You won’t believe the shocking loss Localiza (RENT3) just suffered in the 2nd quarter – it’s devastating PM Results!

**Title: The Challenges and Turning Point for Locate (RENT3) in the Second Quarter of 2023**

**Introduction**
In the second quarter of 2023, the Locate (RENT3), a leading car rental company, faced significant challenges that led to a loss of BRL 88.8 million, compared to a gain of BRL 456.7 million in the previous year. However, the company still managed to achieve an adjusted net profit of R$ 419 million, which reflects its resilience and ability to adapt to changing market conditions. This article explores the factors behind the company’s loss, highlights the impact of Provisional Measure 1,175, discusses the effects on different business units, and looks at the company’s future prospects.

**The Impact of Provisional Measure 1,175**
The non-monetary impact derived from the amortization of the added value, coupled with the effects of Provisional Measure 1,175 and the cancellation of the tax loss of Car Rental Systems, resulted in a total impact of R$ 507.8 million. This substantial impact led to the company’s evaluation of a quarterly loss of R$ 88.8 million. Notably, only with the implementation of Provisional Measure 1,175, the impact reached R$ 416.7 million.

**Challenges Faced by Locate**
The adjusted result of Locate reflects the effects of seasonality in Car Rental and the slower growth in net income of Fleet Management and Seminovos. These challenges were compounded by the implementation of Provisional Measure 1,175, which affected the company’s pricing, sales volumes of used cars, and fleet rejuvenation process. In a management report, the company acknowledged the difficulties faced during the quarter and referred to the measure as reducing the speed of purchasing rental cars and impacting the growth rate.

**A Turning Point Reached**
Despite the challenging quarter, Locate sees a turning point in sight. The company acknowledges the start of the cycle of falling interest rates, which is expected to improve the demand for car rentals. Additionally, there are signs of the price of new cars gradually returning to pre-Provisional Measure levels. The company remains optimistic about the future, expecting an improvement in the cash generation cycle as a result of reduced renewal capital expenditure.

**Financial Performance**
Locate’s earnings before interest, taxes, depreciation, and amortization (EBITDA) saw a significant increase, totaling R$ 2.345 billion, reflecting a growth of 110%. Adjusted EBITDA reached R$ 2.498 billion, a 27.9% increase. Despite the loss in the second quarter, the company’s net billing increased by 124.5% to R$ 6.846 billion, with the used car unit contributing R$ 3.283 billion (43.4%) and rentals contributing R$ 3.562 billion (27.4%). Furthermore, Locate managed to lower its net debt from BRL 26.110 billion at the end of 2022 to BRL 25,897 billion, resulting in a net debt to EBITDA ratio of 2.78 times.

**Conclusion**
The second quarter of 2023 presented several challenges for Locate, leading to a loss of BRL 88.8 million. However, the company demonstrated resilience by achieving an adjusted net profit of R$ 419 million. The impact of Provisional Measure 1,175 played a significant role in the company’s financial performance, affecting pricing, sales volumes, and the fleet rejuvenation process. Despite the difficulties, Locate remains optimistic about the future, with expectations of improving cash generation and the normalization of market conditions. As the car rental industry continues to navigate through changing dynamics, Locate’s ability to adapt and capitalize on opportunities will be crucial for its future success.

**Summary**
Locate (RENT3) reported a loss of BRL 88.8 million in the second quarter of 2023, compared to a gain of BRL 456.7 million in the previous year. The impact of Provisional Measure 1,175, along with other factors such as seasonality and slower growth in certain business units, contributed to the company’s challenges during the quarter. Despite these difficulties, Locate achieved an adjusted net profit of R$ 419 million and witnessed an increase in EBITDA and net billing. The company expects an improvement in the cash generation cycle and a return to normal market conditions in the future.

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