Roadshow Deutsche Bank - 15ª Conferência Anual Citibank Latam (inglês)

0

2006 Results presentation(R$ millions - USGAAP)

Localiza Rent a Car S.A.

Integrated business platform

As of December 31, 2006

This integrated business platform gives us superior performance

Synergies:

cost reduction

cross selling

bargaining power

182 agenciesin 9 countries6,730 cars

26 points of sale79% sold to final consumer

145 agencies31,373 cars1,000,000 individuals and14,000 corporations

15,265 cars(635 managed)350 clients

1.688 employees 156 employees

15 employees 350 employees

Overhead = 124 employees

2

Cor

e B

usin

esse

sSu

ppor

t

Increase market leadership maintaining high return

Create value taking advantage of the synergies of the integrated business platform

Add value to the brand by expanding the network in Brazil and South America

Strategy by segment

Add value to the businesses of the platform as a competitive advantage, reducing depreciation costs

3

Growth opportunitiesand

Competitive advantages

4

Growth opportunities

Air traffic

GDP elasticity

Consolidation

Credit cards

Replacement

Fleet outsorcing

5

Source: Bacen, Localiza

Accumulated growth rate – car rental

Growth opportunities: GDP

Source: Bacen, Localiza

Localiza – Daily volume GDP

7.7x

The average car rental division volume growth was 7.7 x GDP over the last 3 years

2003 2004 2005 2006

6

Number of travellers has increased 13% on the last 3 years

Localiza is the absolute leader in airport branches in Brazil

In 2006 Localiza Car Rental Division grew 2 times faster than the number of passengers

Air traffic evolution(Millions of passengers per year)

CAGR: +13%

Growth opportunities: Air traffic

7183

96 102

2003 2004 2005 2006

Source: infraero

7

Source: www.abecs.

CAGR: +18%

# of credit cards (million)

Growth opportunities: Credit cards

48 5368

78

2003 2004 2005 2006

78 million credit cards in Brazil

35.5 million potential Localiza customers

37% of car rental revenues camethrough credit cards in 2006

8

Localiza is very well positioned to capture this growth due to its geographic footprint

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)

Source: FENASEG -

9

Growth opportunities: Fleet outsourcing

Focus of corporations on their core businesses Focus of corporations on their core businesses

Fixed asset reduction by companies (increase their asset turnover)Fixed asset reduction by companies (increase their asset turnover)

Renting a fleet is more economic than owning itRenting a fleet is more economic than owning it

Large potential market with low penetration due to lack of habit Large potential market with low penetration due to lack of habit

10

DTG11%

Vanguard20%

Hertz28%

Avis Budget32%

Other2%

Enterprise7%

All others19%

Avis Budget7%

Hertz9%

Enterprise65%

US airport segment* US$10BN

US off-airport segment* - US$10BN

Source:*Avis presentation nov/06 - local segment share amounts are company estimates** National/Alamo prospectus, NYSE/SEC, September 20, 2006

USA: 5 companies hold 92% of market shareEurope: 6 companies hold 74% of market share**

US Market share 2005

Growth opportunities: Consolidation

11Source: ABLA

Growth opportunities: Consolidation

Localiza’s market share – Car and Fleet - Brazil

2004 2005

16% 18%

7% 4% 4%Local

players69%

Unidas Avis Hertz

2006E

20%

Localiza corporation grew 30.2% in 2006. ABLA estimated the market growth in 12%

Localiza grew more than 2x the market in 2006

12

1960Unidas

74

Avis83

Hertz86

Localiza203

Hertz33

Avis31

Unidas31

Localiza 76

Others48

Growth opportunities: Off-airport market

In the airports the market is concentrated in the hands of the networksOff-airport market is fragmented mainly among 1.960 small car rental companies

Source: 1964 companies as of ABLA’s report* Localiza as of 12/31/06**Each company website, 01/07/07*** Assuming that each local player has one agency

BR on airport segment* agencies

BR off-airport segment*agencies

Others***

Airport and off airport market - Brazil

Localiza is the consolidator in a fragmented industry!

*

**

*

**** **

** **

13

Growth opportunities: On airport and off-airport growth

14,3% 14,0%

1,5% 0,2%

27,2%20,4%

12,3% 9,8%

1T06 2T06 3T06 4T06

Consolidation is happening mainly on the off-airport agencies

Volume growth Revenue growth

Airport 17.2% 16.0%

Off-airport 49.6% 46.7%

2006 / 2005 Growth (Car rental division)

Elasticity on airport in 2006 was 2 times the growth of domestic deplanements

Domestic deplanements increase x Localiza (rentals on airports)

Daily rental volume on airportsDomestic deplanement

54% 59%

46% 41%

2005 2006

Of f- airport x On - airport share

On-airport agenciesOff-airport agencies

+5 p.p.

-5 p.p.100% 100%

2006

14

Bargainingpower

Highercompetitiveness

Market shareincrease

Gains of scale Integrated platform

Geographical distributionYield management

Credit with lower interest rateKnow-how

Strong brandState of the art ITBargaining power

Depreciation

Competitive advantages

15

Competitive Advantages: Integrated business platform

Franchising

Car rental Fleet rental

Used Car Sales

This integrated business platform gives us superior performance

16

International footprint

International footprint

Strategic locationsStrategic locations

Nationwidepresence

Nationwidepresence

Competitive Advantages: Largest distribution

327 agencies in 9 countries

17

Competitive Advantages: Largest distribution

279

86

83

74

Localiza Hertz Avis Unidas

243**279*

Localiza network is larger than

the second, the third and the fourth competitors combined.

(number of agencies in Brazil)

* As of December 31, 2006 ** As of January 29,2007

18

Yield management allows Localiza to be more competitive and profitable

Month of the yearMonth of the year

Day of the weekDay of the week

EventsEvents

CityCity

Volume per customerVolume per customer

Competitors’ monitoringCompetitors’ monitoring

Localiza adjusts its prices based on supply & demand

Competitive Advantages: Yield management

19

Competitive Advantages: credit with lower interest rate

Global ScaleLocaliza Rent a Car S.A. BB / Stable /--Hertz Corp. BB-/ Stable /--

Vanguard (National / Alamo) B+/ Stable /--

Avis Budget Car Rental BB+/ Stable /--

Enterprise Rent-Car Co. A-/ Stable / A-2

brAA-/ Stable /--Localiza Rent a Car S.A.

brAA/ Positive /brA-1Banco Citibank S.A.

brAA+/ Positive /brA-1Banco Itaú S.A.

brAA+/ Positive /brA-1Banco Bradesco S.A

brA+/ Positive /--CPFL Energia S.A.

brAA+/ Positive /--Gerdau S.A.

brA+/ Stable /--TAM S.A.

Local Currency

Standard & Poor’s as of January 2007

Localiza has the best rating among its international peers considering the debt currency

20

Deep knowledge of the businessState-of-the-art systemsOperational excellenceAdoption of best practicesStable management

Competitive Advantages: Know-how

15SeminovosMarco Guimarães

33Vice-presidentAntonio Resende (Founder)

21CFORoberto Mendes

22Total FleetDaltro Barbosa

26Car rentalGina Rafael

33

33

Eugênio Mattar (Founder)

CEO and Chairman of the Board Salim Mattar (Founder)

Experience in Localiza

ResponsibilityName

Vice-president

15Investor relationsSilvio Guerra

24Aristides Newton Franchising

We believe this experienced team will run the business for the next ten years

21

Top of mindTop of mind

High quality of services

Customer satisfaction

Strong nationwide presence

International franchising program

High standards of ethical behavior

Competitive Advantages: Brand recognition

22

Speed in transaction timeBetter operational controlCustomer satisfactionOn-line networkCost reduction

Competitive Advantages: State of the art IT

23

Localiza enjoys better price and conditions due to its large scale

Localiza purchased more than US$1,2 billion worth of cars from 2003-2006*

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

*96.9 thousand cars between 2003-2006 calculated on average purchase price of 2006

Competitive Advantages: Bargaining power

15.062

22.182

26.105

33.520

2003 2004 2005 2006

24

When car prices go up more than inflation, depreciaton decreases

% over rental revenue 2000 2001 2002 2003 2004 2005 2006

Localiza (car rental division) 13.8% 11.9% 9.3% 9.2% 1.8% 2.9% 5.2%

Hertz (USA) - - - - 22% 23% 23% *

National / Alamo (USA) - - - - 22% 23% 23% *

Competitive Advantages: Depreciation

Depreciation cost over the car rental revenue

* Until Set/06Source: National/Alamo prospectus, Sep 20, 2006, p.11 Hertz prospectus, Nov 21,2006, p.12 and 17, Avis 2006 10K

Average depreciationper car

Real decrease in thenew car price

Real increase in thenew car price

3.617,7

2.142,51.656,2

1.752,3322,9 492,3

939,10,9p.p.

-4,1p.p.

-1,0p.p.

-5,1p.p.

4,7p.p.

9,8p.p.

3,7p.p.

(2.000,0)

(1.000,0)

-

1.000,0

2.000,0

3.000,0

4.000,0

2000 2001 2002 2003 2004 2005 2006

-6,0%

-2,0%

2,0%

6,0%

10,0%

Avis / Budget (USA) - - - - 26% 29% 31%

Average depreciation per year (R$1 thousand) over average price of purchased car in 2005 and 2006 (R$25 thousand) = 4% depreciation

25

Financials

26

6990,6

106,5

138,2

2003 2004 2005 2006

2006 highlights

Consolidated net revenues

CAGR: 29%

Consolidated EBITDA

CAGR: 27%

(R$ million. USGAAP)

1,8

44,5

75,6

57,4

2003 2004 2005 2006

EVA Net income

CAGR: 26% CAGR: 30%

313 286

210

152

2003 2004 2005 2006

532634

877

1,145

2003 2004 2005 2006

27

13 13

26

15

2003 2004 2005 2006

2006 highlights: Footprint expansion

Owned car rental agencies Used car points of sales

41%24%

100%

32*

24% increase in the number of owned car rental agencies

100% increase in the number of used car points of sales

* Until the end of 1H07

17%71

83

117

145

2003 2004 2005 2006

28

(R$ milhlion. USGAAP)

EBITDA margin per segment

Fleet Rental 69,4% 65.2% 63.6% 69.3%

Car Resale -9,2% 8.2% 10.5%

43,5%TOTAL

4.6%

42.4%41.7% 45.3%

28,6%

43,6%

2,9%

51,8%

27.3%

39.0%

4.6%

51.7%

32.6%33.1%TOTAL

47.6%41.5%Franchising

13.7%13.2%Car Resale

52.5%51.5%Rentals

Con

solid

ated

Flee

tRen

tal

20,7%

6,6%

38,1%

21.2%

4.6%

42.3%

27.9%28.4%TOTAL

14.4%15.3%Car Resale

46.3%42.6%Car Rental

Car

Ren

tal

2006200520042003

See addendum 1

29

2006 cash generation

Cash and cash equivalents in

01/01/06:

Cash and cash equivalents in

12/31/06:

See addendum 2

(R$ million. USGAAP)+313.7

70.8 30.1

Operating activities

Financing andother

activities

The cash generation of R$ 957 MM was larger than the needs to renew 23,174 cars (R$643.3MM) and also to grow 28.8% = 10,346 cars (R$287.0MM)

957.0

60.1

-127.5

Acquisitionsto renew

23,174 cars

Investment in Liquid securities

in short-term

-643.3

-287.0

Acquisitionsto growth

10,346 cars

-930.3

30

Investment in fleet(R$ million. USGAAP)

Net investment per car (R$ ‘000)

2004 2005 2006

Average price purchased carsAverage price sold cars

Net

% over purchase price

22,219,3

26,423,9

27,725,4

2,9 2,5 2,3

13.1% 9.5% 8.3%

Fleet growth (thousand)

+10.3+7.3+6.5

2004 2005 2006

690.0

493.1

930.3

448.2 303.0

590.3

2004 2005 2006

22.18226.105

33.520

15.71518.763

23.174

2004 2005 2006

Purchases Sales

Number - thousand Net investment - million

190.1

241.8340.0

Net investment per car to renew the fleet is declining from 13.1% to 8.3% due tothe fact that new car prices are increasing in line with inflation

Net investment per car to renew the fleet is declining from 13.1% to 8.3% due tothe fact that new car prices are increasing in line with inflation

31

Net debt (R$ million) USGAAPRating S&P – BrAA- / Stable

(R$ million. USGAAP)

Indebtness

2003 2004 2005 2006Net debt / fleet market value 22%

27% / 73%

0.57x

Net debt / EBITDA (BRGAAP) 0.61x 1.1x 1.5x 1.0X

46% 60% 36%

Net debt / equity 33% / 67% 50% / 50% 42% / 58%

Net debt / EBITDA (USGAAP) 1.34x 1.89x 1.42x

After the extraordinary dividend, the debt/equity leverage will return to a level (estimated 53% / 47%) that maximizes value for the shareholders

After the extraordinary dividend, the debt/equity leverage will return to a level (estimated 53% / 47%) that maximizes value for the shareholders

87

281

539443

2003 2004 2005 2006

2006 operatingcash flow was58% of the debtat the end of2005

See addendum 3

32

WACC

2003 2004 2005 2006 2007E*

WACC 24.1% 18.4% 15.8% 11.8%

10.7%

12.6%

42% / 58%

11.2%

8.7%

14.0%

53% / 47%

Third party cost of capital 16.6% 11.5% 13.5%

Cost of own capital 26.9% 21.8% 18.1%

Third party’s capital x equity 27% / 73% 33% / 67% 50% / 50%

The 4 p.p. WACC decrease was offset by the reduction of 4 p.p. in ROICThe 4 p.p. WACC decrease was offset by the reduction of 4 p.p. in ROIC

R$ / million

1,8

75,644,5

57,4

11,8%

24,1% 18,4%15,8%

19,8%

24,1%

29,3%

24,6%

-

25,0

50,0

75,0

100,0

2003 2004 2005 2006-5,0%

5,0%

15,0%

25,0%

35,0%

EVA WACC nominal ROIC

-4 p.p.

* 2007 Estimate considering the R$ 196.7 million extraordinary dividend

33

ROIC

2003 2004 2005 2006

ROIC 24.5% 29.3% 24.1% 19.8%

Average increase in the car price 14,0% 17,4% 9,4% 4,0%

IPCA – inflation index 9.3% 7.6% 5.7% 3.1%

The 4 p.p. decrease in the ROIC in 2006 was mainly due to the slow down of the asset turnover:• Stable tariffs in the car rental• 4% increase in the new car prices in 2006• Impact of inflation in operating costs

The 4 p.p. decrease in the ROIC in 2006 was mainly due to the slow down of the asset turnover:• Stable tariffs in the car rental• 4% increase in the new car prices in 2006• Impact of inflation in operating costs

R$ / million

1,8

75,644,5

57,4

11,8%

24,1% 18,4%15,8%

19,8%

24,1%

29,3%

24,6%

-

25,0

50,0

75,0

100,0

2003 2004 2005 2006-5,0%

5,0%

15,0%

25,0%

35,0%


-4 p.p.

34

1,8

75,644,5

57,4

11,8%

24,1% 18,4%15,8%

19,8%

24,1%

29,3%

24,6%

-

25,0

50,0

75,0

100,0

2003 2004 2005 2006-5,0%

5,0%

15,0%

25,0%

35,0%


Spread and EVA

2003 2004 2005 2006

Average invested capital – R$ million 323.5 410.8 689.4 937.8

Spread (ROIC – WACC) percentage points 0.55 10.83 8.32 8.06

EVA – R$ million 1.8 44.5 57.4 75.6

Localiza continues to present low spread volatility

In 2006 EVA grew 32% in accordance with the 31% growth in rented fleet

Localiza continues to present low spread volatility

In 2006 EVA grew 32% in accordance with the 31% growth in rented fleet

R$ / million

32%

35

Localiza and peers spread

Localiza Hertz* Avis* DTG*

8.0p.p.

-3.4p.p.

-6.9p.p.

-2.2p.p

2006

*Source: Morgan Stanley reports - Hertz 12/26/2006, Avis 09/05/2006 and DTG 09/28/2006

36

ROE – return on equity

OBS: ROE was calculated dividing net income by average equity of the year. excluding the income of the year

In 2006 Localiza equity grew R$ 156 MM due to the follow-on

Localiza was the 13th among the largest 500 companies in Brasilwith consistent ROE in the last 5 years, by 2006 FGV ranking

Localiza was the 13th among the largest 500 companies in Brasilwith consistent ROE in the last 5 years, by 2006 FGV ranking

39% 39% 37%29%

2003 2004 2005 2006

37

2007Perspectives

38

2007 perspectives

74% 74%67%

63% 61% 59%66%

70%

2000 2001 2002 2003 2004 2005 2006 2007

minimum 25% growth in volume minimum 25 new agenciesEBITDA margin of 42%utilization rate of 70%

Utilization rate - car rental division

Increasing the utilization rate will allow the increase of the asset turnover

minimum 15% growth in volumeEBITDA margin of 65%

39

2007 perspectives: Management proposals for RENT3

Extraordinary distribution of dividends

R$ 196.7 million that added to the sum already distributed of R$ 35.2 million (as of interests over own capital) reach R$ 3.45 per share or 12% over RENT3 quote beginning 2006

Split of the shares

Each one will be converted into 3 for the increase of the negotiability index

40

2007 perspectives: Localiza’s strategies to add value

ROIC – WACC = SPREAD

Gains of scale:• Organic growth

Increase revenue:• Increase volume• Keep flat rates

Reduce assets:• Increase utilization rate

Capital structure optimization:• Optimize capital structure(own vs third parties capital)

• To maintain proper leverage for fast growth

Margin x Asset turnover Low volatility

Operating income x (1- taxes) / revenue

Revenue / asset

Reduce income tax:• Quarterly payment of interest on own capital

41

Strategies

Short-term:

To maintain fast growth volume

To increase our geographical footprint

To maintain profitability through scale and productivity

Long-term:

To expand business scale mainly through organic growth

To add value to the shareholders through new dividend policy

Localiza’s compensation system is aligned with the short-term (variable remuneration) and long-term strategies (stock option with 3 to 11 years vesting)

42

Localiza’s recentrecognition

43

Recognition

Standard & Poor’s rating upgraded to ‘brAA-’ in national scale and ‘BB’

in global scale. same as sovereign risk. with stable outlook

Included in IBrX (between the 100 most traded shares)

Included in ISE – Corporate Sustainability Index (34 companies)

“Best Company for Shareholders” by Capital Aberto magazine. between

Companies of up to R$ 5 BI market share

The best subsequent public offer among the listed companies by

Infomoney, in a survey among the brokers registered in BOVESPA

44

Performance - RENT3

10

15

20

25

30

35

40

45

50

55

60

65

70

23-M

ay7-J

un21

-Jun

5-Jul

19-Ju

l2-A

ug16

-Aug

30-A

ug14

-Sep

28-S

ep13

-Oct

27-O

ct11

-Nov

28-N

ov12

-Dec

26-D

ec10

-Jan

24-Ja

n8-F

eb22

-Feb

10-M

ar24

-Mar

7-Apr

25-A

pr10

-May

24-M

ay7-J

un22

-Jun

6-Jul

20-Ju

l3-A

ug17

-Aug

31-A

ug15

-Sep

29-S

ep16

-Oct

30-O

ct14

-Nov

30-N

ov14

-Dec

2-Jan

16-Ja

n31

-Jan

14-F

eb2-M

ar

Pric

e

0

20

40

60

80

100

120

Vol

ume-

R$

thou

sand

Volume RENT3 RENT3 IBOVESPA

Performance: RENT3 2005 + 149% X IBOV + 38%RENT3 2006 + 124% X IBOV + 33%RENT3 since IPO + 403% X IBOV + 80%

Average daily trading volume in 2006: R$ 10,5 million

RENT3 X IBOV

From IPO until 03/08/2007.

03/08/07R$57.80

IPO: R$ 11.50

Follow-on: R$ 41.00

45

RENT3 performance

Localiza was the Best Company for Shareholders in 2006 (companies up to R$ 5 bi market cap)

Research by Economática. Stern & Stewart, IBGC, FEA/USP and Capital Aberto Magazine

Localiza was the Best Company for Shareholders in 2006 (companies up to R$ 5 bi market cap)

Research by Economática. Stern & Stewart, IBGC, FEA/USP and Capital Aberto Magazine Source: Capital Aberto magazine

Average daily traded volume (R$ million)

4,6

10,6

19,2

9,1

2005 2006 jan/07 feb/07

+130%

+111%

46

Thank you!

Localiza’s IR:www.localiza.com/riPhone: 55 (31) 3247-7039

47

Disclaimer - Forward looking statements

The material that follows 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.

48

Addendum 1:Financial Cycles

49

Revenue per car sold** 102,20SG&A (7%) (7,15)Safety Margin (3%) (3,06) Book value after 12 months 91,99

Car rental financial cycle

115Financial payment

Financing

100

Car Sales Revenue

102

** Depreciation over list price: 100-(102.2/125)x100 = 18,2%

100Car acquisition

(List price net of dealers discount = 125)

Holding cost of cars after tax with 3% margin = depreciation + financial cost.Either the leverage is through third party financing or shareholder’s capital.

Principal 100,00Interest (CDI + 1 p.p.) 15,00Financial payment 115,00

Depreciation = estimated price of selling after one year, net of SG&A and safety margin minus price of purchase. Depreciation rate: 100-(102.2*0.9) = 8.02%

50

Car rental financial cycle


Financing

100

Car Sales Revenue

102

Revenues = 114,58

Expenses = 62,84

100Car acquisition


*

Consolidated net margin is 19,3% of car rental revenues (if 100% leveraged).

R$ % R$ % R$ %

Car rental revenue 114,58 100,0% 102,20 100,0% 216,78 100,0%Costs (46,00) -40,1% (46,00)SG&A (16,84) -14,7% (7,15) (23,99)Book value of car resale (91,99) -90,0% (91,99) -3,8%

EBITDA 51,75 45,2% 3,06 3,0% 54,81 25,3%Depreciation (8,20) -8,0% (8,20) -3,8%Interest (15,00) -14,7% (15,00) -6,9%Tax (30%) (15,52) -13,5% 6,04 5,9% (9,48) -4,4%

NET INCOME 36,22 31,6% (14,10) -13,8% 22,12 10,2%% over car rental revenue

Car Rental Car Resale (Seminovos) Consolidated

31,6% -12,3% 19,3%




51

R$ % R$ % R$ %

Fleet rental Revenue 53,64 100,0% 102,20 100,0% 155,84 100,0%Costs (14,24) -26,5% (14,24) -9,1%SG&A (3,97) -7,4% (7,15) (11,12) -7,1%Book value of car resale (91,99) -90,0% (91,99) -59,0%

EBITDA 35,43 66,0% 3,06 3,0% 38,49 24,7%Depreciation (8,20) -8,0% (8,20) -5,3%Interest (15,00) -14,7% (15,00) -9,6%Tax (30%) (10,63) -19,8% 6,04 5,9% (4,59) -2,9%

NET INCOME 24,80 46,2% (14,10) -13,8% 10,70 6,9%% over fleet rental revenue

Fleet Rental Car Resale (Seminovos) Consolidated

46,2% -26,3% 20,0%

Fleet rental financial cycle

Financing

100


100Car acquisition


Revenues = 53,64

Car Sales Revenue

102

Expenses = 18,21

Consolidated net margin is 20% of fleet rental revenues (if 100% leveraged).




*

52

Pro-forma cash flow and

working capital

53

Pro-forma cash flow: net cash provided by operating activities

Year Ended Year Ended Year Ended Variation Variation2.004 2.005 2.006 Acum 2006-2005 %

CASH FLOWS FROM OPERATING ACTIVITIES: Net income 90.568 106.519 138.233 31.714 29,8%

Adjustments to reconcile net income to net cash provided by ( used in ) operating activities:

Depreciation and amortization (including goodwill) 23.353 42.969 56.989 14.020 32,6% Vehicles written off as a result of theft 2.609 4.275 5.159 884 20,7% Cost of used car sales 248.651 361.171 530.439 169.268 46,9% Deferred income taxes (179) 11.275 7.950 (3.325) -29,5% Provision for doubtful accounts (236) 578 (446) (1.024) -177,2% Provision for contingencies 8.414 284 (2.012) (2.296) -808,5% Realized gains on derivatives 25 1.706 - (1.706) -100,0% Exchange variation, net (17.428) (31.987) (8.153) 23.834 -74,5% Unrealized (gain) loss on derivatives 49.030 504 23.016 22.512 4466,7% Compensation expense - Stock Options 12.404 7.828 1.704 (6.124) -78,2% Other 1.198 (2.465) (117) 2.348 -95,2%

418.409 502.657 752.762 250.105 49,8%

(Increase) decrease in operating assets: Accounts receivable (7.579) (39.091) (35.572) 3.519 -9,0% Escrow deposits (996) (3.498) (670) 2.828 -80,8% Accrued interest income on marketable securities - - (4.531) (4.531) Recoverable taxes (1.830) (8.986) (2.019) 6.967 -77,5% Other 6.169 (5.554) (7.879) (2.325) 41,9%

(4.236) (57.129) (50.671) 6.458 -11,3%

Increase (decrease) in operating liabilities: Accounts payable (22.917) (18.817) 220.256 239.073 -1270,5% Payroll and related charges 1.753 1.176 4.605 3.429 291,6% Income tax and social contribution 2.108 (134) 5.343 5.477 -4087,3% Taxes, other than on income (2.210) 481 387 (94) -19,5% Advances from customers 732 1.740 (1.109) (2.849) -163,7% Reserve for contingencies (483) (803) (334) 469 -58,4% Loans and debt and debentures - accrued interest expense, net 1.690 12.645 (6.766) (19.411) -153,5% Deffered revenues - - 22.008 22.008 Other 403 1.273 10.528 9.255 727,0%

(18.924) (2.439) 254.918 257.357 -10551,7%Net cash provided by operating activities 395.249 443.089 957.009 513.920 116,0%

54

Pro-forma cash flow: investment and financing activitiesYear Ended Year Ended Year Ended Variation Variation

2.004 2.005 2.006 Acum 2006-2005 %CASH FLOWS FROM ( USED IN ) INVESTING ACTIVITIES:

Purchases of marketable securities - - (140.674) (140.674) Proceeds from sales of marketable securities - - 13.146

Sub-total (127.528)

Car purchase (493.109) (690.040) (930.318) (240.278) 34,8% Close out of derivatives contracts - - - Additions to property and equipment, net (10.209) (27.974) (31.185) (3.211) 11,5% Cash paid on settlement of derivatives contracts (4.034) (66.160) (3.074) 63.086 -95,4% Acquisitions of former franchisees - - (1.502) (1.502)

Net cash provided by investing activities (507.352) (784.174) (1.093.607) (309.433) 39,5%

CASH FLOWS FROM ( USED IN ) FINANCING ACTIVITIES: Long-term debt:

Proceeds 2.954 139.000 (139.000) -100,0% Short-term loans: -

Proceeds 332.791 971.945 361.425 (610.520) -62,8%Repayments (200.732) (1.177.803) (371.346) 806.457 -68,5%

Debentures: - Captações 350.000 (350.000) -100,0%

Transaction with related parties: - Capital increase 16.030 15.372 150.126 134.754 876,6%

Dividends (cash) (50.000) (4.000) (5.595) (1.595) 39,9% Dividends (interest on capital) (18.859) (12.016) (38.665) (26.649) 221,8%Net cash used in financing activities 82.184 282.498 95.945 (186.553) -66,0%

NET INCREASE IN CASH AND CASH EQUIVALENTS (29.919) (58.587) (40.653) 17.934 -30,6%

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 159.264 129.345 70.758 (58.587) -45,3%

CASH AND CASH EQUIVALENTS AT END OF YEAR 129.345 70.758 30.105 (40.653) -57,5%

(29.919) (58.587) (40.653) 17.934 -30,6%

Supplemental disclosures of cash flow information:

Cash paid during the year for: Interest 24.825 105.167 77.848 (27.319) -26,0% Income tax and social contribution 34.337 33.613 32.850 (763) -2,3%

59.162 138.780 110.698 (28.082) -20,2%

55

Working capitalWORKING CAPITAL

Year Ended Year Ended Year Ended2.004 2.005 2.006

ASSETSAccounts receivable, net 54.821 93.334 134.786 Deferred income tax and social contribution 2.043 2.890 2.173 other 3.363 14.739 12.561

60.227 110.963 149.520 Escrow deposits 18.949 23.267 23.913 Deferred income tax and social contribution 13.865 11.191 11.387 Compulsory loans 83 83 83 other 254 2.820 2.034

33.151 37.361 37.417 subtotal 93.378 148.324 186.937

LIABILITIESTotal accounts payable: 58.753 39.398 264.156 Accounts payable to automakers 48.448 22.853 244.935 Other accounts payable 10.305 16.545 19.221 Payroll and related charges 13.315 14.491 22.397 Deferred revenues - - 1.280 Income tax and social contribution 1.793 1.659 3.633 Deferred income tax and social contribution 15.396 24.338 30.608 Taxes other tha income 2.380 4.693 5.476 Advances from customers 5.579 7.319 6.210 other 1.511 13.171 12.463

98.727 105.069 346.223 Reserve for contingencies 52.371 53.210 47.533 Deferred revenues - - 11.369 Deferred income tax and social contribution 5.734 6.246 7.402 Taxes other tha income 2.680 - 8.020

60.785 59.456 74.324 subtotal 159.512 164.525 420.547

WORKING CAPITAL (66.134) (16.201) (233.610)% OVER REVENUES -10,4% -1,8% -20,4%

56

Working capital without account payable to automakers

Year Ended Year Ended Year Ended2.004 2.005 2.006

ASSETSAccounts receivable, net 54.821 93.334 134.786 Deferred income tax and social contribution 2.043 2.890 2.173 other 3.363 14.739 12.561

60.227 110.963 149.520 Escrow deposits 18.949 23.267 23.913 Deferred income tax and social contribution 13.865 11.191 11.387 Compulsory loans 83 83 83 other 254 2.820 2.034

33.151 37.361 37.417 subtotal 93.378 148.324 186.937

LIABILITIESTotal accounts payable: 58.753 39.398 264.156 Accounts payable excluding payable do automakers 10.305 16.545 19.221 Payroll and related charges 13.315 14.491 22.397 Deferred revenues - - 1.280 Income tax and social contribution 1.793 1.659 3.633 Deferred income tax and social contribution 15.396 24.338 30.608 Taxes other tha income 2.380 4.693 5.476 Advances from customers 5.579 7.319 6.210 other 1.511 13.171 12.463

50.279 82.216 101.288 Reserve for contingencies 52.371 53.210 47.533 Deferred revenues - - 11.369 Deferred income tax and social contribution 5.734 6.246 7.402 Taxes other tha income 2.680 - 8.020

60.785 59.456 74.324 subtotal 111.064 141.672 175.612

WORKING CAPITAL (17.686) 6.652 11.325 % OVER REVENUES -2,8% 0,8% 1,0%

WORKING CAPITAL WITHOUT ACCOUNT PAYABLE TO AUTOMAKERS

57

Addendum 3:Third party x own capital cost

58

Cost of third party capitalR$ / million

We estimated that the cost of third party capital will decrease 3 p.p. due to CDI rate decrease

59

Cost of own capitalR$ / million

In 2007 the difference between the cost of own capital and third party capital cost will be 5.3 p.p. .In 2006 this difference was 1.9 p.p.

60

Addendum 4:Earnings Release

Roadshow Deutsche Bank - 15ª Conferência Anual Citibank Latam (inglês)

Documents

Transcript of Roadshow Deutsche Bank - 15ª Conferência Anual Citibank Latam (inglês)