Localiza Rent A Car S/Adr

Good morning and welcome to the Localiza & Co's second quarter of 2025 webinar. Joining us are Bruno Lazansky, CEO, Rodrigo Tavares, CFO, and Nora Lanari, Director of Investor Relations 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 the Q&A icon at the bottom of your screens, typing 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 English or in Portuguese. 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 Bruno Lazansky, CEO of the company, to start the presentation.

Good morning everyone and thank you for attending our Q2 webinar. In the second quarter of 2025, we achieved solid results aligned with our focus of restoring ROIC spread. We made consistent progress across the strategic priorities outlined for the year, demonstrating the company's ability to adapt and execute with excellence throughout different cycles. We continued the process of price recomposition, with a sequential quarter-over-quarter increase in average rates, which contributed to revenue growth both in the car rental and fleet rental divisions. Our productivity and cost efficiency agenda had a positive impact on expenses, contributing to the expansion of operating margins in both rental divisions. In fleet rental, we continued to make progress in reducing exposure to severe use segments, ending the quarter with around 23,000 vehicles down from the 31,000 in December 2024. In this division, revenues from light vehicles and subscription grew close to 20% year over year, optimizing our capital allocation towards segments with higher returns on invested capital and lower operational complexity. Seminovo's volumes were flat year over year, reflecting a more restrictive credit scenario. We're focusing on commercial and operational initiatives to expand volumes. Following the IPI tax reduction announcement in June, our Seminovo's car sales accelerated in July, making it one of the best months year-to-date. Now, I would like to provide you with a few examples of how Localiza continues to further expand its leadership in customer satisfaction and loyalty. In car rental, we achieved an all-time high level of digital pickup penetration, now with the option for the customer to choose the exact car model and mileage, significantly increasing NPS and convenience. In subscription, Localiza Mail continues to offer the best-rated app in the segment, and new unique features were deployed, such as the option to digitally schedule maintenance, manage tickets and payments, or view mileage, spend, and car location, all in real-time. These are just a few examples of how Localiza continues to innovate and differentiate at an unmatched speed across a large number of products and segments that are hard to replicate. Another key milestone was the fleet rental system integration, a necessary step for the incorporation of LocAmerica that will also allow us to capture further viable cost efficiencies in the fleet rental division. Since the business combination in July 2022, we have merged 14 entities, streamlining operations and corporate structure. The incorporation led to the write-off of deferred income tax balances related to Local America's tax loss carry-forwards, with a non-cash impact in Q2 2025 results. Starting in September, we will capture tax benefits from the amortization of the goodwill, reducing cash taxes over the next five years more than offsetting the write-off. Building on these advancements, we achieved a robust quarter with consolidated net revenue of R9.9 billion, EBITDA of R3.3 billion, and EBIT of R2 billion. Finally, net income total $768 million, excluding the effect of the tax credit write-off. Debt ratios remained at healthy levels, with improvements in the net debt to EDA and net debt to fleet value ratios. We closed the semester with an annualized ROIC of 13.7% and a spread of 4.1 percentage points over the cost of debt after tax. To present the details of the second quarter of 2025, I would like to hand over to our Head of Investor Relations, Nora Lanari.

Thank you, Bruno, and good morning, everyone. On page two, we will begin with the car rental division in Brazil. In Q2 2025, aligned with our goal of restoring the ROIC spread and our priorities of price recomposition and fleet productivity, we reduced the available fleet in car rental following the peak season. With a tighter fleet, we recorded 18.2 million rental days, a 2.3% decrease compared to the same period of last year, and an 8.3% increase in the net revenue, reaching R$2.5 billion. On page 3, we show a 10.6% increase in the average daily rate for the quarter, which ended the period at R$148.9 million. The utilization rate remained stable, reflecting an efficient fleet pricing and mix management during a seasonally softer quarter. Moving to page 4, we present the performance of fleet rental division, which recorded net revenues of R$ 2.2 billion, 10.2% higher than in the same period last year. This growth was driven by an increase in average daily rate and stability in the numbers of rental days. In line with the strategic priorities for the year and aiming to expand the ROIC spread in this division, we maintained a healthy pace of revenue growth in our target segments, light fleets and car subscription, which grew approximately 20% in second quarter 25 compared to the second quarter 24. However, as mentioned by Bruno, we continue to reduce exposure to severe usage contracts, ending the period with around 23,000 cars versus 31,000 in December 2024. Moving to page 5, we present an average daily rate of 102.7 rel, 11% higher than in Q2 24. The utilization rate increased by 0.5 percentage points compared to Q2-24, reaching 95.8%. For the semester, the utilization rate was 96%, 1.4 percentage points higher than the same period of last year, demonstrating improved efficiency in asset utilization. Moving to page 6, we present the growth in Seminova's revenue, which reached R$5.1 billion, an increase of 9.1% compared to Q2-24. The volume of cars sold was flat year-over-year, explained by a more restrictive credit condition, as well as the announcement of the IPI reduction on June 26, which impacted end-of-month sales. On the other hand, average selling price increased due to the mix of cars and model year sold, contributing to the year-over-year revenue growth. In July, semi-novel sales accelerated again. Moving on to page 7, we show significant progress in reducing the average kilometer of cars sold. We recorded a 19.5% decrease in the average kilometer from 61.5 thousand in the first half 2023 to 49.5 thousand in the first half 2025. Since the peak in average kilometer in 2022, the company has been advancing in reducing the kilometer of cars sold, especially in the wholesale segment, which has contributed to the higher selling prices and lower maintenance and preparation costs. Moving to page 8, we present car purchase and sales balance. After reducing the purchase volumes in Q1 2025 to adjust the fleet to post-peak season demand, In Q2 2025, we resumed car acquisition for fleet renewal. We ended the quarter with an additional of 5,136 vehicles and a net investment of R$1.5 billion. During the quarter, around 74,000 cars were purchased, being 50,000 in the car rental division and 24,000 in the fleet rental division. And around 69,000 cars were sold, with 44,000 in the car rental and 25,000 in the fleet rental division. The average selling price of Seminova's cars continued to rise throughout the semester, reflecting a sales mix with lower average kilometer and improved model year mix. As a result, comparing to Q2 24, we added approximately 500 more cars to the fleet, with a reduction of about 250 million in the net capex. On page 9, we present the evolution of the average purchase and sale price of cars. In car rental, the average purchase price was R$82,300, and the average sale price reached R$72,700 in Q2-25, resulting in a renewal investment of R$9,600 per car. The gradual progress in fleet rejuvenation and the reduction in the average kilometer of cars sold have contributed to lowering renewal capex. In fleet rental, the average purchase price was R$98,800 in Q2, while the average selling price was R$78,400, resulting in a renewal investment of R$20,400 per car. The higher renewal capex in the fleet rental division compared to the car rental is explained by the average contracts term, with longer vehicle cycles as well as the mix of cars purchased. The reduction in renewal capex has contributed to the improvement in operating cash generation. On page 10, we present the end-of-period fleet. The company closed the quarter with a fleet of 632,957 vehicles, stable compared to the second quarter of 2024, and aligned with the strategy of prioritizing price recomposition and increasing fleet productivity. Moving on to page 11, consolidated net revenues continue to grow this quarter, with an increase of 9.4% in 2025, compared to the same period last year, totaling R$9.9 billion. Rental revenues presented a growth of 9.3%, while revenues from Seminovas totaled R$5.2 billion in the quarter, a 9.5% increase compared to the same period last year. On page 12, we present consolidated EBITDA, In the quarter, consolidated EBITDA totaled R$3.3 billion, a 40.1% increase compared to the same period last year. In the second quarter last year, EBITDA was impacted by defects of the floods in Rio Grande do Sul, as well as the Recovery Value Adjustment, AVR, on vehicles in Seminovas, which totaled R$386 million. Excluding these effects, EBITDA growth would have been 20.4% compared to a 9.4% increase in net revenues, demonstrating the company's excellence in execution, as well as price and cost management. In Q2-25, the EBITDA margin for the car rental division was 66.5, an increase of 12.4 percentage points year over year. In Q2-24, the rent-a-car margin was impacted by the recognition of 101 million related to the AVR and adjustments associated with the floods in Rio Grande do Sul. Excluding these effects, margin would have been 58.5 in Q2-24, a year-over-year increase of 8 percentage points. In fleet rental, the margin was 71%, an increase of 12.8 percentage points compared to Q2-24. In the down margin of light vehicles and car subscription, segments reached 73.4%. In Q2-24, fleet rental margin was impacted by the recognition of $113 million related to the AVR and adjustments associated with the floods. Excluding these effects, margin would have been 63.7% in Q2-24, a year-over-year increase of 7.3 percentage points. We remain focused on the agenda of cost efficiencies and productivity, which, combined with the completion of the fleet rental systems integration, is expected to support the ongoing expansion of rental margins. Seminovels reported a margin of 1.6% in line with the company's expectations. On page 13, we see the trend in annualized average depreciation per car. In car rental, annualized average depreciation per car was R$7,500, slightly above the average seen in recent quarters. In fleet rental, average depreciation per car was R$8,500 in Q2-25, including trucks. In July, the government published a decree regulating the Mover program, and reducing the IPI tax rate for eligible cars, with an effect on new car prices and a consequent impact on Seminovas. As disclosed in the material fact published on August 6th, we estimate a pre-tax impact between R$800 million and R$1 billion to be recognized in Q3 2025 results. Moving on to page 14, we see consolidated EBIT for the second quarter of 2025 of R$2 billion, in line with the first quarter this year, despite a quarter with lower activity due to seasonality. The annual comparison is impacted by the recognition of additional depreciation in AVR in the second quarter of 2024, totaling approximately R$1.7 billion. For the first half of this year, EBIT totaled R$4.1 billion. To present the net income, I will hand over to Rodrigo.