UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 001-10308


Avis Budget Group, Inc.
(Exact name of registrant as specified in its charter)

Delaware

06-0918165

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

6 Sylvan Way

Parsippany,

07054

(Address of principal executive offices)

(Zip Code)

(973)

496-4700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01	CAR	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock was ~~48,066,343~~38,738,944 shares as of July ~~29, 2022.~~31, 2023.

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		Page
PART I	Financial Information
Item 1.	Financial Statements
	Consolidated Condensed Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and ~~Six~~ ~~Months Ended~~ 2022 ~~June~~ 3 0 ~~, 2022 and 2021~~ (Unaudited)	4
	Consolidated Condensed Balance Sheets as of June 30 3 0 , ~~2022~~2023 and December 31, ~~2021~~2022 (Unaudited)	5
	Consolidated Condensed Statements of Cash Flows for the S ixSix Months Ended June 30 3 0 , ~~2022~~2023 and ~~2021~~2022 (Unaudited)	6
	Consolidated Condensed Statements of Stockholders’ Equity for the ~~Three~~Three and Six Months Ended June 30 3 0 , ~~2022~~2023 and ~~2021~~2022 (Unaudited)	8
	Notes to Consolidated Condensed Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3837
Item 4.	Controls and Procedures	38
PART II	Other Information
Item 1.	Legal Proceedings	4039
Item 1A.	Risk Factors	4039
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4039
Item 5.	Other Information	39
Item 6.	Exhibits	4039
	Signatures	4140

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q may be considered “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by any such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such as “believes,” “expects,” “anticipates,” “will,” “should,” “could,” “may,” “would,” “intends,” “projects,” “estimates,” “plans,” “forecasts,” “guidance,” and similar words, expressions or phrases. The following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the Coronavirus (“COVID-19”) pandemic, the continued restrictions that have been placed on travel in many countries and the resulting adverse impact on the global economy, the potential effects on the global economy and markets as a result of the ongoing military conflict between Russia and Ukraine, and the risk of a recession in the United States or in any of the other regions in which we operate. These factors include, but are not limited to:

•COVID-19 and its resulting impact on the global economy, which has had, and is expected to continue to have, a significant impact on our operations, including unprecedented volatility in demand levels, as well as its current, and uncertain future impact including, but not limited to, its effect on the ability or desire of people to travel, including due to travel restrictions, and other restrictions and orders, which may continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price;

•the high level of competition in the mobility industry, including from new companies or technology, and the impact such competition may have on pricing and rental volume;

•a change in our fleet costs, including as a result of a change in the cost of new vehicles, resulting from inflation or otherwise, manufacturer recalls, disruption in the supply of new vehicles, shortages in semiconductors used in new vehicle production, and/or a change in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;

•the results of operations or financial condition of the manufacturers of our vehicles, which could impact their ability to perform their payment obligations under our agreements with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make vehicles available to us or the mobility industry as a whole on commercially reasonable terms or at ~~all particularly as COVID-19 related restrictions are lifted and travel demand increases;~~all;

•~~the significant~~levels of and volatility in travel demand, ~~as a result of COVID-19,~~ including ~~the current and any~~ future ~~disruptions~~volatility in airline passenger traffic;

•a deterioration in economic conditions, resulting in a recession or otherwise, particularly during our peak season or in key market segments;

•an occurrence or threat of terrorism, the current and any future pandemic diseases, natural disasters, military conflict, including the ongoing military conflict between Russia and Ukraine, or civil unrest in the locations in which we operate, and the potential effects of sanctions on the world economy and markets and/or international trade;

•any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business, including as a result of COVID-19, inflation, the ongoing military conflict between Russia and Ukraine, and any embargos on oil sales imposed on or by the Russian government;

•our ability to continue to successfully implement or achieve our business plans and strategies, achieve and maintain cost savings and adapt our business to changes in mobility;

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•political, economic or commercial instability in the countries in which we operate, and our ability to conform to multiple and conflicting laws or regulations in those countries;

•our ability to dispose of vehicles in the used-vehicle market on attractive terms;

•our dependence on third-party distribution channels, third-party suppliers of other services ~~and~~and co-marketing arrangements with third parties;

•risks related to completed or future acquisitions or investments that we may pursue, including the incurrence of incremental indebtedness to help fund such transactions and our ability to promptly and effectively integrate any acquired businesses or capitalize on joint ventures, partnerships and other investments;

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•our ability to utilize derivative instruments, and the impact of derivative instruments we utilize, which can be affected by fluctuations in interest rates, gasoline prices and exchange rates, changes in government regulations and other factors;

•our exposure to uninsured or unpaid claims in excess of historical levels and our ability to obtain insurance at desired levels and the cost of that insurance;

•risks associated with litigation or governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and consumer privacy, labor and employment, and tax;

•risks related to protecting the integrity of, and preventing unauthorized access to, our information technology systems or those of our third-party vendors, licensees, dealers, independent operators and independent contractors, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, compliance with privacy and data protection regulation, and the effects of any potential increase in cyberattacks on the world economy and markets and/or international trade;

•any impact on us from the actions of our third-party vendors, licensees, dealers, independent operators and independent contractors and/or disputes that may arise out of our agreements with such parties;

•any major disruptions in our communication networks or information systems;

•risks related to tax obligations and the effect of future changes in tax laws and accounting standards;

•risks related to our indebtedness, including our substantial outstanding debt obligations, ~~potential~~recent and future interest rate increases, ~~recent and potential further~~which increase our financing costs, downgrades by rating agencies and our ability to incur substantially more debt;

•our ability to obtain financing for our global operations, including the funding of our vehicle fleet through the issuance of asset-backed securities and use of the global lending markets;

•our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, or to obtain a waiver or amendment of such covenants should we be unable to meet such covenants;

•significant changes in the assumptions and estimates that are used in our impairment testing for goodwill or intangible assets, which could result in a significant impairment of our goodwill or intangible assets; and

•other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.

We operate in a continuously changing business environment and new risk factors emerge from time to time. New risk factors, factors beyond our control, or changes in the impact of identified risk factors may cause actual results to differ materially from those set forth in any forward-looking statements. Accordingly, forward-looking statements

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should not be relied upon as a prediction of actual results. Moreover, we do not assume responsibility if future results are materially different from those ~~forecast~~forecasted or anticipated. Other factors and assumptions not identified above, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and “Risk Factors” in Item 1A in this quarterly report and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our ~~2021~~2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~17, 2022~~16, 2023 (the ~~“2021~~“2022 Form 10-K”), may cause actual results to differ materially from those projected in any forward-looking statements.

Although we believe that our assumptions are reasonable, any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual results could differ materially from past results and/or those anticipated, estimated or projected. We undertake no obligation to release any revisions

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to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data)

(Unaudited)


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022		2021				2023		2022		2023		2022
Revenues	Revenues		$	3,244	$	2,371	$	5,676	$	3,743	Revenues		$	3,123	$	3,244	$	5,680	$	5,676

Expenses	Expenses										Expenses
												Operating	1,475		1,349		2,782		2,496
		Operating	1,349		1,032		2,496		1,864			Vehicle depreciation and lease charges, net	375		234		640		345
		Vehicle depreciation and lease charges, net	234		338		345		592			Selling, general and administrative	378		359		702		642
		Selling, general and administrative	359		294		642		476			Vehicle interest, net	172		97		305		174
		Vehicle interest, net	97		77		174		152			Non-vehicle related depreciation and amortization	52		51		108		109
		Non-vehicle related depreciation and amortization	51		62		109		130			Interest expense related to corporate debt, net:
		Interest expense related to corporate debt, net:										Interest expense	68		64		141		117
		Interest expense	64		59		117		120
		Early extinguishment of debt	—		—		—		129			Restructuring and other related charges	1		6		5		14
		Restructuring and other related charges	6		22		14		42			Transaction-related costs, net	—		1		—		1
		Transaction-related costs, net	1		1		1		2			Other (income) expense, net	4		—		2		—
Total expenses	Total expenses		2,161		1,885		3,898		3,507		Total expenses		2,525		2,161		4,685		3,898

Income before income taxes	Income before income taxes		1,083		486		1,778		236		Income before income taxes		598		1,083		995		1,778
Provision for income taxes	Provision for income taxes		309		88		477		8		Provision for income taxes		162		309		247		477
Net income	Net income		774		398		1,301		228		Net income		436		774		748		1,301
		Less: net loss attributable to non-controlling interests	(4)		—		(6)		—			Less: net income (loss) attributable to non-controlling interests	1		(4)		1		(6)
Net income attributable to Avis Budget Group, Inc.	Net income attributable to Avis Budget Group, Inc.		$	778	$	398	$	1,307	$	228	Net income attributable to Avis Budget Group, Inc.		$	435	$	778	$	747	$	1,307

Comprehensive income attributable to Avis Budget Group, Inc.	Comprehensive income attributable to Avis Budget Group, Inc.		$	742	$	400	$	1,310	$	254	Comprehensive income attributable to Avis Budget Group, Inc.		$	456	$	742	$	758	$	1,310

Earnings per share	Earnings per share										Earnings per share
		Basic	$	16.05	$	5.69	$	25.74	$	3.26		Basic	$	11.13	$	16.05	$	19.16	$	25.74
		Diluted	$	15.71	$	5.63	$	25.14	$	3.23		Diluted	$	11.01	$	15.71	$	18.93	$	25.14

See Notes to Consolidated Condensed Financial Statements (Unaudited).

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Avis Budget Group, Inc.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions, except par value)

(Unaudited)

June 30,
2022 December 31, 2021
Assets
Current assets:
Cash and cash equivalents $ 579 $ 534
Receivables, net 871 775
Other current assets 615 538
Total current assets 2,065 1,847
Property and equipment, net 520 537
Operating lease right-of-use assets 2,293 2,368
Deferred income taxes 1,423 1,615
Goodwill 1,066 1,108
Other intangibles, net 685 724
Other non-current assets 393 382
Total assets exclusive of assets under vehicle programs 8,445 8,581
Assets under vehicle programs:
Program cash 103 89
Vehicles, net 16,315 12,866
Receivables from vehicle manufacturers and other 247 222
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party 985 842
17,650 14,019
Total Assets $ 26,095 $ 22,600
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other current liabilities $ 2,744 $ 2,389
Short-term debt and current portion of long-term debt 27 19
Total current liabilities 2,771 2,408
Long-term debt 4,624 3,990
Long-term operating lease liabilities 1,843 1,910
Other non-current liabilities 562 625
Total liabilities exclusive of liabilities under vehicle programs 9,800 8,933
Liabilities under vehicle programs:
Debt 2,767 2,542
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party 11,331 8,848
Deferred income taxes 2,484 2,242
Other 362 244
16,944 13,876
Commitments and contingencies (Note 12) 0 0
Stockholders’ equity:
Preferred stock, $0.01 par value—authorized 10 shares; NaN issued and outstanding, respectively — —
Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively 1 1
Additional paid-in capital 6,643 6,676
Retained earnings (accumulated deficit) 1,122 (185)
Accumulated other comprehensive loss (130) (133)
Treasury stock, at cost— 89 and 81 shares, respectively (8,290) (6,579)
Stockholders’ equity attributable to Avis Budget Group, Inc. (654) (220)
Non-controlling interests 5 11
Total stockholders’ equity (649) (209)
Total Liabilities and Stockholders’ Equity $ 26,095 $ 22,600


		June 30, 2023		December 31, 2022
Assets
Current assets:
	Cash and cash equivalents	$	571	$	570
	Receivables, net	897		810
	Other current assets	765		506
Total current assets		2,233		1,886

Property and equipment, net		624		594
Operating lease right-of-use assets		2,547		2,405
Deferred income taxes		1,457		1,379
Goodwill		1,082		1,070
Other intangibles, net		669		666
Other non-current assets		480		499
Total assets exclusive of assets under vehicle programs		9,092		8,499

Assets under vehicle programs:
	Program cash	109		70
	Vehicles, net	20,625		15,961
	Receivables from vehicle manufacturers and other	421		421
	Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party	1,148		976
		22,303		17,428
Total Assets		$	31,395	$	25,927

Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable and other current liabilities	$	2,810	$	2,547
	Short-term debt and current portion of long-term debt	34		27
Total current liabilities		2,844		2,574

Long-term debt		4,668		4,644
Long-term operating lease liabilities		2,079		1,884
Other non-current liabilities		529		554
Total liabilities exclusive of liabilities under vehicle programs		10,120		9,656

Liabilities under vehicle programs:
	Debt	3,399		2,534
	Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party	14,375		11,275
	Deferred income taxes	2,997		2,754
	Other	629		408
		21,400		16,971
Commitments and contingencies (Note 13)

Stockholders’ equity:
	Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, respectively	—		—
	Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively	1		1
	Additional paid-in capital	6,625		6,666
	Retained earnings	3,326		2,579
	Accumulated other comprehensive loss	(90)		(101)
	Treasury stock, at cost— 97 and 98 shares, respectively	(9,991)		(9,848)
Stockholders’ equity attributable to Avis Budget Group, Inc.		(129)		(703)
	Non-controlling interests	4		3
Total stockholders’ equity		(125)		(700)
Total Liabilities and Stockholders’ Equity		$	31,395	$	25,927

See Notes to Consolidated Condensed Financial Statements (Unaudited).

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Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


				Six Months Ended June 30,							Six Months Ended June 30,
				2022		2021					2023		2022
Operating activities	Operating activities							Operating activities
Net income	Net income			$	1,301	$	228	Net income			$	748	$	1,301
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
		Vehicle depreciation		777		595			Vehicle depreciation		1,017		777
		Amortization of right-of-use assets		414		492			Amortization of right-of-use assets		503		414
		(Gain) loss on sale of vehicles, net		(497)		(89)			(Gain) loss on sale of vehicles, net		(455)		(497)
		Non-vehicle related depreciation and amortization		109		130			Non-vehicle related depreciation and amortization		108		109

		Stock-based compensation		12		14			Stock-based compensation		16		12
		Amortization of debt financing fees		16		17			Amortization of debt financing fees		19		16
		Early extinguishment of debt costs		—		129
		Net change in assets and liabilities:							Net change in assets and liabilities:
			Receivables	(139)		(117)				Receivables	(52)		(139)
			Income taxes and deferred income taxes	373		(42)				Income taxes and deferred income taxes	150		373
			Accounts payable and other current liabilities	434		428				Accounts payable and other current liabilities	108		434
		Operating lease liabilities		(415)		(489)			Operating lease liabilities		(500)		(415)
		Other, net		(14)		(41)			Other, net		120		(14)
Net cash provided by operating activities	Net cash provided by operating activities			2,371		1,255		Net cash provided by operating activities			1,782		2,371

Investing activities	Investing activities							Investing activities
Property and equipment additions	Property and equipment additions			(76)		(30)		Property and equipment additions			(105)		(76)
Proceeds received on asset sales	Proceeds received on asset sales			2		2		Proceeds received on asset sales			—		2
Net assets acquired (net of cash acquired)	Net assets acquired (net of cash acquired)			(1)		(5)		Net assets acquired (net of cash acquired)			(33)		(1)

Other, net	Other, net			23		(5)		Other, net			—		23
Net cash used in investing activities exclusive of vehicle programs	Net cash used in investing activities exclusive of vehicle programs			(52)		(38)		Net cash used in investing activities exclusive of vehicle programs			(138)		(52)

Vehicle programs:	Vehicle programs:							Vehicle programs:
		Investment in vehicles		(6,269)		(6,203)			Investment in vehicles		(8,881)		(6,269)
		Proceeds received on disposition of vehicles		2,594		2,308			Proceeds received on disposition of vehicles		3,977		2,594
		Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		(210)		(163)			Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		(329)		(210)
		Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		67		61			Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		157		67
				(3,818)		(3,997)					(5,076)		(3,818)
Net cash used in investing activities	Net cash used in investing activities			(3,870)		(4,035)		Net cash used in investing activities			(5,214)		(3,870)

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Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)

(In millions)

(Unaudited)


			Six Months Ended June 30,						Six Months Ended June 30,
			2022		2021				2023		2022
Financing activities	Financing activities						Financing activities
Proceeds from long-term borrowings	Proceeds from long-term borrowings		729		1,100		Proceeds from long-term borrowings		$	—	$	729
Payments on long-term borrowings	Payments on long-term borrowings		(11)		(1,105)		Payments on long-term borrowings		(15)		(11)
Net change in short-term borrowings	Net change in short-term borrowings		—		2		Net change in short-term borrowings		3		—

Repurchases of common stock	Repurchases of common stock		(1,748)		(22)		Repurchases of common stock		(200)		(1,748)
Debt financing fees	Debt financing fees		(6)		(14)		Debt financing fees		(2)		(6)

Net cash used in financing activities exclusive of vehicle programs	Net cash used in financing activities exclusive of vehicle programs		(1,036)		(39)		Net cash used in financing activities exclusive of vehicle programs		(214)		(1,036)

Vehicle programs:	Vehicle programs:						Vehicle programs:
		Proceeds from borrowings	8,921		8,200			Proceeds from borrowings	11,866		8,921
		Payments on borrowings	(6,289)		(4,718)			Payments on borrowings	(8,158)		(6,289)
		Debt financing fees	(14)		(13)			Debt financing fees	(28)		(14)
			2,618		3,469				3,680		2,618
Net cash provided by financing activities	Net cash provided by financing activities		1,582		3,430		Net cash provided by financing activities		3,466		1,582

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash		(25)		(4)		Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash		6		(25)

Net increase in cash and cash equivalents, program and restricted cash	Net increase in cash and cash equivalents, program and restricted cash		58		646		Net increase in cash and cash equivalents, program and restricted cash		40		58
Cash and cash equivalents, program and restricted cash, beginning of period	Cash and cash equivalents, program and restricted cash, beginning of period		626		765		Cash and cash equivalents, program and restricted cash, beginning of period		642		626
Cash and cash equivalents, program and restricted cash, end of period	Cash and cash equivalents, program and restricted cash, end of period		$	684	$	1,411	Cash and cash equivalents, program and restricted cash, end of period		$	682	$	684

See Notes to Consolidated Condensed Financial Statements (Unaudited).

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Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

(Unaudited)

Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Treasury Stock Stockholders’ Equity Attributable to Avis Budget Group, Inc. Non-controlling Interests Total Stockholders’ Equity
Shares Amount Shares Amount
Balance at March 31, 2022 137.1 $ 1 $ 6,646 $ 344 $ (94) (87.4) $ (7,889) $ (992) $ 9 $ (983)
Comprehensive income:
Net income — — — 778 — — — 778 (4) 774
Other comprehensive loss — — — — (36) — — (36) — (36)
Total comprehensive income (loss) 778 (36) 742 (4) 738
Net activity related to restricted stock units — — (3) — — 0.1 — (3) — (3)
Repurchases of common stock — — — — — (1.5) (401) (401) — (401)
Balance at June 30, 2022 137.1 $ 1 $ 6,643 $ 1,122 $ (130) (88.8) $ (8,290) $ (654) $ 5 $ (649)
Balance at March 31, 2021 137.1 $ 1 $ 6,642 $ (1,640) $ (163) (67.2) $ (5,156) $ (316) $ — $ (316)
Comprehensive income:
Net income — — — 398 — — — 398 — 398
Other comprehensive income — — — — 2 — — 2 — 2
Total comprehensive income 398 2 400 — 400
Net activity related to restricted stock units — — 4 — — 0.1 4 8 — 8
Balance at June 30, 2021 137.1 $ 1 $ 6,646 $ (1,242) $ (161) (67.1) $ (5,152) $ 92 $ — $ 92


	Common Stock			Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Stockholders’ Equity Attributable to Avis Budget Group, Inc.		Non-controlling Interests		Total Stockholders’ Equity
	Shares	Amount								Shares		Amount
Balance at March 31, 2023	137.1	$	1	$	6,620	$	2,891	$	(111)	(97.3)		$	(9,845)	$	(444)	$	3	$	(441)


Comprehensive income:
Net income	—	—		—		435		—		—		—		435		1		436
Other comprehensive income	—	—		—		—		21		—		—		21		—		21
Total comprehensive income						435		21						456		1		457


Net activity related to restricted stock units	—	—		5		—		—		—		—		5		—		5
Repurchases of common stock	—	—		—		—		—		(0.7)		(146)		(146)		—		(146)
Balance at June 30, 2023	137.1	$	1	$	6,625	$	3,326	$	(90)	$	(98.0)	$	(9,991)	$	(129)	$	4	$	(125)

Balance at March 31, 2022	137.1	$	1	$	6,646	$	344	$	(94)	(87.4)		$	(7,889)	$	(992)	$	9	$	(983)

Comprehensive income:
Net income (loss)	—	—		—		778		—		—		—		778		(4)		774
Other comprehensive income (loss)	—	—		—		—		(36)		—		—		(36)		—		(36)
Total comprehensive income (loss)						778		(36)						742		(4)		738


Net activity related to restricted stock units	—	—		(3)		—		—		0.1		—		(3)		—		(3)
Repurchases of common stock	—	—		—		—		—		(1.5)		(401)		(401)		—		(401)
Balance at June 30, 2022	137.1	$	1	$	6,643	$	1,122	$	(130)	(88.8)		$	(8,290)	$	(654)	$	5	$	(649)


		Common Stock			Additional Paid-in Capital				Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)		Treasury Stock				Stockholders’ Equity Attributable to Avis Budget Group, Inc.			Non-controlling Interests				Total Stockholders’ Equity				Common Stock					Additional Paid-in Capital				Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)				Treasury Stock					Stockholders’ Equity Attributable to Avis Budget Group, Inc.			Non-controlling Interests			Total Stockholders’ Equity
		Shares	Amount								Shares			Amount						Shares								Amount									Shares							Amount
Balance at December 31, 2021		137.1	$	1			$	6,676				$	(185)	$	(133)	(81.2)		$	(6,579)				$	(220)			$	11		$	(209)
Balance at December 31, 2022																												Balance at December 31, 2022	137.1			$	1		$	6,666			$	2,579		$	(101)			(97.6)		$	(9,848)		$	(703)		$	3		$	(700)

Comprehensive income:	Comprehensive income:																											Comprehensive income:
Net income	Net income	—	—		—				1,307			—		—		—		1,307			(6)				1,301			Net income	—			—		—				747			—				—		—			747			1			748
Other comprehensive income	Other comprehensive income	—	—		—				—			3		—		—		3			—				3			Other comprehensive income	—			—		—				—			11				—		—			11			—			11
Total comprehensive income	Total comprehensive income								1,307			3						1,310			(6)				1,304			Total comprehensive income										747			11									758			1			759

Net activity related to restricted stock units																												Net activity related to restricted stock units	—			—		(41)				—			—				0.3		3			(38)			—			(38)
Repurchases of common stock																												Repurchases of common stock	—			—		—				—			—				(0.7)		(146)			(146)			—			(146)
Balance at June 30, 2023																												Balance at June 30, 2023	137.1			$	1	$	6,625			$	3,326		$	(90)			$	(98.0)	$	(9,991)		$	(129)		$	4		$	(125)

Balance at December 31, 2021																												Balance at December 31, 2021	137.1			$	1	$	6,676			$	(185)		$	(133)			(81.2)		$	(6,579)		$	(220)		$	11		$	(209)

Comprehensive income:																												Comprehensive income:
Net income (loss)																												Net income (loss)	—			—		—				1,307			—				—		—			1,307			(6)			1,301
Other comprehensive income																												Other comprehensive income	—			—		—				—			3				—		—			3			—			3
Total comprehensive income (loss)																												Total comprehensive income (loss)										1,307			3									1,310			(6)			1,304

Net activity related to restricted stock units	Net activity related to restricted stock units	—	—		(33)				—			—		0.3		(3)		(36)			—				(36)			Net activity related to restricted stock units	—			—		(33)				—			—				0.3		(3)			(36)			—			(36)
Repurchases of common stock	Repurchases of common stock	—	—		—				—			—		(7.9)		(1,708)		(1,708)			—				(1,708)			Repurchases of common stock	—			—		—				—			—				(7.9)		(1,708)			(1,708)			—			(1,708)

Balance at June 30, 2022	Balance at June 30, 2022	137.1	$	1	$	6,643			$	1,122		$	(130)	(88.8)		$	(8,290)	$	(654)		$	5			$	(649)		Balance at June 30, 2022	137.1			$	1	$	6,643			$	1,122		$	(130)			(88.8)		$	(8,290)		$	(654)		$	5		$	(649)

Balance at December 31, 2020		137.1	$	1	$	6,668			$	(1,470)		$	(187)	(67.3)		$	(5,167)	$	(155)		$	—			$	(155)

Comprehensive income:
Net income		—	—		—				228			—		—		—		228			—				228
Other comprehensive income		—	—		—				—			26		—		—		26			—				26
Total comprehensive income									228			26						254			—				254

Net activity related to restricted stock units		—	—		(22)				—			—		0.3		25		3			—				3
Repurchases of common stock		—	—		—				—			—		(0.1)		(10)		(10)			—				(10)
Balance at June 30, 2021		137.1	$	1	$	6,646			$	(1,242)		$	(161)	(67.1)		$	(5,152)	$	92		$	—			$	92

See Notes to Consolidated Condensed Financial Statements (Unaudited).

Avis Budget Group, Inc.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)

(Unless otherwise noted, all dollar amounts in tables are in millions, except per share amounts)

1. Basis of Presentation

Avis Budget Group, Inc. provides mobility solutions to businesses and consumers worldwide. The accompanying unaudited Consolidated Condensed Financial Statements include the accounts and transactions of Avis Budget Group, Inc. and its subsidiaries, as well as entities in which Avis Budget Group, Inc. directly or indirectly has a controlling financial interest (collectively, “we”, “our”, “us”, or the “Company”), and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting.

We operate the following reportable business segments:

•Americas—- consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in ~~certain~~the areas in which we do not operate directly.

•International— - consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in ~~certain~~the areas in which we do not operate directly.

The operating results of acquired businesses are included in the accompanying Consolidated Condensed Financial Statements from the dates of acquisition. Differences between the preliminary allocation of purchase price and the final allocation for our ~~2021~~2022 acquisitions of various licensees were not material. We consolidate joint venture activities when we have ~~more than 50%~~a controlling ~~interests~~interest and record non-controlling interests within stockholders’ equity and the statement of comprehensive income equal to the percentage of ownership interest retained in such entities by the respective non-controlling party.

In presenting the Consolidated Condensed Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Consolidated Condensed Financial Statements contain all adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These financial statements should be read in conjunction with our ~~2021~~2022 Annual Report on Form 10-K (the ~~“2021~~“2022 Form 10-K”).

Summary of Significant Accounting Policies

Our significant accounting policies are fully described in Note 2 – Summary of Significant Accounting Policies in our ~~2021~~2022 Form 10-K.

Cash and cash equivalents, Program cash and Restricted cash. The following table provides a detail of cash and cash equivalents, program and restricted cash reported within the Consolidated Condensed Balance Sheets to the amounts shown in the Consolidated Condensed Statements of Cash Flows.


		As of June 30,					As of June 30,
		2022		2021			2023		2022
Cash and cash equivalents	Cash and cash equivalents	$	579	$	1,324	Cash and cash equivalents	$	571	$	579
Program cash	Program cash	103		84		Program cash	109		103
Restricted cash (a)	Restricted cash (a)	2		3		Restricted cash (a)	2		2
Total cash and cash equivalents, program and restricted cash	Total cash and cash equivalents, program and restricted cash	$	684	$	1,411	Total cash and cash equivalents, program and restricted cash	$	682	$	684

________

(a)Included within other current assets.

Vehicle Programs. We present separately the financial data of our vehicle programs. These programs are distinct from our other activities since the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.

Transaction-related costs, net. Transaction-related costs, net are classified separately in the Consolidated Condensed Statements of Comprehensive Income. These costs are comprised of expenses primarily related to acquisition-related activities such as due diligence and other advisory costs, expenses related to the integration of the acquiree’s operations with those of our operations, including the implementation of best practices and process improvements, non-cash gains and losses related to re-acquired rights, expenses related to pre-acquisition contingencies and contingent consideration related to acquisitions.

Currency Transactions. We record the gain or loss on foreign currency transactions on certain intercompany loans and the gain or loss on intercompany loan hedges within interest expense related to corporate debt, net.

Divestitures. In February 2022, we completed the sale of our operations in the United States Virgin Islands for $13 million, for the right to operate the Avis brand. During the six months ended June 30, 2022, we recorded a gain of $2 million within restructuring and other related charges.

In March 2022, we completed the sale of our operations in the Netherlands for $15 million, subject to working capital adjustments, for the right to operate the Avis and Budget brands. During the six months ended June 30, 2022, we recorded a loss of $7 million, net of impact of foreign currency adjustments, within restructuring and other related charges. The Netherlands operations were reported within our International reporting segment.

Variable Interest Entity (“VIE”). We review our investments to determine if they are VIEs. A VIE is an entity in which either (i) the equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. Entities that are determined to be VIEs are consolidated if we are the primary beneficiary of the entity. The primary beneficiary possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. We will reconsider our original assessment of a VIE upon the occurrence of certain events such as contributions and redemptions, either by us, or third parties, or amendments to an entity’s governing documents. On an ongoing basis, we reconsider whether we are deemed to be a VIE’s primary beneficiary. See Note 15 – Related Party Transactions for our VIE investment in our former subsidiary.

Investments. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had equity method investments with a carrying value of ~~$68~~$85 million and ~~$72~~$77 million, respectively, which are ~~recorded within~~included in other non-current assets. Earnings from our equity method investments are ~~reported~~included within operating expenses. For the three months ended June 30, ~~2022~~2023 and ~~2021, we recorded $2 million related to our equity method investments, in each period. For the six months ended June 30,~~ 2022, ~~and 2021,~~ we recorded $3 million and $2 million related to our equity method investments, respectively. For the six months ended June 30, 2023 and 2022, we recorded $4 million and $3 million related to our equity method investments, respectively. See Note 15 – Related Party Transactions for our equity method investment in our former subsidiary.

Revenues. Revenues are recognized under “Leases (Topic 842),” with the exception of royalty fee revenue derived from our licensees and revenue related to our customer loyalty program, which were approximately $42 million an~~d $19 million during~~during the three months ended June 30, 2023 and 2022, in each period, and ~~2021, respectively,~~$86 million and $76 ~~million and $59~~ million during the six months ended June 30, 2023 and 2022, ~~and 2021, respectively.~~respectively.

The following table presents our revenues disaggregated by geography:

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Americas $ 2,567 $ 1,974 $ 4,567 $ 3,054
Europe, Middle East and Africa 525 281 849 484
Asia and Australasia 152 116 260 205
Total revenues $ 3,244 $ 2,371 $ 5,676 $ 3,743


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Americas	$	2,428	$	2,567	$	4,444	$	4,567
Europe, Middle East and Africa	543		525		910		849
Asia and Australasia	152		152		326		260
Total revenues	$	3,123	$	3,244	$	5,680	$	5,676

The following table presents our revenues disaggregated by brand:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Avis	Avis	$	1,753	$	1,204	$	3,034	$	1,921	Avis	$	1,748	$	1,753	$	3,163	$	3,034
Budget	Budget	1,284		985		2,266		1,509		Budget	1,180		1,284		2,157		2,266
Other	Other	207		182		376		313		Other	195		207		360		376
Total revenues	Total revenues	$	3,244	$	2,371	$	5,676	$	3,743	Total revenues	$	3,123	$	3,244	$	5,680	$	5,676

________

Other includes Zipcar and other operating brands.

Recently Issued Accounting Pronouncements

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which amends Topic 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2021-08 ~~becomes~~became effective for us on January 1, 2023. ~~Early adoption is permitted on a retrospective or prospective basis.~~ The adoption of this accounting pronouncement isdid not ~~expected to~~ have a material impact on our Consolidated Condensed Financial Statements.

~~Reference Rate Reform~~

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which amends ASU 2020-04 and clarifies the scope and guidance of Topic 848 to allow derivatives impacted by the reference rate reform to qualify for certain optional expedients and exceptions for contract modifications and hedge accounting. The guidance is optional and is effective for a limited period of time through December 31, 2022. As of June 30, 2022, this guidance had no impact on our Consolidated Condensed Financial Statements and we will continue to evaluate this guidance.

2. Leases

Lessor

The following table presents our lease revenues disaggregated by geography:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Americas	Americas	$	2,549	$	1,972	$	4,534	$	3,026	Americas	$	2,410	$	2,549	$	4,405	$	4,534
Europe, Middle East and Africa	Europe, Middle East and Africa	505		268		814		460		Europe, Middle East and Africa	523		505		872		814
Asia and Australasia	Asia and Australasia	148		112		252		198		Asia and Australasia	148		148		317		252
Total lease revenues	Total lease revenues	$	3,202	$	2,352	$	5,600	$	3,684	Total lease revenues	$	3,081	$	3,202	$	5,594	$	5,600

The following table presents our lease revenues disaggregated by brand:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Avis	Avis	$	1,728	$	1,201	$	2,989	$	1,891	Avis	$	1,721	$	1,728	$	3,109	$	2,989
Budget	Budget	1,270		975		2,242		1,491		Budget	1,168		1,270		2,132		2,242
Other	Other	204		176		369		302		Other	192		204		353		369
Total lease revenues	Total lease revenues	$	3,202	$	2,352	$	5,600	$	3,684	Total lease revenues	$	3,081	$	3,202	$	5,594	$	5,600

_______

Other includes Zipcar and other operating brands.

Lessee

We have operating and finance leases for rental locations, corporate offices, vehicle rental fleet and equipment. Many of our operating leases for rental locations contain concession agreements with various airport authorities that allow us to conduct our vehicle rental operations on site. In general, concession fees for airport locations are based on a percentage of total commissionable revenue as defined by each airport authority, some of which are subject to minimum annual guaranteed amounts. Concession fees other than minimum annual guaranteed amounts are not included in the measurement of operating lease Right of Use (“ROU”) assets and operating lease liabilities, and are recorded as variable lease expense as incurred. Our operating leases for rental locations often also require us to pay or reimburse operating expenses.

The components of lease expense are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Property leases (a)	Property leases (a)									Property leases (a)
Operating lease expense	Operating lease expense	$	168	$	134	$	329	$	273	Operating lease expense	$	214	$	168	$	419	$	329
Variable lease expense	Variable lease expense	152		112		254		166		Variable lease expense	108		152		191		254
Total property lease expense	Total property lease expense	$	320	$	246	$	583	$	439	Total property lease expense	$	322	$	320	$	610	$	583

__________

(a) Primarily within operating ~~expense and incl~~u~~des $(2) million~~ an~~d $(3) million~~ ~~for the~~ ~~three months ended June 30, 2022~~ ~~and 2021, respectively, and $(9) million and~~ ~~$16 million for the~~ ~~six months ended June 30, 2022 and~~ ~~2021, respectively, of minimum annual guaranteed rent in excess of concession fees, net, as defined in our rental concession agreements.~~expenses.

Supplemental balance sheet information related to leases is as follows:


		As of June 30, 2022			As of December 31, 2021				As of June 30, 2023			As of December 31, 2022
Property leases	Property leases							Property leases
Operating lease ROU assets	Operating lease ROU assets	$	2,293		$	2,368		Operating lease ROU assets	$	2,547		$	2,405

Short-term operating lease liabilities (a)	Short-term operating lease liabilities (a)	$	487		$	496		Short-term operating lease liabilities (a)	$	506		$	555
Long-term operating lease liabilities	Long-term operating lease liabilities	1,843			1,910			Long-term operating lease liabilities	2,079			1,884
Operating lease liabilities	Operating lease liabilities	$	2,330		$	2,406		Operating lease liabilities	$	2,585		$	2,439

Weighted average remaining lease term	Weighted average remaining lease term	8.6 years			8.8 years			Weighted average remaining lease term	8.6 years			8.2 years
Weighted average discount rate	Weighted average discount rate	3.88		%	3.84		%	Weighted average discount rate	4.54		%	4.30		%

_________

(a) Included in ~~Accounts~~accounts payable and other current liabilities.

Supplemental cash flow information related to leases is as follows:


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash payments for lease liabilities within operating activities:	Cash payments for lease liabilities within operating activities:					Cash payments for lease liabilities within operating activities:
Property operating leases	Property operating leases	$	354	$	407	Property operating leases	$	431	$	354
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:	Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:					Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:
Property operating leases	Property operating leases	$	311	$	269	Property operating leases	$	572	$	311

3. Restructuring and Other Related Charges

~~Restructuring~~

During second quarter 2022, we initiated a restructuring plan to focus on consolidating our global operations by designing new processes and implementing new systems (“Cost ~~Optimization Plan”~~Optimization”). ~~During the six months ended~~As of June 30, ~~2022,~~2023, we formally communicated the termination of employment to approximately 85270 employees as part of this process, and terminated approximately 75255 of these employees. ~~The Company expects~~We expect further restructuring expense of approximately $5$2 million related to this initiative to be incurred ~~in 2022.~~this year.

~~During first quarter 2021, we initiated a global~~The following table presents our restructuring liabilities and related activities by reportable segment as it relates to our Cost Optimization plan, ~~to focus on cost discipline by reviewing headcounts, facilities and contractor agreements. We~~which are transforming our business as we prepare to exit the COVID-19 crisis by controlling fixed costs and matching variable costs to demand (“T21”). During the six months ended June 30, 2022, we formally communicated the termination of employment to approximately 55 emp~~loyees, as part of this process, and terminated approximately~~ ~~50 of these employees. We expect no further restructuring expense to be incurred~~all personnel related in ~~2022 under this initiative.~~nature:


		Americas		International		Total
Balance as of January 1, 2023		$	1	$	3	$	4
	Restructuring expense	3		2		5
	Restructuring payments and utilization	(3)		(3)		(6)
Balance as of June 30, 2023		$	1	$	2	$	3

During first quarter 2020, we initiated a global restructuring plan to reduce operating costs, such as headcount and facilities, due to declining reservations and revenue resulting from COVID-19 outbreak (“2020 Optimization Plan”). We expect no further restructuring expenses related to this initiative.

During third quarter 2019, we initiated a restructuring plan to exit our operations in Brazil by closing rental facilities, disposing of assets and terminating personnel (“Brazil”). We expect no further restructuring expense related to this initiative.

The following tables summarize the changes to our restructuring-related liabilities and identifies the amounts recorded within our reporting segments for restructuring charges and corresponding payments and utilizations:

Americas International Total
Balance as of January 1, 2022 $ 2 $ 8 $ 10
Restructuring expense:
Cost Optimization 1 3 4
T21 1 2 3
Brazil 1 — 1
Restructuring payment/utilization:
Cost Optimization (1) (2) (3)
T21 (1) (7) (8)
2020 Optimization — (1) (1)
Brazil (1) — (1)
Balance as of June 30, 2022 $ 2 $ 3 $ 5
Personnel Facility
Related
Other (a)
Total
Balance as of January 1, 2022 $ 7 $ 2 $ 1 $ 10
Restructuring expense:
Cost Optimization 4 — — 4
T21 3 — — 3
Brazil — — 1 1
Restructuring payment/utilization:
Cost Optimization (3) — — (3)
T21 (8) — — (8)
2020 Optimization (1) — — (1)
Brazil — — (1) (1)
Balance as of June 30, 2022 $ 2 $ 2 $ 1 $ 5

~~_________~~

~~(a)Includes expenses primarily related to the disposition of vehicles.~~

~~Other Related Charges~~

~~Officer Separation Costs~~

In April 2022, the Company announced the departure of Veresh Sita as Executive Vice President and Chief Digital and Innovation Officer effective May 13, 2022. In connection with Mr. Sita’s separation, the Company recorded other related charges of approximately $1 million, inclusive of accelerated stock-based compensation expense, for the three and six months ended June 30, 2022.

4. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (“EPS”) (shares in millions):


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022		2021				2023		2022		2023		2022
Net income attributable to Avis Budget Group, Inc. for basic and diluted EPS	Net income attributable to Avis Budget Group, Inc. for basic and diluted EPS		$	778	$	398	$	1,307	$	228	Net income attributable to Avis Budget Group, Inc. for basic and diluted EPS		$	435	$	778	$	747	$	1,307

Basic weighted average shares outstanding	Basic weighted average shares outstanding		48.5		69.9		50.8		69.9		Basic weighted average shares outstanding		39.1		48.5		39.0		50.8
Non-vested stock (a)	Non-vested stock (a)		1.0		0.7		1.2		0.7		Non-vested stock (a)		0.4		1.0		0.5		1.2
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding		49.5		70.6		52.0		70.6		Diluted weighted average shares outstanding		39.5		49.5		39.5		52.0

Earnings per share:	Earnings per share:										Earnings per share:
		Basic	$	16.05	$	5.69	$	25.74	$	3.26		Basic	$	11.13	$	16.05	$	19.16	$	25.74
		Diluted	$	15.71	$	5.63	$	25.14	$	3.23		Diluted	$	11.01	$	15.71	$	18.93	$	25.14

________

(a) For the three and six months ended June 30, 2023, 0.1 million non-vested stock awards, in each period, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding. For the six months ended June 30,2022, 0.1 million non-vested stock awards have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.

5. Other Current Assets

Other current assets consisted of:


		As of June 30, 2022		As of December 31, 2021			As of June 30, 2023		As of December 31, 2022
Prepaid expenses	Prepaid expenses	$	301	$	205	Prepaid expenses	$	294	$	252
Sales and use taxes	Sales and use taxes	207		238		Sales and use taxes	312		142
Other	Other	107		95		Other	159		112
Other current assets	Other current assets	$	615	$	538	Other current assets	$	765	$	506

6. Acquisitions

During the six months ended June 30, 2023, we completed the acquisition of a licensee in North America for approximately $14 million, plus approximately $20 million for acquired fleet. This investment is in-line with our strategy to re-acquire licensees when advantageous to expand our footprint of Company-operated locations. The acquired fleet was financed under our existing financing arrangements. In connection with this acquisition, approximately $14 million was recorded to other intangibles related to franchise agreements. The license agreements are being amortized over a weighted average useful life of approximately five years. The fair value of the assets acquired and liabilities assumed has not yet been finalized and is therefore subject to change.

7. Intangible Assets

Intangible assets consisted of:


		As of June 30, 2022						As of December 31, 2021							As of June 30, 2023						As of December 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets	Amortized Intangible Assets													Amortized Intangible Assets
License agreements	License agreements	$	286	$	204	$	82	$	298	$	193	$	105	License agreements	$	305	$	225	$	80	$	290	$	217	$	73
Customer relationships	Customer relationships	245		201		44		257		204		53		Customer relationships	250		214		36		247		207		40
Other	Other	47		36		11		51		36		15		Other	51		43		8		48		39		9
Total	Total	$	578	$	441	$	137	$	606	$	433	$	173	Total	$	606	$	482	$	124	$	585	$	463	$	122
Unamortized Intangible Assets	Unamortized Intangible Assets													Unamortized Intangible Assets
Goodwill	Goodwill	$	1,066					$	1,108					Goodwill	$	1,082					$	1,070
Trademarks	Trademarks	$	548					$	551					Trademarks	$	545					$	544

For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, amortization expense related to amortizable intangible assets was approximately ~~$10~~$6 million and ~~$14~~$10 million, respectively. For the six months ended June 30, 2023 and 2022, ~~and2021,~~ amortization expense related to amortizable intangible assets was ~~approximately $26~~approximately $14 million and ~~$32~~$26 million, respectively. Based on our amortizable intangible assets at June 30, ~~2022,~~2023, we expect amortization expense of approximately ~~$18~~$14 million for the remainder of ~~2022, $26 million for~~ 2023, ~~$21~~$25 million for 2024, ~~$15~~$19 million for 2025, $18 million for 2026, $14 million for ~~2026~~2027 and ~~$12~~$10 million for ~~2027,~~2028, excluding effects of currency exchange rates.

7. 8. Vehicle Rental Activities

The components of vehicles, net within assets under vehicle programs ~~were~~are as follows:


		As of		As of			As of		As of
		June 30,		December 31,			June 30,		December 31,
		2022		2021			2023		2022
Rental vehicles	Rental vehicles	$	18,161	$	14,612	Rental vehicles	$	22,725	$	17,819
Less: Accumulated depreciation	Less: Accumulated depreciation	(2,116)		(1,911)		Less: Accumulated depreciation	(2,407)		(2,211)
		16,045		12,701			20,318		15,608
Vehicles held for sale	Vehicles held for sale	270		165		Vehicles held for sale	276		317
Vehicles, net investment in lease (a)						Vehicles, net investment in lease (a)	31		36
Vehicles, net	Vehicles, net	$	16,315	$	12,866	Vehicles, net	$	20,625	$	15,961

________

(a) See Note 15 – Related Party Transactions.

The components of vehicle depreciation and lease charges, net are summarized below:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Depreciation expense	Depreciation expense	$	396	$	336	$	777	$	595	Depreciation expense	$	540	$	396	$	1,017	$	777
Lease charges	Lease charges	32		42		65		86		Lease charges	40		32		78		65
(Gain) loss on sale of vehicles, net	(Gain) loss on sale of vehicles, net	(194)		(40)		(497)		(89)		(Gain) loss on sale of vehicles, net	(205)		(194)		(455)		(497)
Vehicle depreciation and lease charges, net	Vehicle depreciation and lease charges, net	$	234	$	338	$	345	$	592	Vehicle depreciation and lease charges, net	$	375	$	234	$	640	$	345

At June 30, ~~2022~~2023 and ~~2021,~~2022, we had payables related to vehicle purchases included in liabilities under vehicle programs - other of ~~$249~~$443 million and ~~$485~~$249 million, respectively, and receivables related to vehicle sales included in assets under vehicle programs - receivables from vehicle manufacturers and other of ~~$74~~$140 million and ~~$104~~$74 million, respectively.

8.9. Income Taxes

Our effective tax rate for the six months ended June 30, ~~2022 and 2021 were provisions~~2023 was a provision of ~~26.8% a~~n~~d 3.4%, respectively.~~24.8%. Such ~~rates~~rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes.

Our effective tax rate for the six months ended June 30, 2022 was a provision of 26.8%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes.

9.10. Accounts Payable and Other Current Liabilities

Accounts payable and other current liabilities consisted of:


		As of		As of			As of		As of
		June 30,		December 31,			June 30,		December 31,
		2022		2021			2023		2022
Accounts payable	Accounts payable	$	551	$	407	Accounts payable	$	573	$	466
Short-term operating lease liabilities	Short-term operating lease liabilities	487		496		Short-term operating lease liabilities	506		555
Deferred lease revenues - current	Deferred lease revenues - current	372		185		Deferred lease revenues - current	362		188
Accrued advertising and marketing	Accrued advertising and marketing	280		218		Accrued advertising and marketing	298		268
Accrued sales and use taxes	Accrued sales and use taxes	253		313		Accrued sales and use taxes	271		246
Accrued payroll and related	Accrued payroll and related	202		193		Accrued payroll and related	171		205
Public liability and property damage insurance liabilities – current	Public liability and property damage insurance liabilities – current	159		159		Public liability and property damage insurance liabilities – current	178		174
Other	Other	440		418		Other	451		445
Accounts payable and other current liabilities	Accounts payable and other current liabilities	$	2,744	$	2,389	Accounts payable and other current liabilities	$	2,810	$	2,547

~~10.~~11. Long-term Corporate Debt and Borrowing Arrangements

Long-term corporate debt and borrowing arrangements consisted of:


				As of				As of							As of				As of
		Maturity Date		June 30,				December 31,				Maturity Date			June 30,				December 31,
			2022			2021								2023			2022
4.125% euro-denominated Senior Notes	4.125% euro-denominated Senior Notes		November 2024			$	315			$	341		4.125% euro-denominated Senior Notes	November 2024			$	327			$	321
4.500% euro-denominated Senior Notes	4.500% euro-denominated Senior Notes	May 2025		262				284		4.500% euro-denominated Senior Notes		May 2025			273				268
4.750% euro-denominated Senior Notes	4.750% euro-denominated Senior Notes	January 2026		367				398		4.750% euro-denominated Senior Notes		January 2026			382				375
5.750% Senior Notes	5.750% Senior Notes	July 2027		730				728		5.750% Senior Notes		July 2027			734				732
4.750% Senior Notes	4.750% Senior Notes	April 2028		500				500		4.750% Senior Notes		April 2028			500				500
5.375% Senior Notes	5.375% Senior Notes	March 2029		600				600		5.375% Senior Notes		March 2029			600				600
Floating Rate Term Loan (a)	Floating Rate Term Loan (a)	August 2027		1,181				1,187		Floating Rate Term Loan (a)		August 2027			1,170				1,176
Floating Rate Term Loan(b)	Floating Rate Term Loan(b)	March 2029		728				—		Floating Rate Term Loan(b)		March 2029			723				725
Other ~~(b)~~(c)	Other ~~(b)~~(c)			18				19		Other ~~(b)~~(c)					33				18
Deferred financing fees	Deferred financing fees			(50)				(48)		Deferred financing fees					(40)				(44)
Total	Total			4,651				4,009		Total					4,702				4,671
Less: Short-term debt and current portion of long-term debt	Less: Short-term debt and current portion of long-term debt			27				19		Less: Short-term debt and current portion of long-term debt					34				27
Long-term debt	Long-term debt			$	4,624			$	3,990	Long-term debt					$	4,668			$	4,644

__________

(a)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of June 30, ~~2022,~~2023, the floating rate term loan due 2027 bears interest at one-month ~~LIBOR~~Secured Overnight Financing Rate (“SOFR”) plus 175 basis points, for an aggregate rate of ~~3.42%~~6.97%. We have entered into a swap to hedge $700 million of ~~its~~ interest rate exposure related to the floating rate term loan at an aggregate rate of ~~4.75%~~4.72%.

(b)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of June 30, 2023, the floating rate term loan due 2029 bears interest at one-month SOFR plus 350 basis points for an aggregate rate of 8.70%.

(c)Primarily includes finance leases, which are secured by liens on the related assets.

In March 2022, we entered into a $750 million Floating Rate Term Loan due March 2029, at a price of 97% of the aggregate principal amount, with interest paid monthly, which is part of our senior credit facilities. The Floating Rate Term Loan due March 2029 bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 350 basis points for an aggregate rate of 5.13%.

Committed Credit Facilities and Available Funding Arrangements

As of June 30, ~~2022,~~2023, the committed corporate credit facilities available to us and/or our subsidiaries were as follows:

Total
Capacity Outstanding
Borrowings Letters of Credit Issued Available
Capacity
Senior revolving credit facility maturing 2026 (a)
$ 1,950 $ — $ 1,679 $ 271


	Total Capacity		Outstanding Borrowings		Letters of Credit Issued		Available Capacity
Senior revolving credit facility maturing 2026 (a)	$	2,000	$	—	$	1,493	$	507

__________

(a)The senior revolving credit facility bears interest at one-month ~~LIBOR~~SOFR plus 175 basis points and is part of our senior credit facilities, which include the floating rate term loan and the senior revolving credit facility, and which are secured by pledges of capital stock of certain of our subsidiaries, liens on substantially all of our intellectual property and certain other real and personal property.

Debt Covenants

The agreements governing our indebtedness contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries, the incurrence of additional indebtedness and/or liens by us and certain of our subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback transactions. Our senior credit facility also contains a maximum leverage ratio requirement. As of June 30, ~~2022,~~2023, we were in compliance with the financial covenants governing our indebtedness.

~~11.~~12. Debt Under Vehicle Programs and Borrowing Arrangements

Debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”), consisted of:


		As of		As of			As of		As of
		June 30,		December 31,			June 30,		December 31,
		2022		2021			2023		2022
Americas - Debt due to Avis Budget Rental Car Funding	Americas - Debt due to Avis Budget Rental Car Funding	$	11,377	$	8,889	Americas - Debt due to Avis Budget Rental Car Funding	$	14,440	$	11,322
Americas - Debt borrowings	Americas - Debt borrowings	588		612		Americas - Debt borrowings	885		598
International - Debt borrowings	International - Debt borrowings	1,947		1,757		International - Debt borrowings	2,231		1,700
International - Finance leases	International - Finance leases	170		177		International - Finance leases	202		176
Other	Other	68		3		Other	85		65
Deferred financing fees (a)	Deferred financing fees (a)	(52)		(48)		Deferred financing fees (a)	(69)		(52)
Total	Total	$	14,098	$	11,390	Total	$	17,774	$	13,809

__________

(a)Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$46~~$65 million and ~~$41~~$47 million, respectively.

In ~~April 2022,~~January 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued ~~$660~~$500 million and $350 million of asset-backed notes to investors with an expected final payment date of ~~August 2027, with~~April 2028 and October 2026, respectively, and a weighted average interest rate of ~~3.96%.~~5.36% and 5.31%, respectively.

In ~~May 2022,~~April 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued ~~$87 million, $68~~$450 million and ~~$55~~$550 million of asset-backed notes to investors with an expected final payment ~~dates~~date of ~~March 2025, March 2023~~February 2027 and ~~September 2023,~~June 2028, respectively, ~~with~~and a weighted average interest rate of ~~5.10%.~~5.67% and 5.76%, respectively.

In June ~~2022,~~2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary ~~entered into $800~~issued $476 million and $526 million of ~~variable funding~~ asset-backed notes to investors with an expected final payment date of ~~September 2022. As~~April 2027 and December 2028, respectively, and a weighted average interest rate of ~~June 30, 2022, no funds were drawn on these notes.~~5.91% and 5.98%, respectively.

Debt Maturities

The following table provides the contractual maturities of our debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding, at June 30, ~~2022:~~2023:


	Debt under Vehicle Programs (a)
Within 1 year (b)	$	~~2,287~~2,995
Between 1 and 2 years (c)	~~5,480~~6,723
Between 2 and 3 years (d)	~~3,185~~2,811
Between 3 and 4 years	~~1,578~~2,816
Between 4 and 5 years	~~1,459~~1,783
Thereafter	~~161~~715
Total	$	~~14,150~~17,843

__________

(a) Vehicle-backed debt primarily represents asset-backed securities.

(b) Includes ~~$0.9~~$1.5 billion of bank and bank-sponsored facilities.

(d) Includes ~~$1.4~~$0.1 billion of bank and bank-sponsored ~~facilities.~~facilities.

Committed Credit Facilities and Available Funding Arrangements

As of June 30, ~~2022,~~2023, available funding under our debt arrangements related to our vehicle programs, including related party debt due to Avis Budget Rental Car Funding, consisted of:


		Total Capacity (a)		Outstanding Borrowings (b)		Available Capacity			Total Capacity (a)		Outstanding Borrowings (b)		Available Capacity
Americas - Debt due to Avis Budget Rental Car Funding	Americas - Debt due to Avis Budget Rental Car Funding	$	12,301	$	11,377	$	924	Americas - Debt due to Avis Budget Rental Car Funding	$	14,969	$	14,440	$	529
Americas - Debt borrowings	Americas - Debt borrowings	888		588		300		Americas - Debt borrowings	1,006		885		121
International - Debt borrowings	International - Debt borrowings	2,598		1,947		651		International - Debt borrowings	2,677		2,231		446
International - Finance leases	International - Finance leases	201		170		31		International - Finance leases	228		202		26
Other	Other	68		68		—		Other	85		85		—
Total	Total	$	16,056	$	14,150	$	1,906	Total	$	18,965	$	17,843	$	1,122

__________

(a) Capacity is subject to maintaining sufficient assets to collateralize debt. The total capacity for Americas - Debt due to Avis Budget Rental Car Funding includes increases from an amendment and renewal of our ~~variable funding~~ asset-backed ~~notes~~variable-funding financing facilities during March 2023 and subsequently amended during April ~~2022.~~2023.

(b) The outstanding debt is collateralized by vehicles and related assets of ~~$13.4~~$16.8 billion for Americas - Debt due to Avis Budget Rental Car Funding; ~~$0.9~~$1.3 billion for Americas - Debt borrowings; ~~$2.5~~$3.1 billion for International - Debt borrowings; and $0.2 billion for International - Finance leases.

Debt Covenants

The agreements under our vehicle-backed funding programs contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries and restrictions on indebtedness, mergers, liens, liquidations, and sale and leaseback transactions and in some cases also require compliance with certain financial requirements. As of June 30, ~~2022,~~2023, we are not aware of any instances of non-compliance with any of the financial or restrictive covenants contained in the debt agreements under our vehicle-backed funding programs.

~~12.~~13. Commitments and Contingencies

Contingencies

In 2006, we completed the spin-offs of our Realogy and Wyndham ~~subsidiaries.~~subsidiaries (now known as Anywhere Real Estate, Inc., and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co., respectively). We do not believe that the impact of any resolution of pre-existing contingent liabilities in connection with the spin-offs should result in a material liability to us in relation to our consolidated financial position or liquidity, as ~~Realogy~~Anywhere Real Estate, Inc., Wyndham Hotels and ~~Wyndham each~~Resorts, Inc. and Travel + Leisure Co. have agreed to

assume responsibility for these liabilities.

In March 2023, the California Office of Tax Appeals (“OTA”) issued an opinion in a case involving notices of proposed assessment of California corporation franchise tax for tax year 1999 issued to us. The case involves whether (i) the notices of proposed assessment were barred by the statute of limitations; and (ii) a transaction undertaken by us in tax year 1999 constituted a tax-free reorganization under the Internal Revenue Code (“IRC”). The OTA concluded that the notices of proposed assessment were not barred by the statute of limitations and that the 1999 transaction was not a tax-free reorganization under the IRC. Anywhere Real Estate, Inc. has assumed 62.5%, and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have assumed 37.5% of the potential tax liability in this matter, respectively. We have filed a petition for rehearing and intend to vigorously pursue this matter.

We are also named in litigation that is primarily related to the businesses of our former subsidiaries, including Realogy and Wyndham. We are entitled to indemnification from such entities for any liability resulting from such litigation.

In November 2011, Jose Mendez v. Avis Budget Group Inc., et al. was filed in U.S. District Court for the District of New Jersey. The plaintiff seeks to represent a purported nationwide class and 2 sub-classes of certain renters of vehicles from our Avis and Budget subsidiaries from April 2007 through December 2015. The plaintiff seeks damages in connection with claims relating to our electronic toll service, including that administrative fees and toll charges were not properly disclosed to customers and/or were excessive. Plaintiff’s motion for class certification was approved by the Court in November 2017. The parties have entered into a settlement agreement and plan to file a motion for preliminary approval of the settlement in due course. We have been named as a defendant in ~~other~~ purported consumer class action ~~law suits,~~lawsuits, including ~~a class action filed against us in Florida seeking damages in connection with a breach of contract claim and 2~~three purported class action suits filed against us in New Jersey, 1one related to fines and fees charged to car renters by us for violations incurred during the course of their rental, one seeking damages in connection with a claim relating to an alleged breach of contract and another related to ancillary charges at our Payless subsidiary. ~~In the Florida lawsuit, the Court has entered an order preliminarily approving a proposed settlement.~~

We are currently involved, and in the future may be involved, in claims and/or legal proceedings, including class actions, and governmental inquiries that are incidental to our vehicle rental and car sharing operations, including, among others, contract and licensee disputes, competition matters, employment and wage-and-hour claims, insurance and liability claims, intellectual property claims, business practice disputes

and other regulatory, environmental, commercial and tax matters. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable resolutions could occur. We estimate that the potential exposure resulting from adverse outcomes of current legal proceedings in which it is reasonably possible that a loss may be incurred could, in the aggregate, be up to approximately $35 million in excess of amounts accrued as of June 30, ~~2022.~~2023. We do not believe that the impact should result in a material liability to us in relation to our consolidated financial condition or results of operations.

Commitments to Purchase Vehicles

We maintain agreements with vehicle manufacturers under which we have agreed to purchase approximately ~~$3.8~~$5.6 billion of vehicles from manufacturers over the next 12 months, a ~~$2.1~~$1.1 billion decrease compared to December 31, ~~2021,~~2022, financed primarily through the issuance of vehicle-backed debt and cash received upon the disposition of vehicles. Certain of these commitments are subject to the vehicle manufacturers satisfying their obligations under their respective repurchase and guaranteed depreciation agreements.

Concentrations

Concentrations of credit risk as of June 30, ~~2022~~2023 include (i) risks related to our repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers and primarily with respect to receivables for program cars that have been disposed but for which we have not yet received payment from the manufacturers and (ii) risks related to Realogy and Wyndham, including receivables of ~~$26~~$36 million and ~~$16~~$22 million, respectively, related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with their disposition.

~~13.~~14. Stockholders' Equity

Share Repurchases

Our Board of Directors has authorized the repurchase of up to $~~7.1~~8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in ~~May 2022~~February 2023 (the “Stock Repurchase Program”). During the six months ended June 30, ~~2022,~~2023, we repurchased approximately ~~7.9 million~~723 thousand shares of common stock at a cost of approximately ~~$1.7 billion~~$146.1 million under the program. As of June 30, ~~2022,~~2023, approximately ~~$2.25~~$1.5 billion of authorization remains available to repurchase common stock under the program.

Total Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income.

The components of other comprehensive income (loss) were as follows:


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022		2021				2023		2022		2023		2022
Net income	Net income		$	774	$	398	$	1,301	$	228	Net income		$	436	$	774	$	748	$	1,301
		Less: net loss attributable to non-controlling interests	(4)		—		(6)		—			Less: net income (loss) attributable to non-controlling interests	1		(4)		1		(6)
Net income attributable to Avis Budget Group, Inc.	Net income attributable to Avis Budget Group, Inc.		778		398		1,307		228		Net income attributable to Avis Budget Group, Inc.		435		778		747		1,307
Other comprehensive income (loss):	Other comprehensive income (loss):										Other comprehensive income (loss):
		Currency translation adjustments (net of tax of $(14), $3, $(17) and $(9), respectively)	(50)		15		(43)		1			Currency translation adjustments (net of tax of $2, $(14), $5 and $(17), respectively)	6		(50)		2		(43)
		Net unrealized gain (loss) on cash flow hedges (net of tax of $(4), $(10), $(15) and $(7), respectively)	13		(14)		43		21			Net unrealized gain (loss) on cash flow hedges (net of tax of $(4), $(4), $(2) and $(15), respectively)	14		13		7		43
		Minimum pension liability adjustment (net of tax of $0, $0, $0 and $0, respectively)	1		1		3		4			Minimum pension liability adjustment (net of tax of $0, in each period)	1		1		2		3
			(36)		2		3		26				21		(36)		11		3
Comprehensive income attributable to Avis Budget Group, Inc.	Comprehensive income attributable to Avis Budget Group, Inc.		$	742	$	400	$	1,310	$	254	Comprehensive income attributable to Avis Budget Group, Inc.		$	456	$	742	$	758	$	1,310

__________

Currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) were as follows:


													Currency Translation Adjustments		Net Unrealized Gains (Losses) on Cash Flow Hedges(a)		Minimum Pension Liability Adjustment(b)		Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2023											Balance, January 1, 2023		$	(30)	$	45	$	(116)	$	(101)
												Other comprehensive income (loss) before reclassifications	2		13		—		15
												Amounts reclassified from accumulated other comprehensive income	—		(6)		2		(4)
Net current-period other comprehensive income (loss)											Net current-period other comprehensive income (loss)		2		7		2		11
Balance, June 30, 2023											Balance, June 30, 2023		$	(28)	$	52	$	(114)	$	(90)
			Currency Translation Adjustments(a)		Net Unrealized Gains (Losses) on Cash Flow Hedges(b)		Minimum Pension Liability Adjustment(c)		Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2022	Balance, January 1, 2022		$	16	$	(19)	$	(130)	$	(133)	Balance, January 1, 2022		$	16	$	(19)	$	(130)	$	(133)
		Other comprehensive income (loss) before reclassifications	(43)		36		1		(6)			Other comprehensive income (loss) before reclassifications	(43)		36		1		(6)
		Amounts reclassified from accumulated other comprehensive income	—		7		2		9			Amounts reclassified from accumulated other comprehensive income	—		7		2		9
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)		(43)		43		3		3		Net current-period other comprehensive income (loss)		(43)		43		3		3
Balance, June 30, 2022	Balance, June 30, 2022		$	(27)	$	24	$	(127)	$	(130)	Balance, June 30, 2022		$	(27)	$	24	$	(127)	$	(130)

Balance, January 1, 2021			$	40	$	(51)	$	(176)	$	(187)
		Other comprehensive income (loss) before reclassifications	(10)		14		1		5
		Amounts reclassified from accumulated other comprehensive income	11		7		3		21
Net current-period other comprehensive income			1		21		4		26
Balance, June 30, 2021			$	41	$	(30)	$	(172)	$	(161)

__________

All components of accumulated other comprehensive income (loss) are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries and include ~~$128~~$100 million gain, net of tax, as of June 30, ~~2022~~2023 related to our hedge of our investment in euro-denominated foreign ~~operatio~~nsoperations (see Note 1617 – Financial Instruments).

(a)~~For the six months ended June 30, 2021, the amount was reclassified from accumulated other comprehensive income (loss) into restructuring and other related charges.~~

~~(b)~~For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were $5 million ($4 million, net of tax) and $4 million ($3 million, net of tax), in each period. For the three months ended June 30, 2021, the amounts reclassified from accumulated other comprehensive income (loss) into vehicle interest expense was $1 million ($1 million, net of tax).respectively. For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense ~~was~~were $8 million ($6 million, net of tax) and $9 million ($7 million, net of tax) ~~and $8 million ($6 million, net of tax)~~, respectively. ~~For the six months ended June 30, 2021, the amounts reclassified from accumulated other comprehensive income (loss) into vehicle interest expense was $2 million ($1 million, net of tax).~~

~~(c)~~(b)For the three months ended June 30, ~~2021,~~2023, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses ~~was~~were $2 million ($1 million, net of ~~tax).~~tax.) For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were $3 million ($2 million, net of tax) and $5$3 million ($32 million, net of tax), respectively.

~~14.~~15. Related Party Transactions

SRS Mobility Ventures, LLC

In 2021, SRS Mobility Ventures, LLC acquired a 33 1/3% Class A Membership Interest in one of our subsidiaries at fair value of $37.5 million. SRS Mobility Ventures, LLC is an affiliate of our largest shareholder, SRS Investment Management, LLC.

On September 1, 2022, through the issuance of Class B Preferred Voting Membership Interests, SRS Mobility Ventures, LLC increased their ownership in this subsidiary to 51% at a fair value of $62 million. As a result, we deconsolidated our former subsidiary, Avis Mobility Ventures LLC (“AMV”), from our financial statements and began reporting our proportional share of the former subsidiary’s income or loss within other (income) expense, net in our Consolidated Condensed Statements of Comprehensive Income as we no longer have the ability to direct the significant activities of the former subsidiary and are therefore no longer primary beneficiary of the VIE.

In accordance with ASC Topic 810-10-40, we must deconsolidate a subsidiary as of the date we cease to have a controlling interest in that subsidiary and recognize the gain or loss in net income at that time. The fair value of our retained investment was determined utilizing a discounted cash flow methodology based on various assumptions, including projections of future cash flows, which include forecast of future revenue and EBITDA. Upon deconsolidation, our former subsidiary had a net asset carrying amount of $49 million resulting in a gain of $10 million.

We continue to provide vehicles, related fleet services and certain administrative services to AMV to support their operations. For the three and six months ended June 30, 2023, we recorded $6 million and $14 million, respectively, of related income within other (income) expense, net. As of June 30, 2023 and December 31, 2022, receivables from AMV related to these services were $6 million, in each period, and our net investment in vehicle finance lease with AMV, which is included in vehicles, net, was $31 million and $36 million, respectively. The carrying value of our equity investment in AMV as of June 30, 2023 and December 31, 2022 was approximately $32 million and $49 million, respectively, which is included in other non-current assets. For the three and six months ended June 30, 2023, we recorded losses of $10 million and $16 million, respectively, within other (income) expense, net, related to our equity investment.

~~15.~~16. Stock-Based Compensation

We recorded stock-based compensation expense of $6$8 million and ~~$10~~$6 million ($5 million in each period, ~~and~~ ~~$7 million~~, net of tax) during the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and $1216 million and ~~$14~~$12 million ($911 millionand ~~$10~~$9 million, net of tax) during the six months ended June 30, 2023 and 2022, respectively ~~and~~ ~~2021, respectively.~~.

In 2020, we granted market-based restricted stock units (“RSUs”) that vest based on absolute stock price attainment. The grant date fair value of this award is estimated using a Monte Carlo simulation model.

The weighted average assumptions used in the model are as follows:


Expected volatility of stock price						91%
Risk-free interest rate						0.18%
Valuation period						3 years
Dividend yield						—%

The activity related to RSUs consisted of (in thousands of shares):


				Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)					Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Time-based RSUs	Time-based RSUs									Time-based RSUs
		Outstanding at January 1, 2022		671	$	39.39					Outstanding at January 1, 2023		451	$	92.06
			Granted (a)	67	194.74							Granted (a)	72	208.55
			Vested (b)	(313)	37.21							Vested (b)	(218)	54.55
			Forfeited	(29)	58.22							Forfeited	(5)	158.70
		Outstanding and expected to vest at June 30, 2022 (c)		396	$	66.07	1.0	$	58		Outstanding and expected to vest at June 30, 2023 (c)		300	$	146.24	1.5	$	68
Performance-based and market-based RSUs	Performance-based and market-based RSUs									Performance-based and market-based RSUs
		Outstanding at January 1, 2022		886	$	35.40					Outstanding at January 1, 2023		691	$	57.56
			Granted (a)	96	194.74							Granted (a)	89	208.49
			Vested (b)	(206)	34.94							Vested (b)	(344)	21.09
			Forfeited	(24)	37.33							Forfeited	(6)	129.91
		Outstanding at June 30, 2022		752	$	55.80	1.3	$	111		Outstanding at June 30, 2023		430	$	116.90	1.2	$	98
		Outstanding and expected to vest at June 30, 2022 (c)		744	$	54.31	1.3	$	109		Outstanding and expected to vest at June 30, 2023 (c)		384	$	106.80	1.2	$	88

__________

(a)Reflects the maximum number of stock units assuming achievement of all performance-, market- and time-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs and performance-based RSUs granted during the six months ended June 30, ~~2021~~2022 was ~~$63.12 and $62.27, r~~$194.74~~espectively.~~.

(b)The total fair value of RSUs vested during the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 was $19 million, ~~and~~ ~~$13 million, respectively.~~in each period.

(c)Aggregate unrecognized compensation expense related to time-based RSUs and performance-based and market-based RSUs amounted to ~~$46~~$58 million and will be recognized over a weighted average vesting period of ~~1.2~~1.3 years.

~~16.~~17. Financial Instruments

Derivative Instruments and Hedging Activities

Currency Risk. We use currency exchange contracts to manage our exposure to changes in currency exchange rates associated with certain of our non-U.S.-dollar denominated receivables and forecasted royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S.-dollar denominated acquisitions. We primarily hedge a portion of our current-year currency exposure to the Australian, Canadian and New Zealand dollars, the euro and the British pound sterling. The majority of forward contracts do not qualify for hedge accounting treatment. The fluctuations in the value of these forward contracts do, however, largely offset the impact of changes in the value of the underlying risk they economically hedge. Forward contracts used to hedge forecasted third-party receipts and disbursements up to 12 months are designated and do qualify as cash flow hedges. We have designated our euro-denominated notes as a hedge of our investment in euro-denominated foreign operations.

The estimated net amount of existing gains or losses we expect to reclassify from accumulated other comprehensive income (loss) to earnings for cash flow and net investment hedges over the next 12 months is not material.

Interest Rate Risk. We use various hedging strategies including interest rate swaps and interest rate caps to create what we deem an appropriate mix of fixed and floating rate assets and liabilities. We use interest rate swaps and interest rate caps to manage the risk related to our floating rate corporate debt and our floating rate vehicle-backed debt. We record the changes in the fair value of our cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassify these amounts into earnings in the period during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. We record the gains or losses related to freestanding derivatives, which are not designated as a hedge for accounting purposes, currently in earnings and are presented in the same line of the income statement expected for the hedged item. We estimate that approximately $1$25 million of ~~gains~~gain currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months.

Commodity Risk. We periodically enter into derivative commodity contracts to manage our exposure to changes in the price of gasoline. These instruments were designated as freestanding derivatives and the changes in fair value are recorded in earnings and are presented in the same line of the income statement expected for the hedged item.

We held derivative instruments with absolute notional values as follows:


	As of June 30, ~~2022~~2023
Foreign exchange contracts	$	~~1,732~~1,298
Interest rate caps (a)	~~14,185~~15,042
Interest rate swaps	1,450

__________

(a)Represents ~~$9.8~~$10.2 billion of interest rate caps sold, partially offset by approximately ~~$4.4~~$4.8 billion of interest rate caps purchased. These amounts exclude $5.9 billion of interest rate caps purchased by our Avis Budget Rental Car Funding subsidiary as it is not consolidated by us.

Estimated fair values (Level 2) of derivative instruments ~~were~~are as follows:


			As of June 30, 2022				As of December 31, 2021						As of June 30, 2023				As of December 31, 2022
			Fair Value, Derivative Assets		Fair Value, Derivative Liabilities		Fair Value, Derivative Assets		Fair Value, Derivative Liabilities				Fair Value, Asset Derivatives		Fair Value, Derivative Liabilities		Fair Value, Derivative Assets		Fair Value, Derivative Liabilities
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments										Derivatives designated as hedging instruments
		Interest rate swaps (a)	$	32	$	—	$	2	$	27		Interest rate swaps (a)	$	69	$	—	$	61	$	—

Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments										Derivatives not designated as hedging instruments
		Foreign exchange contracts (b)	14		3		7		10			Foreign exchange contracts (b)	2		3		4		6
		Interest rate caps (c)	28		94		11		15			Interest rate caps (c)	57		142		46		111

		Total	$	74	$	97	$	20	$	52		Total	$	128	$	145	$	111	$	117

__________

Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding, as it is not consolidated by us; however, certain amounts related to the derivatives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss), as discussed in Note 1314 – Stockholders' Equity.

(a)Included in other non-current assets or other non-current liabilities.

(b)Included in other current assets or other current liabilities.

(c)Included in assets under vehicle programs or liabilities under vehicle programs.

The effects of derivatives recognized in our Consolidated Condensed Financial Statements ~~were~~are as follows:


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022		2021				2023		2022		2023		2022
Derivatives designated as hedging instruments (a)	Derivatives designated as hedging instruments (a)										Derivatives designated as hedging instruments (a)
		Interest rate swaps (b)	$	13	$	(14)	$	43	$	21		Interest rate swaps (b)	$	14	$	13	$	7	$	43
		Euro-denominated notes (c)	38		(10)		58		23			Euro-denominated notes (c)	(5)		38		(14)		58
Derivatives not designated as hedging instruments (d)	Derivatives not designated as hedging instruments (d)										Derivatives not designated as hedging instruments (d)
		Foreign exchange contracts (e)	31		3		43		(5)			Foreign exchange contracts (e)	(8)		31		(15)		43
		Interest rate caps (f)	(3)		(1)		(1)		(2)			Interest rate caps (f)	(1)		(3)		(1)		(1)

		Total	$	79	$	(22)	$	143	$	37		Total	$	—	$	79	$	(23)	$	143

__________

(a)Recognized, net of tax, as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

(b)Classified as a net unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss). Refer to Note 1314 – Stockholders' Equity for amounts reclassified from accumulated other comprehensive income into earnings.

(c)Classified as a net investment hedge within currency translation adjustment in accumulated other comprehensive income (loss).

(d)Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged.

(e)~~For the three months ended June 30, 2022, included~~ ~~a $28 million gain in interest expense and a $3 million gain in operating expense and for the~~ ~~six months ended June 30, 2022, included a $40 million gain in interest expense and a $3 million gain in operating expense~~. For the three months ended June 30, 2021, included a $2 million gain in interest expense and a $1 million gain in operating expense and for the six months ended June 30, 2021, included a $5 million lossIncluded in interest expense.

(f)~~Included primarily~~Primarily included in vehicle interest, net.

Debt Instruments

The carrying amounts and estimated fair values (Level 2) of debt instruments ~~were~~are as follows:


			As of June 30, 2022				As of December 31, 2021						As of June 30, 2023				As of December 31, 2022
			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value				Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Corporate debt	Corporate debt										Corporate debt
		Short-term debt and current portion of long-term debt	$	27	$	26	$	19	$	18		Short-term debt and current portion of long-term debt	$	34	$	33	$	27	$	26
		Long-term debt	4,624		4,306		3,990		4,153			Long-term debt	4,668		4,613		4,644		4,411

Debt under vehicle programs	Debt under vehicle programs										Debt under vehicle programs
		Vehicle-backed debt due to Avis Budget Rental Car Funding	$	11,331	$	11,053	$	8,848	$	9,009		Vehicle-backed debt due to Avis Budget Rental Car Funding	$	14,375	$	13,910	$	11,275	$	10,848
		Vehicle-backed debt	2,673		2,674		2,528		2,559			Vehicle-backed debt	3,257		3,257		2,423		2,422
		Interest rate swaps and interest rate caps (a)	94		94		14		14			Interest rate swaps and interest rate caps (a)	142		142		111		111

__________

(a) Derivatives in a liability position.

~~17.~~18. Segment Information

Our chief operating decision-maker assesses performance and allocates resources based upon the separate financial information ~~from each~~ of our operating segments. In identifying our reportable segments, we ~~considered~~also consider the nature of services provided by our operating segments, the geographical areas in which the segments ~~operated~~operate and other relevant factors. We aggregate certain of our operating segments into our reportable segments.

Management evaluates the operating results of each of ~~its~~our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and ~~amortization,~~amortization; any impairment ~~charges,~~charges; restructuring and other related ~~charges,~~charges; early extinguishment of debt ~~costs,~~costs; non-vehicle related ~~interest,~~interest; transaction-related costs, ~~net,~~net; charges for ~~unprecedented personal-injury and other~~ legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which include third party advisory, legal and other professional ~~service fees,~~fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; and income taxes. ~~COVID-19 charges include unusual, direct~~

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and ~~incremental costs due~~in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the COVID-19 pandemic such as minimum annual guaranteed rent in excess of concession fees for the period, overflow parking for idle vehicles and related shuttling costs, incremental cleaning supplies to sanitize vehicles and facilities, and losses associated with vehicles damaged in overflow parking lots, net of insurance proceeds.same basis that management uses internally. Our presentation of Adjusted EBITDA may not be comparable to ~~similarly-titled~~similarly titled measures used by other companies.


				Three Months Ended June 30,											Three Months Ended June 30,
				2022				2021							2023				2022
				Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA					Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA
Americas	Americas			$	2,567	$	1,041	$	1,974	$	634	Americas			$	2,428	$	631	$	2,567	$	1,041
International	International			677		183		397		8		International			695		126		677		183
Corporate and Other (a)	Corporate and Other (a)			—		(19)		—		(18)		Corporate and Other (a)			—		(20)		—		(19)
		Total Company		$	3,244	$	1,205	$	2,371	$	624		Total Company		$	3,123	$	737	$	3,244	$	1,205

Reconciliation of Adjusted EBITDA to income before income taxes:	Reconciliation of Adjusted EBITDA to income before income taxes:											Reconciliation of Adjusted EBITDA to income before income taxes:
						2022				2021							2023				2022
Adjusted EBITDA	Adjusted EBITDA					$	1,205			$	624	Adjusted EBITDA					$	737			$	1,205
Less:	Less:		Non-vehicle related depreciation and amortization (b)			53				67		Less:		Non-vehicle related depreciation and amortization			52				51
			Interest expense related to corporate debt, net:											Interest expense related to corporate debt, net			68				64
			Interest expense			64				59

			Restructuring and other related charges			6				22				Restructuring and other related charges			1				6
			Unprecedented personal-injury and other legal matters, net (c)			—				(11)				Transaction-related costs, net			—				1
			Transaction-related costs, net			1				1				Other (income) expense, net (b)			4				—
														Reported within operating expenses:
														Cloud computing costs			9				2
			COVID-19 charges (d)			(2)				—				COVID-19 charges			—				(2)
														Legal matters, net			5				—

Income before income taxes	Income before income taxes					$	1,083			$	486	Income before income taxes					$	598			$	1,083

__________

(a)Includes unallocated corporate overhead which is not attributable to a particular segment.

(b)~~For the three months ended June 30, 2022, includes operating expenses in our Consolidated Condensed Statements~~Primarily consists of ~~Comprehensive Income~~losses related to ~~cloud computing costs of $2 million. For the three months ended June 30, 2021, includes operating expenses~~our equity investment in a former subsidiary, offset by fleet related and ~~selling, general and~~certain administrative ~~expenses related to cloud computing costs of $3 million and $2 million, respectively, in our Consolidated Condensed Statements of Comprehensive Income.~~

~~(c)Reported within operating expenses.~~

~~(d)The following table presents the unusual, direct and incremental costs due~~services provided to the ~~COVID-19 pandemic:~~same former subsidiary.

2022 2021
Minimum annual guaranteed rent in excess of concession fees, net $ (2) $ (3)
Vehicles damaged in overflow parking lots, net of insurance proceeds — 2
Other charges — 1
Operating expenses $ (2) $ —
COVID-19 charges, net $ (2) $ —


				Six Months Ended June 30,											Six Months Ended June 30,
				2022				2021							2023				2022
				Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA					Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA
Americas	Americas			$	4,567	$	1,851	$	3,054	$	742	Americas			$	4,444	$	1,147	$	4,567	$	1,851
International	International			1,109		206		689		(42)		International			1,236		176		1,109		206
Corporate and Other (a)	Corporate and Other (a)			—		(42)		—		(29)		Corporate and Other (a)			—		(51)		—		(42)
		Total Company		$	5,676	$	2,015	$	3,743	$	671		Total Company		$	5,680	$	1,272	$	5,676	$	2,015

Reconciliation of Adjusted EBITDA to income before income taxes:	Reconciliation of Adjusted EBITDA to income before income taxes:											Reconciliation of Adjusted EBITDA to income before income taxes:
						2022				2021							2023				2022
Adjusted EBITDA	Adjusted EBITDA					$	2,015			$	671	Adjusted EBITDA					$	1,272			$	2,015
Less:	Less:		Non-vehicle related depreciation and amortization (b)			113				135		Less:		Non-vehicle related depreciation and amortization			108				109
			Interest expense related to corporate debt, net:											Interest expense related to corporate debt, net			141				117
			Interest expense			117				120
			Early extinguishment of debt			—				129
			Restructuring and other related charges			14				42				Restructuring and other related charges			5				14
			Unprecedented personal-injury and other legal matters, net (c)			1				(11)				Transaction-related costs, net			—				1
			Transaction-related costs, net			1				2				Other (income) expense, net (b)			2				—
														Reported within operating expenses:
														Cloud computing costs			16				4
			COVID-19 charges (d)			(9)				18				COVID-19 charges			—				(9)
														Legal matters, net			5				1

Income before income taxes	Income before income taxes					$	1,778			$	236	Income before income taxes					$	995			$	1,778

__________

(a)Includes unallocated corporate overhead which is not attributable to a particular segment.

(b)~~For the six months ended June 30, 2022, includes operating expenses in our Consolidated Condensed Statements~~Primarily consists of ~~Operations~~losses related to ~~cloud computing costs of $4 million. For the six months ended June 30, 2021, includes operating expenses~~our equity investment in a former subsidiary, offset by fleet related and ~~selling, general and~~certain administrative ~~expenses related to cloud computing costs of $3 million and $2 million, respectively, in our Consolidated Condensed Statements of Comprehensive Income.~~

~~(c)Reported within operating expenses.~~

~~(d)The following table presents the unusual, direct and incremental costs due~~services provided to the ~~COVID-19 pandemic:~~same former subsidiary.

2022 2021
Minimum annual guaranteed rent in excess of concession fees, net $ (9) $ 16
Vehicles damaged in overflow parking lots, net of insurance proceeds — (4)
Other charges — 6
Operating expenses $ (9) $ 17
Selling, general and administrative expenses $ — $ 1
COVID-19 charges, net $ (9) $ 18

Since December 31, ~~2021,~~2022, there have been no significant changes in segment assets exclusive of assets under vehicle programs. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, Americas’ segment assets under vehicle programs were approximately ~~$14.7~~$18.3 billion and $~~11.4~~14.3 billion, respectively. ~~The change~~ This increase in assets under vehicle programs is ~~primarily due~~directly correlated to the increase in the size and cost of our vehicle rental fleet to meet ~~the increase in rental~~ demand.

~~18.~~19. Subsequent ~~Events~~Event

In July ~~2022, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary~~2023, the Company issued ~~$763~~€400 million of ~~asset-backed notes~~7.25% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually. The proceeds will primarily be used to ~~investors with a weighted average interest rate~~redeem €300 million principal amount of ~~4.90%. Following this issuance, amounts available under our $800 million variable funding asset-backed notes supplement entered into during June 2022 were reduced to zero.~~4.125% Senior Notes due November 2024.

In July ~~2022,~~2023, we repurchased approximately ~~0.2 million~~335 thousand shares of ~~our~~ common stock at a cost of approximately ~~$28~~$74 million under the Stock Repurchase Program.

* * * *

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q, and with our ~~2021~~2022 Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including those discussed in “Forward-Looking Statements”. See “Forward-Looking Statements” and “Risk Factors” for additional information. Unless otherwise noted, all dollar amounts in tables are in millions.


OVERVIEW

Our Company

We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of ~~over 668,000~~approximately 690,000 vehicles in second quarter ~~2022.~~2023. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

Our Segments

We categorize our operations into two reportable business segments: Americas, consisting primarily of our vehicle rental operations in North America, South America, Central America and the Caribbean, car sharing operations in certain of these markets, and licensees in certain areas in which we do not operate directly; and International, consisting primarily of our vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, car sharing operations in certain of these markets, and licensees in certain areas in which we do not operate directly.

Business and Trends

Over the past year, we have seen a number of encouraging developments, such as a significant increase in global travel demand, which generated an increase in demand for rental vehicles and improved pricing across the industry, suggesting a steady return to historic seasonal travel trends. Our strategy continues to primarily focus on ~~cost optimization, core revenue growth~~costs and ~~capital investments aimed~~customer experience to ~~allow us to maximize~~strengthen our ~~infrastructure to capitalize on what we believe will be continued travel demand.~~company, enable resilience, and deliver stakeholder value. During the ~~quarter~~three months ended June 30, ~~2022,~~2023, we generated revenues of ~~$3.2~~$3.1 billion, net income of ~~$774~~$436 million and Adjusted EBITDA of ~~$1.2 billion.~~$737 million. These results were driven by increased ~~demand for rental vehicles, improved pricing across the industry, disciplined cost management~~volume, offset by increased fleet costs and ~~continued fleet management.~~sustained inflationary pressures on costs.

We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The ~~full extent~~factors and trends that we currently believe are or will be most impactful to our results of ~~the ongoing impact of the COVID-19 pandemic on our long-term operational~~operations and financial ~~performance will depend~~condition include the following: interest rates, inflationary impact on ~~future developments, including those outside of our control,~~items such as ~~the spread of new variants of the virus~~commodity prices and ~~the implementation of new or continued~~wages, used car values, and an economic downturn that may impact travel restrictions and the overall economic environment. These variants could cause prolonged impacts on the economy, our industry and on us, with reductions in available staffing and increasing inflation, among other impacts.demand. We ~~will~~ continue to monitor the potential favorable or unfavorable impacts of these and other impacts and take action in connection with it, by leveraging our technology and reviewing cost mitigating actions, among other actions. Significant events affecting travel have historically had an impact on vehicle rental volumes, with the full extent of the impact generally determined by the length of time the event influences travel decisions. As a consequence, we cannot estimate the impactfactors on our business, operations, financial condition, ~~or forecast financial or operational~~and future results ~~with reasonable certainty.~~of operations.

The global semiconductor shortage is impacting fleet supply, resulting in tighter fleets throughout the industry and causing us to hold cars longer compared to periods prior to the COVID-19 pandemic. We have historically navigated through significant vehicle recalls and worked with our vehicle manufacturers, and believe we have the logistics in place to effectively manage our fleet during this disruption in supply. We continue to purchase vehicles and believe we can increase our fleet utilization efficiency to capture increased demand.

RESULTS OF OPERATIONS

We measure performance principally using the following key metrics: (i) rental days, which represent the total number of days (or portion thereof) a vehicle was rented, (ii) revenue per day, which represents revenues divided by rental days, (iii) vehicle utilization, which represents rental days divided by available rental days, with available rental days being defined as average rental fleet times the number of days in the period, and (iv) per-unit fleet costs, which represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet. Our rental days, revenue per day and vehicle utilization metrics are all calculated based on the actual rental of the vehicle during a 24-hour period. We believe that this methodology provides management with the most relevant metrics in order to effectively manage the performance of the business. Our calculation may not be comparable to the calculation of ~~similarly-titled~~similarly titled metrics by other companies. We present currency exchange rate effects to provide a method of assessing how our business performed excluding the effects of foreign currency rate fluctuations. Currency exchange rate effects are calculated by translating the ~~current-year~~current period results at the ~~prior-period~~prior period average exchange rate plus any related gains and losses on currency hedges.

We assess performance and allocate resources based upon the separate financial information of our operating

segments. In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which our segments operate and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and ~~amortization,~~amortization; any impairment ~~charges,~~charges; restructuring and other related ~~charges,~~charges; early extinguishment of debt ~~costs,~~costs; non-vehicle related ~~interest,~~interest; transaction-related costs, ~~net,~~net; charges for ~~unprecedented personal-injury and other~~ legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which include third party advisory, legal and other professional ~~fees,~~fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net, and income taxes. Net charges for unprecedented personal-injury and other legal matters are recorded within operating expenses in our consolidated results of operations. Non-operational charges related to shareholder activist activity include third party advisory, legal and other professional service fees and are recorded within selling, general and administrative expenses in our consolidated results of operations. COVID-19 charges include unusual, direct and incremental costs due to the COVID-19 pandemic, such as minimum annual guaranteed rent in excess of concession fees for the period, overflow parking for idle vehicles and related shuttling costs, incremental cleaning supplies to sanitize vehicles and facilities and other charges, and losses associated with vehicles damaged in overflow parking lots, net of insurance proceeds, and are primarily recorded within operating expenses in our consolidated results of operations.

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to ~~similarly-titled~~similarly titled measures used by other companies.

During the six months ended June 30, ~~2022:~~2023:

•Our revenues totaled $5.7 billion, ~~an increase of 52% compared to~~consistent with the similar period in 2021, primarily due to increased demand for rental vehicles and a significant increase in pricing. The significant increase in revenues was a direct result of the global effort to combat the incidence and spread of the COVID-19 virus, which led to a significant increase in global travel demand, suggesting a steady return to historic travel levels.2022.

•Our net income was ~~$1.3 billion,~~$747 million, representing a ~~significant increase~~decrease of ~~$1.1 billion~~$560 million year-over-year, primarily due to ~~significantly higher revenues, as described above, in addition to disciplined cost management.~~increased fleet costs and sustained inflationary pressures on costs.

•Our Adjusted EBITDA was ~~$2.0~~$1.3 billion, representing a ~~significant increase~~decrease of ~~$1.3 billion year-over-year, primarily due to significantly higher revenues and disciplined cost management.~~$743 million year-over-year.

•

Three Months Ended June 30, 2023 vs. Three Months Ended June 30, 2022

~~We repurchased approximately $1.7 billion~~

Our consolidated condensed results of ~~our common stock, reducing our shares outstanding by approximately 7.9 million shares.~~operations comprised of the following:


		Three Months Ended June 30,
		2023		2022		$ Change		% Change
Revenues		$	3,123	$	3,244	$	(121)	(4	%)

Expenses
	Operating	1,475		1,349		126		9	%
	Vehicle depreciation and lease charges, net	375		234		141		60	%
	Selling, general and administrative	378		359		19		5	%
	Vehicle interest, net	172		97		75		77	%
	Non-vehicle related depreciation and amortization	52		51		1		2	%
	Interest expense related to corporate debt, net:
	Interest expense	68		64		4		6	%

	Restructuring and other related charges	1		6		(5)		(83	%)
	Transaction-related costs, net	—		1		(1)		n/m
	Other (income) expense, net	4		—		4		n/m
Total expenses		2,525		2,161		364		17	%

Income before income taxes		598		1,083		(485)		(45	%)
Provision for income taxes		162		309		(147)		(48	%)
Net income		436		774		(338)		(44	%)
Less: net income (loss) attributable to non-controlling interests		1		(4)		5		n/m
Net income attributable to Avis Budget Group, Inc.		$	435	$	778	$	(343)	(44	%)

___________

n/m - Not Meaningful

~~Three Months Ended June 30, 2022 vs. Three Months Ended June 30, 2021~~

~~Our consolidated condensed results of operations comprised the following:~~

Three Months Ended June 30,
2022 2021 $ Change % Change
Revenues $ 3,244 $ 2,371 $ 873 37 %
Expenses
Operating 1,349 1,032 317 31 %
Vehicle depreciation and lease charges, net 234 338 (104) (31 %)
Selling, general and administrative 359 294 65 22 %
Vehicle interest, net 97 77 20 26 %
Non-vehicle related depreciation and amortization 51 62 (11) (18 %)
Interest expense related to corporate debt, net:
Interest expense 64 59 5 8 %
Restructuring and other related charges 6 22 (16) (73 %)
Transaction-related costs, net 1 1 — 0 %
Total expenses 2,161 1,885 276 15 %
Income before income taxes 1,083 486 597 n/m
Provision for income taxes 309 88 221 n/m
Net income 774 398 376 94 %
Less: net loss attributable to non-controlling interests (4) — (4) n/m
Net income attributable to Avis Budget Group, Inc. $ 778 $ 398 $ 380 95 %

~~___________~~

~~n/m - Not Meaningful~~

Revenues ~~increased $873~~decreased $121 million, or ~~37%~~4%, during the three months ended June 30, ~~2022~~2023 compared to the similar period in ~~2021,~~2022, primarily due to a ~~29% increase in volume as the mobility industry recovers from the pandemic and a 9% increase~~7% decrease in revenue per day, excluding exchange rate effects, partially offset by a ~~$86 million negative impact from currency exchange rate movements.~~4% increase in volume. Total expenses increased ~~15%~~17% during the three months ended June 30, ~~2022,~~2023 compared to the similar period in ~~2021,~~2022, primarily due to increased ~~demand, partially offset by cost discipline as volume returned.~~fleet costs, interest costs, and the impact of inflation. Our effective tax rates were a provision of ~~28.5%~~27.1% and ~~18.1%~~28.5% for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. As a result of these items, our net income ~~increased~~decreased by ~~$376~~$343 million compared to the similar period in ~~2021.~~2022. For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we reported earnings per diluted share of ~~$15.71~~$11.01 and ~~$5.63,~~$15.71, respectively.

Operating expenses ~~decreased~~increased to ~~41.6%~~47.2% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~43.5%~~41.6% during the similar period in ~~2021,~~ 2022, primarily due to ~~the increased revenues~~a decrease in revenue per day and cost ~~discipline as volume returned.~~inflation. Vehicle depreciation and lease charges ~~decreased~~increased to ~~7.2%~~12.0% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~14.3%~~7.2% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues and a 44% lower~~ per unit fleet ~~cost,~~costs, excluding exchange rate effects, driven by ~~the continued favorable trend in the used-vehicle market.~~increased fleet levels and depreciation rates. Selling, general and administrative costs ~~decreased~~increased to ~~11.1%~~12.1% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~12.4%~~11.1% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues~~marketing costs and ~~cost discipline as volume returned.~~inflation. Vehicle interest costs ~~were 3.0%~~increased to 5.5% of revenue during the three months ended June 30, ~~2022, which is consistent with 3.2%~~2023, compared to 3.0% during the similar period in ~~2021.~~2022, primarily due to rising interest rates and additional funding for vehicles.

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:


				Three Months Ended June 30,												Three Months Ended June 30,
				2022				2021								2023				2022
				Revenues		Adjusted EBITDA		Revenues			Adjusted EBITDA					Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA
Americas	Americas			$	2,567	$	1,041	$	1,974		$	634	Americas			$	2,428	$	631	$	2,567	$	1,041
International	International			677		183		397			8		International			695		126		677		183
Corporate and Other (a)	Corporate and Other (a)			—		(19)		—			(18)		Corporate and Other (a)			—		(20)		—		(19)
		Total Company		$	3,244	$	1,205	$	2,371		$	624		Total Company		$	3,123	$	737	$	3,244	$	1,205

				Reconciliation to Adjusted EBITDA												Reconciliation to Adjusted EBITDA
								2022			2021									2023		2022
Net income	Net income							$	774		$	398	Net income							$	436	$	774
Provision for income taxes	Provision for income taxes							309			88		Provision for income taxes							162		309
Income before income taxes	Income before income taxes							1,083			486		Income before income taxes							598		1,083

Add:	Add:		Non-vehicle related depreciation and amortization (b)					53			67		Add:		Non-vehicle related depreciation and amortization					52		51
			Interest expense related to corporate debt, net:												Interest expense related to corporate debt, net					68		64
			Interest expense					64			59				Restructuring and other related charges					1		6
										Transaction-related costs, net						—		1
			Restructuring and other related charges					6			22				Other (income) expense, net (b)					4		—
			Unprecedented personal-injury and other legal matters, net (c)					—			(11)				Reported within operating expenses:
			Transaction-related costs, net					1			1				Cloud computing costs					9		2
			COVID-19 charges (d)					(2)			—				COVID-19 charges, net					—		(2)
															Legal matters, net					5		—
Adjusted EBITDA	Adjusted EBITDA							$	1,205		$	624	Adjusted EBITDA							$	737	$	1,205

__________

(a)Includes unallocated corporate overhead which is not attributable to a particular segment.

(b)~~For the three months ended June 30, 2022, includes operating expenses~~Primarily consists of losses related to ~~cloud computing costs of $2 million. For the three months ended June 30, 2021, includes operating expenses~~our equity investment in a former subsidiary, offset by fleet related and ~~selling, general and~~certain administrative ~~expenses related to cloud computing costs of $3 million and $2 million, respectively.~~

~~(c)Reported within operating expenses in our consolidated condensed results of operations.~~

~~(d)The following table presents the unusual, direct and incremental costs due~~services provided to the ~~COVID-19 pandemic:~~same former subsidiary.

Americas


		Three Months Ended June 30,							Three Months Ended June 30,
		2022		2021		% Change			2023		2022		% Change
Revenues	Revenues	$	2,567	$	1,974	30	%	Revenues	$	2,428	$	2,567	(5	%)
Adjusted EBITDA	Adjusted EBITDA	1,041		634		64	%	Adjusted EBITDA	631		1,041		(39	%)

Revenues ~~increased 30%~~decreased 5% during the three months ended June 30, ~~2022~~2023 compared to the similar period in ~~2021,~~2022, primarily due to ~~a 28% increase in volume and a 2% increase~~an 8% decrease in revenue per ~~day.~~day, partially offset by a 3% increase in volume.

Operating expenses increased to ~~41.6%~~47.6% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~40.9%~~41.6% during the similar period in ~~2021,~~2022, primarily due to ~~higher fuel prices, partially offset by revenue.~~a decrease in revenue per day and cost inflation. Vehicle depreciation and lease charges ~~decreased~~increased to ~~5.0%~~10.5% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~13.1%~~5.0% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues and a 62% decrease in~~ per-unit fleet costs, ~~excluding exchange rate effects,~~ driven by ~~the continued favorable trend in the used-vehicle market.~~increased fleet levels and depreciation rates. Selling, general and administrative costs ~~decreased~~were 10.1% of revenue, consistent with the similar period in 2022, primarily due to ~~9.6%~~increased marketing costs, offset by a decrease in other selling, general and administrative costs. Vehicle interest costs increased to 6.0% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~10.0%~~3.3% during the similar period in ~~2021,~~2022, primarily due to ~~increased revenues~~rising interest rates and ~~cost discipline as volume returned. Vehicle interest costs were 3.3% of revenue~~additional funding for vehicles.

Adjusted EBITDA decreased 39% during the three months ended June 30, ~~2022 consistent with 3.2% during~~2023 compared to the similar period in ~~2021.~~

2022, primarily due to higher per-unit fleet costs and inflationary pressures.

~~Adjusted EBITDA was $407 million higher~~International


	Three Months Ended June 30,
	2023		2022		% Change
Revenues	$	695	$	677	3	%
Adjusted EBITDA	126		183		(31)	%

Revenues increased 3% during the three months ended June 30, ~~2022~~2023, compared to the similar period in ~~2021,~~2022, primarily due to ~~increased revenues, lower per-unit fleet costs and cost discipline as~~a 7% increase in volume, ~~returned.~~

~~International~~

Three Months Ended June 30,
2022 2021 % Change
Revenues $ 677 $ 397 71 %
Adjusted EBITDA 183 8 n/m

~~___________~~

~~n/m - Not Meaningful~~

~~Revenues increased 71% during the three months ended June 30, 2022, compared to the similar period in 2021, primarily due to 44% increase~~partially offset by a 3% decrease in revenue per day, excluding exchange rate effects, and a ~~33% increase in volume, partially offset by an $81~~$3 million negative impact from currency exchange rate movements.

Operating expenses ~~decreased~~increased to ~~41.4%~~45.3% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~56.4%~~41.4% during the similar period in ~~2021,~~2022, primarily due to ~~increased revenues~~a decrease in revenue per day and cost ~~discipline as volume returned.~~inflation. Vehicle depreciation and lease charges ~~decreased~~increased to ~~15.8%~~17.3% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~19.9%~~15.8% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues, partially offset by a 19% increase in~~ per-unit fleet costs, excluding exchange rate ~~effects.~~effects, driven by increased fleet levels. Selling, general and administrative costs ~~decreased~~increased to ~~14.2%~~15.6% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~19.2%~~14.2% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues~~marketing costs and ~~cost discipline as volume returned.~~inflation. Vehicle interest costs ~~decreased~~increased to ~~1.7%~~3.8% of revenue during the three months ended June 30, ~~2022~~2023 compared to ~~3.3%~~1.7% during the similar period in ~~2021,~~2022, primarily due to ~~increased revenues.~~rising interest rates and additional funding for vehicles.

Adjusted EBITDA ~~was $175 million higher in second quarter 2022~~decreased 31% during the three months ended June 30, 2023 compared to the similar period in ~~2021,~~2022, primarily due to ~~increased revenues and cost discipline as volume returned, partially offset by an increase in~~higher per-unit fleet costs, inflationary pressures, and a ~~$22~~$2 million negative impact from currency exchange rate movements.

3231

Six Months Ended June 30, ~~2022~~2023 vs. Six Months Ended June 30, ~~2021~~2022

Our consolidated condensed results of operations comprised the following:


			Six Months Ended June 30,										Six Months Ended June 30,
			2022		2021		$ Change		% Change				2023		2022		$ Change		% Change
Revenues	Revenues		$	5,676	$	3,743	$	1,933	52	%	Revenues		$	5,680	$	5,676	$	4	n/m

Expenses	Expenses										Expenses
		Operating	2,496		1,864		632		34	%		Operating	2,782		2,496		286		11	%
		Vehicle depreciation and lease charges, net	345		592		(247)		(42	%)		Vehicle depreciation and lease charges, net	640		345		295		86	%
		Selling, general and administrative	642		476		166		35	%		Selling, general and administrative	702		642		60		9	%
		Vehicle interest, net	174		152		22		14	%		Vehicle interest, net	305		174		131		75	%
		Non-vehicle related depreciation and amortization	109		130		(21)		(16	%)		Non-vehicle related depreciation and amortization	108		109		(1)		(1	%)
		Interest expense related to corporate debt, net:										Interest expense related to corporate debt, net:
		Interest expense	117		120		(3)		(3	%)		Interest expense	141		117		24		21	%
		Early extinguishment of debt	—		129		(129)		n/m
		Restructuring and other related charges	14		42		(28)		(67	%)		Restructuring and other related charges	5		14		(9)		(64	%)
		Transaction-related costs, net	1		2		(1)		(50	%)		Transaction-related costs, net	—		1		(1)		n/m
												Other (income) expense, net	2		—		2		n/m
Total expenses	Total expenses		3,898		3,507		391		11	%	Total expenses		4,685		3,898		787		20	%

Income before income taxes	Income before income taxes		1,778		236		1,542		n/m		Income before income taxes		995		1,778		(783)		(44	%)
Provision for income taxes	Provision for income taxes		477		8		469		n/m		Provision for income taxes		247		477		(230)		(48	%)
Net income	Net income		1,301		228		1,073		n/m		Net income		748		1,301		(553)		(43	%)
Less: net loss attributable to non-controlling interests			(6)		—		(6)		n/m
Less: net income (loss) attributable to non-controlling interests											Less: net income (loss) attributable to non-controlling interests		1		(6)		7		n/m
Net income attributable to Avis Budget Group, Inc.	Net income attributable to Avis Budget Group, Inc.		$	1,307	$	228	$	1,079	n/m		Net income attributable to Avis Budget Group, Inc.		$	747	$	1,307	$	(560)	(43	%)

___________

n/m - Not Meaningful

Revenues ~~increased $1.9 billion, or 52%,~~ during the six months ended June 30, ~~2022 compared to~~2023 were consistent with the similar period in 2021, primarily due to a 36% increase in volume as the mobility industry recovers from the pandemic and a 14% increase in revenue per day, excluding exchange rate effects, partially offset by a $115 million negative impact from currency exchange rate movements.2022. Total expenses increased ~~11%~~20.2% during the six months ended June 30, ~~2022,~~2023, compared to the similar period in ~~2021,~~2022, primarily due to increased ~~demand, partially offset by cost discipline as volume returned.~~fleet costs, interest costs, and the impact of inflation. Our effective tax rates were a provision of ~~26.8%~~24.8% and ~~3.4%~~26.8% for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. As a result of these items, our net income ~~increased~~decreased by ~~$1.1 billion~~$560 million compared to the similar period in ~~2021.~~2022. For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we reported earnings per diluted share of ~~$25.14~~$18.93 and ~~$3.23,~~$25.14, respectively.

Operating expenses ~~decreased~~increased to ~~44.0%~~49.0% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~49.8%~~44.0% during the similar period in ~~2021,~~2022, primarily due to ~~the increased revenues~~a decrease in revenue per day and cost ~~discipline as volume returned.~~inflation. Vehicle depreciation and lease charges ~~decreased to 6.1% of revenue during the six months ended June 30, 2022 compared to 15.8% during the similar period in 2021, primarily due to~~ increased ~~revenues and a 55% lower per unit fleet cost, excluding exchange rate effects, driven by the continued favorable trend in the used-vehicle market. Selling, general and administrative costs decreased~~ to 11.3% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~12.7%~~6.1% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues~~per unit fleet costs, excluding exchange rate effects, driven by increased fleet levels and ~~cost discipline as volume returned. Vehicle interest~~depreciation rates. Selling, general and administrative costs ~~decreased~~increased to ~~3.1%~~12.4% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~4.1%~~11.3% during the similar period in ~~2021,~~2022, primarily due to increased ~~revenues.~~marketing costs and inflation. Vehicle interest costs increased to 5.4% of revenue during the six months ended June 30, 2023 compared to 3.1% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.

3332

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:


				Six Months Ended June 30,											Six Months Ended June 30,
				2022				2021							2023				2022
				Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA					Revenues		Adjusted EBITDA		Revenues		Adjusted EBITDA
Americas	Americas			$	4,567	$	1,851	$	3,054	$	742	Americas			$	4,444	$	1,147	$	4,567	$	1,851
International	International			1,109		206		689		(42)		International			1,236		176		1,109		206
Corporate and Other (a)	Corporate and Other (a)			—		(42)		—		(29)		Corporate and Other (a)			—		(51)		—		(42)
		Total Company		$	5,676	$	2,015	$	3,743	$	671		Total Company		$	5,680	$	1,272	$	5,676	$	2,015

				Reconciliation to Adjusted EBITDA											Reconciliation to Adjusted EBITDA
								2022		2021									2023		2022
Net income	Net income							$	1,301	$	228	Net income							$	748	$	1,301
Provision for income taxes	Provision for income taxes							477		8		Provision for income taxes							247		477
Income before income taxes	Income before income taxes							1,778		236		Income before income taxes							995		1,778

Add:	Add:		Non-vehicle related depreciation and amortization (b)					113		135		Add:		Non-vehicle related depreciation and amortization					108		109
			Interest expense related to corporate debt, net:											Interest expense related to corporate debt, net					141		117
			Interest expense					117		120
			Early extinguishment of debt					—		129
			Restructuring and other related charges					14		42				Restructuring and other related charges					5		14
			Unprecedented personal-injury and other legal matters, net (c)					1		(11)				Transaction-related costs, net					—		1
			Transaction-related costs, net					1		2				Other (expense) income, net (b)					2		—
			COVID-19 charges (d)					(9)		18				Reported within operating expenses:
														Cloud computing costs					16		4
														COVID-19 charges					—		(9)
														Legal matters, net					5		1
Adjusted EBITDA	Adjusted EBITDA							$	2,015	$	671	Adjusted EBITDA							$	1,272	$	2,015

__________

(a)Includes unallocated corporate overhead which is not attributable to a particular segment.

(b)~~For the six months ended June 30, 2022, includes operating expenses~~Primarily consists of losses related to ~~cloud computing costs of $4 million. For the six months ended June 30, 2021, includes operating expenses~~our equity investment in a former subsidiary, offset by fleet related and ~~selling, general and~~certain administrative ~~expenses related to cloud computing costs of $3 million and $2 million, respectively.~~

~~(c)Reported within operating expenses in our consolidated condensed results of operations.~~

~~(d)The following table presents the unusual, direct and incremental costs due~~services provided to the ~~COVID-19 pandemic:~~same former subsidiary.

2022 2021
Minimum annual guaranteed rent in excess of concession fees, net $ (9) $ 16
Vehicles damaged in overflow parking lots, net of insurance proceeds — (4)
Other charges — 6
Operating expenses (9) 17
Selling, general and administrative expenses — 1
COVID-19 charges, net $ (9) $ 18

Americas


		Six Months Ended June 30,							Six Months Ended June 30,
		2022		2021		% Change			2023		2022		% Change
Revenues	Revenues	$	4,567	$	3,054	50	%	Revenues	$	4,444	$	4,567	(3	%)
Adjusted EBITDA	Adjusted EBITDA	1,851		742		149	%	Adjusted EBITDA	1,147		1,851		(38	%)

Revenues ~~increased 50%~~decreased 3% during the six months ended June 30, ~~2022~~2023 compared to the similar period in ~~2021,~~2022, primarily due to a ~~38% increase in volume and an 8% increase~~ 5% decrease in revenue per ~~day.~~day, partially offset by a 3% increase in volume.

Operating expenses ~~decreased~~increased to ~~43.0%~~48.9% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~46.9%~~43.0% during the similar period in ~~2021,~~2022, primarily due to ~~increased revenues~~a decrease in revenue per day and cost ~~discipline as volume returned.~~inflation. Vehicle depreciation and lease charges ~~decreased to 3.4% of revenue during the~~ ~~six months ended June 30, 2022~~ ~~compared to 14.5% during the similar period in 2021, primarily due to~~ increased ~~revenues and a 75% decrease in per-unit fleet costs, driven by the continued favorable trend in the used-vehicle market. Selling, general and administrative costs decreased~~ to 9.7% of revenue during the six months ended June 30, ~~2022~~2023

compared to ~~10.2%~~3.4% during the similar period in ~~2021,~~2022, primarily due to increasedper-unit fleet costs, driven by increased fleet levels and depreciation rates. Selling, general and administrative costs were 10.0% of revenue, consistent with the similar period in 2022, primarily due to increased ~~revenues~~marketing costs, offset by a decrease in other selling, general and ~~cost discipline as volume returned.~~administrative costs. Vehicle interest costs ~~decreased to 3.3%~~were 5.8% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~compared to 4.1%~~3.3% during the similar period in ~~2021,~~ 2022, primarily due to ~~increased revenues.~~rising interest rates and additional funding for vehicles.

Adjusted EBITDA ~~was $1.1 billion higher~~decreased 38% during the six months ended June 30, ~~2022~~2023 compared to the similar period in ~~2021,~~2022, primarily due to ~~increased revenues, lower~~higher per-unit fleet costs and ~~cost discipline as volume returned.~~inflationary pressures.

International


		Six Months Ended June 30,							Six Months Ended June 30,
		2022		2021		% Change			2023		2022		% Change
Revenues	Revenues	$	1,109	$	689	61	%	Revenues	$	1,236	$	1,109	11	%
Adjusted EBITDA	Adjusted EBITDA	206		(42)		590	%	Adjusted EBITDA	176		206		(15	%)

Revenues increased ~~61%~~ 11% during the six months ended June 30, ~~2022~~2023, compared to the similar period in ~~2021,~~2022, primarily due to a ~~37%~~3% increase in revenue per day, excluding exchange rate effects, and ~~a 30%~~an 11% increase in volume, partially offset by a ~~$110~~$35 million negative impact from currency exchange rate movements.

Operating expenses ~~decreased~~increased to ~~47.1%~~48.5% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~62.7%~~47.1% during the similar period in ~~2021,~~2022, primarily due to ~~increased revenues and cost discipline as volume returned.~~ inflationary pressures. Vehicle depreciation and lease charges ~~decreased~~were 17.0% of revenue, consistent with the similar period in 2022. Selling, general and administrative costs increased to ~~17.2%~~16.6% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~21.6%~~15.2% during the similar period in ~~2021,~~ 2022, primarily due to increased ~~revenues~~ marketing costs and inflation~~partially offset by a 10% increase in per-unit fleet~~. Vehicle interest costs ~~excluding exchange rate effects.~~ ~~Selling, general and administrative costs decreased~~increased to ~~15.2%~~3.8% of revenue during the six months ended June 30, ~~2022~~2023 compared to ~~19.1%~~2.0% during the similar period in ~~2021,~~ 2022, primarily due to ~~increased revenues~~rising interest rates and ~~cost discipline as volume returned. Vehicle interest costs~~additional funding for vehicles.

Adjusted EBITDA decreased ~~to 2.0% of revenue~~15% during the six months ended June 30, ~~2022~~ ~~compared to 3.8% during the similar period in 2021, primarily due to increased revenues.~~

~~Adjusted EBITDA was $248 million higher during the~~ ~~six months ended June 30, 2022~~2023 compared to the similar period in ~~2021,~~2022, primarily due to ~~increased revenues and cost discipline as volume returned, offset by higher per-unit fleet~~inflationary pressures on costs and a ~~$23~~$9 million negative impact from currency exchange rate movements.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We present separately the financial data of our vehicle programs. These programs are distinct from our other activities as the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the generation or acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.

FINANCIAL CONDITION

June 30,
2022 December 31, 2021 Change
Total assets exclusive of assets under vehicle programs $ 8,445 $ 8,581 $ (136)
Total liabilities exclusive of liabilities under vehicle programs 9,800 8,933 867
Assets under vehicle programs 17,650 14,019 3,631
Liabilities under vehicle programs 16,944 13,876 3,068
Stockholders’ equity (649) (209) (440)

The increase in liabilities exclusive of liabilities under vehicle programs is principally related to the increase in corporate indebtedness from the issuance of Floating Rate Term Loan due March 2029. See “Liquidity and Capital Resources” and Note 10 to our Consolidated Condensed Financial Statements.


	June 30, 2023		December 31, 2022		Change
Total assets exclusive of assets under vehicle programs	$	9,092	$	8,499	$	593
Total liabilities exclusive of liabilities under vehicle programs	10,120		9,656		464
Assets under vehicle programs	22,303		17,428		4,875
Liabilities under vehicle programs	21,400		16,971		4,429
Total stockholders’ equity	(125)		(700)		575

The increases in assets ~~under vehicle programs~~ and liabilities under vehicle programs are principally related to the increase in the size and cost of our vehicle rental ~~fleet to meet increased rental demand.~~

~~The decrease in stockholders’ equity is primarily due to our share repurchases, partially offset by comprehensive income.~~fleet.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below.

In March 2022, we entered into a $750 million Floating Rate Term Loan due March 2029, at a price of 97% of the aggregate principal amount, with interest paid monthly, which is part of our senior credit facilities. The Floating Rate Term Loan due March 2029 bears interest at one-month SOFR plus 350 basis points for an aggregate rate of 5.13%.

~~During second quarter 2022,~~January 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued ~~an aggregate of approximately $870~~$500 million and $350 million of asset-backed ~~notes. We used the~~notes to investors with an expected final payment date of April 2028 and October 2026, respectively, with a weighted average interest rate of 5.36% and 5.31%, respectively. The proceeds from these borrowings were used to ~~fund the repayment of~~repay maturing vehicle-backed debt and the acquisition of rental cars in the United States. ~~Borrowings under the Avis Budget Rental Car Funding program primarily represent fixed rate notes. Our~~

In April 2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary ~~also entered into $800~~issued $450 million and $550 million of ~~variable funding~~ asset-backed notes to investors with an expected final payment date of February 2027 and asJune 2028, respectively, and a weighted average interest rate of 5.67% and 5.76% respectively. The proceeds from these borrowings were used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States.

In June ~~30, 2022, no funds~~2023, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued $476 million and $526 million of asset-backed notes to investors with an expected final payment date of April 2027 and December 2028, respectively, and a weighted average interest rate of 5.91% and 5.98% respectively. The proceeds from these borrowings were ~~drawn on these notes.~~used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States.

In July 2023, the Company issued €400 million of 7.25% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually. The proceeds will primarily be used to redeem €300 million principal amount of 4.125% Senior Notes due November 2024.

Our Board of Directors has authorized the repurchase of up to $~~7.1~~8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in ~~May 2022~~February 2023. Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments and other factors. The repurchase program may be suspended, modified or discontinued at any time without prior notice. The repurchase program has no set expiration or termination date. During the six months ended June 30, ~~2022,~~ 2023, we repurchased approximately ~~7.9 million~~723 thousand shares of common stock at a cost of approximately ~~$1.7 billion~~$146.1 million under the program. As of June 30, ~~2022,~~2023, approximately ~~$2.25~~$1.5 billion of authorization remained available to repurchase common stock under the program.

CASH FLOWS

The following table summarizes our cash flows:


			Six Months Ended June 30,								Six Months Ended June 30,
			2022		2021		Change				2023		2022		Change
Cash provided by (used in):	Cash provided by (used in):								Cash provided by (used in):
		Operating activities	$	2,371	$	1,255	$	1,116		Operating activities	$	1,782	$	2,371	$	(589)
		Investing activities	(3,870)		(4,035)		165			Investing activities	(5,214)		(3,870)		(1,344)
		Financing activities	1,582		3,430		(1,848)			Financing activities	3,466		1,582		1,884
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash	Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash		(25)		(4)		(21)		Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash		6		(25)		31
Net increase in cash and cash equivalents, program and restricted cash	Net increase in cash and cash equivalents, program and restricted cash		58		646		(588)		Net increase in cash and cash equivalents, program and restricted cash		40		58		(18)
Cash and cash equivalents, program and restricted cash, beginning of period	Cash and cash equivalents, program and restricted cash, beginning of period		626		765		(139)		Cash and cash equivalents, program and restricted cash, beginning of period		642		626		16
Cash and cash equivalents, program and restricted cash, end of period	Cash and cash equivalents, program and restricted cash, end of period		$	684	$	1,411	$	(727)	Cash and cash equivalents, program and restricted cash, end of period		$	682	$	684	$	(2)

The ~~increase~~decrease in cash provided by operating activities during the six months ended June 30, ~~2022~~2023 compared with the ~~same~~similar period in ~~2021~~2022 is primarily due to the ~~increase~~decrease in our net income.

The ~~decrease~~increase in cash used in investing activities during the six months ended June 30, ~~2022~~2023 compared with the ~~same~~similar period in ~~2021~~2022 is primarily due to the increase in ~~proceeds received on vehicle sales.~~our net investment in vehicles.

The ~~decrease~~increase in cash provided by financing activities during the six months ended June 30, ~~2022~~2023 compared with the ~~same~~similar period in ~~2021~~2022 is primarily due to the increase in our net borrowings under vehicle programs and decrease in our repurchases of common stock, ~~and payments on vehicle borrowings,~~ offset by athe decrease in ~~net payments on~~our corporate borrowings.

DEBT AND FINANCING ARRANGEMENTS

At June 30, ~~2022,~~2023, we had approximately ~~$19~~$22.5 billion of indebtedness, including corporate indebtedness of approximately $5$4.7 billion and debt under vehicle programs of approximately ~~$14~~$17.8 billion. For information regarding our debt and borrowing arrangements, see Notes 1, 1011 and 1112 to our Consolidated Condensed Financial Statements.

LIQUIDITY RISK

Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses. The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations. Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.

Our liquidity ~~position was impacted by COVID-19 as a result of significant volume declines. However, since 2021, travel advisories~~has in the past been, and ~~restrictions were eased, which led to a significant increase~~could in ~~global travel demand, resulting in increased demand for rental vehicles and improved pricing across~~ the ~~industry. However, the full extent of the ongoing impact of this virus on our long-term operational performance and liquidity will depend on~~ future developments, including those outside of our control, such as the spread of new variants of the virus, which may be resistant to currently approved vaccines and the implementation of new or continued travel restrictions.

~~Our liquidity could~~ be, negatively affected by any financial market disruptions or the absence of a recovery or worsening of the U.S. and worldwide economies, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally. We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used-vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market.

As of June 30, ~~2022,~~2023, we had ~~$579~~$571 million of available cash and cash equivalents and access to available borrowings under our revolving credit facility of approximately ~~$271~~$507 million, providing us with ~~approximately $850 million~~access to an approximate $1.1 billion of total liquidity.

Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings. As of June 30, ~~2022,~~2023, we were in compliance with the financial covenants governing our indebtedness. For additional information regarding our liquidity risks, see Part I, Item 1A, “Risk Factors” of our ~~2021~~2022 Form ~~10-K, as well as the “Risk Factors” section in this quarterly report.~~10-K.

CONTRACTUAL OBLIGATIONS

Our future contractual obligations have not changed significantly from the amounts reported within our ~~2021~~2022 Form 10-K with the exception of our commitment to purchase vehicles, which decreased by approximately ~~$2.1~~$1.1 billion from December 31, ~~2021,~~2022, to approximately ~~$3.8~~$5.6 billion as of June 30, ~~2022~~2023 due to seasonality. Changes to our obligations related to corporate indebtedness and debt under vehicle programs are presented above within the section titled “Liquidity and Capital Resources—Debt and Financing Arrangements” and also within Notes 1011 and 1112 to our Consolidated Condensed Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

~~ACCOUNTING POLICIES~~Accounting Policies

The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principles (GAAP), we are required to make estimates and assumptions

that affect the amounts reported therein. Several of the estimates and assumptions ~~that~~ we are required to make ~~pertain~~relate to matters that are inherently uncertain as they relate to future ~~events.~~events and/or events that are outside of our control. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented within the section titled “Critical Accounting ~~Policies”~~Estimates” of our ~~2021~~2022 Form 10-K are the accounting policies (related to goodwill and other indefinite-lived intangible assets, vehicles, income taxes and public liability, property damage and other insurance liabilities) that we believe require subjective ~~and/or~~and complex judgments that could potentially affect ~~2022~~ reported results. There have been no significant changes to those accounting policies or our assessment of which accounting policies we would consider to be critical accounting policies.

~~Goodwill and Other Indefinite-lived Intangible Assets~~. We perform our annual goodwill and other indefinite-lived intangible assets impairment assessment in the fourth quarter of each year at the reporting unit level, or more frequently if events or circumstances indicate that the carrying amount of goodwill and other indefinite-lived intangible assets may be impaired. For our Europe, Middle East and Africa (“EMEA”) reporting unit, the percentage by which the estimated fair value exceeded the carrying value as of October 1, 2021 was 10% and the amount of goodwill allocated to our reporting unit was $488 million.

We evaluated qualitative factors and determined that an interim impairment test was not required this quarter as we believe it is more likely than not that the fair value of our goodwill and other indefinite-lived intangible assets exceeds the carrying value. We will continue to closely monitor actual results versus our expectations as well as any significant changes in events or conditions, including the impact of COVID-19 on our business and the travel industry, and the resulting impact to our assumptions about future estimated cash flows, the discount rate and market multiples. In the future, failure to achieve our business plans, a deterioration of the general economic conditions of the countries in which we operate, or significant changes in the assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets (such as the discount rate) could result in significantly different estimates of fair value that could trigger an impairment of the goodwill of our reporting units or intangible assets.

New Accounting Standards

For detailed information regarding new accounting standards and their impact on our business, see Note 1 to our Consolidated Condensed Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and gasoline prices. We assess our market risks based on changes in interest and currency exchange rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates. We used June 30, ~~2022~~2023 market rates to perform a sensitivity analysis separately for each of these market risk exposures. We have determined, through such analyses, that the impact of a 10% change in interest or currency exchange rates on our results of operations, balance sheet and cash flows would not be material. Additionally, we have commodity price exposure related to fluctuations in the price of unleaded gasoline. We anticipate that such commodity risk will remain a market risk exposure for the foreseeable future. We determined that a 10% change in the price of unleaded gasoline would not have a material impact on our earnings for the period ended June 30, ~~2022.~~2023. For additional information regarding our long-term borrowings and financial instruments, see Notes ~~10,~~ 11, 12 and 1617 to our Consolidated Condensed Financial Statements.

Item 4. Controls and Procedures

(a)Disclosure Controls and Procedures. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, ~~2022.~~2023.

(b)Changes in Internal Control Over Financial Reporting. During the ~~fiscal~~second quarter ~~to which this report relates,~~of 2023, there ~~has been~~was no change in our internal control over financial reporting (as such term is defined in Rules

13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3938

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding our legal proceedings, see Note 1213 – Commitments and Contingencies to our Consolidated Condensed Financial Statements and refer to our ~~2021~~2022 Form 10-K.

SEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. In accordance with these regulations, we use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required pursuant to this item.

Item 1A. Risk Factors

~~The following~~During the six months ended June 30, 2023, we had no material developments to report with respect to our risk factors. For additional information regarding our risk factors, ~~are provided~~please refer to ~~update the risk factors previously disclosed in~~ our ~~periodic reports filed with the SEC, including our 2021~~2022 Form 10-K.

The ongoing military conflict between Russia and Ukraine and the related sanctions are causing uncertainty that may have an adverse impact on our business, financial condition and results of operations.

The world economy and markets are experiencing volatility and disruption from the ongoing military conflict between Russia and Ukraine, the length and impact of which are highly unpredictable. This conflict could lead to significant increases in our costs, including gas and fleet costs, including as a result of sanctions or any embargos on oil sales imposed on or by the Russian government; further impact fleet availability; and impact demand for travel as a result of weakness in economic conditions, increased inflation or increases in the cost of gas. In addition, as a result of the conflict, governmental and non-governmental entities have issued alerts noting the potential for increased cyber-attacks. Such risks and disruptions could adversely impact our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Total Number of Shares Purchased (in millions) (a)
Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions)
April 2022 1.46 $269.43 1.46 $259
May 2022 — — — $2,259
June 2022 0.06 147.31 0.06 $2,250
1.52 $264.66 1.52 $2,250


	Total Number of Shares Purchased (in millions) (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions)
April 2023	0.00	$	—	0.00	$	1,691
May 2023	0.02	169.92		0.02	$	1,688
June 2023	0.70	202.90		0.70	$	1,545
	0.72	$	201.99	0.72	$	1,545

___________

(a) Excludes shares which were withheld by the Company to satisfy employees’ income tax liabilities attributable to the vesting of restricted stock unit awards.

~~Our~~The Company’s Board of Directors has authorized the repurchase of up to $~~7.1~~8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in ~~May 2022~~February 2023. Under our stock repurchase program, wethe Company may repurchase shares from time to time in open market transactions, and may also repurchase shares in accelerated share repurchases, tender offers, privately negotiated transactions or by other means. Repurchases may also be made under a plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The timing and amount of repurchase transactions will be determined by ~~our~~the Company’s management based on ~~our~~its evaluation of market conditions, ~~our~~the Company’s share price, legal requirements, restricted payment capacity under ~~our~~its debt instruments and other factors. The stock repurchase program may be suspended, modified or discontinued ~~at any time~~ without prior notice.

Item 5. Other Information

During the three months ended June 30, 2023, no director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

See Exhibit Index.

4039

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AVIS BUDGET GROUP, INC.

Date:

August ~~2, 2022~~1, 2023

/s/ Cathleen DeGenova

Cathleen DeGenova

Vice President and

Chief Accounting Officer

4140

Exhibit Index


Exhibit No.			Description
3.1			Amended and Restated Certificate of Incorporation of Avis Budget Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 5, 2006).
3.2			Amended and Restated Bylaws of Avis Budget Group, Inc., dated as of August 10, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated August 13, 2020).
4.1			Indenture, dated as of July 13, 2023, by and among Avis Budget Finance plc, as issuer, the guarantors party thereto, Deutsche Bank Trust Company Americas, as trustee and registrar, and Deutsche Bank AG, London Branch, as paying agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated July 14, 2023).
4.2			Form of 7.25% Senior Notes due 2030 (included as Exhibit A to Exhibit 4.1).
10.1			Fifth Amendment, dated as of April 21, 2023, to the Sixth Amended and Restated Credit Agreement, dated as of July 9, 2021, among Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC, as borrower, Avis Budget Group, Inc., the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto.
10.2			Series ~~2022-1~~2023-3 Supplement, dated as of April ~~14, 2022,~~6, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series ~~2022-1~~2023-3 Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April ~~19, 2022)~~11, 2023).
~~10.2~~10.3			Series 2023-4 Supplement, dated as of April 6, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-4 Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 11, 2023).
10.4			Series 2023-5 Supplement, dated as of June 1, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-5 Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 6, 2023).
10.5			Series 2023-6 Supplement, dated as of June 1, 2023, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2023-6 Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 6, 2023).
10.6			Second Amendment to the Fifth Amended and Restated Series 2010-6 Supplement, dated as of April ~~14, 2022,~~24, 2023, by and among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, Avis Budget Car Rental, LLC, as Administrator, JPMorgan Chase Bank, N.A., as Administrative Agent, the Non-Conduit Purchasers, the CP Conduit Purchasers, the Committed Note Purchasers, the APA Banks and the Funding Agents named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee and as Series 2010-6 Agent (incorporated by reference to Exhibit ~~10.2~~10.1 to the Company’s Current Report on Form 8-K dated April ~~19, 2022)~~28, 2023).
~~10.3~~10.7			Second Amendment to the Third Amended and Restated Series 2015-3 Supplement, dated as of April ~~14, 2022,~~24, 2023, by and among Avis Budget Rental Car Funding (AESOP) LLC, as Issuer, Avis Budget Car Rental, LLC, as Administrator, JPMorgan Chase Bank, N.A., as Administrative Agent, the Non-Conduit Purchasers, the CP Conduit Purchasers, the Committed Note Purchasers, the APA Banks and the Funding Agents named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee and as Series 2015-3 Agent (incorporated by reference to Exhibit ~~10.3~~10.2 to the Company’s Current Report on Form 8-K dated April ~~19, 2022).~~
~~10.4~~			Separation Agreement, dated April 19, 2022, between Veresh Sita and Avis Budget Group, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 22, 2022).
~~10.5~~			Series 2022-2 Supplement, dated as of June 7, 2022, between Avis Budget Rental Car Funding (AESOP) LLC, Avis Budget Car Rental, LLC, as Administrator, JPMorgan Chase Bank, N.A., as Administrative Agent, the Non-Conduit Purchasers, the CP Conduit Purchasers, the Committed Note Purchasers, the APA Banks and the Funding Agents named therein, and The Bank of New York Mellon Trust Company, N.A., as trustee and as Series 2022-2 Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 10, 2022).
~~10.6~~			Amended and Restated Series 2019-3 Supplement, dated as of May 26, 2022, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and Series 2019-3 Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 10, 2022).
~~10.7~~			Amended and Restated Series 2017-2 Supplement, dated as of May 31, 2022, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and Series 2017-2 Agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated June 10, 2022).
~~10.8~~			Amended and Restated Series 2018-1 Supplement, dated as of May 31, 2022, between Avis Budget Rental Car Funding (AESOP) LLC and The Bank of New York Mellon Trust Company, N.A., as trustee and Series 2018-1 Agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated June 10, 2022)28, 2023).
31.1			Certification of Chief Executive Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2			Certification of Chief Financial Officer pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase.
101.DEF			XBRL Taxonomy Extension Definition Linkbase.
101.LAB			XBRL Taxonomy Extension Label Linkbase.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase.
104			Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)

†			Denotes management contract or compensatory plan.

4241


		June 30, 2022		December 31, 2021
Assets
Current assets:
	Cash and cash equivalents	$	579	$	534
	Receivables, net	871		775
	Other current assets	615		538
Total current assets		2,065		1,847

Property and equipment, net		520		537
Operating lease right-of-use assets		2,293		2,368
Deferred income taxes		1,423		1,615
Goodwill		1,066		1,108
Other intangibles, net		685		724
Other non-current assets		393		382
Total assets exclusive of assets under vehicle programs		8,445		8,581

Assets under vehicle programs:
	Program cash	103		89
	Vehicles, net	16,315		12,866
	Receivables from vehicle manufacturers and other	247		222
	Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party	985		842
		17,650		14,019
Total Assets		$	26,095	$	22,600

Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable and other current liabilities	$	2,744	$	2,389
	Short-term debt and current portion of long-term debt	27		19
Total current liabilities		2,771		2,408

Long-term debt		4,624		3,990
Long-term operating lease liabilities		1,843		1,910
Other non-current liabilities		562		625
Total liabilities exclusive of liabilities under vehicle programs		9,800		8,933

Liabilities under vehicle programs:
	Debt	2,767		2,542
	Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party	11,331		8,848
	Deferred income taxes	2,484		2,242
	Other	362		244
		16,944		13,876
Commitments and contingencies (Note 12)		0		0

Stockholders’ equity:
	Preferred stock, $0.01 par value—authorized 10 shares; NaN issued and outstanding, respectively	—		—
	Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, respectively	1		1
	Additional paid-in capital	6,643		6,676
	Retained earnings (accumulated deficit)	1,122		(185)
	Accumulated other comprehensive loss	(130)		(133)
	Treasury stock, at cost— 89 and 81 shares, respectively	(8,290)		(6,579)
Stockholders’ equity attributable to Avis Budget Group, Inc.		(654)		(220)
	Non-controlling interests	5		11
Total stockholders’ equity		(649)		(209)
Total Liabilities and Stockholders’ Equity		$	26,095	$	22,600


	2022		2021
Minimum annual guaranteed rent in excess of concession fees, net	$	(2)	$	(3)
Vehicles damaged in overflow parking lots, net of insurance proceeds	—		2

Other charges	—		1
Operating expenses	$	(2)	$	—


COVID-19 charges, net	$	(2)	$	—