Avis Budget Group, Inc. · NASDAQ:CAR
Avis Budget — Q4 2015 Earnings Presentation
29 slides from Avis Budget's earnings presentation, Feb 24, 2016
Slide 1: Fourth Quarter 2015 Earnings Call
Fourth Quarter 2015 Earnings Call February 24, 2016 Webcast: ir.avisbudgetgroup.com Dial-in: (630) 395-0021 Replay: (203) 369-1615 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: Full-Year 2015 Highlights
FULL-YEAR 2015 HIGHLIGHTS Record Revenue and Adjusted EBITDA Acquired Maggiore and licensees in Scandinavia and Poland Completed integration of Budget licensee for Southern California Generated more than $500 million of free cash flow Repurchased nearly $400 million of stock Leveraging technology to
Slide 5: David Wyshner, President and Chief Financial Officer
David Wyshner President and Chief Financial Officer
Slide 6: Full-Year 2015 Results
FULL-YEAR 2015 RESULTS Record Revenue and Adjusted EBITDA ($ in millions) Revenue Adjusted EBITDA Adjusted EBITDA increased 9% in $8,485 +0% $8,502 constant currency $903 $876 +3% Adjusted diluted earnings per share grew approximately 15% in +5% in constant 10.6% constant currency currency 10.3% mar
Slide 7: Americas – Revenue
AMERICAS – REVENUE Fourth Quarter Volume Growth Driven by Strong Leisure Demand Rental days grew 3% in the fourth quarter ‒ Leisure volumes increased 7% Demand for non-core and “Signature” vehicles grew Reservations through mobile apps grew more 10% than 30% at Avis and nearly 60% at Budget Internat
Slide 8: Americas – Pricing
AMERICAS – PRICING Pricing Trends Remained Challenging Mix effect from lower commercial volume negatively impacted Avis and Budget Currency Other Reported (a) pricing by 40 basis U.S. Pricing Effects Effects Americas Pricing points (<1%) (<1%) (½%) (2%) (a) Primarily Payless, Canada and Latin Americ
Slide 9: International Revenue
INTERNATIONAL Revenue Grew 12% in Constant Currency in the Fourth Quarter (a) International Revenue Drivers Excluding Total Currency movements Maggiore had a $64 million negative impact on Total revenue +12% +6% revenue and a $6 (b) million negative Rental days +21% +10% impact on Adjusted EBITDA in
Slide 10: International Adjusted EBITDA
INTERNATIONAL Adjusted EBITDA Declined in the Quarter Positive organic volume growth in most markets in the fourth quarter Currency movements and timing differences Second-half Adjusted negatively affected fourth quarter results EBITDA increased 13% in constant Pricing remains competitive throughout
Slide 11: Fleet Costs
FLEET COSTS Fleet Costs Have Been Better than Anticipated Monthly Per-Unit Fleet Costs (Americas) Total Company 2016 per- unit fleet costs expected $316 to be $280-$290 per (7%) $310 $295 (4%) $297 month Americas 2016 per-unit fleet costs expected to be $305-$313 per month Americas fleet expected to
Slide 12: Balance Sheet
BALANCE SHEET Strong Liquidity Position Nearly $5 billion of available liquidity worldwide (a) Net corporate leverage of 3.3x No corporate debt maturities until fourth Year-end cash balance quarter 2017 of $452 million Net Corporate Leverage(a) 3.4x 3.3x Full Year Full Year 2013 2015 (a) Net corpora
Slide 13: Capital Allocation
CAPITAL ALLOCATION Consistent Use of Free Cash Flow 2015 free cash flow of $525 million Our priorities for free cash flow continue to be share repurchases and tuck-in acquisitions Have now deployed Repurchased a record $394 million of stock in 2015 more than $1 billion for share repurchases and ‒ Re
Slide 14: Ride-Hailing
RIDE-HAILING Car Rental and Ride-Hailing Primarily Serve Different Use Cases One-Day Rentals Low-Mileage Rentals(a) as a % of Volume as a % of Volume 2014 2015 2014 2015 3% 3% 3% 3% Corporate travel managers continue to view car rental as best value for their travelers Unchanged year over year Uncha
Slide 15: Zipcar
ZIPCAR Zipcar Continues to be the World’s Leading Car Sharing Network Zipcar has just under a million members Grew membership in established markets and new ones Zipcar’s fleet totaled more than 13,000 Zipcar available at over 500 colleges and cars in the fourth universities quarter Expect to expand
Slide 16: 2016 Outlook
2016 OUTLOOK Investing to Capture Growth and Margin Opportunities in Years Ahead Americas (a) Full-year pricing projected to be largely unchanged Volume expected to grow 2% to 4% Currency movements impacting revenue Per-unit fleet costs expected to increase 3% to 5% growth by 2% and Adjusted EBITDA
Slide 17: 2016 Outlook: 2016 Estimates
2016 OUTLOOK 2016 Estimates (a) ($ in millions, except EPS) Projection Diluted share count of Revenue $8,700 - $8,850 approximately 94 to 97 million, a decline of 9% Adjusted EBITDA 820 – 900 (b) year-over-year Non-vehicle D&A 190 Expect capital expenditures of Interest expense 200 approximately $21
Slide 18: Free Cash Flow
FREE CASH FLOW Free Cash Flow ($ in millions) 2016E 2015 (a) Adjusted pretax income $430 – $510 $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 30 78
Slide 19: Foreign Currency
FOREIGN CURRENCY Continued Impacts from Exchange-Rate Movements (a) Year-over-Year Effect of Currency Movements (in millions) First Second Third Fourth Full Quarter Quarter Quarter Quarter Year Revenue ($42) ($43) ($35) ($20) ($140) (b) Adjusted EBITDA ($20) ($1) ($8) ($1) ($30) Currently expect app
Slide 20: Summary
SUMMARY Record 2015 Results with Opportunities Ahead Record revenue and Adjusted EBITDA Expanded margins by 270 basis points over the last five years Continued focus on managing costs, driving efficiency and leveraging technology Generating significant free cash flow and returning cash to stockholde
Slide 21: Larry De Shon, Chief Executive Officer
Larry De Shon Chief Executive Officer
Slide 22: Strategic Opportunities
STRATEGIC OPPORTUNITIES Significant Opportunities Lie Ahead All major participants in North America have implemented price increases No pricing growth assumed in our forecast New and expanded airline partnerships helping to drive strong leisure volume Investing in new technology to improve the custo
Slide 23: Near-Term Opportunities
NEAR-TERM OPPORTUNITIES Focused on Process Improvement and Cost Controls Transformation 2015 initiative providing substantial benefits Pursuing opportunities to drive improvements in large cost items Further expansion of integrated Demand–Fleet– Pricing system to optimize decision-making Investing t
Slide 24: Medium-Term Opportunities
MEDIUM-TERM OPPORTUNITIES Investing in Technology to Transform the Customer Experience We Offer Self-service car rental: ‒ Entire car rental process is managed through a mobile app ‒ Will drive customer loyalty, incremental revenue and significant cost savings Already testing in several markets 24
Slide 25: Long-Term Opportunities
LONG-TERM OPPORTUNITIES Taking Full Advantage of Connected Car Connected-car technology will enable us to generate substantial cost savings ‒ Eliminates manual processes ‒ Drives improved fleet utilization ‒ Off-airport “locations” change substantially Our large-scale fleet management expertise is a
Slide 26: Avis Budget Group
avis budget group
Slide 27: 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 28: Glossary
GLOSSARY Reconciliation of Net Corporate Debt (in millions): December 31, December 31, December 31, 2015 2014 2013 Corporate debt $ 3,461 $ 3,353 $ 3,321 Less: Cash and cash equivalents 452 624 693 Net corporate debt $ 3,009 $ 2,729 $ 2,628 Reconciliation of Adjusted EBITDA to Income before income t
Slide 29: Glossary
GLOSSARY Reconciliation of adjusted net income to net income: Year Ended Year Ended December 31, December 31, 2015 2014 Adjusted net income $ 333 $ 327 Less certain items, net of tax: Transaction-related costs, net 55 9 Acquisition-related amortization expense 36 22 Early extinguishment of debt 14 3