Avis Budget Group, Inc. (
NASDAQ: CAR) today
announced third quarter 2020 financial results, with Net income of
$45 million and Adjusted net income of $79 million.
Despite revenue being down 44% compared to the same period in
the prior year, we achieved positive Adjusted EBITDA of $220
million in the third quarter through cost removal actions and
sizing fleet to demand by selling over 100,000 vehicles globally.
During the quarter we removed approximately $1 billion of costs,
bringing the total to $2 billion year to date, and we are now on
track to deliver more than $2.5 billion of cost removal for the
full year.
We generated positive cash flow from operations and from
Adjusted Free Cash flow in the quarter by implementing aggressive
cost saving actions, taking advantage of sequential improvement in
rental demand, and right-sizing our vehicle fleet. This resulted in
our liquidity position at the end of the quarter to be $2.4
billion. Given the current operating environment, we believe our
liquidity position is now robust enough to return the excess equity
that we accessed earlier in the year back into our ABS facilities.
This will position us to fund the purchase of our 2021 fleet
appropriately.
We took advantage of a strong used vehicle market globally
exceeding the prior year's vehicle dispositions by 50%. Fleet for
the quarter was down 29% year-over-year with global utilization
peaking in the 70% range, further demonstrating our ability to flex
our fleet size up or down even during disruptive market
conditions.
“We remain focused on what we can control. We have removed more
than $2 billion of cost globally throughout the year, with more
expected to come in the fourth quarter,” said Joe Ferraro, Avis
Budget Group Chief Executive Officer. “Those cost removals along
with our demonstrated history of aligning our fleet with demand
allowed us to achieve both strong positive Adjusted EBITDA and
Adjusted Free Cash Flow, despite these difficult times.”
Q3 Highlights
- We continued to reduce our cost base to match current revenue
trends, removing another $1 billion of costs. We have removed more
than $2 billion of costs since implementing our cost saving actions
earlier this year.
- We profitably disposed of 75,000 vehicles in the U.S.,
including a record 49,000 vehicles sold through alternative
channels.
- We completed a senior notes offering of $350 million, and used
the proceeds to pay off $100 million of existing notes and provide
additional liquidity. We also completed an offering of $650 million
of asset-backed securities for a weighted average interest rate of
2.28%, our lowest rate since 2013 for our fleet financing.
- We continued our Avis Safety Pledge and Budget Worry-Free
Promise to keep our customers and employees safe. We have expanded
our partnerships to enhance the cleanliness and disinfection of our
rental facilities and vehicles.
- We continue to expand contactless rentals for our Avis
Preferred customers through the use of our app, which also enhances
the rental experience.
Outlook
We are a seasonal business and anticipate normal fourth quarter
seasonal declines in demand as we move from the peak summer period
to the shoulder fall and winter period. Although we believe the
travel environment will remain challenged, we still expect to be
Adjusted EBITDA and Adjusted Free Cash Flow positive excluding the
return of vehicle equity for the fourth quarter.
Investor Conference Call
We will host a conference call to discuss third quarter results
on October 30, 2020, at 8:30 a.m. (ET). Investors may access the
call at ir.avisbudgetgroup.com or by dialing (877) 407-2991 and a
replay will available on our website and at (877) 660-6853 using
conference code 13711168.
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 COVID-19 outbreak, 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 resulting economic conditions and
related restrictions, the high level of competition in the mobility
industry, changes in our fleet costs, including 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, our ability to realize our estimated cost savings on a
timely basis, or at all, 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, the current and any
future pandemic diseases or other natural disasters, 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 Quarterly Report on Form 10-Q for
the three and six months ended June 30, 2020 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.
Non-GAAP Financial Measures and Key Metrics
This release, including the Outlook section, includes financial
measures such as Adjusted EBITDA, Adjusted Net Income and Adjusted
Free Cash Flow, as well as other financial measures that are not
considered generally accepted accounting principles (“GAAP”)
measures as defined under SEC rules. Important information
regarding such measures is contained in the financial tables to
this release and in Appendix I, including the definitions of these
measures and reconciliations to the closest comparable GAAP
measures. The Company and its management believe that these
non-GAAP measures are useful to investors in measuring the
comparable results of the Company period-over-period. The GAAP
measures most directly comparable to Adjusted EBITDA, Adjusted Free
Cash Flow, Adjusted pretax income (loss), Adjusted net income
(loss) and Adjusted diluted earnings (loss) per share are net
income (loss), net cash provided by operating activities, income
(loss) before income taxes, net income (loss) and diluted earnings
(loss) per share, respectively. The Company believes it is
impracticable to provide a reconciliation to the most comparable
GAAP measures for the fourth quarter due to the degree of
uncertainty associated with forecasting the reconciling items and
amounts. Foreign currency translation effects on the Company’s
results are quantified by translating the current period’s non-U.S.
dollar-denominated results using the currency exchange rates of the
prior period of comparison including any related gains and losses
on currency hedges. Per-unit fleet costs, which represent vehicle
depreciation, lease charges and gain or loss on vehicle sales,
divided by average rental fleet, are calculated on a per-month
basis.
Contact David Calabria IR@avisbudget.com
PR@avisbudget.com
Tables Follow
Table 1
Avis Budget Group,
Inc.SUMMARY DATA SHEET(In
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30, |
|
|
Nine Months
Ended September 30, |
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
Income Statement and Other
Items |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
1,534 |
|
|
$ |
2,753 |
|
|
(44 |
)% |
|
$ |
4,047 |
|
|
$ |
7,010 |
|
|
(42 |
)% |
Income (loss) before income taxes |
53 |
|
|
328 |
|
|
(84 |
)% |
|
(821 |
) |
|
273 |
|
|
n/m |
Net income (loss) |
45 |
|
|
189 |
|
|
(76 |
)% |
|
(594 |
) |
|
160 |
|
|
n/m |
Earnings (loss) per share - diluted |
0.63 |
|
|
2.50 |
|
|
(75 |
)% |
|
(8.40 |
) |
|
2.10 |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Measures (non-GAAP) (A) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
220 |
|
|
471 |
|
|
(53 |
)% |
|
(249 |
) |
|
645 |
|
|
n/m |
Adjusted pretax income (loss) |
99 |
|
|
373 |
|
|
(73 |
)% |
|
(580 |
) |
|
355 |
|
|
n/m |
Adjusted net income (loss) |
79 |
|
|
223 |
|
|
(65 |
)% |
|
(412 |
) |
|
225 |
|
|
n/m |
Adjusted earnings (loss) per share - diluted |
1.13 |
|
|
2.96 |
|
|
(62 |
)% |
|
(5.83 |
) |
|
2.95 |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of |
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
Balance Sheet Items |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,564 |
|
|
$ |
686 |
|
|
|
|
|
|
|
|
|
|
Vehicles, net |
8,780 |
|
|
12,177 |
|
|
|
|
|
|
|
|
|
|
Debt under vehicle programs |
8,339 |
|
|
11,068 |
|
|
|
|
|
|
|
|
|
|
Corporate debt |
4,164 |
|
|
3,435 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
(76 |
) |
|
656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30, |
|
|
Nine Months
Ended September 30, |
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
1,114 |
|
|
$ |
1,868 |
|
|
(40 |
)% |
|
$ |
2,936 |
|
|
$ |
4,822 |
|
|
(39 |
)% |
International |
420 |
|
|
885 |
|
|
(53 |
)% |
|
1,111 |
|
|
2,188 |
|
|
(49 |
)% |
Corporate and Other |
— |
|
|
— |
|
|
n/m |
|
— |
|
|
— |
|
|
n/m |
Total Company |
$ |
1,534 |
|
|
$ |
2,753 |
|
|
(44 |
)% |
|
$ |
4,047 |
|
|
$ |
7,010 |
|
|
(42 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
222 |
|
|
$ |
321 |
|
|
(31 |
)% |
|
$ |
(41 |
) |
|
$ |
508 |
|
|
n/m |
International |
6 |
|
|
169 |
|
|
(96 |
)% |
|
(174 |
) |
|
187 |
|
|
n/m |
Corporate and Other |
(8 |
) |
|
(19 |
) |
|
n/m |
|
(34 |
) |
|
(50 |
) |
|
n/m |
Total Company |
$ |
220 |
|
|
$ |
471 |
|
|
(53 |
)% |
|
$ |
(249 |
) |
|
$ |
645 |
|
|
n/m |
|
|
n/m |
Not meaningful. |
(A) |
See Table 5 for reconciliations
of non-GAAP measures and Appendix I for definitions. |
|
|
Table 2
Avis Budget Group,
Inc.CONSOLIDATED STATEMENTS OF
OPERATIONS(In millions, except per share
data)
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
$ |
1,534 |
|
|
$ |
2,753 |
|
|
$ |
4,047 |
|
|
$ |
7,010 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Operating |
825 |
|
|
1,291 |
|
|
2,505 |
|
|
3,534 |
|
Vehicle depreciation and lease charges, net |
256 |
|
|
551 |
|
|
1,089 |
|
|
1,579 |
|
Selling, general and administrative |
166 |
|
|
350 |
|
|
549 |
|
|
947 |
|
Vehicle interest, net |
77 |
|
|
90 |
|
|
247 |
|
|
261 |
|
Non-vehicle related depreciation and amortization |
74 |
|
|
62 |
|
|
214 |
|
|
195 |
|
Interest expense related to corporate debt, net: |
|
|
|
|
|
|
|
Interest expense |
64 |
|
|
49 |
|
|
163 |
|
|
139 |
|
Early extinguishment of debt |
2 |
|
|
10 |
|
|
9 |
|
|
10 |
|
Restructuring and other related charges |
17 |
|
|
22 |
|
|
89 |
|
|
66 |
|
Transaction-related costs, net |
— |
|
|
— |
|
|
3 |
|
|
6 |
|
Total
expenses |
1,481 |
|
|
2,425 |
|
|
4,868 |
|
|
6,737 |
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes |
53 |
|
|
328 |
|
|
(821 |
) |
|
273 |
|
Provision for
(benefit from) income taxes |
8 |
|
|
139 |
|
|
(227 |
) |
|
113 |
|
Net income
(loss) |
$ |
45 |
|
|
$ |
189 |
|
|
$ |
(594 |
) |
|
$ |
160 |
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share - diluted |
|
|
|
|
|
|
|
Basic |
$ |
0.64 |
|
|
$ |
2.52 |
|
|
$ |
(8.40 |
) |
|
$ |
2.12 |
|
Diluted |
$ |
0.63 |
|
|
$ |
2.50 |
|
|
$ |
(8.40 |
) |
|
$ |
2.10 |
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding |
|
|
|
|
|
|
|
Basic |
69.7 |
|
|
75.2 |
|
|
70.8 |
|
|
75.6 |
|
Diluted |
70.2 |
|
|
75.7 |
|
|
70.8 |
|
|
76.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
Avis Budget Group,
Inc.KEY METRICS SUMMARY
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Days (000’s) |
19,289 |
|
|
31,374 |
|
|
(39 |
)% |
|
54,715 |
|
|
85,249 |
|
|
(36 |
)% |
Revenue per Day, excluding exchange rate effects
(A) |
$ |
57.82 |
|
|
$ |
59.56 |
|
|
(3 |
)% |
|
$ |
53.70 |
|
|
$ |
56.57 |
|
|
(5 |
)% |
Average Rental Fleet |
362,192 |
|
|
469,863 |
|
|
(23 |
)% |
|
392,737 |
|
|
440,493 |
|
|
(11 |
)% |
Vehicle Utilization |
57.9 |
% |
|
72.6 |
% |
|
(14.7) pps |
|
50.8 |
% |
|
70.9 |
% |
|
(20.1) pps |
Per-Unit Fleet Costs per Month, excluding exchange rate effects
(A) |
$ |
152 |
|
|
$ |
267 |
|
|
(43 |
)% |
|
$ |
217 |
|
|
$ |
283 |
|
|
(23 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Days (000’s) |
9,542 |
|
|
18,056 |
|
|
(47 |
)% |
|
26,633 |
|
|
45,389 |
|
|
(41 |
)% |
Revenue per Day, excluding exchange rate effects
(A) |
$ |
42.22 |
|
|
$ |
49.04 |
|
|
(14 |
)% |
|
$ |
42.11 |
|
|
$ |
48.20 |
|
|
(13 |
)% |
Average Rental Fleet |
154,781 |
|
|
263,420 |
|
|
(41 |
)% |
|
170,632 |
|
|
229,892 |
|
|
(26 |
)% |
Vehicle Utilization |
67.0 |
% |
|
74.5 |
% |
|
(7.5) pps |
|
57.0 |
% |
|
72.3 |
% |
|
(15.3) pps |
Per-Unit Fleet Costs per Month, excluding exchange rate effects
(A) |
$ |
187 |
|
|
$ |
222 |
|
|
(16 |
)% |
|
$ |
213 |
|
|
$ |
221 |
|
|
(4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Days (000’s) |
28,831 |
|
|
49,430 |
|
|
(42 |
)% |
|
81,348 |
|
|
130,638 |
|
|
(38 |
)% |
Revenue per Day, excluding exchange rate effects
(A) |
$ |
52.66 |
|
|
$ |
55.71 |
|
|
(5 |
)% |
|
$ |
49.90 |
|
|
$ |
53.66 |
|
|
(7 |
)% |
Average Rental Fleet |
516,973 |
|
|
733,283 |
|
|
(29 |
)% |
|
563,369 |
|
|
670,385 |
|
|
(16 |
)% |
Vehicle Utilization |
60.6 |
% |
|
73.3 |
% |
|
(12.7) pps |
|
52.7 |
% |
|
71.4 |
% |
|
(18.7) pps |
Per-Unit Fleet Costs per Month, excluding exchange rate effects
(A) |
$ |
163 |
|
|
$ |
251 |
|
|
(35 |
)% |
|
$ |
216 |
|
|
$ |
262 |
|
|
(18 |
)% |
_________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer to Table 6
for key metrics calculations and Appendix I for key metrics
definitions. |
(A) The following metrics include changes in
currency exchange rates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per Day |
$ |
57.79 |
|
|
$ |
59.56 |
|
|
(3 |
)% |
|
$ |
53.67 |
|
|
$ |
56.57 |
|
|
(5 |
)% |
Per-Unit Fleet Costs per Month |
$ |
152 |
|
|
$ |
267 |
|
|
(43 |
)% |
|
$ |
217 |
|
|
$ |
283 |
|
|
(23 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per Day |
$ |
43.98 |
|
|
$ |
49.04 |
|
|
(10 |
)% |
|
$ |
41.70 |
|
|
$ |
48.20 |
|
|
(13 |
)% |
Per-Unit Fleet Costs per Month |
$ |
195 |
|
|
$ |
222 |
|
|
(12 |
)% |
|
$ |
210 |
|
|
$ |
221 |
|
|
(5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per Day |
$ |
53.22 |
|
|
$ |
55.71 |
|
|
(4 |
)% |
|
$ |
49.75 |
|
|
$ |
53.66 |
|
|
(7 |
)% |
Per-Unit Fleet Costs per Month |
$ |
165 |
|
|
$ |
251 |
|
|
(34 |
)% |
|
$ |
215 |
|
|
$ |
262 |
|
|
(18 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4 (page 1 of 2)
Avis Budget Group,
Inc.CONSOLIDATED CONDENSED SCHEDULES OF CASH FLOWS
AND ADJUSTED FREE CASH FLOWS(In
millions)
CONSOLIDATED CONDENSED SCHEDULE OF CASH
FLOWS
|
Nine Months EndedSeptember 30, 2020 |
Operating
Activities |
|
Net cash provided by operating activities |
$ |
632 |
|
|
|
Investing
Activities |
|
Net cash used in investing activities exclusive of vehicle
programs |
$ |
(133 |
) |
Net cash provided by investing activities of vehicle programs |
2,616 |
|
Net cash provided by investing activities |
$ |
2,483 |
|
|
|
Financing
Activities |
|
Net cash provided by financing activities exclusive of vehicle
programs |
$ |
560 |
|
Net cash used in financing activities of vehicle programs |
(2,943 |
) |
Net cash used in financing activities |
$ |
(2,383 |
) |
|
|
Effect of changes in exchange
rates on cash and cash equivalents, program and restricted
cash |
28 |
|
Net change in cash and cash
equivalents, program and restricted cash |
760 |
|
Cash and cash
equivalents, program and restricted cash, beginning of period
(A) |
900 |
|
Cash and cash
equivalents, program and restricted cash, end of period
(B) |
$ |
1,660 |
|
|
|
|
|
CONSOLIDATED SCHEDULE OF ADJUSTED FREE
CASH FLOWS (C)
|
Nine Months EndedSeptember 30, 2020 |
Loss before income taxes |
$ |
(821 |
) |
Add-back of
non-vehicle related depreciation and amortization |
214 |
|
Add-back of debt
extinguishment costs |
9 |
|
Add-back of
restructuring and other related costs |
89 |
|
Add-back of
non-operational charges related to shareholder activist
activity |
4 |
|
Add-back of
transaction-related costs |
3 |
|
Add-back of
COVID-19 charges |
90 |
|
Working capital
and other |
111 |
|
Capital
expenditures (D) |
(99 |
) |
Tax payments, net
of refunds |
(12 |
) |
Vehicle programs
and related (E) |
838 |
|
Adjusted
free cash flow |
$ |
426 |
|
|
|
Acquisition and
related payments, net of acquired cash (F) |
$ |
(42 |
) |
Borrowings, net of
debt repayments |
688 |
|
Restructuring and
other related payments |
(86 |
) |
Transaction-related payments |
(3 |
) |
Non-operational
payments related to shareholder activist activity |
(5 |
) |
Issuance of common
stock |
15 |
|
Repurchases of
common stock |
(119 |
) |
Change in program
cash |
(116 |
) |
Change in
restricted cash |
(2 |
) |
Foreign exchange
effects, financing costs and other |
4 |
|
Net change
in cash and cash equivalents, program and restricted cash (per
above) |
$ |
760 |
|
|
|
|
|
Table 4 (page 2 of 2)
RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
|
Nine Months EndedSeptember 30, 2020 |
Net cash provided by operating activities (per
above) |
$ |
632 |
|
Investing activities of vehicle programs |
2,616 |
|
Financing activities of vehicle programs |
(2,943 |
) |
Capital expenditures |
(75 |
) |
Proceeds received on sale of assets and nonmarketable equity
securities |
5 |
|
Change in program cash |
116 |
|
Change in restricted cash |
2 |
|
Acquisition and disposition-related payments |
(21 |
) |
Non-operational payments related to shareholder activist
activity |
5 |
|
Restructuring and other related payments |
86 |
|
Transaction-related payments |
3 |
|
Adjusted
free cash flow (per above) |
$ |
426 |
|
|
|
|
|
|
|
|
|
|
|
(A) |
Consists of cash and cash equivalents of $686 million, program cash
of $211 million and restricted cash of $3 million. |
(B) |
Consists of cash and
cash equivalents of $1,564 million, program cash of $94 million and
restricted cash of $2 million. |
(C) |
See Appendix I for
the definition of Adjusted free cash flow. |
(D) |
Includes $24 million
of cloud computing implementation costs. |
(E) |
Includes
vehicle-backed borrowings (repayments) that are incremental to
amounts required to fund incremental (reduced) vehicle and
vehicle-related assets. |
(F) |
Excludes $21 million
of vehicles purchased as a part of North America licensee
acquisitions, which were financed through incremental
vehicle-backed borrowings. |
|
|
Table 5 (page 1 of 2)
Avis Budget Group,
Inc.DEFINITIONS AND RECONCILIATIONS OF NON-GAAP
MEASURES(In millions, except per share
data)
The accompanying press release includes certain non-GAAP
(generally accepted accounting principles) financial measures as
defined under SEC rules. To the extent not provided in the press
release or accompanying tables, we have provided the reasons we
present these non-GAAP financial measures and a description of what
they represent in Appendix I. For each non-GAAP financial measure a
reconciliation to the most comparable GAAP financial measure is
calculated and presented below with reconciliations of net income
(loss), income (loss) before income taxes and diluted earnings
(loss) per share to Adjusted EBITDA and our Adjusted earnings
measures.
|
|
Three Months Ended September 30, |
Reconciliation of net income to Adjusted
EBITDA: |
2020 |
|
2019 |
|
|
|
|
Net income |
$ |
45 |
|
|
$ |
189 |
|
Provision for income taxes |
8 |
|
|
139 |
|
Income before income taxes |
53 |
|
|
328 |
|
|
|
|
|
|
Add certain items: |
|
|
|
|
Restructuring and other related charges |
17 |
|
|
22 |
|
|
Acquisition-related amortization expense |
17 |
|
|
13 |
|
|
COVID-19 charges (A) |
10 |
|
|
— |
|
|
Early extinguishment of debt |
2 |
|
|
10 |
|
Adjusted pretax income |
99 |
|
|
373 |
|
|
|
|
|
Add: |
Non-vehicle related depreciation and amortization (excluding
acquisition-related amortization expense) |
57 |
|
|
49 |
|
Interest expense related to corporate debt, net (excluding
early extinguishment of debt) |
64 |
|
|
49 |
|
Adjusted EBITDA |
$ |
220 |
|
|
$ |
471 |
|
|
|
|
|
|
Reconciliation of net income to adjusted
net income: |
|
|
|
|
|
|
|
|
Net income |
$ |
45 |
|
|
$ |
189 |
|
Add certain items, net of tax: |
|
|
|
|
Restructuring and other
related charges |
14 |
|
|
17 |
|
|
Acquisition-related
amortization expense |
12 |
|
|
10 |
|
|
COVID-19 charges |
7 |
|
|
— |
|
|
Early extinguishment of
debt |
1 |
|
|
7 |
|
Adjusted net income |
$ |
79 |
|
|
$ |
223 |
|
|
|
|
|
|
Earnings per share - diluted |
$ |
0.63 |
|
|
$ |
2.50 |
|
|
|
|
|
|
Adjusted diluted earnings per
share |
$ |
1.13 |
|
|
$ |
2.96 |
|
|
|
|
|
|
Shares used to calculate Adjusted diluted
earnings per share |
70.2 |
|
|
75.7 |
|
_______ |
|
(A) |
For three months ended
September 30, 2020 consists of $8 million within operating
expenses, $1 million within selling, general and administrative
expenses and $1 million within vehicle depreciation and lease
charges, net in our Consolidated Statements of Operations.
Primarily consisting of $18 million of incremental cleaning
supplies to sanitize vehicles and facilities, and overflow parking
for idle vehicles and related shuttling costs, $11 million of
minimum annual guaranteed rent in excess of concession fees and
$(19) million associated with vehicles damaged in overflow parking
lots, net of insurance proceeds. |
|
|
Table 5 (page 2 of 2)
|
|
Nine Months
Ended September 30, |
Reconciliation of net income (loss) to
Adjusted EBITDA: |
2020 |
|
2019 |
|
|
|
|
Net income (loss) |
$ |
(594 |
) |
|
$ |
160 |
|
Provision for (benefit from) income taxes |
(227 |
) |
|
113 |
|
Income (loss) before income
taxes |
(821 |
) |
|
273 |
|
|
|
|
|
|
Add certain items: |
|
|
|
|
COVID-19 charges (A) |
90 |
|
|
— |
|
|
Restructuring and other related charges |
89 |
|
|
66 |
|
|
Acquisition-related amortization expense |
46 |
|
|
44 |
|
|
Early extinguishment of debt |
9 |
|
|
10 |
|
|
Non-operational charges related to shareholder activist
activity (B) |
4 |
|
|
— |
|
|
Transaction-related costs, net |
3 |
|
|
6 |
|
|
Gain on sale of equity method investment in China (C) |
— |
|
|
(44 |
) |
Adjusted pretax income (loss) |
(580 |
) |
|
355 |
|
|
|
|
|
Add: |
Non-vehicle related depreciation and amortization (excluding
acquisition-related amortization expense) |
168 |
|
|
151 |
|
Interest expense related to corporate debt, net (excluding
early extinguishment of debt) |
163 |
|
|
139 |
|
Adjusted EBITDA |
$ |
(249 |
) |
|
$ |
645 |
|
|
|
|
|
|
Reconciliation of net income (loss) to
adjusted net income (loss): |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(594 |
) |
|
$ |
160 |
|
Add certain items, net of tax: |
|
|
|
|
COVID-19 charges |
67 |
|
|
— |
|
|
Restructuring and other related charges |
69 |
|
|
51 |
|
|
Acquisition-related amortization expense |
34 |
|
|
32 |
|
|
Early extinguishment of debt |
7 |
|
|
7 |
|
|
Non-operational charges related to shareholder activist
activity |
3 |
|
|
— |
|
|
Transaction-related costs, net |
2 |
|
|
5 |
|
|
Gain on sale of equity method investment in China |
— |
|
|
(30 |
) |
Adjusted net income (loss) |
$ |
(412 |
) |
|
$ |
225 |
|
|
|
|
|
|
Earnings (loss) per share -
diluted |
$ |
(8.40 |
) |
|
$ |
2.10 |
|
|
|
|
|
|
Adjusted diluted earnings (loss) per
share |
$ |
(5.83 |
) |
|
$ |
2.95 |
|
|
|
|
|
|
Shares used to calculate Adjusted diluted
earnings (loss) per share |
70.8 |
|
|
76.2 |
|
_______ |
|
(A) |
For nine months ended
September 30, 2020 consists of $87 million within operating
expenses, $2 million within selling, general and administrative
expenses and $1 million within vehicle depreciation and lease
charges, net in our Consolidated Statements of Operations.
Primarily consisting of $41 million of minimum annual guaranteed
rent in excess of concession fees, $35 million of incremental
cleaning supplies to sanitize vehicles and facilities, and overflow
parking for idle vehicles and related shuttling costs and $14
million of losses associated with vehicles damaged in overflow
parking lots, net of insurance proceeds. |
(B) |
Reported within selling,
general and administrative expenses in our Consolidated Statements
of Operations. |
(C) |
Reported within operating
expenses in our Consolidated Statements of Operations. |
|
|
Table 6
Avis Budget Group,
Inc.KEY METRICS CALCULATIONS($ in
millions, except as noted)
|
Three Months Ended September 30, 2020 |
|
Three Months Ended September 30, 2019 |
|
Americas |
|
International |
|
Total |
|
Americas |
|
International |
|
Total |
Revenue
per Day (RPD) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
1,114 |
|
|
$ |
420 |
|
|
$ |
1,534 |
|
|
$ |
1,868 |
|
|
$ |
885 |
|
|
$ |
2,753 |
|
Currency exchange rate effects |
2 |
|
|
(17 |
) |
|
(15 |
) |
|
— |
|
|
— |
|
|
— |
|
Revenue excluding exchange rate effects |
1,116 |
|
|
403 |
|
|
1,519 |
|
|
1,868 |
|
|
885 |
|
|
2,753 |
|
Rental days (000's) |
19,289 |
|
|
9,542 |
|
|
28,831 |
|
|
31,374 |
|
|
18,056 |
|
|
49,430 |
|
RPD excluding exchange rate effects (in $'s) |
$ |
57.82 |
|
|
$ |
42.22 |
|
|
$ |
52.66 |
|
|
$ |
59.56 |
|
|
$ |
49.04 |
|
|
$ |
55.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle
Utilization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental days (000's) |
19,289 |
|
|
9,542 |
|
|
28,831 |
|
|
31,374 |
|
|
18,056 |
|
|
49,430 |
|
Average rental fleet |
362,192 |
|
|
154,781 |
|
|
516,973 |
|
|
469,863 |
|
|
263,420 |
|
|
733,283 |
|
Number of days in period |
92 |
|
|
92 |
|
|
92 |
|
|
92 |
|
|
92 |
|
|
92 |
|
Available rental days (000's) |
33,322 |
|
|
14,240 |
|
|
47,562 |
|
|
43,227 |
|
|
24,235 |
|
|
67,462 |
|
Vehicle utilization |
57.9 |
% |
|
67.0 |
% |
|
60.6 |
% |
|
72.6 |
% |
|
74.5 |
% |
|
73.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-Unit
Fleet Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle depreciation and lease charges, net |
$ |
166 |
|
|
$ |
90 |
|
|
$ |
256 |
|
|
$ |
376 |
|
|
$ |
175 |
|
|
$ |
551 |
|
Currency exchange rate effects |
(1 |
) |
|
(3 |
) |
|
(4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
$ |
165 |
|
|
$ |
87 |
|
|
$ |
252 |
|
|
$ |
376 |
|
|
$ |
175 |
|
|
$ |
551 |
|
Average rental fleet |
362,192 |
|
|
154,781 |
|
|
516,973 |
|
|
469,863 |
|
|
263,420 |
|
|
733,283 |
|
Per-unit fleet costs (in $'s) |
$ |
456 |
|
|
$ |
562 |
|
|
$ |
488 |
|
|
$ |
801 |
|
|
$ |
666 |
|
|
$ |
752 |
|
Number of months in period |
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
Per-unit fleet costs per month excluding exchange rate effects (in
$'s) |
$ |
152 |
|
|
$ |
187 |
|
|
$ |
163 |
|
|
$ |
267 |
|
|
$ |
222 |
|
|
$ |
251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020 |
|
Nine Months Ended September 30, 2019 |
|
Americas |
|
International |
|
Total |
|
Americas |
|
International |
|
Total |
Revenue
per Day (RPD) |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
2,936 |
|
|
$ |
1,111 |
|
|
$ |
4,047 |
|
|
$ |
4,822 |
|
|
$ |
2,188 |
|
|
$ |
7,010 |
|
Currency exchange rate effects |
2 |
|
|
11 |
|
|
13 |
|
|
— |
|
|
— |
|
|
— |
|
Revenue excluding exchange rate effects |
2,938 |
|
|
1,122 |
|
|
4,060 |
|
|
4,822 |
|
|
2,188 |
|
|
7,010 |
|
Rental days (000's) |
54,715 |
|
|
26,633 |
|
|
81,348 |
|
|
85,249 |
|
|
45,389 |
|
|
130,638 |
|
RPD excluding exchange rate effects (in $'s) |
$ |
53.70 |
|
|
$ |
42.11 |
|
|
$ |
49.90 |
|
|
$ |
56.57 |
|
|
$ |
48.20 |
|
|
$ |
53.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle
Utilization |
|
|
|
|
|
|
|
|
|
|
|
Rental days (000's) |
54,715 |
|
|
26,633 |
|
|
81,348 |
|
|
85,249 |
|
|
45,389 |
|
|
130,638 |
|
Average rental fleet |
392,737 |
|
|
170,632 |
|
|
563,369 |
|
|
440,493 |
|
|
229,892 |
|
|
670,385 |
|
Number of days in period |
274 |
|
|
274 |
|
|
274 |
|
|
273 |
|
|
273 |
|
|
273 |
|
Available rental days (000's) |
107,610 |
|
|
46,753 |
|
|
154,363 |
|
|
120,255 |
|
|
62,760 |
|
|
183,015 |
|
Vehicle utilization |
50.8 |
% |
|
57.0 |
% |
|
52.7 |
% |
|
70.9 |
% |
|
72.3 |
% |
|
71.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Per-Unit
Fleet Costs |
|
|
|
|
|
|
|
|
|
|
|
Vehicle depreciation and lease charges, net |
$ |
767 |
|
|
$ |
322 |
|
|
$ |
1,089 |
|
|
$ |
1,123 |
|
|
$ |
456 |
|
|
$ |
1,579 |
|
Currency exchange rate effects |
— |
|
|
5 |
|
|
5 |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
767 |
|
|
$ |
327 |
|
|
$ |
1,094 |
|
|
$ |
1,123 |
|
|
$ |
456 |
|
|
$ |
1,579 |
|
Average rental fleet |
392,737 |
|
|
170,632 |
|
|
563,369 |
|
|
440,493 |
|
|
229,892 |
|
|
670,385 |
|
Per-unit fleet costs (in $'s) |
$ |
1,954 |
|
|
$ |
1,917 |
|
|
$ |
1,943 |
|
|
$ |
2,550 |
|
|
$ |
1,985 |
|
|
$ |
2,356 |
|
Number of months in period |
9 |
|
|
9 |
|
|
9 |
|
|
9 |
|
|
9 |
|
|
9 |
|
Per-unit fleet costs per month excluding exchange rate effects (in
$'s) |
$ |
217 |
|
|
$ |
213 |
|
|
$ |
216 |
|
|
$ |
283 |
|
|
$ |
221 |
|
|
$ |
262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our calculation of rental days
and revenue per day may not be comparable to the calculation of
similarly-titled metrics by other companies. Currency exchange rate
effects are calculated by translating the current-year results at
the prior-period average exchange rates plus any related gains and
losses on currency hedges. |
|
Appendix I
Avis Budget Group,
Inc.DEFINITIONS OF NON-GAAP MEASURES AND KEY
METRICS
Adjusted EBITDAThe accompanying 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. Net charges for unprecedented personal-injury legal matters
and gain on sale of equity method investment in China are recorded
within operating expenses in our consolidated condensed statement
of operations. Non-operational charges related to shareholder
activist activity include third party advisory, legal and other
professional service fees and are recorded within selling, general
and administrative expenses in our consolidated results of
operations. COVID-19 charges include unusual, direct and
incremental costs due to the COVID-19 global pandemic such as
minimum annual guaranteed rent in excess of concession fees for the
period, overflow parking for idle vehicles and related shuttling
costs, incremental cleaning supplies to sanitize vehicles and
facilities, and losses associated with vehicles damaged in overflow
parking lots, net of insurance proceeds and are primarily recorded
within operating expenses in our consolidated condensed statement
of operations. We have revised our definition of Adjusted EBITDA to
exclude COVID-19. We did not revised prior years' Adjusted EBITDA
amounts because there were no other charges similar in nature to
these. Adjusted EBITDA includes stock-based compensation expense
and deferred financing fee amortization totaling $9 million and $11
million in third quarter 2020 and 2019, respectively and totaling
$22 million and $34 million in the nine months ended
September 30, 2020 and 2019, respectively.
We believe 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. A reconciliation
of Adjusted EBITDA from net income (loss) recognized under GAAP is
provided on Table 5.
Adjusted Earnings Non-GAAP MeasuresThe
accompanying press release and tables present Adjusted pretax
income (loss), Adjusted net income (loss) and Adjusted diluted
earnings (loss) per share, which exclude certain items. We believe
that these measures referred to above are useful to investors as
supplemental measures in evaluating the aggregate performance of
the Company. We exclude restructuring and other related charges,
transaction-related costs, costs related to early extinguishment of
debt and certain other items as such items are not representative
of the results of operations of our business less a provision for
income taxes derived utilizing applicable statutory tax rates for
each item. A reconciliation of our Adjusted earnings Non-GAAP
measures from the appropriate measures recognized under GAAP is
provided on Table 5.
Adjusted Free Cash FlowRepresents Net Cash
Provided by Operating Activities adjusted to reflect the cash
inflows and outflows relating to capital expenditures, the
investing and financing activities of our vehicle programs, asset
sales, if any, and to exclude debt extinguishment costs,
transaction-related costs, restructuring and other related charges,
COVID-19 charges and non-operational charges related to shareholder
activist activity. We have revised our definition of Adjusted Free
Cash Flow to exclude COVID-19 charges and have not revised prior
years' Adjusted Free Cash Flow amounts as there were no other
charges similar in nature to these. We believe this change is
meaningful to investors as it brings the measurement in line with
our other non-GAAP measures. We believe that Adjusted Free Cash
Flow is useful to management and investors in measuring the cash
generated that is available to be used to repay debt obligations,
repurchase stock, pay dividends and invest in future growth through
new business development activities or acquisitions. Adjusted Free
Cash Flow should not be construed as a substitute in measuring
operating results or liquidity, and our presentation of Adjusted
Free Cash Flow may not be comparable to similarly-titled measures
used by other companies. A reconciliation of Adjusted Free Cash
Flow to the appropriate measure recognized under GAAP is provided
on Table 4.
Available Rental DaysDefined as Average Rental
Fleet times the numbers of days in a given period.
Average Rental FleetRepresents the average
number of vehicles in our fleet during a given period of time.
Currency Exchange Rate EffectsRepresents the
difference between current-period results as reported and
current-period results translated at the prior-period average
exchange rates plus any related currency hedges.
Net Corporate DebtRepresents corporate debt
minus cash and cash equivalents.
Net Corporate LeverageRepresents Net Corporate
Debt divided by Adjusted EBITDA for the twelve months prior to the
date of calculation.
Per-Unit Fleet CostsRepresents vehicle
depreciation, lease charges and gain or loss on vehicles sales,
divided by Average Rental Fleet.
Rental DaysRepresents the total number of days
(or portion thereof) a vehicle was rented during a 24-hour
period.
Revenue per DayRepresents revenues divided by
Rental Days.
Vehicle UtilizationRepresents Rental Days
divided by Available Rental Days.
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