Avis Budget (CAR) 6 Aug 24 2024 Q2 Earnings call transcript

In the latest earnings call, Avis Budget Group reported a robust second quarter with revenue of over $3 billion and an adjusted EBITDA of $214 million. The company's strategic decisions to adjust its fleet and optimize utilization have positioned it well for the summer peak, setting the stage for improved revenue per day performance.

Fleet Adjustments and Utilization

Avis Budget Group has taken a proactive approach in managing its fleet, selling a record amount of vehicles in the first half of the year. This has led to improved utilization in the Americas, setting the company up for a strong position to drive additional utilization and pricing benefits. The company's goal is to ensure its fleet is kept inside of demand, which has been a key factor in its success. Despite a slight increase in fleet size, the company started July with fleet down over prior year.

Pricing and Demand

Pricing showed sequential improvement in the second quarter, with pricing in the Americas down 2% and U.S. rental car inside of that. The company saw a significant improvement in pricing trends throughout the quarter, which is expected to continue into the summer and remain about flat for the third quarter. The demand in the Americas was up 1% in the second quarter, and the company expects this trend to continue into the third quarter.

International Performance

International performance was nearly $700 million of revenue and $48 million of adjusted EBITDA in the second quarter. The company has seen improvements in inter-European cross-border travel, which is up in mid-double digits compared to last year. Additionally, international inbound volume showed significant strength compared to last year. The company's focus on leveraging global brands and strategic partnerships, particularly in inbound volume from North America and targeted growth in inter-European cross-border leisure business, is expected to generate higher margin volume.

Operational Efficiencies and Cost Savings

Avis Budget Group has made significant strides in improving operational efficiencies and reducing costs. The company has seen substantial improvements in operating expenses on a rental day basis, which is expected to continue in the back half of the year. The deployment of self-service kiosks in more than 60 European locations has improved productivity and customer satisfaction.

Fleet Negotiations and Future Outlook

The company's ongoing model year 2025 fleet negotiations are progressing well, with prices currently at levels below recent years. The company is seeing early signs of improved utilization and rental day growth as the demand for self-service kiosks continues to increase. The company's cost efficiencies have positioned it well for a successful back half of the year, with available liquidity of over $800 million and a net corporate leverage ratio of 3.3 times.

Conclusion

Avis Budget Group's second quarter results demonstrate a strong performance, driven by strategic fleet adjustments, improved utilization, and operational efficiencies. The company's focus on pricing and demand, particularly in the Americas, has positioned it well for the summer peak and beyond. With a solid financial position and a clear strategy for the future, Avis Budget Group is poised for continued success in the back half of 2024.