Localiza Rent A Car S/Adr

Good morning and welcome to the Localiza & Co's first quarter of 2025 webinar. Joining us are Rodrigo Tavares, our CFO, and myself, Nora Lanari, Investor Relations Director of the company. We inform you that this webinar is being recorded and will be available at ri.localiza.com, where the complete material for the results disclosure is available. The presentation is also available for download on the IR website. For the Q&A session for analysts and investors, we advise you to signal your interest in participating via Q&A icon at the bottom of your screens. Type in your name, institution, and language. When called upon, a request to activate your microphone will appear on the screen. The questions can be made both in Portuguese or in English. To send written questions, use the Q&A icon at the bottom of your screen and fill in your name and institution before the question. We inform you that the values in this presentation are in millions of reais and in IFRS. We emphasize that the information contained in this presentation and any statements that may be made during the conference regarding business prospects, projections, and operational and financial goals of Localiza constitute beliefs and assumptions of the company's management, as well as information currently available. Future considerations are not performance guarantees. They involve risks, uncertainties, and assumptions as they refer to future events and, therefore, depend on circumstances that may or may not occur. Now, I will hand over to Rodrigo Tavares, CFO of the company, to start the presentation.

Thank you, Inara. Good morning and welcome to Localize as well, Inara. We concluded the first quarter of 2025 with solid results, aligned with our priorities announced at the end of last year, which were scaling up Seminovos for fleet renewal, adjusting rental prices, prioritizing revenue growth and return on invested capital spread, seeking cost efficiency and productivity, continuing the business portfolio optimization process, improving our customer experience to enhance our competitive advantage, and concluding fleet rental system integration, capturing incremental synergies. At the end of 2024, anticipating the increase in new car prices, we made a significant purchase that added about 31,000 cars to the fleet. In this quarter, we reduced the fleet after the peak season, aiming to improve productivity and overall fleet utilization. We continued to advance in the process of tariff adjustment, cost management agenda, as well as reduction of severe usage contracts, which contributed to the expansion of EBITDA margins, both in car rental and fleet rental division, compared to last year. As a result, in the first quarter, we presented consolidated net revenues of R$ 10.1 billion, EBITDA of R$ 3.3 billion and net income of R$ 842 million, 14.8% higher than the profit of first quarter of 2024. Debt ratios remained at healthy levels despite the significant reduction in accounts payable to automakers related to the purchase in the last quarter of 2024. We expect these ratios to gradually improve throughout the year. We ended the quarter with a ROIC of 13.7% and a spread of 4.4 percentage points over the cost of debt, even with the increase in average interest rate for the period. In the second quarter of 2025, we will continue to advance in our strategic priorities, aiming to restore the ROIC spread, as well as integrated fleet rental systems, which should contribute to additional synergies in the second half of the year. To present the details of the first quarter of 2025, I hand over to our Investor Relations Director, Nora Lanari.

Thank you, Rodrigo. On page 2, we start with the car rental division in Brazil. In the first quarter 25, aligned with our goal of restoring the ROIC spread and the priorities of price adjustments and fleet productivity, we reduced the number of cars in the car rental division after the peak season. With a leaner fleet, we presented 19.2 million rental days, close to the number presented in Q1-24, but with a 9.1% increase in net revenue, which totaled 2.6 billion reais. On page 3, we present an 11.2% growth in the average daily rate for the quarter, which ended the period at 147.1 reais. We also highlight the 0.5 percentage point increase in the utilization rate, reflecting efficient fleet, price, and mix management. Moving to page 4, we see the evolution of the car rental branches network. We ended the quarter with 535 corporate branches in Brazil, in addition to 18 locations in Mexico, and 149 franchise branches, totaling 702 locations in Latin America. On page 5, we present the evolution of the fleet rental division. We continue to reduce exposure to severe usage contracts and, after a moderate start of the year, we saw commercial activity accelerating in March. As a result, fleet rental presented net revenues of R$ 2.2 billion, an increase of 13.3% compared to the first quarter of 2024. Excluding the effects of the reduction in the portfolio of severe usage contracts, we presented a growth exceeding 20% in revenues of light vehicles and car subscriptions. On page 6, we present the average daily rate of R$100.5, an increase of 10.7% compared to the same period last year. The utilization rate showed a strong increase of 2.3 percentage points with an improvement in the car journey productivity. Moving to page 7, we present the evolution of Seminovo's revenue, which reached R$ 5.3 billion, a growth of 21.8% compared to Q1-24, explained by the 15% growth in volumes of cars sold in Brazil, as well as the increase in the average price of the cars sold. The volume of 74,720 cars sold puts us at an annualized base of close to 300,000 cars. which allows for a gradual advancement in the fleet rejuvenation process. On page 8, we see the Seminovo's network with an increase of 19 stores compared to the first quarter of last year. Throughout the first quarter of 2025, two stores were opened, ending the period with 244 stores in 125 cities across the country. We will maintain the scaling of Seminovas as a priority, expanding the network size and seeking to increase productivity per salesperson. Moving to page 9, we show an important progress in reducing the average kilometer of the cars sold. We present a 21.1% reduction in the average kilometer from 62.8 thousand in the first quarter 23 to 49.6 thousand in the first quarter 25. retail showed a reduction of 6.4 thousand kilometers or 13.3%, while the wholesale showed a reduction of 17.6 thousand kilometers or 24.1% in two years. We will continue the process of reducing the average kilometer and age of the sales through FAO this year. Moving to page 10, we present the balances of car purchases and sales. As mentioned in the fourth quarter of 24 earnings call, in the first quarter this year, we reduced the purchases aiming to adjust the fleet after the peak season, aligned with our goal of improving productivity and price recomposition. We purchased 33,899 cars and sold 74,720 cars, resulting in a reduction of 40,821 cars in the fleet. representing a net divestment of R$ 2 billion. On page 11, we present the evolution of the average price of cars purchased and sold. In the car rental division, the average purchase price was R$ 81,900, And the average selling price advanced to R$69,100 in the first quarter this year, resulting in a net investment for fleet renewal of R$12,800 per car, reflecting the sales mix and the reduction in the average mileage at sale. The gradual progress in the fleet rejuvenation process should continue to contribute to maintaining the trajectory of reducing renewal capex. In fleet rental, the average purchase price was R$102,100 in the first quarter of 2025, reflecting the purchase mix more concentrated in the car subscription, with higher average tickets. The average sale price was R$74,300, resulting in a net investment for fleet renewal of R$27,800 per car in this quarter. On page 12, we show the end-of-period fleet after the reduction made throughout the first quarter of this year. We ended the quarter with 627,997 cars, stable compared to the same period last year, but with a significant reduction compared to the end of 2024. The reduction of about 41,000 cars was mainly concentrated in the car rental division and aims to increase fleet productivity, contributing to the recomposition of the ROIC spread. Moving on to page 13, this quarter consolidated net revenue continued to advance in double digits, presenting an increase of 16.7% compared to the same quarter last year, totaling R$10.1 billion, which Rental revenues totaled 4.8 billion, a growth of 11.2% year-on-year, while semi-novice revenues totaled 5.3 billion, an increase of 22.2%. On page 14, we present consolidated EBITDA. In the first quarter of 2025, the EBITDA margin of the car rental division was 65.2%, an increase of 1.9 percentage point year-on-year. The robust margin in the quarter mainly reflects rental pricing, as well as progress in reducing the average mileage of the fleet, which results in lower maintenance costs per car, partially offset by increase in preparation costs explained by the higher number of cars prepared. In fleet rental, the margin was 70%, an increase of 0.8 percentage point compared to the first quarter of 2024. mainly explained by the pricing of the new contracts and reduction in maintenance costs partially offset by the increase in preparation costs due to the higher volume of cars prepared for sale. Allowance for doubtful accounts expenses remained high this quarter is still impacted by customers in trucks sub-segment associated with agribusiness. Excluding trucks and other initiatives, the EBITDA margin would have been of 72.6% in the fleet rental division. Seminovas presented a margin of 2%, mainly reflecting the adjustment in prices of used cars observed in December. Throughout the quarter, we observed greater stability in the price of Seminovas. On page 15, we see the evolution of the annualized depreciation per car. In car rental, the average annual depreciation per car was R$ 7,245 this quarter, within the range expected by the company and in line with the depreciation of Q4-24. In fleet rental, the average depreciation per car was R$ 8,280, including trucks. the depreciation of light vehicles was 7,768 reais, also within the range of expectations disclosed by the company. Throughout this year, we observed an increase in the price of new cars, resulting in higher spreads between new and used cars. On page 16, we show the evolution of the company's depreciation expectations range compared to the depreciation realized in each quarter covered by the guidance. This quarter, depreciation remained within the range expected by the company both in car rental and fleet rental divisions. Considering the conclusion of the reference period, we will discontinue the guidance from now on. Moving to page 17. we see the consolidated EBIT of the first quarter 2025 of R$2.1 billion, an increase of 11.5% compared to the same period last year, still impacted by higher car depreciation. The EBIT margin for the car rental showed an increase of 1.6 percentage point, while the EBIT margin for fleet rental showed a contraction of 1.6 percentage point. As a result, the consolidated EBIT margin remains stable year-on-year. On page 18, we present the profit of 842 million reais in the first quarter this year, a growth of 14.8% compared to the same period last year, reflecting the increase of 406 million in EBITDA, partially offset by the increase of 193 million in depreciation, 85 million in net financial expenses, and 19 million in income tax and social contributions. To present the cash flow, the debt ratios, and the ROIC spread, I will hand over to Rodrigo.