CAR - Earnings call transcript Q1 2020 | Avis Budget Group, Inc.

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Operator

Greetings, and welcome to the Avis Budget Group’s First Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Senior of and Avis Finance Treasurer Group. Budget Calabria, Vice Corporate President for David you. Thank

begin. may You

David Calabria

Good thank everyone, morning, and us. you for joining

On Joe are Officer; our with Interim Financial call Chief Executive North, and Ferraro, Officer. Chief John the our me

statements in identified remind as and our release uncertainties results I section and discussing will from to revise that are risks, differ to assumptions, statements. information that assumptions forward-looking that uncertainties we materially the Before no we and well factors periodic our other as of like undertake with and could or the earnings everyone risks filings begin, to We other involves would and Relations information. update obligation forward-looking be Such our SEC website. forward-looking cause Investor such actual

we closest GAAP On available which release, certain define these reconciliations discuss earnings measures. measures for we non-GAAP is our to Please how comparable will and this measures. the call, refer press on website, our financial to

like With that, Joe. to to over I’d call the turn

Joe Ferraro

morning, and Thank you, everyone. David, good

First, and I’d all employees safe challenging thank are frontline to first particular, around healthy, medical people can still in transportation everyone world critical solutions I ensuring during workers, and like essential the is responders, who and our access times. service hope providers staying these

our discuss with morning, operational along actions into provide the balance our second take through to safety sufficient efforts for cash an will more XXXX is quarter John and position, first then to I’d After that, will discuss detail, and I rest current XXXX. liquidity our and like protocols and year. the of This the us update of the on and our in cost-removal outlook which

employees well-being remains the priority our customers. first and of Our our health and

customers safety, one the our emphasizing on actions. and control rental in hygienic Car and their is our it environment. most forms of empowers transportation, to own trust laser-focused empathy of all are We

times In customer go safely in looking customers count vehicles both providing them of on and and can improving home We get provided demonstrated a April or return driving us to or options as leave experience. business have clean from We strong they legacy avoid for need of students crowded fees areas to this vacations uncertainty, conveniently. We the transit our they ages mass and to March associated with wherever as returning travel. we school. metro assist removed to from younger transportation customers

and to delivery Truck go. York, complementary We need national workers to throughout safely created University food free of they frontline offered a program vehicle fleet city to We for the of discount the Budget rentals our from their to plans, in for where Medicine reduction flexibility provided New medical in Francisco travel get trucks and San travel for waiving people We Navajo to an we Nation. program, allow the of extension outreach activity. alter announced School California our loyalty their promoted cancellation in the of to fees given unprecedented efforts significant

for experience are proud differentiated We of rental that current as offer, most environment. ideal it is we the the

Power, J.D. including high-quality by experience. in counter, Avis rental rental the to our enrolled Preferred investment distancing enables bypass our Avis social highest-rated the allowing travel technology, car multi-year app, Our no-touch, best-in-class, and customers a app in maximizing

convenience counter FastBreak to our offer options members allow additional also bypass for We Budget for certainty. and

paid of provide responsible employees of ensure with customers. our our interior for with COVID-XX, and critical customers each vehicles, are after health and and to the special peace augmented sanitize maximum before attention mind to EPA-certified and ensure to the procedures most the customer vehicle Over touch We points. disinfect not just enhanced operating with rental days, products human on we last CDC-recommended coronavirus, including them we’ve that be the against and to and transaction cleanliness, XX our clean facility focus do and our effective both continued one

We "sneeze and guidelines. CDC, gloves, including social to installed meet or in masks sourced state exceed hand and and procedures safeguard protective and airports equipment all sanitizers, additional plexiglass additional hand-washing we and implemented staff, customers. have shields" distancing We’ve ensure frontline our both for personal employees and local

can You demonstrating sterilization protocols and video a see on website. our our safety enhanced

We to employees unprecedented working tirelessly are solutions to and in our transportation customers to have these safe private ensure a times. and healthy environment access and convenient stay

record pandemic. operating I’d In a the continued pacing by day, towards year. strong had to the the with revenues actions from per February, taken volume, and we a response to like revenue and our Americas, operational we results significantly better per-unit the momentum January We higher in of discuss record Now key we have in up quarter continued and were all Through increased and metrics cost. XX% fleet end XXXX. improvement driven improved record-low utilization our February, first X%, with the

of end the EBITDA. At million of February, prior $XX adjusted we ahead year in were

shelter-in-place and entire to were million in our our which deterioration improved personnel, revenue materially upon month. last took reductions annualized start dramatic We the than We including caused action, beginning to shrinking organization significant the record over halting requirements March. cost fleet in non-essential size savings, initially targeting However, In our in a spending, the for to the effects these economy. year. unprecedented business week, off the impacted pivoted we all in and we’ve significant travel $XXX of respond less pandemic a in and

started took used early in U.S. as believe the to We number cars demand adjust accelerate March. to our to evidenced positioned Auction us size sold, wane. We actions this reporting well fleet of by of for month vehicles the before

result, cars month. the dispose a in XX,XXX we As of able to were

in cancel incoming year. States the of In the United remainder we the XX% of our to for rental step unprecedented vehicle took addition, orders

anticipate vehicles number Given XXXX. and our of decisive to three quick and the added next dispose reduce of to months throughout being fewer the the needing to action we of over our fleet, balance units

as reduce recovery gradual taken and to fixed cost quarter a to XX% We a expect mix. maintain and in we’ve XX% variable well significantly down thereafter, with actions revenues to as costs be second the our

our you presentation, demand effective rental our have we find proper As find to size utilization. maintaining will the quickly our fleet to history while in of service with matching investor customers a balance our

vehicle fewer length as flexibility miles of many which we Given allow compared not to we fleet, rentals, the additional time historical vehicles hold in across will the accreting are our trends.

alone, decisive spending. million a undertaken $XXX of of and around the As extraordinary fixed over world, significant driven shrinking and achieve the result all will savings, cost size effort by the annualized action halt $X fleet reductions in we in non-essential including billion personnel, of removal the

XX% we costs quarter same year. compared the for estimating reduced have last the second We’re quarter to more by than

the most the this quarter expectation, current our quarter second year. on be will Based difficult

have in seen expect in We revenue April XX% similar declines of and May.

further improvement the We to and expect restrictions year, leisure in June, recover to are travel demand begins to demand throughout lifted with as recover. begin

of markets Our a indications the seeing where set being are strategy improves. shelter-in-place summer. situation hopeful quarter, and improving current our recovery the maximize reservations is of early In to third team beginning so and show this as restrictions lifted, demand, the improvement balance recovery the over for in we in June we’re ready us leaving the

to in the actions business the on optimistic, vigilant in will behavior, to prove with or outlook and change world. business match adapt We’ll if are additional costs environment to matching stay see demand. ready scale a the levels our revenue with be we to the remove prepared our too further to costs changes focus around and and we Should be any

airport Our more for market remains while stability provided local low. has business us, travel demand

down and less Our are by business Zipcar off-airport less than to hail, compared April are package ride the impacted prior rental operations, outbreak delivery, XX% in and year.

stable more year, for travel, the expect as health to as care the essential. We as businesses localized delivery, rest package remain and food, these of well remains

our business demand rental have from is recovering been data where lifted, by evidenced customers. leisure pent-up due markets As recent restrictions in to

the our as prior alternative by direct-to-consumer. to we well retail as fleet In including five to online offering locations direct-to-dealer operate disposals through drive. and be compared direct-to-consumer majority June sales be ultimate year. channels, in in Americas, will test of We XX states The anticipate XX% reduced

from second achieving more the during month demand the fact, at of to consumer for the beginning recover. were we the sales levels as vehicles retail In our used of than April, doubled half

and vehicles physical vehicles, in sale program which car receive we residual that insulates channel. as in on us of used investigate our We guaranteed North is throughout This dispose highlight will the also have of year. utilize approximately balance America, risk is we value our fleet the of would manufacturers. will continue as prices reduce to this advantage time we from We different and the disruptions dependence potential that to in XX% values the inventory a auctions differentiated of to ways by for maintain

year. prior was around April revenue below international down for XX%

our However, light our are vehicles, proving resilient. off-airport, business commercial including more long-term

on fleet XX,XXX compared fleet commitments ease to starting in countries European April the with to versus track see recovery closing management reduce the returns year. International vehicle units prior lockdown to for beginning tight are commencing than more balance May. purchase the are with of We program current year, restrictions of actions to by

actions the declines continue remain both with billion vehicles from the employees and allow and offering reducing the residual experience of of our and of amount vehicles and customers, exceeding every we’re line distancing rentals emphasizing costs in a facilities to annually. and costs, business, fixed our In Program the expense social around to variable dramatic decisive right-size unprecedented scrutinize our fleet healthy. for taken and to fleet conclusion, and reduce taken the international additional segment, majority the we headcount, remove We’ve sanitized and touchless are value impact quick world. to We’ve customers all actions our maintain for opportunities. remove to safe an $X

we’re requirements begin that over optimistic lifted. markets and initial countries and June in indications and recover where in will of seeing shelter-in-place We’re improvement to demand are summer,

appears it to other as customers vehicles of their our safe Additionally, to modes environment given rent the consumers personal space. ability choosing be a alternative and to control maintain for that transportation, may

assistance and launched and million into the world. market have $XXX liquidity transactions be for eligible a secured yesterday, sufficient around may continuing offering for government investigate XXXX, We to capital or additional notes we XXXX

and as to adjusted preparing improved world the navigate challenging returns cash We will dynamically these through to generate and and EBITDA flows the times normal. are company respond

I’ll turn discuss to to our it cash over John and that, With liquidity position.

John North

Joe. Thanks, everyone. morning Good

programs, which credit liquidity of million $XXX from equivalents, our million $XXX credit. in As we billion, is on approximately after on not consideration in available cash revolving XXXX, for and facility into comprised our accessible vehicle $X.X taking of availability and cash balance of had million approximately consolidated needs $XXX of sheet; our of letters March cash XX,

strong of balance were our We our was $XXX this due estimate quarter year our covenant XXXX waiver April. our effort anniversary in corporate XX, a our four notes XXXX, of this, cash anticipate the agreement awarded the To second senior we address XX, XX% us with to This in we a senior June our leverage associated for excluding relaxed April that amount with amended net XXXX. of million, facilities, million we obtaining XX, debt credit approval increase credit until times, be At the the governing XX, and provides approximately on will $XXX of XXXX performance. until June covenant redeemed as burn for existing leverage the from retirement creditors. March and

million Additionally, in $XXX amendment thank additional record their to the amendment work for like accomplishing allows tireless to I’d lien treasury time. us first our debt. to up team incur the in of

and balance need meaningful corporate current the we secured position, debt fleet have we debt operational a of To Joe year. have million the launched assumptions, notes no to and yesterday. mentioned, no our on liquidity until any adequate this offering $XXX as Based year have further bolster for cash XXXX We beyond. refinance maturities

the clarity term I in ABS further is few of all with provide to at take our conduit wanted which the comprised debt on a debt, quarter. our facilities end We to of the were securitization, around facilities of specifically and vehicle world. bank compliance minutes first

ASOP structure, test and the at have by than of States, in on test end monthly more March. to XXX% the of XXX% the continues largest United met we room our as covenant mark-to-market maintenance the example, by the more disposition met than For plenty test

the in financings. takes unique in Our a conservative ways approach and ABS is securities to asset-backed many industry structure

depreciation two company. different in rates have We our

our is ABS the second first depreciation, non-cash, depreciation, monthly. The is which which is compliance GAAP cash goes into is structure and that

at currently to Our our zero a statements, each of basis vehicle depreciation depreciation or gain sold. when rate found required X% amounts can loss expected a our and the are be results GAAP month. that assets is in This amount is in we depreciate financial cost approximately

higher X.XX% structure than set Compliance the month, at we into our or cash per depreciation, not the is It shown rate. is amount pay income statement. each per the GAAP vehicle far in month, depreciation

a Assuming a under in at months, to XX% ABS XX% an XX XX% facility, vehicle the life. creates of our the cushion GAAP, depreciate differential but and average of end which will vehicle vehicle life value we a residual XX%

the between can cash depreciation each ABS depreciation residual equity differential rates utilize to the structure, fleet. are The values ABS vehicle GAAP in for can is cushion the an as paid equity, down we due and the we impacted. unlock the fleet sell into cash provide event we the which Also,

ABS our that is way XX% worldwide the loan-to-value is a maintain Another structure and conservative ABS on have ratio structure, in basis. unique approximately we equity of meaning we XX% a

needs point in source March to the as of cash presentation depreciation a to for needs, of corporate I’d reduced general the XX concepts. XX% the facilities XX and investor were and Slide GAAP for year, of our of are structure equity capital, we difference, in these release. the extract structure, from graphical able you a fleet Because equity outlined press held to this significant our explanation our

XXX to results. point with Turning highlight, finished than travel and X% per down volume, the the due world EBITDA used shared resulting utilization quarter from revenue first $XX quarter a fleet Per-unit in in X% vehicles. mid-March decrease and loss vehicle million loss being approximately basis per drivers, of combined shelter-in-place were day actions $X.X through the of for around share resulted as quickly better We our diluted prior by held lower offset costs of less to year performing a turnbacks down on down million we our $XXX orders. X% revenue, up and Joe effect adjusted Net the accelerated you, market significant $XXX quarter. respectively. were million well these the with and as $X.XX, The program billion

to outlook Finally, the like for of our the remainder I’d discuss year.

July case, how difficult remains positive we and be are available the Act financings recovery flow world. modeled the for as as for beyond. will opportunistic future we play projection the have and In remain programs other options, continue focused Despite base government virus and in evaluate this, we the under any predict, from anticipating numerous made out. to internally funds additional on the While to to scenarios well cost-removal may our CARES cash around accessing

a While know of safe exactly look, hail. we we to a recovery other modes do to how alternative including have will transportation, the not opportunity ride unique provide

and these our safety, during unprecedented We empathy times. trust continue of to emphasize in all actions

I And happy are with Joe and take to questions. your that,

Operator

[Operator with Instructions] Mazari comes question of Our line first from Hamzah question. your the with Jefferies. proceed Please

Hamzah Mazari

My implications business? on morning, safe Is Good about healthy. question Hertz your think or is Could potential about is that I positive hope guys? for you of just you the to how and negative talk everybody bankruptcy. you first that

Joe Ferraro

we looked we started were well March, Joe. really April change even this frankly, thought had we is hit I and things have unprecedented comment a Quite This what going cost this quarter. we And we pivot affairs. actions into a And to get to decisive When happened, a to really demand. can fleet. don’t whole pivot, whole of anybody had and holds. lot to lot predict do think based out continue the we quickly. to will that I future And record the an really We with on were in can’t Hertz events quarter. took May. We and supply really past to strong. try off on of going of and

forward. basis we’ll And we opportunity well we normally the that that the that as advantage will on used potential continue the that We we metrics see. and and are at, look we’re improvement business sales. do every take manage, drivers as to to as seeing we volume we move of based the do, we that need And achieve we cost our operate as car that seeing

Hamzah Mazari

Great. a And just follow-up question.

your On reason upsize $XXX or for the you offering million go assumptions in the burn of the the that and around burn, include ABS? mark-to-market why cash note the million $XXX just the any then And didn’t $XXX does you. Thank to relation cash just that, on liquidity-wise, million? in QX – then

John North

sequentially second Yes. we The the burn John. cash improves quarter. This that have through amount is

back was residual $XXX made we in But that if compliance said going June. we talked be then. $XXX ASOP go XXXX in some have given issue million in look at in fall in So particularly we it have, we percent, you terms we and didn’t value the and XX-plus saw in what about, declines room a We $XXX in happened vehicle back XXXX, million and of forecast. our May million where values April, assumptions to and that X%,

liquidity have the major is, so significant for there. of won’t amount a room, given expectation And need our we

fluid Obviously, now. what degree Manheim as we’re in the it’s best that’s saw And we but we’re to and seeing prices, things and as all that in was react can, terms or sales that’s a the like say, that we would in certainly, Index. I saw not vehicle the but published of April we’ll have prediction data we right affected, to

we’re picking being can it. think nimble, punches, we’re manage so And through and and I our we

In terms had it’s still say open. I I significant we’ve of investor would demand. the deal, very mean

are trying before. has get way done noted people haven’t the there marketplace. to a treasury in David ABS a and And Certainly, lot they to in up team out education on of I that the speed

get makes transaction think want sense. a to I we that

sure strike. the the it keep open, all also We’re us, size, that balancing can that transaction of as for it’s be as yield of the sure the trying also to protect and make that’s to options we balance we’re our make but favorable in terms want we to and

Hamzah Mazari

Great very thank much. you

Operator

Thank you.

from proceed question Jonas your Morgan Adam with line next Our of the question. with comes Please Stanley.

Adam Jonas

and community really I those in gaps. Avis the call. the for very, the everyone Avis in been It’s efforts everybody for and very thoughts narrow very to extraordinary to thanks thank helpful knowledge my and on for helping timely, so want echo that. also And team I this And

confirm on of of and question claim tech other or any the one claim is, Avis, assets on side outside can and the or don’t trusts? ABS Just such your No from any things and Avis the the systems vehicles my have that brand you of nature. legal Budget holders that brand as assets the

David Calabria

Adam, in of anything It’s receivables They the do the are and vehicle have the David. that trust. any vehicles outside not claim there. this just is

Adam Jonas

to might Thanks trusts. why not, Thanks those you’re in possibility include I concessions ask I that for any to was of than because is made But reason more conforming The that that. I ABS any wanted what been confirming holders that. have eliminate to appreciate so the David. there’s

Operator

Thank you.

Our line next the Woronka Bank. Please of question Chris Deutsche with comes with your question. from proceed

Chris Woronka

Hope was on RPD. longer mentioned business, the you’ve you’re seeing an think that I offset I’m a what the cost question rentals mean – in in unit-level on staying well. of a – presentation length on bit I the little longer-term April how how increase economics and transaction? the per the that does you’re But of impact My is of meaningful wondering does that in the change kind much side. has

Joe Ferraro

It’s you. Thank Joe. actually. much are longer seeing length rental, Yes, Yes. of we

as the because a need somewhere. a they have four-or-so they average cars keeping could is as vehicle shelter the longer. It’s And aspect, call we’ve in now we this customers the that vehicle With LOR, are days. be recovery the seen And early people it, is place, to because that to keeping get above use are keep in eight. and they could if security – be is what want on, out, that they

however, good in There So our in past we that. growth we’ve weekend, weeklies. and in have bookings, our see weekend seen this growth pretty we’ve we surge a seen – did And business. seen monthlies,

all actually transaction of But in high. length in first XX% little of bit some have the all, it revenue that got so been seen and been restricted is cities, month April, we really the to the I close that. the better. Quite a has shelter-in-place rules some staggering. and that in think of The weekend saw on. turn rental per we’ve which frankly, It’s weather up been was

that what you, transactions, if for Now down. you – mean, does are I however,

be scheme of you a does and once, that out repair in clean we more you drop-through period allows once, a once, car you move you a longer things for what for it what significant the goes is believe But a time. because a of to car car

have seen So that. some we of

be I had expect a continues, term. think normalcy the a more we long still significant in going bit maybe dealing it’s with seen But an we’ve to So we’ve degree. like But right than little It to as recovery seems now, effect. the that’s past. pretty that the

Chris Woronka

showing And year? in way, if fleet of what a little about beyond quarter, for that Or longer-term difficult beyond. fourth Okay. make know fourth us still have are decisions then quarter to think in demand none that adequate the how of kind decisions going say, quarter, are in or think to a worse for the now? Great. the really as really do you have is size look question flex you the in third going you’re about longer the we to later better Appreciate you term, color. planning right changes fleet? kind more like is of, terms bigger But the of how of or you And

Joe Ferraro

Yes. It’s question. good a

one a aligning that a in days. to demand fleet. was run or that first period good time. with we presentation, basis XX% the if were improved XXX during the think the we the – XXXX, done thing utilization would quarter, growth Quite we’ve In you Even job had, improvement about think you and frankly, we XX% February go this I And back since Americas, rental didn’t in fleet our in we’ve up our done years, right? investor over points that over supply. February of much month-to-date So

that we’ve we demand. time, fleet could good to flex maximum a the So get in showed

been exclusively city should systems the have less, couple that understand where allow and we’ve have for and years. should in them cars the what us pricing more of are model patterns fleet have better to and place past We demand our utilizing and demand

go out, or XXXX We upside we year, as last – fleet. – were as off just flexibility that starting our times in less with in bought downside always buy – we off less buying are cars. than started we’re a cars with uncertain, the we build So so

And less the XX%. of near month if cars And the been quarter, I much April I you that bought. was look March pretty frankly, were it’s there the quite reported first industry, at think XX% think

is So have fleets right-sizing business looking But go and demand segment. that will by flex at on our city, fleet the our customer to obviously as believe situation occur as it should we the we well. if industry in out. the ability we advantage I we based And company take that of the doesn’t, And would to need reduce cars. more have we’d by

Chris Woronka

Okay, very guys. good. Thanks

Operator

Thank you.

question. Our the Research. next Healy John line question with proceed your comes Northcoast of with Please from

John Healy

Thank you.

Just a more on QX. wanted million bit to cash color burn ask the $XXX little in

EBITDA what size restructuring CapEx? kind expense in for net potential just would of and the And to that and were be the expectation loss the mere with the quarter? you If the for – of $XXX that, severance against million

John North

all a that that. month I how into And because is John. payments reason is this of arrears. fleet and depreciation us granular John, know to we’re April is the biggest larger the the than the other don’t months in cash that go the in. is for Obviously, want we get burn

was to as spend, money obviously We’ve already we million thing had out so this So happened a the going that. taken March April. There door in think, year. we this were our that’s that going that’s very the fast. out $XXX significant reduction was said mean activity I to I CapEx,

was would I QX bit an say a And anomaly. of so

tried that and to have of sense look And at could we have you our get can much that an We as and go everyone would as opportunity get on share. Qs information file to is. where that back early so a

the been to the And getting the you out P&L operators gone revenue. in the cash driver do relentless. could are it effects where May function the is to see line cost that. fleet the are that and improvements significant. by slowing primary And about has that a team, June And and that relentless through of line our And are matching Joe then we’ve we’ve of the the burn there. pretty that sequential shown in costs has

other reductions I’d there hopefully, well model run are rate’s other we’re it, than insignificant in deliver I the you’re recognize fleet-sizing I maintain we’ve on of done. are things track say, we costs not certainly, And to probably But savings the the both that severance helpful structure. number and but think and given of are going I that, pretty the variable/fixed And equal buckets. assumptions kind And to helpful. XX-XX think –

John Healy

Great. And little some wanted announced to they ask just opportunities. I assistance a government help the nations. got some about they Europe, Thank that the of you. know European I think from more bit

maybe Just kind of you how than car to can faster, with of rental happen curious direct ACRA industry? the in what Are do assistance U.S. And government? progressing U.S. moving some slower internationally? they is kind here opportunities the see the for maybe

John North

again. John is Sure. This

looking obviously, Spain, advantage the programs paying Europcar taken and to has the in of particular. France that attention some in in close around world, We’re of and

interest. Our they’re a taking understanding programs of those security that are

ability world programs. coupled and potentially $XXX that million million those increase unintentional, capacity not gives was additional so debt the a offering, us around to in the senior the And to and we secured with $XXX got it participate incur

think to think that, remain our ACRA I the U.S., with obviously the carve-out not I belief there’s is Within we’re focused But one. to specific be probably under to try very going preparing although find a rental we assumption programs are advantage fruition, deferrals. take other so other tax-related whether of are that and income may reform come we better or and the payroll option that tax not to investigate there, they’re can we certainly looking to every

well. potentially how access The as we is that. can And $XXX Act Cares the on million table everything been the then that’s in and earmarked else

world. we’re So unturned leaving no stone the around

with comfortable We way trying investors everything with very of what street the find ways which amendment to to liquidity. really And in put communication needed will place, seeing in thoughtful that the yesterday, sequential and to to controlled the relentless stuff. about credit and deal us to and in in try all be we’re launching we’ve that first, the that the people increase our more from the continue XX% of to more that good we a mind, around to aggressive the we done feel and upsize allowed sign, continued to capital potential get to

So we’re to programs. going try can our protect very to flexibility also well, equity as We’ll we us. consideration of and to terms holders governmental as same continue to thing for as a the important which do in much preserve is trying

So that it I I’d answer way. guess

John Healy

And thank Great, appreciate you disclosure. the all guys.

Operator

you. Thank

with of Brinkman Our next your proceed Ryan JPMorgan. Please with question line comes from the question.

Ryan Brinkman

XQ something XX. just I agree for rate been I end. alone so, Slide – demand, and manage need closely the on or reduced and to down just more XX% with thanks little But have with in employees XQ by very let by back see more Great, bit prepare was fleet know able given going drilling you I XX% down surprised in size size band. – wanted for not end, narrow to XQ, historically on utilization taking circle like or revenue and severely question. and down June, for a XQ to you’ve guess but my impressively been a I’d within April haven’t an you at just May forward, I for managing to demand Maybe similar something figures that similar to fleet little which fleet

And maybe a does what are cetera? are that to recovery you your low And that XX%? ramifications of you in imply preferring talk utilization? maybe industry utilization size as or – vehicle the And level you’re pricing does on to anticipated historically or of for profitability, that that of an Is quickly at wait least that into of pricing fleet as enters target of Or sort de-fleet? can about what prices? what et down able level

Joe Ferraro

Yes. great question. That’s a

cars. decided Yes, get by Joe. lot is to And had February, a March, term, try early seemed match was historically design. what in near it with supply able that. then we fine. quickly, the been and everything this our in prudent We about of has we’ve we to of to we demand, that And the be got we selling for happened and us right, – think and very to pride in that So our be would take out in out in when of came

we XX,XXX So Plus getting and us we out in having have to the month periods selling mentioned program move then which that early earlier, started we of lot. some good we we we quickly. relatively we really March, are in the in okay, cars, and a right? first closed, weeks, that and have out cars out of April which the did, took helped as really had, were cars auctions able couple out

close to the the And and up. activity all started dealerships all orders, the with shelter-in-place

latter kind the actually quite slowed So the we week pick that our April. of of had week April. down at We’ve very quite up in a an part good on lots, retail bit. the frankly, of – seen demand And last

cars, we’re around to to situation able starts the As and we sell turn will. more certainly

as not lot the year for less put pressure out action paying certainly rest the cars that’s to will orders, sell we’ll is to we and be we other them that that to The sell number North expecting able because cars took, start that quickly. those XX% a on our of which we to come fact to And the of to a need going in over we start dividends were would in up, go America. catch cancel and good

based fleet July. in We activity – look in put anticipated to point sometime get on time, if our our right-sized a

doesn’t have to But that. Now have to if we take do do we other have kind a that – would that things. we ability happen, to of

recovery. the at looking we’re So

as going not lifted, happen that’s we’ve orders these as get traditionally the leisure are past shelter- commercial, is period. as to and back volume see this much leisure one goes leisure July to in-place seen We’re it periods, weekend. starting come to The trying what’s sooner August out.

demand with And to our continue we’ll fleet. change. change, things our match And obviously if we’ll

thing even other that we’re is and – the one April months and mileage, potentially, of The last item is on less right, March accreting in that, and May.

certain current pleased out months amount have if So make need to are we it?" to Or to face. mileage? have of we and sell supply low to meet so And flexibility or that the get the decisions want to. augment But of ability we our will with cars, to and to levels I’m fleet of those on that we then we hold a to we with decisions a want say, do to car "Do the

Ryan Brinkman

understanding some dust expectations? that pandemic maybe fairly for the prior relative That’s disposition, months of were look the your ultimately Okay. settle helpful. couple estimating just at to prices a or of earlier and my different out the or could settles? What right when wholesale at And to to they prices relative you are what Thanks. on it’s used potential is market you now. illiquid vehicle What

Joe Ferraro

on to large we fairly gain Prior pandemic, were Yes. the getting sales.

put to believe existed. certainly what going I would that demand. hard then in pent-up there’s the that wouldn’t So place some say take that and we and I’d that’s to mean is say to When a happen. line sand going opportunity eventually, be predict, I

key we in all with that can are line? may think cars you flexible I or as here months, the to our current know, deal we rental And whether ready? what the come are actions, in And we be adapt? selling

think I And forward. manage that’s going we how the in key

cars rules the I this saw of the this a quarters number with less the shelter-in-place week. – traditional was we selling past And are fourth lifted, XX% the first we have alternate XX%. it sold when more So on of when past dependency been auctions. over quarter these we’ll do our quarter in in because cars channels. demand through We’ve good think

we year many it the XX terrific that So – our we rely before didn’t heavily we who direct-to-consumer certainly. have on stores that, are direct-to-dealer, have whether year last We relationships, which and now. be have retail and product,

buy a have we can vehicle it. our and then drive customer a And online test where rent ultimate

our we different working in week past. what starting and to – favor, we’ve it’s back. two will in than saw And So the signs those are that come and we this last that’s in had

we’re pretty that. with pleased So

Ryan Brinkman

much. very you thank Great, Okay.

Operator

Thank you.

question next Please your of Our comes proceed Barclays. question. from the Johnson line with Brian with

Brian Johnson

recognize share rental b, terms about are rental that are argument people way, but you more arrivals in might Yes. trends volume airplanes, down, apparent the if any way displacing versus getting there of favor look bolster of kind PNCs personal that versus of a at hygienic volume, off spaces? of are in your airport and rentals as companies; rental volumes other your a, I

Joe Ferraro

it’s that’s Joe. question. That’s is Yes, an interesting –

airlines anyone’s our early obviously, competitor to lot share set. XX% to have period, to what tell into market the a reported been capacity, in February traffic. well reduced on December, above that too November, that It’s prior would is. share have routes airport year of And our market and on, The you, tremendously and the down early right? routes. it’s reduce say January I of hamper above was will way So going their

So of – but it’s now, right kind early.

And we monitor activity. our

seen XX% business doesn’t remainder mean rent from airports people our come airplanes, local. and – will coming with get say who would if now, off right get to coming that who is we indications, cars. Now people from that. not of to We’ve and I who live locally people are is the early

us drive. accounts, some talking an to going reduce corporate there surge that When to hours start change. states capacity, you’re are of But locally. increase Currently, rent five of seen continue. that’s that should that is As want that’ll that who And to in you our – today, cars some there appointment, to we and we’ve tell airlines think for in if obviously restrictions environment. a live people

And about that, about alternative. think the it. after So a that to right be good our you’re we’re you car we last clean think returns going When might cars, comment. your someone

they it We’re before get clean going rented. to

disinfect to We’re it. going

that safe. that’s would and products And get to you’re control in it. in certified clean going We’re the and you the car this environment, are And going EPA-approved. to CDC use a by

to in of be let transportation. that’s think who going modes you to. you to You feel need an advantage compared other We

– think whole we a the and average, other It’s control change car change will you rental lot, can’t compared hands not hands and mass say, about you where times to On time." four month. average, "Wow. On a cars a change transit you They it. all a environments car

So yes, an to be in advantage think we there’s going that.

and We’re at use work goes maybe some We’ve And do least at as early we’ll on. during of least promoting mode transportation seen I versus there’ll that safe But that a see our environment. time pandemic. safety others. rush think an this initial to on transpires be what

Brian Johnson

market to at XQ there a did kind your follow-on, does headline be of would going airports Because business. this car taking versus that share of before wind easy up little bankruptcy, it’s rental competitors you there’s – pre-crisis a XQ, I in any ride indeed things of helpful, share that you kind due bit of ride mention maybe again, about, media around think just numbers share? talk and kind away all down. if one turned And Could about

on comment could you maybe So that.

Joe Ferraro

look share from said, you Yes. November, during Like been has our growing. I if – December market

we So were pretty with that. pleased

that the be think business, of one if that think helpful ride commercial that might augment hail. stats commercial I more to you is of at look other the where you is group customers

in – as commercial days, X% Our first States. about business and in the February, far in rental as the January United were up

were of pretty – that dealing good through were number And pleased top. enjoying commercial and spent with business. activity, coming years small large was we whether or the we of there, mid-market a the just So we were ride-hail a book it with there that we would good growth. pretty we or be business And – that over

sound that thought pretty So for if we asking yes, indicators, for was us. that, you’re

Brian Johnson

you. thank Okay,

Operator

Thank you.

from Consumer morning comes the of Please with Research. question question. with Edge Derek your this Our final Glynn proceed line

Derek Glynn

Good morning. recovery? X.X what rolled you was program back the it had I mentioned for all deck, possibility impact on for benefit a in Clunkers of out you And the In be in slide recent XXXX? may a think you hope do you How you In original that well. us business program. a are Cash expediting helpful your when from the ways would program? remind can such And that

John North

I because off program when came original previous Sure. This it – off going people up, creates at SAAR trading correctly, remember John. think are it really million cars was of as was It it like And for XXXX, to older XXXX in residual used I is believe, massive everyone lot industry it well hit manufacturing a just was the was a If needed, given – car boost. then monthly that. number with values. that the real and I’ll XX my the huge a the I in it vehicle some and support Maybe forward a – start that helps and scarcity the experience values I think real of for what shot takes a benefit, arm but it and that exactly supply out, was XXXX, and also or for used dealers.

well. And so helps the it’s automotive really benefit as to get a and ecosystem again whole rolling manufacturing to

it’s think think that I sense. something make So would we

numbers X.X OEMs. days the probably is I vehicle particular you’re for million, after over pretty think up at out, coming that, seeing But and of and supply closed look the still sales some be belief days drop days I with rapidly. production likely obviously, as and in going to if SAAR you go recovers XXX slow supply at days the our April of SAAR the most supply may that given think

something to our later so helpful, in it’s partners bit the very a it And probably might production want get see going, And well. really come But and June and in of be and stay healthy. that might with take July. year time for would And likely we to flexible been as as We are to stay to trying it it for to certainly, us. something they’ve them opposed think certainly OEM close Washington. would with in we’re it advocating you

Joe Ferraro

John’s pretty back I for certainly And believe us here we it a And a it was benefit we during at us And like again, high a demand so for real for road, this it it boost. was I and vehicles right, had a there be it used if comes prices. was Yes, it big will benefit was now. good if Yes. Joe. then. cars off definitely was to And six-month I had it. when – is took recall, the say,

Derek Glynn

Got of best luck. it. you, Thank and helpful that’s

Operator

to floor comments. you. back for our any I’ll Ladies that time Thank for final and turn Ferraro gentlemen, allowed Mr. concludes questions. the

Joe Ferraro

so everyone. you, for Thank Yes. joining Thanks today. us early

with So proud team’s these our taken which just of company environment. lose any to decisive our first never and the cost costs ready our customers. And we are I’m employees basis our changes safety navigate We’ve unprecedented of our business is the of our summarize, times. and our to in to resiliency incredibly actions ability adapt remove sight priority, and through to

in liquidity as Until interest again capitalize through We to thank I demand company, the have us look soon. sufficient forward XXXX, and travel for see and you I returns. safe. you our on healthy your to recovery speaking stay we’ll and to then, to stay want

Operator

Thank you. conference. today’s concludes This

your participation. disconnect Thank at for your lines You this you time. may

Avis Budget (CAR) 5 May 202020 Q1 Earnings call transcript