CAR - Earnings call transcript Q2 2021 | Avis Budget Group, Inc.

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Operator

Greetings and welcome to Avis Budget Group's Second Quarter 2021 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. It is now my pleasure to introduce your host, David Calabria, Treasurer and Senior Vice President of Corporate Finance. you. Thank

begin. may You

David Calabria

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

Ferraro, me Executive Chief On with Joe Financial our our the call Choi, are Chief Brian Officer; Officer. and

With and and statements of to any be this discuss certain We undertake all prove no to turn we release Please will to to and risks Investor we our identified from measures. our to is earnings as Such website financial statements. future website. assumptions, will such differ I'd information. could in is SEC performance. uncertainties update and we everyone financial our on should define refer the how Before cause would which risks, GAAP which forward-looking like forward-looking earnings to over press revise upon we to or make available results other assumptions comparable future our can I measures. uncertainties measures obligation closest may Relations statements prediction be not like our that the periodic for forward-looking including statements are factors other begin, performance, and as we to actual and forward-looking and or the no call, of materially the and these reconciliations call release, our that, Accordingly, about as be guarantees with forward-looking non-GAAP of subject potential Joe. a relied filings On actual discussing our information, to well section inaccurate, remind that results

Joe Ferraro

for you and David. today. Thank everyone, you, Good us thank morning, joining

recovery, to our difference we job that and of the unfortunately XX ago, that our by been pandemic that posted we've we the get on call of call I quarter Since I delivered the were compared the start had best second to in our message XXXX company's reporting you in quarter loss a EBITDA me would to this adjusted revenue, the of second discipline makes. tell the adjusted disruption, the capable rhetoric. a just unenviable XXXX, posted operating that and stating months XXXX, XX-year yesterday travel revenues already XX% with take this that and post-pandemic empty rebound largest in historic Avis best Budget obvious, leverage I Group margin position of coming this history. this consistent business down why EBITDA of the ever. a new the the the Today, just our wasn't and began, year cost Budget over Let a best in in will what chapter introduction [ph] will Group our transformed to results the a The story. of our us in of Avis are company advantage out operational we that innings results demonstrating come quarter, early a maximum is that is the of. on efficiencies and travel. focus a this being proved Despite we Today, go

segment. Let's with the Americas start

in the second pricing. revenue in travel started we improvement traditional tight outdoor to with late and seasonal mountains, This balanced beach, pent-up of a saw As busy the fleets month holiday March, the We surrounding and July June you at led February, season. venues. rental US more continued the close-in Demand demand, and from summer locations previously, mostly and up close-in in of stronger and throughout Xth see for positive with sequential the said to further days, to bookings the display strongest, other golf patterns travel change it increased both being materialize out demand we recall, as momentum to reservations. the quarter, convergence demand showing the each and last in started quarter pricing

the the restrictions were volume in Hawaii, and fleet quarter, and as utilization. which helped Coast During such locations West California lifted

proprietary system, data, ready opportunity. was experience reservation Fleet Demand team ground Pricing both drive combined with of using to Our this our on the the years

although, XX% car was our vehicles versus still of down roughly rental a utilization than shortage higher This second is across in the actually XXXX, entire prevalent the are in days that demand XXXX. reflects we Now it to relative quarter in fleet rental was industry.

in a laid our of call, reflected our saw efforts this new and out last economics things demand implement on how that with lead on of the to of our state best will supply As allowed operationally. in to the change laws ourselves simple were price. to like this invariably imbalance Brian We revenue something given focus control. up and is the us sure XX% gears of of talk had sequentially I'm quarter able cost XXX% we RPD becoming many versus more do our change, Throughout XXXX. version per day will pandemic, do was the magnitude focus we hasn't RPD shift questions less. to the quarter. We of rethink of be which on this XX% the benefit that and that about I'd the but changed, focusing processes second

efforts resiliency. We During able the reflected withstand downturn, in the were to our in scenes results were shocks. of never these demand before

Americas, efforts the the reflected EBITDA leverage. year-over-year. billion However, operating this $XXX if an million, results increased demand by roughly an Americas while by recent million. incremental XXXX, was In during the approximately XX%. $X.X quarter increased second EBITDA On upswing, these you increased in quarter for when period basis, on adjusted of revenue the results two-year increased by $XXX compare million $XXX adjusted were same Americas of our revenue of most for margin by our a

our tough over quarter move to very profitability understand, It's when enables has let's what that's us now they segment. this environment favor. the that our the as both increase. demonstrated is Our easy international environment With presented quarter, is The pandemic deliver discipline can times this Americas us during levels challenging through team maniacal concept on in after and that, to difficult the to an execute. gets maximize to cost but and demand

inflection days four a XXXX. rental down for reached largely we've quarter versus While have mid-XXs the last been Americas, an macroeconomic the basis, last comparable in internationally. remains in the quarters percentage the from environment in point unchanged the On quarters

the the change customer and rationalization step way in $XX a benefit profitability the We $XXX can whenever to the million. $XXX shopping million executed underlying gains versus What gone and are in there to to we're that confidence international RPD depreciation to changed quarter EBITDA loss bookings, Through deliver travel say of on a substantial will adjusted Despite operations, to XXXX. similar lifted these in of the in Americas. which that of quarter recent gain million or a $X at revenue is being to is forward That's has mitigate in is lower, our we structural EBITDA trends seeing cost clear in comparing adjusted was because has more of segment was able possible. is However, the to improvement whenever fleet on, gains. gives the quarter. intent it international roughly say million tailwinds from revenue the our team results million two adjusted vehicle impressive most nearly able $XXX of travel were of me see million decline look Europe to cost improving without EMEA, and over base a segment international EBITDA in $XXX the second travel demand XXXX. restrictions international that XXXX Perhaps

team international service battle-tested that chance the Our is awaiting eagerly to demand.

dynamics relatively more stable Moving Americas segment of due the to focus onto fleet, the the on we international segment. will

Americas. Let growth me to the in sequential for direct you fleet size the average

first of basis a of increase XXXX, average a percentage one we in an average a increase increase the and two of comparison, In increase quarter a XXXX, quarter basis vehicles By size XXX,XXX basis. quarter, the the size. average of vehicles. size on absolute That XXX,XXX fleet one had to percentage of an fleet had only XX,XXX on XXXX quarter XX% an an in vehicles basis and period XX,XXX second on XXXX from on XX% a had quarter During vehicles. an we reflects we absolute fleet sequential

locations. Our fleet every June as sequentially arrive increased fleet size the to with being highest our month new

the want both cancellations commitment factors. production their to of relationships mitigate can our everything with OEM This that sure were main the solutions our add summer So slated side deep quarter we our deliveries and how and choice. the opportunities. despite on thank up manufacturers. for OEM the our shortage? period. received did unforeseen required The semiconductor to have, and we reiterate the make we more creative we hand-in-hand Two worked partner their ongoing to be partners efforts to to to partners from One, this flexibility vehicles I ramp and from us we allowed capitalize for doing potential

Despite we car Secondly, help fewer self-help consumer spike existing required we values, serve to demand. to record in maximize used quarter do continue our than breaking vehicles to sold the the the first fleet.

rate We less demand to XXXX utilization. in those to capitalize able In year, both We allowed fleet briefly and and have complete we'd out going wrap service excellence is working were organization, our together. our chain, this volume. always to also annual and fleet on overall shared maintenance. at proud had fleet commenting to touches our the and diligent due to of with team it on invested heart management section of in This the of by us how on vehicles, be expect the that I've corporate, what every like that our I'd do, to operations, area buys. quarter now. as delivered our fleet normal us by I'm heavily availability we XXXX purchase preventive of cars, and amount maximizing up services, compared usable a reconditioning increase improved forward. everyone said almost cities of our most supply of of the to fleet available model the this with year this fleet part continue

the believe and a However, conversations the that fluid third still on more clarity We continue normal their we're get production in forecasts. into as this a late will situation. quarter is year, manufacturers not

the geographies. reported latest been We've an with you've market variant. no from in cases COVID like since to pandemic on certain basis tracking I'd what and views to COVID reading, safety a this following Delta increase different closely Finally, in been the What close is Avis' cases local we're commitment our began. around

Delta the for with seeing Bookings summer However, from variant are third momentum positive to strong. impact the no second at the time, the saw the throughout bookings. current this quarter looking we our continued quarter we

our may and in our currently Safety future, our demand Budget around vigilant has past but been months, Avis normalizing Pledge as our company the this few While The just trajectory change has Promise. remains been stable. the upward industry Worry-Free over travel

measures offer mind our our peace safety providing We to best-in-class of and to workforce. will continue customers

turnaround makes. $X year This and quarter the a thank me liquidity. So to and all nearly in XXXX. of employees gone EBITDA in have this adjusted just one We've I began, that, possible in take wrap With what difference XXXX to to EBITDA let $XXX record where over million effort billion year. the of without second of in That's over moment second tireless making a I'll Brian I a our quarter. the in it million from up quarter delivering losing want to a entire this adjusted $XXX discuss team our leverage for been turn wouldn't our to

Brian Choi

earnings our I and which both liquidity. per off with same and focus adjusted are comments day. Thank our I presentation. press on our release off kicked now topic last results, will leverage domestic reconciled the to My everyone. morning, our from will call, addressing by you, numbers and revenue I'd Joe, like today start good in call GAAP discuss

at on being second turnaround in discussed second our had sequentially. prices. call, Those that determined last Americas again the strengthened as price tight quarter. and result a clear throughout demand last We and the availability quarter, RPD clearly we we made profitability supply demand discuss I the by significant supply car impact the of the Avis industry. RPD the set clearly of dynamics do rental continued As the in consumer increasing not quarter, in

a I adjusted past the look in gain from that sustainable catch-up this mentioned, our RPD the way substantial second is, it in We to As only received $XXX million. a know how and and is view million of second loss simply years our We business losses. the a quarter $XXX quarter but quarter million. to roughly years EBITDA a Compare no experience to XXXX. But $X two last another elevated counterparties was XXXX between obligations financial swing bailout combined what's near-death happening quarter the two-year of of is XXXX I stack $XXX of to went level by honor at we and Joe that our EBITDA of million as federal were profitability. year. the $XXX XXXX over in of don't second withstanding average billion now to through second adjusted it able

of the and in travelers, the nature are to value provide the value our asset Given deliver customers we mission-critical receiving a of great we my service the proposition. opinion,

this think at demand even the substantiates RPD levels view. I we're these seeing elevated

Let's move on to liquidity financings. and

we $X.X our $X.X billion comprised June availability liquidity XX, equivalents, approximately of $XXX revolving of available had and in and approximately facility. As credit in billion, million cash of on cash

is asset-backed rate rate issued of XX%. years company's on X.XX%. advance on were with five and a capital In XXXX-X borrowing in had adding done we history. markets debt our best of favorable have de-tranche In any those billion approximately facilities. XXXX-X, we $XXX $X.X asset-backed our million at of and notes maturity available notes cash our our the to structure. notes interest with we June, bringing We rate of $XXX optimizing had on our in took blended That of capacity XXXX-X we asset-backed Additionally, interest notes series and the to and May, ABS million of advantage multi-tiered issued proactive refinancing approximately

also efficiently peaks. maturity extended AESOP of of fund banks relationships to XXXX we our March our to continuing funding variable date notes Additionally, our until demonstrate with strong the our summer

relief and Finally, a in with our credit eliminated we facility renewed our date maturity of July, XXXX period.

corporate well debt this result, tranches of until XXXX our year. meaningful laddered no ABS is debt a refinance no corporate any and maturities with to need our As

of the We are combined to decade, trajectory seen our a been in June. strongest all financing end my on in secured around strength, of in This the I've balance how facilities closely over I've our compliance best with us significant with ever well in. position robust free considering as our structure our of is Avis and world following flow. cash opinion, covenant in with of headroom the tests maintenance privileged our capital sheet earnings leave position the deploy for

always, address debt during X.XX% benefit As intention important Yesterday, to XXXX our we considering Notes we pandemic. cash took retire all Budget on hand cash to due stakeholders of the free use Group. in outstanding optimal of with and it's Avis the the announced Senior when flow, on incremental order to address the

used authorization announced $X a We also of buyback return to new value share to be billion shareholders. that'll opportunistically

be also Finally, investing we ourselves. in will

employees to the Our been with have more do asked during less pandemic.

customers. workforce, our investors, our and productivity, and rebuild to driving we our and systems As the believe business, cash we these must rental provide our our operational efficiencies key free equity will use of debt in delivering better flow our tools We areas benefit employee the enhancing keep a base necessary experience. investors,

call I model when environment $X this Now of deliver back, cost have revenues this during over building the leaner go-forward stated would our pandemic, that XXXX normalize with we wouldn't are come our adjusted level to we not but Revenues back RPD. and EBITDA. would billion levels, also structurally in base normal

open earlier it we our why our mentioned though, this a what would close combined continued entire this $X.X discipline I is which for let's With catch-up pricing up which in to XXXX. be allowing in Joe X that, with EBITDA, time, questions. As achieved billion times adjusted deliver cost in is at for pushing is profitability, organization to increased

Operator

the of Please you. Instructions] your question first Thank from with Deutsche [Operator line Our with comes question. proceed Bank. Woronka Chris

Chris Woronka

world in some benefit understanding bit fleet have also any market, you the obviously car year, of heading going a good congratulations question kind little to you second view you're of bring just the into results. Hey, your how used about but around, maybe fleet cars, and into guys gains, the forward, half as Wanted you quarter you and year? assumption. to next an acquisitions fantastic back make sell the didn't But morning, more underwriting have didn't in next on is and of talk fleet

world a view two? directionally towards could the over trend next just or fleet what maybe costs So year of Thanks.

Joe Ferraro

and morning, Joe. is thank you. Good Okay. Chris, This

even far fleet quarter it and We for fluid situation, So our it unusual call very the mentioned bit had And as we was that planning. what they demand, quarter, managed. of the deliveries on one that was out a look us of levels that we align we is as previous this to turned were a elevated But to like you The of to getting were with we publicly would the our that like, insight OEM this fleet heard about work I We be most were have is strategy. come in and and down, be. in able that and able thing to saw. affected. it with guys a unfortunately, at that and as this plants up February core change closed competencies we didn't probably late partners that about with fleet demand all organization

right - forward go getting new we 'XXs As now. new model in right we're year in cars now, model still

in see already normal manufacturing that's having on early remarks, starting at you point 'XXs. are about at a in said they coming my as the to months. look prepared delay we're production would the the we could with coming as their time, the schedules, continue this And in on OEMs I the model and weeks because and be to going talk conversations So in year, still

of back opinion we to with we And as on. used My quarter deal far year. As that cars used cars, it that wasn't in year, that market, sell below in are now, we as last sold in where levels to early of saw are this are ability they were normal it kind a made new you to 'XX. still at the are look our not a cars you spike the inventories lot on but were getting choice the and like they whole them know, of if to kind a car 'XX, do demand -

old the And full had the as that in we the vehicles of industry years, in and 'XX supplier market - did complement not over 'XX, has car XXXX, predominant are received still We again the the seeing legs. get normally of vehicles. one-year think used in I

in higher long down and continues. at last tailwinds quite think it's do How of market, some in that. 'XX I sure. goes? in there I bit it's running totally I'm although And still If a was But the look that 'XX. weeks, gone think is the you than on in that it prices couple that the not

Chris Woronka

all sense that XX goes obviously, is? it's if Okay. And about and RPD, we is, Very helpful. historically with this you just new industry underpriced I that and Thanks, weighted Joe. data which follow-up away, is come streams, kind perfection. something think is or it we're great. out I triangulate a of industry If that with and to the you you what would there way that involves get be any any RPD any unusual price XX, through then are agree back know to If some maybe guys as a do can't of value. But of say, relative that. fleet here, highest you - things the the thoughts But predicting on your transactions, to is is levels, here normal sort fleet and some beyond wild some else? Just Thanks. the

Brian Choi

Yes. Chris, here. it's Brian

availability way, So two the demand going as prices. by at this repetitive, in. again. disclaimer those and not just discover the right? to supply of going know but at down We that I'm this to first price break jump the let's to Avis, industry, car consumer the me I rental is with going set state take is components, it sound of crack right. and do in determined We, Joe Let And out

consumer demand, just and let's leisure consumer is demand, start First with within demand.

from seeing largely been segment. natural So consumer cooped it's the have domestically, demand outsized are savings is year, for leisure Americas, like the a people up international that so travel we're in high, unavailable,

right? Now think not, is elevated could time? Of that to course, perpetuity? for some last going remain in so. it But I

right in consumer now strength like, see conversely, is depressed. currently. the think, continued But segment pretty I we commercial So demand

seeing comes large So that be while increases we the especially rates. commercial, in will segment, with lower commercial

normalization that downward some to mix on So RPD. of business pressure cause is going

just like in on we're secure can't the perspective, a said, to do from player, with like one just working you comment switching supply fleet. OEM very we're side, to it our - I We're but what our Now, and partners disciplined doing competitors will our do. manner,

that's going going an it's a tough going last to to for are what at XX efficiency, industry minimize and leaner the what to to months, unknown, doing more we've going we're we're to because So like we, keep costs, will structurally happen say business. just doing be supply. to Avis, been maximize operational we're And bulletproof

the assuming Chris, level does building sustainability It's So, what to going to we're going of our now, RPD. mean right to of back this your question, not business all that just but say for models be tough sustains. RPD

Joe Ferraro

Yes.

I is think this Joe. Brian -

lot us is it's demand to we've at and is contribution this in, and place of allows a really pricing it look you more at the business I But system June, and summer, happened out at demand I you think more have a school opportunity, and in and third started to explosion happened in weather of like like rate, mix are at of at Brian my an people we look and look it. position there fleet drive - May, April we've good - best you earlier at - and quarter, leisure in think on the a hit of certain. when There then was fourth gotten if it, because that the if that more it look It of here which it opportunity or on. demand leisure vehicles head. it to this a kind vehicles in was early the those and was year opinion,

to ancillary benefit. points leisure in as about been fleet we to were a there were of And we so that lot large add component the have aware here, certain haven't in of position opportunity a the our you unpack that you And probably price ancillary. how the geographies driven where quarter the to maximize fact well of a then, when in there's that's area was well. RPD, predominantly that Since talked and it

Chris Woronka

very Thanks, again. Okay, and congratulations, helpful. guys

Joe Ferraro

Chris. Thanks,

Operator

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

John Healy

getting truly in to actually Wanted on remarkable at to I terms it And XX where deeper the of fixed, see turnaround Avis, is of little of about in But Clearly, growth? back, where can Brian, come as we the forward, we the everyone base months. percentage kind examples a in ask some the this get percentage I seeing have transaction Congrats transaction base variable. operationally, P&L. going And little been the different? business? kind you. could the the with of a revisited a of view OpEx, you things. are side reduction in of hoping taken think just that's that's bit questions has just OpEx we've should of Thank really sort one was a what's bit of relationship frequently maybe cost place? cost kind what of Maybe

Brian Choi

Sure.

exactly business look forward. But terms fixed that's we're and to what the now going at we competitive reasons, that be what not will variable. give for John, what of guidance on how in is is So going right

of shortage, labor our our are of prevalent right? cost what across like is the in at As terms we're we people vehicle, And look biggest and buckets right seeing base the business. now business,

to on I like the but is at we've more third and don't for productively, side Like, but fact think like things on is that flip near been running some can't that. that. we're full-time people like operating shuttling there's a side, full there hire - versus running relying So efficiency optimal mix been we've there. more part-time anywhere the yes, given we off, that parties our mix, savings the

I think there. still room to benefit that there's So

lot On also like lot that fact That's operating lot we've of dollars biggest area spend been the single still lot our there. I more of investing into there, we've people. given a an maintaining leverage been probably having in vehicle visibility is vehicles a side that potential think our a the cost things, a where and on, outside there's we focusing resources, and our of

John Healy

question would big for amount regarding reaction your fair Europe a one to picture love in recently [ph] just news guys. just And of and you how Europcar, Great. there's I EW Obviously, to how changer get that internationally? do you combination game - that impacting in of competitive And kind kind about as business view terms how a re-emerges? of of that the kind you it of feel structure been

Brian Choi

No, in the - the within the wasn't I've team to companies. kind involved like And it's of business still And Europcar you that back saying our think of platform as numbers, offers it's done. owned open-ended in things them. given the it's go chance think of to say. plays a of spectacular in cost the they've international our makes takeout said, they're I I question rental had early through see But an a Europcar all the results I with terms has car OEMs how terms what when that out. delivered control. the what has controlling sense lot that We're and

be a position in effectively. whatever compete we'll happen, that think I does to So,

Joe Ferraro

Yes. here. confirm Joe. in I'll I Brian. with This jump Listen, is

XX% I think and over we countries Yet, about, came grind the I handle fleet out, cost were And well down and ready that margins came quarter. this think we've on able as spend the of back the years, we and the some can we was keep are XXXX. last still the with our aligned? compared has looked EBITDA think improve I keep that pleased we at there about Americas incredibly the do. I overachieve In it, to it our path. team effort our mean, and far it, time to about what European that the there. operationalize looked was Europe, we're worrying ways as business overall we displayed are business, down to we And at and overall in it's business. can and

do really sequential think act I think I we and well, manage we about the we the we manage talk together we every get that costs, like I when in revenue drive fleet, do see So day. improvement that say, our competitors, things

we'll takes and forward. going that of care think I how that's business itself, position our

John Healy

guys. Excellent. you, Thank

Joe Ferraro

John. Thanks,

Operator

Our next with Barclays. from question. proceed Stuhldreher Jason question of the Please with comes your line

Jason Stuhldreher

Hi, team. Thank you for the taking question.

off, into we're first more specific little what could was a get Just QX. I on seeing we hoping

mentioned QX and the in what said internationally improving a We're July, pretty think just too, is guess, would you Thanks. US? of cadence Maybe seeing and You I strong now. July, seeing I both I continuation that helpful. a in recovery on think Americas, in into little right and Europe pricing, the be volume it guys is bit. are the still you

Joe Ferraro

Okay. Hi, Joe. this is

would what the slowing down. the of and mentioned holiday right? of when I signs was price we weather thought was kind like and season, maybe than school. was and earlier, is Xth really price of my I it seeing this Sunday to haven't we what far kids started But so to, precursor see to the think that we're it normally I demand off, we exited season or when end was Xth pretty our July July we And summer it's as but rental - started was said, earlier year, say does, opinion, continuation actually And and seen it Monday before prevalent. because a the of we was was June I July was best strong. Monday, in the a quarter of which what bookings, it week and had It as that I when of certainty the bit as a out a summer a - of largely in that saw As any Xth about days, the June, June is holiday, best

Jason Stuhldreher

margins? Okay. return like XXXX the changes following it correctly, you the of when number? Can up XXXX - cost clarify just - I is more think $X.X Or you EBITDA Joe. that sort mentioned target, it's return billion - that you are thinking on Thank really just Helpful. mid fleet sort heard Brian, what then to assumptions range potentially you're business be of And levels. just to around the in the now high-teens to in RPD any volumes operating you to I there could going when the to or levels, for color, it's

Brian Choi

that a Sorry, that us Jason. year. that's billion, The is for Joe I little one, should more on clear in that have pushing been for $X.X this target

dynamics billion discipline given getting we're internal So going through kind there's We're that still this cost to be of working that we for terms like operational given our combined we're at years we're this and that XXXX. in $X.X pricing of guidance of updated things a on efficiencies. macro with think lot year, not unknowns that also seeing, just in the level outer

$X.X that to XXXX. with billion has So do

Jason Stuhldreher

And Okay. kind about billion we right shouldn't to think your changes any target? now of then, $X longer-term

Brian Choi

Yes.

that. the of I still could think kind through working We're predicated that $X in takeouts, say terms like more look billion cost RPD. at first on of opportunities. what target gotten that pass business What we've will we're volume at I the our just as was XXXX more and is finding granular

macro happens the little shake of And with this supply, at point. So some industry what anchor to pricing, I also what bit do kind with a unknown. uncertainties of like still that's out, on we where happens wouldn't that

on commenting that not helpful. going forward. is But we're hopefully, So color that

Jason Stuhldreher

Understood. Thank you.

Operator

your comes Our proceed Please from Stanley. of question Morgan with Bill question. Kovanis next with the line

Billy Kovanis

here. question, more quarter, the from quarter Great next here? not you. Thank term. not and month, where So to it's Simple over but next medium

go, tailwinds, billion double in have US some costs international I is become this definitely an overall. mean, rise, improve pricing adjusted 'XX, it like EBITDA and of that almost of can volumes You which, $X.X will to the the looks fleet record I possible, looks incremental in it if think but about But XXXX. just like high will room flagged headwind the

with sure, you medium way just your up just about thinking to want match And this less are guys. it internally? views make to can the So the bit Thanks guys be does term? a cyclical, how longer I around business

Brian Choi

COVID just asking, Billy, fleet kind still used guidance Well, exactly next a time. to chip of the There's still of lot impact I mentioned on which mid-term have will clouds the market. out. know don't its shortage outlook on demand. and on availability don't side, vehicle the effect that the car We travel that not this we're guidance blame Sure. or what unknowns, be, We pointed at Joe ongoing for like few you going a but them get of this into you year

and think is is plan to I for forward next going what for from this our go laid out game I not that year change what will say year. we

approach business. take So our the resilient drop-through very strong to be going to in a cost-first we're have demand we'll a That way, in we'll environment. environment, weak demand and high

Billy Kovanis

Got it. Thanks.

Operator

proceed from Research of Millman Michael Associates. with question. comes the Please Millman Our line your next with question

Michael Millman

Thank you.

But us it other standpoint, be back guess question us to it's kind an guess, Hertz year numbers some Are next business, So on extent, Maybe to you they're from I a that's and analysts, suggest my put some Hertz. Or got of is terms lot And base be I has strong for that? of effort to you with $X.X start lost pricing. to that? of get stabilized? in crapshoot. around are approach thinking to is do billion that you, a make would much fair might some to going of numbers second to little now a obviously, and a

Brian Choi

Yes.

analyst start me you. an community forecast will not agree it's to for with then easy for first XXX% all, the CFOs either. the super your the at with and If of Joe easy Michael, But it second. for year not Let I the question, XXXX. helps It's answer world

there, terms starting think pain. So going out what in through and it that? you sense. I that that answer I like seems ourselves. feel of makes laid We're mean, I you the your Joe, want from working billion $X.X with to But

Joe Ferraro

It's company come to out now, to and competitors. with for do I to and to about I've been they time color granted, for what ourselves. long forward. a Yes. I've early reorganize won't happens and team a as I competitor going business take about I that worry our very little that learned in the I'll you tell this always, prefer is not tout any this bankruptcy. and on give of

which business be We've never to cost long something really demand, fleet run been here. now. business. doing our really inflated slightly we a think rational always I below fleet we've marginal for run to is time our a We after go

a have we'll believe rational of the to demand our approach side we business. So

about, good talk at looking at costs. We think got we've As all really talked I how language. we Brian the manage same

in talk it talk an on And airport, to those the business. an cost Orlando where and and to that's to base really the in are operator their Italy you they could matters. will about all So operator or ground, of manage guys you what doing they're

approach see maniacal removal. So, cost a to you'll I think

the way allow don't everything won't did, then You and normal. is back to allow won't through say XXXX, we go that. I We that.

We way overall of have performance. our looking great a at

how and So comes to fleet manage proprietary in demand think demand. a fleet have system. we we line, then supply And costs in pricing and I it line

tremendous I gives As location cars and to to different that our us down before, length rentals how of price different contribution said on various the level insight rates. for

gave think quarter opportunity us I because or provided places vehicles here past this a So, big that - all same. huge the all not a not are

So, I of care that, we ourselves. that concentrate on take will think

Operator

proceed Jefferies. Hamzah Mazari Our question. with of next question line with Please your comes from the

Mario Cortellacci

like there comment expectations on coming on customer on first speak your getting filling pricing seeing back obviously, Cortellacci demand in people the base that's side? just what little you Mario on then maybe is But can any guess could this the for Hi, And are you seeing a you're question, you just about what of business, on kind seeing on specifically what just your and You comment road? what I touched not you're back. with on-airport? my then Hamzah. conversations are for

Joe Ferraro

Okay.

let this off with Joe. - start is So, me

think, been Let we seeing TSA on thereabouts. the kind XXXX. and million it's increases steady. it full. The airplanes the I or start there's with - you, destinations, We environment. are about volume me we've of tell or to off so been what day have airport and to - I be the passengers that around, a seen - track XX% you pretty X mountain increased down compared But whether guys resorts, beach scheduled we're And airlines that's It's in

the one has business Seems the travel airplane the at we was our about has been maybe And seeing pandemic. needed than it? weekend, that day locations. heard we that ready you on-airport is, our other are in was more past places providing CEOs the XX%. the come we market We're And think mattered Our heard during the the we that how been the like it key spark And at that for last of saying in airline this talking most. capacity were air local business back. me past. has robust I year

and on a well. late, been are the busy of business pretty airlines and our has I've been pandemic, road I'll of the because business is airports and I you give and our and fair around that So are on-airport anecdotally. continues. busy haven't very crowded, solid, the been as the amount

go The question, was of you on your second to Mario, - part please, that? can back

Mario Cortellacci

related what on any then, the - the back. price of Yes. an just I We're you're guess, been some traditionally, it business hasn't more looking to of there? kind to for travel And It was timing? related just on-airport. Obviously, hearing update But on-airport. customers come - update the there. has guess, on I from

Joe Ferraro

Sure.

right? We that's XXXX, have not in improvement commercial where course. at you two that it our what in see was 'XX demand, when decline I stats, And past a to. this in look of if sequential the think those portion seen referring It's the a the commercial back good areas. to quarter versus are is and So inbound, you're of TSA you probably

are and to hasn't trade come got road to to the commercial able to on seen there are get some they seen are to that towards get to we've when companies, maybe in So traveling What healthcare, of organization, that. Those end year, people. I commercially. a entertainment, be that this we our have that's back it got was see they of part going of mean, of first is the yet. accounts, the there's the and occur contracting, quarter, we groups office maybe third I I latter mix, the the certain logistic back fourth. beginning to think talking talk defense and

to travel. that when bit so I be And little the we've allowed technology, that to growth. But when get maybe we with on has those more seen they're companies, think predicated offices back and participate they seen and to where wholeheartedly some we've - of a

Mario Cortellacci

And second the QX. utilization at Should of you a are in on or think, could in was Got expect half the one in levels Americas fleet we guess, I sneak what are or I back half more then, stable? less it. 'XX? just in if increase I XX% further guys like looking expectations. the these

Joe Ferraro

Yes.

at you at I We day. ours think when XX-hour utilization, at tight. really say, XX%, on you're look look a our

look, it's the you that way the in XXs. If to others convert

in to strong place; fleet the Our are utilization And on and is, February, reasons: provide usable we one our two benefits. more two, to is for has out-of-service us control. coming, reason are been had and invested tremendous going right seeing utilization cars fleet been We fleet back it's the strong. the why this that giving

We're So a as will seasonal very is about what's and - there. summer we'll be travel I utilization And the business. it's then the of summer, year, the solid said, like. the full rest

you into then to going October So you situation all come go where the have summer, out September, of holidays. you're the a it's about travel and for

we what fresh, think have, doing, keeping able some continue level the utilization. as we doing we'll we're be use fleet the improved of as technology we maintain long that to So

Operator

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

Rajat Gupta

on So. for Congrats on Brinkman. the Hey, Ryan is Gupta Rajat good This morning. results.

to Just $X.X cash $XXX billion. $XXX would million the to had on free a flow. close imply million somewhere maybe that Presently, question

going capital would versus run to any on So buyback M&A forward, of kind how helpful. going etcetera? color going with priorities really of could forward sense that free rate or change flow like a cash Thanks. the us allocation that give of or are look Like be CapEx, versus you

Brian Choi

Yes, sure, Rajat.

clarify thing. actually one me Let

happen it's be would about that rate we to what tough assume level The year. think of that like Like But this increases said, run is I think run $X.X billion, can going that a us going that's this right? RPD catch-up profitability, So this forward. in talked point, rate I right? a be irresponsible that, of said that's it at a we've to forward. You this would and say

be think to the run that the to this we're what billion that, a is and that like Like, of rate sustainable. say drop-through I premature through but go what's still $X.X that's be? going like So, like at point forward working $X is would billion

start So this cash there you're be But a with let generating. amount year, will that. of flow free substantial right, me

see free lot what's quarter. with M&A the point. a out There's cash in generation to flow happened of not can You had there be second just this at

keep capital to to so of as to leverage in of of we make that during that's kind our we've care deploy in that. level, say, on way. so to like terms So tuck-in took have ourselves, we still that that. laid maybe buyback to that our as of that and that We're I great the press like then in going release the didn't going debt lot be be at the always I We cost we're be before I or as this structurally highly are eye those certain view going is there's that to opportunistically. There's our we're point, take think investing we continue after - like should expenditures investing we'll stays up, of going get investors. at come to last base accretive; be place There well. looking And some what additional the that, that in said. incremental addressing to that. to things at We're night, get that And going pandemic are through. sure do, value and we capital XXXX, out kind out we're But in acquisitions for consistent things well, that we lower a then very a to been a returning it's to shareholders our

areas. to going are we're those yes, So holistic approach our we But deploy cash flow. free a main to take how the

Rajat Gupta

pricing terms drop-through trough more employed it. That's pricing XX% incremental that stuff, like the I just revenue. just of Got of of like anyway just in like going is helpful forward, pricing a on drop-through change historically, in rule thumb like Does that the that mean, is for structure And color. EBITDA. And and of good models? a with that of changes have use those That like still like Thanks. would how forward rule help. a you're like to cost incentivizing the business, the thumb you staff, just just with to that made extra the pricing?

Brian Choi

Sure.

But roughly for I like me XX% depends it what rough that I'll on-airport, incentives. the Both to XX%. I where to Joe acquired fees Let like you it we for the it that high, actually on on But the and is channel airport think depends know customer. because think - right? part, XX% through, that it you hand over like get actually, are take the then goes

from card have that, We fees. partnerships, credit commissions

imagine be XX% that might for to in But the at a just take XX% quarter So areas. like yes, leakage a was and seems a it this driven if in is incremental look sequentially high. would you given lot [ph] like the I Americas the like margin like other high that place given that good by that start. there's the... And Joe, price, on

Joe Ferraro

add, you whether that accretive, And lot there's that to more aligned unpack lot on-airport just has price, [ph] those Listen, length revenue, which mix, of have it's when airport of or this quarter. Yes. vehicle drop-throughs, of cetera, we do with that. variables are of very and business and the we've ancillary to - rental, or had a a et which less type with seen rented, high

our they that. for sell, base and our we what we is about of - employee do, incentive is responsive team As and far how compensation most base as incentives have the very to

Operator

Aileen comes of question. America. Please Smith with next Bank from the Our question of with your proceed line

Aileen Smith

Hi, good everyone. morning

flow way deliveries on restocked until we significant dealer maybe level going more thinking going fleet if way, is cash inventory event. production of next you use you on requirement older not with guys to the size set XXXX only also but to that them a for of also up to the it be a a based had a the your guys for may year. increasing but to investment be time is different is environment year-end, next just going not up refreshing about be assume I think same But remain pretty in the Following Rajat's that question, vehicles that then significant you through constrained this year, you probably year mileage for more could substantially fleet, divesting at

might next on you how between year corporate thought you ABS may possible your - do folks, And to rates that just next year? structures sufficient do on to year? that is towards you and think do? fleet think into into this cash inflow outflow is as imbalance about versus basis you a with Or you to need clarification programs hold operating there think that the advanced equity any an need in cash you vehicle So you allocate really everything that to

Brian Choi

Sure.

me take one. that Let

thinking of the this well. in back And good amount right ABS pretty in with it equity de-tranche obsess optimize our you're about we're that and that in last of of all think of structures really fourth our need quarter the the exactly equity rate, I year, that but of in put given terms way, work kind first combined to that that the as Aileen, doing think the into quarter amount been the the structure. I we've and over we we we around advance

in a least at So good think we're I the for future, position. foreseeable

Aileen Smith

Okay.

going about So, be the to when this excess cash we that significant is generated year. think

internally to do allocate M&A, guys process any the you thought to somewhere excess on on EBITDA is strength If billion there repurchases, only - you near-term going aggressive, rentals it's more of are capitalize there, how there areas around store share things? beyond are or $X.X whether other north cash is in and to I which accretive guys touchless or is or other get in some business out mean, output initiatives? the could further rolling there

Brian Choi

Joe, why take We're Yes. - absolutely don't you that? actually

Joe Ferraro

more we've deploy without exchange like to that our working to year. efficiently an in see - going many the and to the are the our done me car in I think about the out, you're was talk in leaders understand And how at. or two were we'll technology those There about wrap, we support to enhance just what pick the would the this many cash I capital. we're process get you want how that I we a going phone a efficient talk use having things how if if come to to even we the what give around more operationalize year some that we through quicker that on And is that in that's for what of a get on out of to were a we exits the necessary on the really bypass up us Listen, We is the And and of things would to the And going your those now. and you can do and that's last because the solutions that big Admittedly, working come. think differentiate that and great we're and and are were we things environment, where QR some process hands looking ability in to business, individual, we from a right we that completing and mind code it come leave do Yes. the we're counter, be, a way. calls. that of didn't - make But XXXX rolled couldn't ability the concept, we create the tools rolled you'd to ground and on our think gate more gate. experience. There themselves uncertain how future do customer it to really about we're on that decisions second past. think that have

Brian Choi

in add Yes. And actually just that, to two it's right, mentioned. segments, so actually, Joe to that

this we the delivering just in experience leave of kind do better vehicles investing we to will customers. employee that make some of how base, customer definitely pressure had our on So a and

And make how sure big and we area accountable, hold area. organization, cost is that how ourselves that more efficiently become big to investment. is as require the more lowest one do that's operating the possible, data-driven second we then do going at how So internally, we're we a structure do

capital of well. going to go amount as significant a So is towards that

Aileen Smith

possible that commentary. of When and a question Joe's quarter, to look from the is from, at the the think to percentage automaker companies do Okay, - Touching guys reports in if some XX,XXX the And Americas And remarks, the the pretty I wise a normalizes significant I market coming vehicle one used other fleeting course the way. the to on up fleet in up may. follow-up, meaning great. car asked the those vehicles programs activity prepared perhaps where last you size some new bracket That's I you the it purchases think vehicle for stepping on where year? in were helpful of on think in versus increase follow used quarter in one channels? quarter, in of rental we were I at vehicles vehicles from over that base

Joe Ferraro

Yes.

would I vehicles. support used that say, new majority Okay, doesn't the I'll large those take we with vehicles, mean of locations that. are that don't cities and our specific or

it are We opportunistic that. to when comes

team fleet is things, car. we talk how about One buy and three I I to think continue it. to make decisions involve about that the underlying the the you

hold our one, go about suggest, are talking to third car, of our the like, we And you buy, time where is car to strategy, need? to concentrating make hold the how it, the our spent get them? would in how And years on a and the what's direct-to-consumer. use past that second you of you lot the is your vehicle? going long we the car delete that So going to But two, rental you more sure to run right exiting are mileage accretion this ahead car sell number values car? number buy through when The modeling the we rates residual is, use we how you

fit that the to vehicles have quarter, mean bought in So to it we're new, we used long that because we but we was anything, right? open As purchase larger doesn't say model, a into - as I that was this majority have. - haven't

Brian Choi

- it capital invested us, and to doesn't we the return market need is as like that Yes. And the sometimes, our on you and run for but car, know, purchases. opposed every I just car not buy to in has - make of used what stay we used the mean, an strong have terms sense we're how on said, we rational Joe been, fleet

Operator

concludes our That Mr. for question-and-answer it hand to session. I'd like remarks. Ferraro back to closing

Joe Ferraro

you. Thank Yes.

recap, Budget first second saw quarter. all they end was levels the year. continued historic the this we over want cost being at past discipline, for of Avis our delivered to in I in record-breaking So their all for the Group. put momentum second to into international quarter Americas work the The results thank quarter employees hard and adjusted at EBITDA resulting personally

able achieve a Group we're way, you your Budget With as and team. these the as always, company. Avis dedication our their believing in results thank interest to for And

Operator

this Ladies your today's conclude and does participation. for teleconference. you gentlemen, Thank

this disconnect may have time. day. wonderful lines at And You a your

Avis Budget (CAR) 4 Aug 212021 Q2 Earnings call transcript