Localiza Rent a Car (RENT3) Q2 2024 earnings summary

Executive summary

• Net revenue for 2Q24 reached R$9.0 billion, up 32.2% year-over-year, driven by strong growth in all divisions despite significant headwinds from falling used car prices and severe floods in Rio Grande do Sul.

• Net loss of R$570 million, impacted by R$1.67 billion in additional depreciation and asset value adjustments due to falling used car prices and flood impacts.

• Car Rental and Fleet Rental divisions saw double-digit revenue growth, while Seminovos (used car sales) revenue surged 43.7% year-over-year.

• Floods in Rio Grande do Sul caused R$103 million in direct impacts, affecting thousands of cars and multiple branches.

• Management remains focused on restoring ROIC spread, optimizing capital allocation, and rejuvenating the fleet to drive future profitability.

Financial highlights

• Consolidated net revenue: R$9.0 billion (+32.2% YoY); Car Rental: R$2.3 billion (+16.1% YoY); Fleet Rental: R$2.0 billion (+27.2% YoY); Seminovos: R$4.7 billion (+43.7% YoY).

• EBITDA stable at R$2.35 billion; adjusted EBITDA (excluding one-offs) would have been R$2.74 billion.

• EBIT was negative R$112 million, reflecting asset value adjustments and flood impacts.

• Net debt at R$30.7 billion; net debt/fleet value at 0.61x; net debt/LTM EBITDA at 2.83x; net debt/equity at 1.21x.

• ROIC spread turned negative, reflecting the impact of asset revaluation and external shocks.

Outlook and guidance

• Management expects gradual reduction in depreciation in coming quarters as fleet rejuvenation progresses and market conditions stabilize.

• Focus remains on price management, portfolio optimization, cost efficiency, and innovation to restore historical ROIC spreads.

• Expansion of Seminovos sales capacity and disciplined capital allocation are key priorities for 2024.

• No formal financial projections for 2024 were disclosed.

• No plans to reduce fleet life cycle below 15 months; most benefits expected at this level.