This article first appeared on GuruFocus .
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Net Revenue:R$12.3 billion, a 24.5% increase year-over-year.
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EBIT:R$2.3 billion, up 15.1% compared to the same quarter last year.
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Net Income:R$1 billion, a 30.6% increase year-over-year.
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EBITDA:R$3.8 billion, representing a 14.1% increase year-over-year.
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Car Rental Net Revenue:R$2.8 billion, an 11.2% increase year-over-year.
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Fleet Rental Net Revenue:R$2.4 billion, a 5.8% increase year-over-year.
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Seminovos Net Revenue:R$7.1 billion in Brazil, a 39% increase year-over-year.
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Car Rental EBITDA Margin:67.6%, an increase of 1.1 percentage points year-over-year.
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Fleet Rental EBITDA Margin:75.6%, a 4.6 percentage points increase year-over-year.
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Seminovos EBITDA Margin:1.9% in Brazil, slightly above the same period last year.
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Car Rental EBIT Margin:44.5%, an increase of 2.5 percentage points.
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Fleet Rental EBIT Margin:49.2%, up 3.4 percentage points year-over-year.
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Vehicles Sold:92,000 vehicles during the quarter, compared to 68,000 in the same period of 2025.
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Average Daily Rate (Car Rental):Increased 3.7% year-over-year.
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Utilization Rate (Car Rental):Reached 81.9%, a 3.3 percentage points increase.
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Average Daily Rate (Fleet Rental):Increased 5.6% year-over-year.
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Utilization Rate (Fleet Rental):Reached 96.7%.
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Average Age of Operating Fleet:Reduced by 24.1% to 8.2 months, compared to 10.8 months in the second quarter of 2025.
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Free Cash Flow Before Interest:Totaled R$1.8 billion in the first half of 2026.
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Net Debt:R$32.4 billion at the end of the quarter, an increase of 4.2% compared to year-end 2025.
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Net Debt to EBITDA Ratio:2.16 times.
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Annualized ROIC:16.1% for the first half of the year, with a spread of 6.1 percentage points over the after-tax cost of debt.
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Localiza Rent A Car SA ( LZRFY ) delivered strong double-digit net revenue growth of 24.5% year-over-year, reaching R$12.3 billion in Q2 2026, with all business lines accelerating.
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The car rental division achieved an 11.2% revenue increase, driven by a 6.8% growth in rental base and a 3.7% rise in average daily rates, alongside a 3.3 percentage point improvement in utilization to 81.9%.
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Fleet rental returned to year-over-year growth in rental days, with targeted segments like light fleet and car subscription growing 13%, and the division's EBITDA margin expanded by 4.6 percentage points to 75.6%.
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Net income surged 30.6% year-over-year to R$1 billion, with an ROIC spread of 6.1 percentage points, demonstrating effective pricing strategies even amid higher depreciation.
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The company completed a landmark R$7 billion debt exchange offer, extending debt maturity and reducing average cost, while maintaining a comfortable net debt-to-EBITDA ratio of 2.16 times.
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Fleet rejuvenation progressed significantly, with the average age of the operating fleet down 24.1% to 8.2 months, leading to lower maintenance and preparation costs per vehicle.
Negative Points
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Depreciation per vehicle continues to trend upward, with annualized depreciation in car rental reaching R$8,243 and fleet rental R$9,198, reflecting conservative residual value assumptions amid competitive pressures.
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Seminovos EBITDA margin declined 1.2 percentage points quarter-over-quarter to 1.9%, pressured by a higher SUV sales mix and increased investments in store openings, rebranding, and marketing.
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The company anticipates continued depreciation increases, particularly in car rental, due to expected deflationary pressures from new market entrants and competitive dynamics in the Brazilian automotive industry.
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Free cash flow before interest was negative at R$1.8 billion, driven by heavy net car CapEx of R$5.2 billion and investments in fixed assets, partially offset by supplier payables.
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Net debt increased 4.2% year-to-date to R$32.4 billion, reflecting higher fleet purchases and investments, though partially mitigated by the recent debt refinancing.
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Seminovos sales pace remains high at around 90,000 vehicles per quarter, but the company expects continued margin pressure in the near term as it invests to increase retail sales mix and optimize SUV life cycles.
Q & A Highlights
Q: What is the outlook for depreciation trends, and how is the company balancing higher depreciation with profitability? A: Rodrigo Tavares, CFO, stated that depreciation is expected to continue trending mildly upward, especially in the rent-a-car division. He emphasized that despite increasing depreciation, the company is simultaneously increasing profit and returns, which proves that all assumptions are correctly embedded in pricing. The depreciation is forward-looking, factoring in new market dynamics and residual value expectations, and the company is taking a conservative approach to capital allocation.
Q: What are the expectations for Seminovos (used car sales) volumes and margins in the second half of 2026? A: Rodrigo Tavares, CFO, expects sales to remain at the current level of around 90,000 vehicles per quarter, which is the optimal level to reach the desired fleet life cycle. Nora Lanari, Head of IR, added that the EBITDA margin will likely remain under pressure due to continued investments in retail capacity expansion, a higher mix of SUV sales, and marketing initiatives. The company does not anticipate a major difference in the trend of the EBITDA margin in the near term.
Q: What drove the significant increase in car purchases during the quarter, and how should we view fleet growth going forward? A: Rodrigo Tavares, CFO, explained that the purchase of almost 125,000 cars was a combination of higher demand, as evidenced by the 11.2% year-over-year revenue growth in rent-a-car, and specific procurement opportunities at the end of the quarter. Nora Lanari, Head of IR, clarified that after the July peak season, the company will adjust the fleet and prioritize price over volumes to maintain the consistent trajectory of ROIC spread restoration.
Q: What is the company's strategy for growth in 2027, given the higher interest rates and depreciation? A: Rodrigo Tavares, CFO, stated that the company proved in the second quarter that growth can be achieved despite higher depreciation and pricing. The main target is to increase the ROIC spread to the upper level of the target band. Demand has been resilient, as shown by the strong second quarter and July performance. If this persists, the company can continue to grow in 2027, but the primary focus remains on return and profitability.
Q: How is the company factoring in the potential deflationary cycle of car prices into its depreciation assumptions? A: Rodrigo Tavares, CFO, confirmed that the company is embedding some kind of deflation in both pricing and depreciation assumptions. While acknowledging factors that could support prices, such as increased import taxes, the company is preparing for increased competition from new entrants. Nora Lanari, Head of IR, noted that while July FIPE tables showed a stronger decline, August data reflected a reduced pace of decline, but the company remains cautious and anticipates a potential deflationary cycle.
Q: What are the main drivers of the increase in fiscal (tax) credits and personnel costs in the quarter? A: Nora Lanari, Head of IR, explained that the increase in fiscal credits is due to a larger fleet value and shorter useful life from appraisal reports, which accelerates the pace of credits. The cost expansion is primarily impacted by the anticipation of long-term incentive plans, specifically related to payroll taxes and social contributions, which amounted to around R$80 million, roughly offsetting the increase in tax credits.
Q: How is the company's fleet rental portfolio evolving, and what is the outlook for this segment? A: Rodrigo Tavares, CFO, expressed high confidence in the quality of the fleet rental portfolio, noting that since the end of 2024, the company has reduced severe-use vehicles from close to 50,000 to less than 14,000. The returns from this portfolio are increasing monthly, and the assumptions embedded in capital allocation are proving correct. He noted that there is no large difference in profitability between the "Localiza Me" (individual) and corporate fleet segments, and the company is very comfortable with the quality of investments made in this area.
Q: What is the company's view on the impact of the tax reform on its business? A: Rodrigo Tavares, CFO, stated that the tax reform is expected to have a positive impact on the B2B segment, which represents close to 70% of the business, in terms of affordability and relative competitiveness against ownership. For the B2C segment, the company expects to lose some competitiveness against ownership but can still offer a good deal. The transition will be slow, with full implementation by 2033, and the company expects a positive impact on cash generation in the short term due to the life cycle of tax credits.
Q: How is the competitive environment from new OEM entrants affecting the company, particularly regarding entry-level vehicles? A: Rodrigo Tavares, CFO, noted that while new entrants are discussing launching entry-level cars, the price difference remains significant. Very entry-level cars in Brazil are around R$60,000-70,000, while the new "entry-level" cars from competitors are priced above R$100,000. The most intense competition is in the small SUV segment, while the very entry-level segment still lacks direct competition.
Q: What are the risks and opportunities for Seminovos margins, and how is the company preparing for them? A: Rodrigo Tavares, CFO, acknowledged factors for both upside and downside risks. Positives include fleet renewal, improving retail mix, and potential tax increases on imports. Negatives include uncertainty around competitive dynamics with 20 new brands entering Brazil. The company is taking a conservative approach. Nora Lanari, Head of IR, reinforced that a low single-digit margin (between 1% and 3%) remains a reasonable expectation for the Seminovos division.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
