Localiza Rent a Car (RENT3) Q3 2024 earnings summary

Executive summary

• Consolidated net revenue for 3Q24 reached R$9.7 billion, up 32.3% year-over-year, with EBITDA of R$3.3 billion and net income of R$812 million, a 22.2% increase from 3Q23, driven by strong growth in Car Rental, Fleet Rental, and Seminovos, efficient cost management, and disciplined capital allocation.

• Focused on restoring ROIC spread through pricing adjustments, portfolio optimization, cost management, and fleet rejuvenation, with significant progress after a challenging 2Q24.

• Recognized as a top employer and most innovative company in its sector.

Financial highlights

• Car Rental net revenue rose 18.7% year-over-year to R$2.4 billion, with an average daily rate of R$142.1 (+19.0% YoY) and utilization rate at 79.9%.

• Fleet Rental net revenue increased 23.9% to R$2.1 billion, with an average daily rate of R$95.9 (+13.8% YoY) and utilization rate at 95.9%.

• Seminovos net revenue from car sales grew 43.7% to R$5.1 billion, with 73,816 cars sold and EBITDA margin at 5.3%.

• Consolidated EBITDA margin was 34.3% and EBIT margin 21.0% for 3Q24.

• Free cash flow before interest in 9M24 was R$3.0 billion, with cash position at R$11.8 billion, covering debt amortizations until 2026.

Outlook and guidance

• Depreciation guidance for Car Rental maintained at R$6,700–7,700 per car for 3Q24, with expectations to decrease in subsequent quarters; annualized gross depreciation per car for Fleet Rental light vehicles at R$7,500–8,500.

• Expect gradual convergence of Seminovos margin to low single digits, with continued improvement in used car prices and credit availability supporting stable margins.

• Fleet renewal and rejuvenation to be gradual, extending through 2025, with continued discipline in capital allocation and prioritization of profitable segments.

• Market expects new car sales in Brazil to exceed 2.4 million units in 2024.