Avis Budget Group, Inc. (
NASDAQ: CAR) today
provided preliminary First Quarter 2020 Financial Results as well
as a further business update related to COVID-19 to supplement our
earlier press release issued on March 23, 2020.
Preliminary First Quarter ResultsJanuary and
February started out exceptionally strong with Revenue up 9%,
continuing the momentum from the end of 2019, and suggesting that
2020 was shaping up to potentially be a record year. March results
were significantly impacted as shelter in place orders effectively
eliminated travel activity globally.
For the First Quarter of 2020, we expect to report total Revenue
of $1.7 to $1.8 billion, a 9% decrease at the midpoint, as rental
volume was impacted in the second half of March. We expect our net
loss to be between $(155) and $(165) million and Adjusted EBITDA to
be between $(85) and $(95) million, compared to Adjusted EBITDA of
$(1) million in the First Quarter of 2019.
Rental days were in a range of 34.4 to 34.6 million, Revenue per
Day was in a range of $50 to $51, and Per-Unit Fleet Costs were in
a range of $250 to $255. The results are preliminary and final
results for the First Quarter may change. See "Forward-Looking
Statements" for further information.
Current Revenue TrendsApril revenue appears to
have stabilized, down approximately 80% from the prior year. We are
planning for similar levels of decline in May but are anticipating
a recovery in the following months as travel restrictions are
eased. Our current reservations show improvement in June and
sequentially increase over the balance of the summer.
We believe renting a vehicle will continue to be a safe, clean
and attractive alternative when people return to normal way of
life. We clean our cars before every rental transaction with
disinfectant that is CDC-recommended and EPA certified to be
effective against human coronavirus, including novel pathogens such
as COVID-19.
Both of our Americas and International segments are experiencing
lower Revenue per Day due in part to longer length of rental as
customers are opting for more monthly rentals. The majority of our
current revenue is comprised of leisure vehicle rentals, light
commercial vehicles and mini-leases which all have a longer holding
period.
Update on Mitigation PlansIn March, we
committed to over $400 million of annualized cost removal and
mitigation. Since then, we have exceeded our target on an
annualized basis by taking unprecedented actions to preserve
liquidity, remove costs and shrink the size of our vehicle
fleet.
All non-essential capital and operating expenditures were
eliminated and we are continuing to negotiate with partners and
suppliers for further reductions. We have reduced or furloughed
approximately 70% of our global workforce, or approximately 21,000
employees. Also, we have reduced base compensation at the level of
vice presidents and above, froze merit increases, eliminated our
401(k) match for highly compensated employees, and canceled all
future hiring.
We aggressively reduced the size of our global fleet beginning
in March and continuing in April, and currently estimate that we
will end June with over 20% fewer units than the prior year. Our
vehicle dispositions will occur through both traditional methods
and by utilizing our alternative distribution strategy by selling
directly to dealers and consumers. Finally, we have negotiated a
significant number of new vehicle cancellations to improve
utilization and shrink the fleet size.
As a result of these unprecedented actions, we believe we will
achieve an estimated $2.0 billion in annualized cost removal and
mitigation through our actions to date, and we are prepared to take
additional actions as appropriate.
Balance Sheet, Liquidity and Financial
CovenantsAs of March 31, 2020, we had access to $1.4
billion of available cash and cash equivalents and estimate
available borrowings under our revolving credit facility to be
approximately $225 million after taking into account requirements
for letters of credit, providing us with access to an estimated
$1.6 billion of total liquidity.
We have no meaningful corporate debt maturities until 2023 and
have no material fleet financing maturities in 2020. As a result,
based on current operational assumptions, we believe we have
adequate liquidity for the balance of 2020 and into 2021.
In light of the current unprecedented circumstances, we have
entered into discussions with our senior secured lenders to both
seek a waiver of our financial covenant and to increase the amount
of first lien debt permitted under our credit agreement.
We will continue to evaluate opportunistic financing, as well as
accessing funds made available through the Coronavirus Aid, Relief,
and Economic Security (CARES) Act of 2020, which was passed at the
end of March.
Earnings Release AnnouncementWe plan to report
final first quarter 2020 results after the market close on Monday,
May 4, 2020, and to host a conference call for institutional
investors to discuss these results on Tuesday, May 5, 2020 at 7:00
a.m. Eastern time.
Investors may access the call at ir.avisbudgetgroup.com, or by
dialing (877) 407-2991. Investors are encouraged to dial in
approximately 10 minutes prior to the call. A web replay will be
available at ir.avisbudgetgroup.com following the call. A telephone
replay will be available from 11:00 a.m. Eastern time on May 5,
2020 until 10:00 p.m. on May 19, 2020 at (877) 660-6853 using
conference code 13702810.
About Avis Budget Group
Avis Budget Group, Inc. is a leading global provider of mobility
solutions, both through its Avis and Budget brands, which have more
than 11,000 rental locations in approximately 180 countries around
the world, and through its Zipcar brand, which is the world's
leading car sharing network with more than one million members.
Avis Budget Group operates most of its car rental offices in North
America, Europe and Australasia directly, and operates primarily
through licensees in other parts of the world. Avis Budget Group is
headquartered in Parsippany, N.J. More information is available at
avisbudgetgroup.com.
Forward-Looking Statements
Certain statements in this press release constitute
“forward-looking statements.” Any statements that refer to outlook,
expectations or other characterizations of future events,
circumstances or results, including all statements related to our
future results, impact from the coronavirus, cost-saving actions,
and cash flows are forward-looking statements. Various risks that
could cause future results to differ from those expressed by the
forward-looking statements included in this press release include,
but are not limited to, the severity and duration of the COVID-19
outbreak and related travel restrictions, the high level of
competition in the mobility industry, changes in our fleet costs as
a result of a change in the cost of new vehicles, manufacturer
recalls and/or the value of used vehicles, disruption in the supply
of new vehicles, disposition of vehicles not covered by
manufacturer repurchase programs, the financial condition of the
manufacturers that supply our rental vehicles which could affect
their ability to perform their obligations under our repurchase
and/or guaranteed depreciation arrangements, any further
deterioration in economic conditions generally, particularly during
our peak season and/or in key market segments, any further
deterioration in travel demand, including airline passenger
traffic, any occurrence or threat of terrorism, any changes to the
cost or supply of fuel, risks related to acquisitions or
integration of acquired businesses, risks associated with
litigation, governmental or regulatory inquiries or investigations,
risks related to the security of our information technology
systems, disruptions in our communication networks, changes in tax
or other regulations, a significant increase in interest rates or
borrowing costs, our ability to obtain financing for our global
operations, including the funding of our vehicle fleet via
asset-backed securities markets, any fluctuations related to the
mark-to-market of derivatives which hedge our exposure to exchange
rates, interest rates and fuel costs, our ability to meet the
covenants contained in the agreements governing our indebtedness,
and our ability to accurately estimate our future results and
implement our cost savings actions. Other unknown or unpredictable
factors could also have material adverse effects on the Company’s
performance or achievements. Important assumptions and other
important factors that could cause actual results to differ
materially from those in the forward-looking statements are
specified in Avis Budget Group’s Annual Report on Form 10-K for the
year ended December 31, 2019 and in other filings and furnishings
made by the Company with the Securities and Exchange Commission
(the "SEC") from time to time. The Company undertakes no obligation
to publicly update any forward-looking statements to reflect
subsequent events or circumstances.
The preliminary financial information set forth herein is not a
comprehensive statement of our financial condition or results for
the three months ended March 31, 2020 and is subject to the
completion of our financial closing procedures. We have not yet
finalized our financial statement closing process for the three
months ended March 31, 2020. In connection with the finalization
process, we may identify items that would require us to make
adjustments to our preliminary estimates, which may be material.
The preliminary estimates have been prepared by and are the
responsibility of our management and represent estimates and
expectations based on the most current information available.
Deloitte & Touche LLP has not audited, reviewed, compiled or
performed any procedures with respect to such preliminary
estimates. Our actual financial results for the three months ended
March 31, 2020 could be different from those set forth herein and
those differences could be material.
Non-GAAP Financial Measures and Key Metrics
This press release presents Adjusted EBITDA, which represents
income (loss) from continuing operations before non-vehicle related
depreciation and amortization, any impairment charges,
restructuring and other related charges, early extinguishment of
debt costs, non-vehicle related interest, transaction-related
costs, net charges for unprecedented personal-injury legal matters,
non-operational charges related to shareholder activist activity,
gain on sale of equity method investment in China, COVID-19 charges
and income taxes. Adjusted EBITDA is a financial measure not
prepared in accordance with generally accepted accounting
principles (“GAAP”). Management believes that Adjusted EBITDA is
useful to investors as a supplemental measure in evaluating the
aggregate performance of our operating businesses and in comparing
our results from period to period. Adjusted EBITDA is the measure
that is used by our management, including our chief operating
decision maker, to perform such evaluation. Adjusted EBITDA is also
a component in the determination of management's compensation.
Adjusted EBITDA should not be considered in isolation or as a
substitute for net income or other income statement data prepared
in accordance with GAAP and our presentation of Adjusted EBITDA may
not be comparable to similarly-titled measures used by other
companies.
Below is a reconciliation of management’s estimate of net loss
to estimated Adjusted pretax loss and Adjusted EBITDA for the three
months ended March 31, 2020. In the table below, we provide an
estimate of the items we exclude from our calculation of Adjusted
pretax loss and Adjusted EBITDA for 2020, which primarily include
restructuring and other related charges, acquisition-related
amortization expense, COVID-19 charges, early extinguishment of
debt, non-operational charges related to shareholder activist
activity, and transaction-related costs, net.
Reconciliation of
pretax loss to Adjusted EBITDA |
In millions |
Net loss |
$(155) - $(165) |
Benefit from income taxes |
(106) - (110) |
Pretax loss |
(261) - (275) |
Add: |
|
Estimated certain items(1) |
73 - 75 |
Adjusted pretax loss |
(188) - (200) |
Add: |
|
Non-vehicle related depreciation and amortization (excluding
acquisition-related amortization expense) |
55 - 56 |
Interest expense related to corporate debt, net (excluding early
extinguishment of debt) |
48 - 49 |
Adjusted
EBITDA |
$(85) - $(95) |
(1) Includes restructuring and other related charges,
acquisition-related amortization expense, COVID-19 charges, early
extinguishment of debt, non-operational charges related to
shareholder activist activity, and transaction-related costs,
net.
This press release also includes information for Rental Days,
Revenue per Day and Per-Unit Fleet costs. Rental Days represents
the total number of days (or portion thereof) a vehicle was rented
during a 24-hour period. Revenue per Day represents revenues
divided by Rental Days. Per-Unit Fleet Costs represents vehicle
depreciation, lease charges and gain or loss on vehicles sales,
divided by the average number of vehicles in our fleet during a
given period of time.
Contact |
David Calabria |
IR@avisbudget.com |
PR@avisbudget.com |
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