Localiza Rent a Car S.A.

Localiza reported second-quarter 2026 net revenue of BRL 12.3 billion, up 24.5% year over year. EBIT was BRL 2.3 billion, up 15.1%, and net income reached BRL 1 billion, up 30.6%. Car Rental net revenue was BRL 2.8 billion, up 11.2%; Fleet Rental net revenue was BRL 2.4 billion, up 5.8%; and Seminovos net sales revenue in Brazil was BRL 7.1 billion, up 38.9%. EBITDA for the quarter was BRL 3.8 billion, up 14.1%, with Car Rental EBITDA margin at 67.6%, Fleet Rental EBITDA margin at 75.6%, and Seminovos EBITDA margin at 1.9% in Brazil. On cash flow, first-half free cash flow before interest was BRL 1.8 billion; net debt ended the quarter at BRL 32.4 billion; cash was BRL 11.4 billion; net debt/EBITDA was 2.16x; and annualized ROIC for the first half was 16.1% with a 6.1 percentage point spread over after-tax cost of debt. Management said it expects the second half of 2026 to continue with net revenue growth in both Rent a Car and Fleet Rental, while sustaining Seminovos sales through a larger retail mix. No quarterly or full-year numeric guidance was provided beyond those directional targets.

Rodrigo Tavares said the company sustained the strong start to the year with accelerating year-over-year revenue growth across all business lines, backed by disciplined capital allocation and progress in restoring returns. He emphasized that the business is now pricing for a more conservative residual value and depreciation environment, but still delivering higher profit and returns. His tone was confident but cautious, repeatedly tying growth to ROIC spread restoration and disciplined pricing rather than volume at any cost.

As CFO, Rodrigo highlighted the quarter’s hard numbers: net revenue of BRL 12.3 billion, EBIT of BRL 2.3 billion, net income of BRL 1 billion, and first-half free cash flow before interest of BRL 1.8 billion. He also pointed to net debt of BRL 32.4 billion, cash of BRL 11.4 billion, and a 2.16x net debt/EBITDA ratio, saying liquidity is sufficient to cover maturities over this year and the following two years. He stressed liability management, noting the July exchange offer refinanced about BRL 7 billion of debt and extended maturities while reducing average debt cost. On returns, he cited a 16.1% annualized ROIC and a 6.1 percentage point spread, and said depreciation should continue mildly trending up, especially in Rent a Car.

Analysts focused on depreciation, Seminovos margins, fleet expansion, and whether management was becoming more aggressive on pricing or growth. Management said depreciation is still trending up and is booked month by month, with assumptions built conservatively around possible deflation and tougher competition; they also said July did not show a change in Seminovos price trends. On Seminovos, management said sales should stay around 90,000 vehicles per quarter and that margins may stay in the low single digits, around 1% to 3%, as the company invests in stores, marketing, personnel, and rebranding to raise retail mix. They also said demand remains resilient, aided by high interest rates making ownership less attractive, and that after July they will prioritize price over volume to keep ROIC spread recovering.