Avis Budget Group, Inc. · NASDAQ:CAR
Avis Budget — Q2 2016 Earnings Presentation
28 slides from Avis Budget's earnings presentation, Aug 3, 2016
Slide 1: Second Quarter 2016 Earnings Call
Second Quarter 2016 Earnings Call August 3, 2016 Webcast: ir.avisbudgetgroup.com Dial-in: (630) 395-0021 Replay: (203) 369-1243 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: Second Quarter 2016 Highlights
SECOND QUARTER 2016 Investing for Long-Term Success HIGHLIGHTS Launched Avis Now ‒ App-based technology puts the traveler in control of the entire rental process ‒ Fundamentally changing the car rental experience Further progress on manpower planning and shuttling initiatives Expanded Zipcar’s one-w
Slide 5: Americas – Pricing Trends
AMERICAS – PRICING Pricing Trends Improved Dramatically TRENDS (a) Pricing increased 2% year-over-year Used our Demand-Fleet-Pricing system to take advantage of yielding opportunities Focused on higher-margin channels and segments Carefully managed our fleet levels ‒ Our utilization increased 100 ba
Slide 6: Americas Achievements
AMERICAS ACHIEVEMENTS Leisure Demand Drove Volume Growth Leisure volume benefited from increased brand advertising and marketing partnerships Inbound volume stabilized Commercial account retention continues to Prepaid volumes grew 8%, and prepaid rentals are exceed 99% now available on our mobile ap
Slide 7: International Achievements
INTERNATIONAL ACHIEVEMENTS Strong International Volume Growth Rental days grew 8% ‒ Leisure volume increased 8% ‒ Commercial volume was up 6% Robust European inbound growth ‒ Trend continuing into summer New Avis and Budget websites driving higher conversion rates Minimal impact on summer demand see
Slide 8: 2016 Outlook
2016 OUTLOOK Encouraged by Summer Trends Worldwide Americas ‒ Seeing positive year-over-year pricing ‒ Volume growth driven by leisure demand International ‒ Demand remains strong ‒ Pricing likely to continue to be challenged, but mitigated by growth in ancillary revenue Consumers are traveling this
Slide 9: Investing in Our Business
INVESTING IN OUR BUSINESS Investments in Technology Will Drive Higher Margins Demand-Fleet-Pricing – rolling out fully integrated yield-management system in the Americas beginning early next year Labor productivity Manpower Planning – leveraging technology to increased 10% in the improve labor produ
Slide 10: Avis Now – The Future of the Car Rental Experience
INVESTING IN OUR BUSINESS Avis Now – The Future of the Car Rental Experience More than 145,000 “Avis’ new app is a giant leap customers have forward for the rental industry.” downloaded the app – Fortune Can be used at nearly 60 airports More than 40,000 rentals “Could the Avis Now app actually comp
Slide 11: Highlights
HIGHLIGHTS Focused on the Future of Our Business Investing in technology to drive efficiencies, lower costs and improve margins Encouraging second quarter metrics ‒ Improved Americas pricing ‒ Volume growth globally ‒ Increased fleet utilization Summer off to a good start Raising the midpoint of our
Slide 12: David Wyshner, President and Chief Financial Officer
David Wyshner President and Chief Financial Officer
Slide 13: Second Quarter 2016 Results
SECOND QUARTER 2016 Record Second Quarter Revenue RESULTS ($ in millions) Revenue Adjusted EBITDA $2,243 $2,173 $227 $204 +4% in constant currency 10.4% 9.1% margin margin Second Quarter Second Quarter Second Quarter Second Quarter 2015 2016 2015 2016 13
Slide 14: Americas
AMERICAS Second Quarter Growth Driven by Higher Pricing and Increased Leisure Demand Pricing increased 2% in constant currency Rental days grew 2% ‒ Leisure volumes increased 3% Americas Adjusted EBITDA declined 8% ‒ Commercial volumes declined 1% due to higher per-unit fleet costs and Pricing is ex
Slide 15: International
INTERNATIONAL Increased Revenue Driven by Organic Volume Growth Strong volume growth throughout the quarter Robust inbound volumes continuing into summer Competitive pricing environment Currency movements had a $6 million International Adjusted EBITDA declined due to a $6 negative impact on million
Slide 16: Fleet Costs
FLEET COSTS Americas Per-Unit Fleet Costs Now Expected to Increase 5% to 6% (a) Monthly Per-Unit Fleet Costs (Americas) $314 $313-$316 Americas fleet expected $295 +6% $297 +5-6% to be 65% risk in 2016 and at least 70% in 2017 International 2016 per- unit fleet costs continue to be better than initi
Slide 17: Zipcar
ZIPCAR Zipcar Continues to be the World’s Leading Car Sharing Network Successfully rolled out “Instant Join & Drive” nationwide ‒ Enabling new customers to initiate their first Zipcar’s fleet totaled transaction in minutes more than 14,000 cars in the second ONE>WAY offering now available in Baltimo
Slide 18: Balance Sheet
BALANCE SHEET Strong Liquidity Position More than $3.5 billion of available liquidity worldwide Net corporate leverage of 3.7x Extended the maturity ‒ Expect our net leverage will be in the range of date for $825 million of our corporate term loan 3.0x to 3.5x by year-end from 2019 to 2022 Less than
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 Repurchased $180 million of stock in first half 2016, No significant a 55% increase compared to first half 2015 acquisitions thus far in 2016 Continue to ex
Slide 20: 2016 Outlook
2016 OUTLOOK Expecting Significant Second-Half Earnings Growth Americas (a) Full-year pricing now projected to be unchanged Volume expected to grow 2% to 3% Currency movements reducing Adjusted Per-unit fleet costs expected to increase 5% to 6% EBITDA by $23 million year-over-year International Stro
Slide 21: 2016 Estimates
2016 OUTLOOK 2016 Estimates Diluted share count of ($ in millions, except EPS) Projection approximately 93 to 95 million, a reduction of Revenue $8,750 – $8,900 roughly 11% year-over- Adjusted EBITDA 850 – 900 year (a) Non-vehicle D&A 195 Expect capital expenditures of Interest expense 205 approxima
Slide 22: Free Cash Flow
FREE CASH FLOW Free Cash Flow ($ in millions) 2016E 2015 (a) Adjusted pretax income $450 – $500 $546 (b) Plus: Non-vehicle D&A 195 163 Free cash flow has exceeded $450 million Less: Capital expenditures (210) (201) every year since 2012 Less: Cash taxes (50) – (60) (29) Plus: Vehicle programs 50 78
Slide 23: Currency Effects
CURRENCY EFFECTS No Material Exchange-Rate Impact 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) ($12) ($9) $3 ($50) (b) Adjusted EBITDA ($33) $3 $1 $6 ($23) Estimating
Slide 24: Summary
SUMMARY Raised the Midpoint of Our Earnings Estimates Pricing trend improved dramatically in the Americas Managed fleet to deliver higher utilization Global volume growth Investing in technology and process improvement to drive future margin growth Generating significant free cash flow and returning
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): June 30, 2016 Corporate debt $ 3,530 Less: Cash and cash equivalents 527 Net corporate debt $ 3,003 Reconciliation of Adjusted EBITDA to net Income (in millions): Twelve Months Ended June 30, 2016 2015 Adjusted EBITDA $ 807 $ 890 Less: Non
Slide 28: Glossary
GLOSSARY Reconciliation of adjusted net income to net income (in millions, except per-share amounts): Three Months Ended June 30, 2016 2015 Adjusted net income $ 60 $ 90 Less certain items, net of tax: Acquisition-related amortization expense 10 10 Early extinguishment of debt 6 14 Restructuring exp