Avis Budget Group, Inc. · NASDAQ:CAR
Avis Budget — Q1 2016 Earnings Presentation
28 slides from Avis Budget's earnings presentation, May 4, 2016
Slide 1: First Quarter 2016 Earnings Call
First Quarter 2016 Earnings Call May 4, 2016 Webcast: ir.avisbudgetgroup.com Dial-in: (630) 395-0021 Replay: (402) 998-1136 Passcode: 2995545
Slide 2: Forward-Looking Statements
FORWARD- LOOKING Statements about future results made in this presentation constitute forward-looking STATEMENTS statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include projections. These statements are based on current expectati
Slide 3: Larry De Shon, Chief Executive Officer
Larry De Shon Chief Executive Officer
Slide 4: First Quarter Highlights: Record Revenues, but Reduced Earnings
FIRST QUARTER 2016 Record Revenues, but Reduced Earnings HIGHLIGHTS Unusually challenging pricing environment Soft commercial and international-inbound demand in the Americas Increased fleet utilization Made significant progress in our shuttling, manpower and self-service initiatives Repurchased $80
Slide 5: Americas – Pricing Trends
AMERICAS – PRICING Pricing Trends Are Already Improving TRENDS Soft demand led to industry over-fleeting ‒ Inbound travel to Florida and Arizona was weak ‒ Lack of major winter storms Full-year Americas pricing now expected to ‒ We were able to use program vehicles to de-fleet decline approximately
Slide 6: Americas Achievements
AMERICAS ACHIEVEMENTS Mitigating Pricing Pressures and Positioning the Business for Future Success Signed several new corporate accounts Leisure volume in the Americas grew 7% ‒ Prepaid volumes grew 28% in the quarter and now represent more than a quarter of our dot-com reservations Fleet utilizatio
Slide 7: International Achievements
INTERNATIONAL ACHIEVEMENTS Strong Adjusted EBITDA Growth in Constant Currency Double-digit growth in intra-European inbound volume ‒ Strong inbound growth from outside Europe Adjusted EBITDA increased $14 million Realizing synergies from Maggiore integration in constant currency Customer satisfactio
Slide 8: 2016 Outlook: Reiterate Full-Year Adjusted EBITDA Projection
2016 OUTLOOK Reiterate Our Full-Year 2016 Adjusted EBITDA Projection Americas ‒ Pricing expected to firm as the year progress ‒ Volume growth driven by robust leisure demand ‒ Some pressure on fleet residual values International ‒ Strong organic volume growth ‒ Inbound travel, especially within the
Slide 9: Investing in Our Business
INVESTING IN OUR BUSINESS Investing to Drive Long-Term Margins Manpower Initiative – leverage technology to optimize our staffing levels Shuttling Initiative – reduce shuttling costs per Continue to anticipate rental transaction $50 million of incremental expenses in Brand Marketing – new Budget dir
Slide 10: Highlights: Full-Year Expectations Intact
HIGHLIGHTS Full-Year Expectations Intact Expect to overcome difficult first quarter ‒ Pricing trends are already improving ‒ Strong leisure demand ‒ New marketing partnerships delivering incremental volume International segment’s strong first quarter is encouraging indicator for full-year results Co
Slide 11: David Wyshner, President and Chief Financial Officer
David Wyshner President and Chief Financial Officer
Slide 12: First Quarter 2016 Results
FIRST QUARTER 2016 RESULTS Record Revenue Despite Pricing Pressures ($ in millions) Revenue Adjusted EBITDA Currency movements $1,850 $1,881 negatively impacted Adjusted EBITDA by $33 million $117 Lower Americas pricing negatively impacted +3% in constant Adjusted EBITDA by $46 currency 6.3% million
Slide 13: Americas: First Quarter Volume Growth Driven by Strong Leisure Demand
AMERICAS First Quarter Volume Growth Driven by Strong Leisure Demand Rental days grew 3% in the first quarter ‒ Leisure volumes increased 7% Commercial volume mix and Brazil negatively impacted pricing by approximately one point Strong U.S. dollar reduced inbound travel (a) Rental DaysAmericas Reven
Slide 14: International Revenue Grew 14% in Constant Currency
INTERNATIONAL Revenue Grew 14% in Constant Currency in the First Quarter (a) International Revenue Drivers Currency movements had a $25 million Excluding Total negative impact on Maggiore revenue and a $29 million negative impact Total revenue +14% +8% on Adjusted EBITDA in (b) the quarter Rental da
Slide 15: Fleet Costs Remain Within Expectations
FLEET COSTS Fleet Costs Remain Within Expectations (a) Monthly Per-Unit Fleet Costs (Americas) Americas fleet now expected to be 65% risk in 2016 $312 $305-$313 $294 +6% $297 +3-5% Residual values in the United States have been somewhat softer than we had initially anticipated International 2016 per
Slide 16: Zipcar Continues to be the World's Leading Car Sharing Network
ZIPCAR Zipcar Continues to be the World’s Leading Car Sharing Network Completed test of “Instant Drive” ‒ Enabling new customers to initiate their first transaction in minutes Zipcar’s fleet totaled more than 12,000 Launched ONE>WAY offering in Los Angeles cars in the first quarter ‒ Expect to expan
Slide 17: Driving Efficiencies
DRIVING EFFICIENCIES Process Improvement and Cost Controls Transformation 2015 initiative providing incremental benefits to lower costs and improve quality Re-engineering human resources processes globally Performance to leverage a common system and providers Excellence initiative also continues to
Slide 18: Balance Sheet: Strong Liquidity Position
BALANCE SHEET Strong Liquidity Position Nearly $5 billion of available liquidity worldwide (a) Net corporate leverage of 3.6x ‒ Corporate leverage target remains 3-4x Quarter-end cash balance of $876 million No corporate debt maturities until fourth includes $300 million quarter 2017 earmarked to re
Slide 19: Capital Allocation
CAPITAL ALLOCATION Consistent Use of Free Cash Flow Our priorities for free cash flow continue to be share repurchases and tuck-in acquisitions ‒ With a 20% free cash flow yield, our use of cash No significant will tilt toward share repurchases acquisitions thus far in 2016 Repurchased $80 million o
Slide 20: 2016 Outlook: Investing to Capture Growth and Margin Opportunities
2016 OUTLOOK Investing to Capture Growth and Margin Opportunities in Years Ahead Americas Full-year pricing now projected to decline (a) approximately 1% Currency movements reducing Adjusted Volume expected to grow 2% to 4% EBITDA by $20 million year-over-year Per-unit fleet costs still expected to
Slide 21: 2016 Estimates
2016 OUTLOOK 2016 Estimates Diluted share count of ($ in millions, except EPS) Projection approximately 94 to 96 million, a reduction of Revenue $8,750 – $8,900 roughly 10% year-over- Adjusted EBITDA 820 – 900 year (a) Non-vehicle D&A 190 Expect capital expenditures of Interest expense 205 approxima
Slide 22: Free Cash Flow
FREE CASH FLOW Free Cash Flow ($ in millions) 2016E 2015 (a) Adjusted pretax income $425 – $505 $546 (b) Plus: Non-vehicle D&A 190 163 Free cash flow has exceeded $450 million Less: Capital expenditures (210) (201) every year since 2012 Less: Cash taxes (40) – (60) (29) Plus: Vehicle programs 50 78
Slide 23: Foreign Currency: No Material Exchange-Rate Impact
FOREIGN CURRENCY No Material Exchange-Rate Impact Currently Expected for Remainder of the Year (a) Year-over-Year Effect of Currency Movements (in millions) First Second Third Fourth Full Quarter Quarter Quarter Quarter Year Revenue ($32) ($6) $13 $17 ($8) (b) Adjusted EBITDA ($33) $4 $4 $5 ($20) No
Slide 24: Summary: Challenging First Quarter, Expectations Unchanged
SUMMARY Challenging First Quarter, Expectations Unchanged Pricing trends are already improving in the Americas Strong International volume growth Continued focus on managing costs, driving efficiency and leveraging technology Generating significant free cash flow and returning cash to stockholders v
Slide 25: Avis Budget Group
avis budget group
Slide 26: Glossary
GLOSSARY This presentation includes certain non-GAAP (generally accepted accounting principles) financial measures as defined under SEC rules. We have provided below reasons we present these non-GAAP financial measures, a description of what they represent and a reconciliation to the most comparable
Slide 27: Glossary
GLOSSARY Reconciliation of Net Corporate Debt (in millions): March 31, March 31, 2016 2015 Corporate debt $ 3,838 $ 3,656 Less: Cash and cash equivalents 876 854 Net corporate debt $ 2,962 $ 2,802 Reconciliation of Adjusted EBITDA to Income before income taxes (in millions): LTM Ended LTM Ended Marc
Slide 28: Glossary
GLOSSARY Reconciliation of adjusted net income (loss) to net loss: Three Months Ended March 31, 2016 2015 Adjusted net income (loss) $ (27) $ 19 Less certain items, net of tax: Restructuring expense 11 - Acquisition-related amortization expense 10 7 Transaction-related costs, net 3 21 Net loss $ (51