Localiza Rent a Car (RENT3) Q2 2024 earnings summary

Executive summary

• Net revenue rose 32.2% year-over-year to R$9.0 billion in 2Q24, driven by strong growth in all divisions, with rentals up 21.6% and Seminovos up 43.7%.

• Net loss of R$570 million, impacted by R$1.7 billion in depreciation and asset value adjustments due to falling used car prices and flood impacts.

• EBITDA remained stable year-over-year, but margins were affected by one-off events and asset revaluations.

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

• Priorities include expanding Seminovos sales, optimizing pricing, and restoring ROIC spread.

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.

• End-of-period fleet reached 631,000 cars, up 7.5% year-over-year.

• 69,316 used cars sold in 2Q24, up 31.5% year-over-year; average selling price rose 10.7% to R$68,100.

• Net investment in fleet was R$1.76 billion, with 73,946 cars purchased and 69,316 sold.

Outlook and guidance

• Depreciation is expected to gradually decrease but remain elevated in coming quarters due to shorter depreciable cycles.

• Management expects normalization of margins and ROIC spread by 2H 2025 as fleet rejuvenation completes.

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

• Focus remains on price management, portfolio optimization, cost efficiency, and innovation.

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