% 48% 54% Fleet rental 17% 42% 45% Used cars 51% 9% * Franchising 1% 1% 1% Total 100% 100% 100% *Profit (loss) alocated in the rental divisions 4
Growth opportunities GDP elasticity Consolidation Air traffic Fleet outsourcing Credit cards Replacement 5
Growth opportunities: GDP Accumulated growth rate rentals 2.6x 5.7x 2004 2005 2006 GDP Sector Localiza Localiza s average annual revenue growth was 5.7x the average annual GDP. The Brazilian car rental market grew 2.6x the GDP in the same period. Source: Bacen, Abla and Localiza 6
Growth opportunities: Air traffic 71 Air traffic evolution (Millions of passengers per year) 83 CAGR: +13% 96 102 2003 2004 2005 2006 Number of travelers has increased 13% CAGR Localiza has strong leadership in airports Localiza s airport agencies has been grown in average 2 times faster than the number of passengers deplaned Air traffic is an important driver for car rental industry Source: Infraero 7
Growth opportunities: Credit cards # of credit cards (million) 48 CAGR: +18% 53 68 79 79 million credit cards 39,5 million credit cards holders 2003 2004 2005 2006 37% of car rental revenues came through credit cards in 2006 Having a credit card is a requirement to rent a car in Brazil and in USA Source: Abecs 8
Growth opportunities: Replacement market Replacement is a growing market in Brazil Brazil has 34 million cars but only 9.2 million insured The accident rate is 16.5% / year The potential market is 10.6 million of daily rentals (2.5 x the car rental division in 2006) Localiza is very well positioned to capture this growth due to its geographic footprint Source: Fenaseg and Denatran 9
Growth opportunities: Fleet outsourcing Large potential market with low penetration due to lack of culture Focus of corporations on their core businesses Fixed asset reduction by companies (increase their asset turnover) Renting a fleet can be more economic than owning it 10
Growth opportunities: Consolidation US Market share 2005 Airport segment* US$10BN DTG 11% Others 2% Enterprise / Vanguard 27% Off-airport segment* US$10BN All others 19% Avis Budget Hertz 28% Avis/Budget 32% Enterprise 65% Hertz 9% 7% USA: 4 companies hold 93% of market share (Auto Rental News) Source:*Avis presentation nov/06 - local segment share amounts are company estimates ** National/Alamo prospectus, NYSE/SEC, September 20, 2006 11
Growth opportunities: Consolidation Airport and off airport market - Brazil Airport segment* agencies Off-airport segment* agencies Avis** 32 Unidas** 31 Others** 41 Localiza* 215 Hertz** 61 Avis** 50 Unidas** 47 Hertz** 31 Localiza* 83 Others*** 1948 Source: *Localiza as of 08/07/07 **Each company website, 08/07/07 *** Assuming that each local player has one agency The main car rental networks are concentrated in airport market Off-airport market is fragmented among almost 2,000 small local car rental companies 12
Localiza is increasing its market share Localiza s market share car and fleet rental 2004 2005 2006 Localiza Localiza Localiza 15.5% 17.9% 20.5% 2006 car rental market share 2006 fleet rental market share 29.0% 13.3% Source: ABLA and Company, based on revenues 13
Competitive advantages Gains of scale Market share increase Integrated platform Geographical distribution Yield management Lower interest rate Know-how Strong brand State of the art IT Depreciation Car resale inventory as a buffer Pricing strategy Higher competitiveness 14
Competitive Advantages: Integrated business platform Car rental Fleet rental Localiza Franchising Used Car Sales This integrated business platform gives Localiza superior performance 15
Competitive Advantages: Largest distribution Nationwide presence Strategic locations International footprint 351 agencies in 9 countries 16
Competitive Advantages: Largest distribution Agencies in Brazil Cities in Brazil 298 213 92 82 78 65 57 50 Localiza Hertz Avis Unidas Localiza Hertz Avis Unidas Localiza network is larger than the second, the third and the fourth competitors combined in number of agencies and cities. Source: Each company website as of August 7,2007 17
Competitive Advantages: Yield management Localiza adjusts its prices based on supply & demand according to: Competition Market Demand Events Volume per customer Yield management allows Localiza to be more competitive and profitable 18
Competitive Advantages: credit with lower interest rate Moody s debt rating as of August, 2007 (Global scale) Baa2 Ba1 Ba2 Ba3 Ba3 B1 B1 Enterprise Localiza Avis Budget Hertz Europcar Dollar Thrifty Vanguard Standard & Poors corporate rating as of May, 2007 (Local Currency) Localiza Rent a Car S.A. braa-/ Stable /-- TAM S.A. braa-/ Stable /-- Gerdau S.A. braa+/ Watch Positive /-- CPFL Energia S.A braa-/ Stable /-- Klabin S.A. braa-/ Stable /-- Banco Citibank S.A. braa+/ Positive /bra-1 Banco Votorantim S.A. braa+/ Stable /bra-1 Unibanco Asset Management braa+/ Positive /bra-1 Localiza has one of the best rating among its international peers 19
Competitive Advantages: Know-how Deep knowledge of the business State-of-the-art systems Operational excellence Adoption of best practices Stable management Localiza has a strong know-how in car rental industry 20
Competitive Advantages: Brand recognition Top of mind High quality of services Customer satisfaction Strong nationwide presence International franchising program High standards of ethical behavior Most consumed car rental brand according to America Economia Magazine ranking 21
Competitive Advantages: State of the art IT Hand held GPS Proprietary softwares Speed in transaction time Better operational control Customer satisfaction On-line network Cost reduction IT provides all the information necessary for decision-making 22
Competitive Advantages: Depreciation Depreciation vs. Car prices increase 2.000 1.500 1.000 500 - (500) (1.000) 1,52.3 9.8p.p. 4.7p.p. 939.1 3.7p.p. 492.3 416.5 322.9 0.9p.p. 1.0 p.p. 2003 2004 2005 2006 9M07 annualized Average depreciation per car Real increase in the new car prices 11% 9% 7% 5% 3% 1% -1% -3% -5% Depreciation: Localiza vs. Peers (% over car rental revenues) Localiza (car rental division) 5% Hertz 22% DTG 23% Sixt 22% Localiza has the lowest depreciation rate among its peers 23
Competitive Advantages: Depreciation Strong ties with the automakers Purchased cars 33,520 26,105 22,182 15,062 2003 2004 2005 2006 In 2006 Localiza purchased almost R$1 billion in cars Localiza and its Franchisees represented in 2006 3.9% of FIAT internal car sales 2.7% of GM internal car sales 1.8% of the Brazilian internal car sales Localiza has better conditions due to its large scale 24
Competitive Advantages: Car resale inventory as a buffer 2006- Rented cars Buffer Buffer Buffer Buffer 1 13 25 37 49 61 73 85 97 109 121 133 145 157 169 181 193 205 217 229 241 253 265 277 289 301 313 325 337 349 361 jan fev mar abr mai jun jul ago set out nov dez Car resale inventory is used as a buffer during peaks of demand 25
Financials 26
9M07 Car rental financial cycle Financing 25.8 1-year cycle Net car sales revenues 25.4 Revenues = 19.3 1 2 3 4 5 Expenses = 10.9 8 9 10 11 12 25.8 Car acquisition 28.9 Financial payment Per operating car Car rental Used cars R$ % R$ % Car rental revenue 19,3 100,0% 27,2 100,0% Costs (8,2) -42,3% (0,1) -0,3% SG&A (2,7) -14,0% (1,8) -6,4% Net car sale revenue 25,4 Book value of car sale (24,3) -89,4% EBITDA 8,4 43,7% 1,0 3,8% Depreciation (0,5) -2,8% (0,2) -0,9% Interest on debt (0,1) -0,6% (1,5) -5,4% Interest on equity (1,7) -6,3% Tax ( 30% ) (2,3) -12,1% 0,7 2,6% NET INCOME 5,4 28,1% (1,7) -6,2% Net income per car/year R$ 3,8 or 15% of purchase price 27
9M07 Fleet rental financial cycle Financing 32.2 2-year cycle Net car sales revenues 27.3 Revenues = 31.0 1 2 3 4 5 Expenses = 9.7 20 21 22 23 24 32.2 Car acquisition 36.0 Financial payment Per operating car Fleet rental Used cars R$ % R$ % Fleet rental revenue 31,0 100,0% 28,8 100,0% Costs (8,2) -26,6% (0,1) -0,3% SG&A (1,5) -4,8% (1,4) -5,0% Net car sale revenue 27,3 Book value of car sale 0,0% (26,5) -92,1% EBITDA 21,3 68,7% 0,8 2,7% Depreciation (0,1) -0,3% (3,9) -13,5% Interest on debt (0,1) -0,4% (2,7) -9,2% Interest on equity (2,7) -9,4% Tax ( 30% ) (6,3) -20,4% 2,5 8,8% NET INCOME 15,0 48,3% (5,9) -20,6% Net income per car/year R$ 4,5 or 14% of purchase price 28
3Q07 Highlights (R$ million, USGAAP) Total net revenue Rrental revenue (rental and franchising) 286.8 33.5% 382.8 143.2 17.5% 168.3 3Q06 3Q07 3Q06 3Q07 EBITDA Net income 80.3 30.4% 104.7 36.3 38.8% 50.4 3Q06 3Q07 3Q06 3Q07 29
Localiza has been presenting a consistent growth (R$ millions. USGAAP) Revenue evolution CAGR: 16.9% 590 633 448 303 191 251 151 89 86 90 85 127 145 160 221 270 286 281 331 429 555 485 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 9M07 EOP fleet evolution CAGR: 15.0% 34.4% Aluguéis Venda de carros 26.6% 35.865 46.003 44.680 Thousands Daily rental evolution car rental 1,435.6 1,317.4 1,299.,0 1,230.6 1,292.6 1,085.2 1,059.5 875.7 1,035.2 761.0 739.5 643.0 714.1 537.7 518.1 1Q 2Q 3Q 4Q 2004 2005 2006 2007 10.783 11.006 14.339 19.821 24.579 22.845 22.355 28.699 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 9M07 EBITDA evolution CAGR: 24.9% 198 154 150 152 134 85 62 42 25.3% 311 278 288 Thousands Daily rental evolution fleet rental 1,199.2 1,254.7 1,318.3 1,005.6 1,022.5 1,070.8 1,089.5 869.0 953.9 763.0 765.0 751.0 705.9 689.7 659.8 1Q 2Q 3Q 4Q 2004 2005 2006 2007 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 9M07 30
...maintaining profitability... (R$ million, USGAAP) Net revenue EBITDA CAGR (*): 34.4% 42.9% 1.145,4 1.117,5 876,9 7,7 5,6 634,4 8,2 782,2 590,3 5,8 632,8 6,5 448,2 377,4 303,0 30.2% 29.4% 20.1% 547,4 324,9 420,5 399,0 479,1 33.5% 382,8 286,8 1,9 1,9 214,5 143,6 17.8% 141,3 166,4 CAGR (*): 25.5% 23.4% 311,5 278,2 288,4 2,9 3,2 26,8 233,8 2,9 197,8 34,5 59,0 2,4 1,2 22,0 36,6 30.5% 35.0% 281,8 19.9% 251,0 216,0 209,4 160,0 30.4% 104,7 80,3 1,0 12,2 4,0 0,9 21.4% 75,4 91,5 2004 2005 2006 9M06 9M07 3Q06 3Q07 2004 2005 2006 9M06 9M07 3Q06 3Q07 Net income CAGR (*): 23.5% 24.4% 138,2 134,3 1,9 106,8 106,5 2,1 90,6 35.3% 1,6 2,1 0,2 50,4 40.2% 199,6 11.1% 36,3 30.5% 142,4 150,1 166,9 0,4 0,8 10.4% 109,1 55,1 61,0-18,6-38,0-63,3-44,8-34,5-19,2-11,4 2004 2005 2006 9M06 9M07 3Q06 3Q07 Rental Used car sale Franchising 31
and consistent EBITDA margins Margin per division 2004 2005 2006 9M6 9M07 Car Rental 40.1% 45.3% 42.1% 43.5% 43.6% Fleet Rental 63.4% 62.4% 69.1% 69.0% 68.7% Consolidated Rental 49.2% 51.4% 51.5% 52.5% 52.4% Seminovos (Used car sales) 12.1% 13.2% 4.5% 5.8% 5.5% Franchising 18.5% 39.0% 37.7% 41.4% 51.8% Total EBITDA / rental revenue 59.7% 64.9% 56.1% 57.8% 59.5% 32
Localiza s car rental division continues to increase its network Owned car rental agencies 83 34 117 28 145 27 172 2004 2005 2006 9M07 27 new agencies 33
...with the highlight for the increase on off-airport agencies Car rental revenue breakdown Revenue increase 2006 3Q07 9M07 100% 100% 100% 100% 47% 46% 41% 38% Airports 16.0% 8.7% 12.1% 53% 54% 59% 62% Off-airports 46.7% 17.8% 24.1% 2004 2005 2006 9M07 Off-airport agencies Airport agencies The geographical expansion strategy protects Localiza from the air-traffic crisis. 34
Solid improvement of productivity... Utilization rate car rental division 4.9 p.p. 2.9 p.p. 60,6% 58,8% 65,5% 66,4% 69,3% The increase of productivity reduced the investment in fleet 2004 2005 2006 9M06 9M07 Buying and selling of cars # of cars - thousands Net investment R$ million +10.3 +7.3 +6.5 33,5 2.8-0.9 26,1 22,2 23,2 21,6 18,8 15,7 17,7 14,9 +340.0 +241.8 +190.1 930,3 128.8 690,0 22,5 590,3 493,1 506,2 448,2 377,4 303,0-25.8 607,0 632,8 2004 2005 2006 9M06 9M07 2004 2005 2006 9M06 9M07 Purchased Sold 35
and low cost of depreciation 2.000 1.500 1.000 500 - (500) (1.000) 1,52.3 9.8p.p. 939.1 4.7p.p. 3.7p.p. 492.3 416.5 322.9 0.9p.p. 1.0 p.p. 2003 2004 2005 2006 9M07 anualizado 11% 9% 7% 5% 3% 1% -1% -3% -5% Average depreciation per car Real increase in the new car prices 2003 2004 2005 2006 9M07 Increase of new car (Pálio) 14.0% 17.4% 9.4% 4.0% 3.8% Inflation IPCA 9.3% 7.6% 5.7% 3.1% 2.8% Real increase in the new car prices 4.7 p.p. 9.8 p.p. 3.7 p.p. 0.9 p.p. 1.0 p.p. % depreciation over rental revenues 9.2% 1.8% 2.9% 5.2% 1.6% 36
3,5 0 0,0 %...contribute to the reduced net investment for fleet renewal Average net investment per car for renewal R$ thd 3.1 9.8p.p. 2.6 2.6 3.7p.p. 0.9p.p. 0.3 1.0p.p. 2004 2005 2006 9M07 Net investment per car Real increase in the new car prices Net investment per car R$ Thds. 2004 2005 2006 Average purchase price 21.9 26.0 27.6 Average selling price 18.8 23.4 25.0 Net investment 3.1 2.6 2.6 % over average purchase price 14.2% 10.0% 9.4% 9M07 27.7 27.4 0.3 1.1% The increase in the new car price in line with inflation contributes for the reduction of the expenditure for fleet renewal. 37
resulting in the increase of the free cash flow Free cash flow before growth (R$ millions. USGAAP) 9.8p.p. 340,7 222,0 * 7.6% 30,3 32,7 3.7p.p. 262.7% 118,7 0.9p.p. 99,5 1.0p.p. 2004 2005 2006 9M07 * Impact on the cash flow due to extraordinary increase in automakers account 2004 2005 2006 9M07 EBITDA after taxes 156.9 245.5 268.8 243.9 Working capital variation 15.7 49.9 (217.4) 81.9 Cash generated by operating activities 141.2 195.5 486.2 162.0 Net car acquisition renewal (100.6) (134.8) (112.9) (42.9) Free cash flow before growth 30.3 32.7 340.7 99.5 Car acquisition - growth (143.8) (194.0) (287.0) - Free cash flow (113.5) (161.3) 53.7 99.5 Cars purchased (thousands) 22,2 26,1 33,5 21,6 Cars sold (thousands) 15,7 18,8 23,2 22,6 38
The debt was elongated and the cost of debt was reduced (R$ millions. USGAAP) Debt amortization chronogram 108.5% of CDI 1 st debentures issue 350.9 CDI + 0.44% 2 nd debentures issue 116.5 117.3 67.0 66.7 66.7 0.9 0.9 2007 2008 2009 2010 2011 2012 2013 2014 Final period balance 2004 2005 2006 9M07 Net debt / fleet 46% 60% 36% 49% Net debt / Net equity 49% / 51% 58% / 42% 41% / 59% 52% / 48% Net debt / EBITDA (USGAAP) 1.3x 1.9x 1.4x 1.6x* Net debt / EBITDA (BRGAAP) 1.1x 1.5x 1.0x 1.1x* Net debt / Market cap 35% 30% 10% 16% Net Debt (R$ million) 281 539 443 616 * Annualized 39
Constant increase in the value added to shareholders EVA 200 40% R$ / mil 100-39.3 24.6% 16.9% 15.7% 55.7 24.8% 18.7% 19.5% 11.0% 10.8% 76.3 102.2 2004 2005 2006 9M07 anualizado 20% 0% EVA WACC ROIC ROIC 24.6% 2004 2005 2006 9M07 annualized 24.8% 18.7% 19.5% WACC nominal 16.9% 15.7% 11.0% 10.8% Spread (ROIC-WACC) - p.p. 7.7 9.2 7.7 8.6 Capital investment - R$ Thds. (1) 509,206 608,207 988,112 1,183,338 EVA - R$ Thds. 39,340 55,703 76,346 102,154 EVA increase 16,363 20,643 25,808 Variation 0,7 p.p. (0,2) p.p. 0,9 195,226 25,808 - (1) For the EVA calculation. we used the Average Capital of the period 40
RENT3 liquidity RENT3 X IBOV Average daily traded volume R$ million 25 2005 2006 2007 388% 120 20 15 10 5 0 100 41 Volume-R$ thousand 80 60 23-May 7-Jun 21-Jun 5-Jul 19-Jul 2-Aug 16-Aug 30-Aug 14-Sep 28-Sep 13-Oct 27-Oct 11-Nov 28-Nov 12-Dec 26-Dec 10-Jan 24-Jan 8-Feb 22-Feb 10-Mar 24-Mar 7-Apr 25-Apr 10-May 24-May 7-Jun 22-Jun 6-Jul 20-Jul Price 4.6 132% 10.6 29% 13.7 40 20 0 3-Aug 17-Aug 31-Aug 15-Sep 29-Sep 16-Oct 30-Oct 14-Nov 30-Nov 14-Dec 2-Jan 16-Jan 31-Jan 14-Feb 2-Mar 16-Mar 30-Mar 16-Apr 30-Apr 15-May 29-May 13-Jun 27-Jun 12-Jul 26-Jul 9-Aug 23-Aug 6-Sep 21-Sep 2005 2006 9M07 Performance RENT3 IBOV 2005 +149% +38% Volume RENT3 RENT3 IBOVESPA 150% From 05/23/05 (IPO) to 09/28/07 2006 +124% +33% 2007-13% +36% Since IPO +388% +150% RENT3 was the 62ª most traded stock at Bovespa in the last 12 months
Industry benchmarks - LTM Total Net Revenue (rentals and car resale) 717.89 - - 2,045.62 - Rental Net Revenue 316.20 8,328.37 1,727.10 1,717.03 1,787.75 EBITDA 177.33 3,140.82 646.41 595.784 352.89 EBITDA Margin (over rental revenues) 56.09% 37.71% 37.43% 34.70% 19.74% Net Income 78.49 168.47 23.71 107.131 1.08 Net Margin (rentals) 24.82% 2.02% 1.37% 6.24% 0.06% P/E 2007 17.88 16.41 13.34 11.53 28.31 EV/EBITDA 2007 10.39 8.06 29.55 4.01 3.43 Coverage South America Worldwide USA Germany and abroad Europe, Middle East and Africa Source: Reuters Knowledge on 09/18/2007. US$ thousand, converted to US Dollar at the EOP exchange rate. 42
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.j 43
Thank you! RI Localiza: www.localiza.com/ir tel: (31) 3247-7039 44