Our journey

We’re happy to current our first quarter of mixed outcomes.

In these three months collectively, now we have already introduced important advances, however earlier than speaking about outcomes, we wish to begin the letter by recalling the strategic rationale that has guided us so far.

Because the starting of our operations, in 1973, our Founders have introduced very robust values of ardour for our prospects, individuals, and worth creation. Throughout all these years, our selections had been constructed upon these values, giving us scale to widen our aggressive benefits, making a related distance when it comes to profitability to our rivals, whatever the macroeconomic and market contexts. This dynamic allowed us to broaden our addressable market, in addition to our relevance and scope within the mobility ecosystem, with the discharge of recent options, supporting sustainable development with worth creation.

We had been in a context of robust development when, in 2020, we confronted an unprecedented pandemic. Within the midst of the challenges imposed by it, we noticed that the Enterprise Mixture with Unidas may speed up our transformation, bringing new expertise and an skilled workforce, to additional improve our scale and relevance within the mobility ecosystem.

We now have suitable cultures, aligned values, complementarity, and powerful governance, which can undoubtedly facilitate the mixing course of. We see nice development alternative within the core Enterprise, as it’s a low-penetrated market; we perceive our options for app drivers and automotive subscription as vital avenues for development and we now have the heavy automobiles enterprise and Internationalization as new vectors to be explored. As well as, now we have achieved the mandatory scale and experience to spend money on new companies within the mobility ecosystem. We’re disciplined in allocating capital in these new avenues, specializing in alternatives with a big addressable market, wholesome financial models, which reinforce our core and during which now we have related aggressive benefits.

We stay agency in our function to construct the way forward for sustainable mobility, and two years after the enterprise mixture announcement, we’re stronger than ever in our purpose. On this first quarter collectively, we realized from one of the best practices of every firm; we debated about our strengths and weaknesses and are satisfied that we’re creating an much more differentiated enterprise.

In simply three months, we accomplished the creation of an operational firm with a fleet of round 50,000 vehicles, 180 branches, 22 used automotive shops, techniques, and groups (carve-out). On October 1st, we offered this firm to Brookfield, which began to function the Unidas model, and we obtained, as agreed, the quantity of R$3.2 billion with money impact in 4Q22. The stability can be paid inside 9 months, adjusted for curiosity, and topic to the same old value changes for this sort of transaction. Moreover, we agreed upon a optimistic value adjustment of round R$320 million associated to the change in working capital and the offered fleet worth, which can be paid to the corporate over the subsequent 120 days.

The sources attained from the carve-out sale can be reinvested within the fleet development, now with higher business and blend situations, in a context of elevated car manufacturing and improve in relevance of direct gross sales. We now have a balanced web debt/EBITDA ratio and mixture of segments, which permit us to maintain our development path.

With the carve-out conclusion, we now have all our focus and vitality on the mixing course of and synergies seize, and now we have already taken some vital steps on this route. The Firm’s management has been outlined and our groups are already working built-in, studying the processes and greatest practices of every firm. We additionally concluded the Rental Automotive branches integration, which already function beneath Localiza’s

model, and we’re concluding the migration course of within the Seminovos community. Since 3Q22, we mixed the administration of automotive procurement and made progress in negotiating the phrases for subsequent 12 months beneath extra enticing situations for the Firm, all the time sustaining stable and long-term relationships with all automakers. Via a devoted integration workforce (IMO), we accomplished the analysis and detailed planning of capturing synergies on all operational and monetary fronts.

With the enterprise mixture, we began a course of to judge the mixed enterprise portfolio, with the purpose of optimizing the capital preliminary allocation and the usage of sources, specializing in initiatives aligned with our technique of development with worth era.

The excessive satisfaction degree of our prospects and engagement of our workforce, basic aggressive benefits of the Firm, remained at a degree of excellence, assuring that we’re transferring in the precise route. The excellence in conducting the carve-out and integration course of, sustaining excessive efficiency within the enterprise, is a results of the dedication and extraordinary vitality of Localiza’s workers, to whom we’re deeply grateful.

We’re very enthusiastic about Localiza’s distinctive place on this new stage of constructing sustainable mobility, all the time targeted on prospects, workforce, and development with worth creation.

1st chapter of the mixed journey – 3Q22 efficiency

We opened our final quarterly letter of 2022, celebrating the conclusion of the enterprise mixture with Unidas, an important milestone in our historical past. Our preliminary problem was to finish the carve-out, maintain our workforce engaged, and the excessive efficiency of our enterprise.

Through the quarter, we noticed the automotive manufacturing advance, in addition to the expansion of the quantity of direct gross sales. On this context, we considerably accelerated the acquisition of vehicles, with a extra enticing combine when it comes to anticipated return and we’re progressively growing the sale of Seminovos. In consequence, in 3Q22, roughly 54 thousand automobiles had been added to the fleet, surpassing the extraordinary degree of 537 thousand vehicles, already excluding the carve-out. The Firm bought 97.7 thousand vehicles at a mean consolidated value of R$90.0 thousand. The discount within the buy value in comparison with 2Q22 is a results of the resumption of manufacturing and supply of entry-level vehicles.

With the elevated variety of vehicles bought, we had been capable of service a big a part of the vehicles backlog contracted within the Fleet Rental Division, in addition to cut back the lead time for brand spanking new contracts, with optimistic affect on volumes and the typical each day price. In Automotive Rental, the upper degree of entry-level vehicles bought has enabled not solely the acceleration of rental volumes, but in addition the start of the fleet rejuvenation course of. On this quarter, the Automotive Rental web income introduced a 30.7% improve and the Fleet Rental elevated by 52.6%, totaling a consolidated web rental income of R$3.2 billion.

In Seminovos, we prioritized the decommissioning of economic system vehicles, which have had their helpful life prolonged and have larger common mileage. 43,600 vehicles had been offered at a mean value of R$68.4 thousand, totaling a web income of R$3.0 billion, 42.2% larger 12 months over 12 months. The upper quantity allowed for larger dilution of promoting bills, contributing to the upkeep of the double-digit EBITDA margin.

We ended the quarter with a web debt/EBITDA ratio of two.76x. With the larger discount in buy costs in relation to the sale value, the capex for fleet replenishment started to say no, growing the Firm’s capability for development from the money generated within the operation. As well as, the proceeds from the carve-out sale obtained within the 4Q, the beginning of the seize of synergies, the dilution of mounted prices with the resumption of

development, and the larger operational effectivity, ought to contribute to the upkeep of a wholesome tempo of development, with a snug leverage degree.

On this quarter, the dedication and engagement of our workforce had been acknowledged in a number of awards and rankings, amongst which we spotlight: NPS Awards, because the automotive rental firm with the very best NPS in Brazil, by SluCX; World Workforce Transformation Seal, attributable to our funding in coaching builders in Brazil, by the Digital Innovation One (DIO) startup; Valor Inovação, 4th within the Transport and Logistics class, by Valor Econômico; Most Unimaginable Place to Work within the Transport and Logistics business, by FIA and UOL; and Valor 1000, as a spotlight of the Transport and Logistics business, by Valor Econômico. We had been additionally honored because the top-ranked in a number of classes within the Institutional Investor rating and, in October, we had been very happy to obtain the award for the 4th greatest firm to work for amongst firms with over 10,000 workers by GPTW.

Mixed outcomes

The 3Q22 earnings presentation consists of info from Localiza and Unidas consolidated since July 1st, 2022. Nevertheless, we are going to carry the quarterly proforma outcomes, including the 2 firms collectively from 1Q21 to 2Q22. On this launch, the annual comparisons can be primarily based on the historic proforma quantity from each firms.

The proforma outcomes are primarily based on obtainable info straight attributable to the enterprise mixture and are factually supportable. This presentation is meant completely as an instance the enterprise mixture’s affect on the Firm’s historic monetary info, as if the transaction had taken place on January 1st, 2021. There isn’t a assurance by the Firm or the auditors that the results of the transaction if taken place on January 1st, 2021, would have been as introduced. The quantitative working numbers weren’t reviewed by the auditors.

We additionally spotlight that, for comparability functions, a few of Unidas’ accounts had been reclassified between traces on the consolidated outcome: reimbursement for harm and gas are now not accounted as operational income and at the moment are acknowledged as value restoration. Contract termination and intervention fines are now not accounted as value restoration and at the moment are acknowledged as operational income and different operational revenues, respectively.

On this quarter, we are going to spotlight the results associated to the enterprise mixture (one-offs), as proven under:

With the carve-out conclusion and the start of the mixing course of, this quarter we had further prices associated to the enterprise mixture, which we spotlight:

1. Integration and carve-out prices (one-offs), together with prices with advisors, funding banks, rebranding of branches and shops, techniques integration, and so on.