Slide 1: Third Quarter 2014 Earnings Call
Third Quarter 2014 Earnings Call October 30, 2014 Webcast: ir.avisbudgetgroup.com Dial-in: (630) 395-0021 Replay: (402) 220-4182 Passcode: Avis Budget
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: Ron Nelson, Chairman and Chief Executive Officer
Ron Nelson Chairman and Chief Executive Officer
Slide 4: Third Quarter 2014 Highlights
THIRD QUARTER 2014 Record Third Quarter Results HIGHLIGHTS Revenue grew 6% and earnings per share grew 29%(a) ‒ Strong demand and pricing trends in North America ‒ Continued growth of Budget in Europe ‒ Incremental acquisition synergies Increased share repurchase authorization by $200 million ‒
Slide 5: North America – Pricing
NORTH AMERICA – Strong Pricing Trends PRICING North America Pricing +3% +2% +2% First phase of integrated Demand–Fleet–Pricing system now deployed in more than 100 markets, increasing our agility Commercial Leisure Total (a) Pricing growth aided by our strategic efforts to accelerate growth Posi
Slide 6: North America – Volume
NORTH AMERICA – Robust Demand Environment VOLUME Rental days increased 6% Ancillary revenue per day increased 7% Local market growth driven by general-use leisure Shifted volume toward higher-margin and commercial rentals proprietary websites and mobile apps Strategic Initiatives Driving Growt
Slide 7: International
INTERNATIONAL Record Results Despite Soft Macroeconomic Conditions Strongest quarterly revenue ever Adjusted EBITDA increased 7% to a record $160 million Invested incremental $5 million in European ‒ Margins expanded by 70 basis points brand marketing year-over-year EMEA revenue increased 2% (
Slide 8: North America – Fleet Costs
NORTH AMERICA – Recalls Driving Modestly FLEET COSTS Higher Than Expected Fleet Costs Recalls impacted utilization and residual values in the third quarter – Utilization down 160 basis points in the quarter Over 140,000 recalls so far in 2014, compared to Strong August SAAR reduced dealer demand
Slide 9: Zipcar
ZIPCAR Record Quarterly Revenue Began pooling of cars at over 80 locations Signed partnership with Southwest Airlines Full-scale launch of one-ways in Boston Launched Zipcar in four cities and at 21 Leveraged existing Avis Budget partnerships by universities in North America signing addition
Slide 10: Capital Allocation
CAPITAL ALLOCATION Uses of Free Cash Flow Acquisitions ‒ Announced agreement to acquire largest Budget licensee in North America ‒ Expected to add $100 million of revenue and more than $25 million of Adjusted EBITDA Share repurchases ‒ Repurchased $210 million of stock through first three quarte
Slide 11: 2014 Outlook
2014 OUTLOOK Expect to Deliver Record Results for 2014 North America ‒ Full-year pricing projected to increase 2-3% in constant currency ‒ Pricing in October increased 3% International ‒ Macroeconomic conditions remain a headwind Driving efficiencies, managing costs, focusing on more profitabl
Slide 12: David Wyshner, Chief Financial Officer
David Wyshner Senior Executive Vice President and Chief Financial Officer
Slide 13: Third Quarter 2014 Results
THIRD QUARTER 2014 RESULTS Increased Adjusted EBITDA Margin ($ in millions) Revenue Adjusted EBITDA Highest quarterly $2,542 $417 Adjusted EBITDA in our +6% history $2,395 +9% $383 Earnings per share increased 29% to $1.91, 16.4% excluding certain items margin 16.0% margin Third Quarter Third Quarte
Slide 14: Third Quarter 2014 Results – North America
THIRD QUARTER 2014 RESULTS – Record Quarterly Revenue NORTH AMERICA (year-over-year change) Rental Days Average Daily Rate Total Revene +8% Ancillary revenue per (b) day increased 7% +6% Pricing increased 3% excluding currency +2% (a) Rental Days Average Total (a) Daily Rate Revenue (a) Excluding Zi
Slide 15: Third Quarter 2014 Results – North America
THIRD QUARTER 2014 RESULTS – Volume and Pricing Increased NORTH AMERICA Third Quarter Year-to-Date Average Average (year-over-year changes) Rental Days Rental Days Daily Rate Daily Rate Per-unit fleet costs Leisure +6% +3% +8% +3% rose 7% Commercial +5% +2% +5% +2% (a) (a) Total +6% +2% +7% +2% Adju
Slide 16: Third Quarter 2014 Results – International
THIRD QUARTER 2014 RESULTS – Revenue Increased due to INTERNATIONAL Higher Ancillary Revenue (year-over-year change) Rental Days Total Revenue per Day Total Revenue +4% +4% Ancillary revenue per (c) day increased 10% Rental Days(a) Total Revenue Total (b) Per Day Revenue (2%) Highest International Q
Slide 17: Third Quarter 2014 Results – Truck Rental
THIRD QUARTER 2014 RESULTS – Reached Goal of Right-sizing TRUCK RENTAL Our Truck Fleet (year-over-year change) Average Daily Rate Utilization Revenue per Vehicle Average fleet is 8% smaller than a year 3% 3% ago Revenue declined 5% 2% due to lower average fleet Average Utilization Revenue Daily Rate
Slide 18: Fleet Costs
FLEET COSTS Fleet Costs Have Normalized Monthly Per-Unit Fleet Costs (North America) $326 $305 +7% $312-$315 Sold close to 30% of our $299 +4-5% risk vehicles through alternative disposition channels in the third quarter Completed approximately 95% of planned 2014 risk-car disposals Third Quarter Th
Slide 19: Balance Sheet
BALANCE SHEET Strong Liquidity Position $4.3 billion of available liquidity at quarter-end Net corporate leverage of 3.0x (a) Expanded our revolving credit facility in October Quarter-end cash by $150 million and extended its maturity balance of $713 million LTM Net Corporate Leverage 3.5x 3.6
Slide 20: 2014 Outlook
2014 OUTLOOK Revised 2014 Estimates (a) (b) ($ in millions, except EPS) Projection Growth vs. 2013 Expect cash taxes of $60 Revenue $8,500 7% to $70 million Adjusted EBITDA 860 – 885 13% Expect capital expenditures of Non-vehicle D&A 150 approximately $190 million Interest expense 210 Pretax income
Slide 21: Summary
SUMMARY Positioned for Earnings and Margin Growth Highest quarterly profit ever in North America – Positive pricing growth continuing into Q4 Record International results despite economic challenges Repurchased $280 million of stock year-to-date – Expect to repurchase a total of $300 to $330 m
Slide 22: Avis Budget Group
avis budget group
Slide 23: 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 24: Glossary
GLOSSARY Reconciliation of Net Corporate Debt (in millions): December 31, March 31, June 30, September 30, 2013 2014 2014 2014 Corporate debt $ 3,394 $ 3,696 $ 3,388 $ 3,335 Less: Cash and cash equivalents 693 841 537 713 Net corporate debt $ 2,701 $ 2,855 $ 2,851 $ 2,622 Reconciliation of Adjusted