Avis Budget Group, Inc. · NASDAQ:CAR
Avis Budget — Q2 2020 Earnings Presentation
28 slides from Avis Budget's earnings presentation, Jul 29, 2020
Slide 1: Avis Investor Presentation
Avis Investor Presentation July 29, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Non-GAAP Financial Measures Avis Budget Group (“Avis” or ”the Company”) emphasizes that statements about future results made in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-
Slide 3: Agenda
Agenda • Company Overview • Financial Results & Update • Liquidity and Leverage Summary • Fleet Debt & ABS Tutorial • Safety & Strategy 3
Slide 4: Overview and Brands
Overview and Brands • We are a leading global provider of mobility solutions with a portfolio of premium and leisure car rental and sharing brands: - More than 11,000 rental locations in ~180 countries around the world. - Zipcar is the world's leading car sharing network with more than one million m
Slide 5: Diversified Revenue Stream
Diversified Revenue Stream 35% 36% Budget Off-Airport Brand 57% Airport Avis 64% 8% On-Airport Other 40% Commercial 30% International Customer Segment 60% Leisure 70% Americas All numbers are approximate as of year ended December 31, 2019 Budget brand includes Budget Truck. Other brands include Zipc
Slide 6: Attractive Financial Model
Attractive Financial Model Five-Year Adjusted Free Cash Flow ($ in millions) Powerful Adjusted Free Cash Flow Data is cumulative for years 2015, 2016, 2017, 2018 and 2019 and adjusted for the adoption of ASU 2016-09 “Improvements to Employee Share-Based Payment Accounting“. 100% 25% 75% 25% Fixed Va
Slide 7: Agenda
Agenda • Company Overview • Financial Results & Update • Liquidity and Leverage Summary • Fleet Debt & ABS Tutorial • Safety & Strategy 7
Slide 8: Q2 2020 Results
Q2 2020 Results Revenue & Other Metrics $ Millions Revenue $ Millions Adjusted EBITDA •• Revenue declined 67% to $760m in the quarter, Reported Reported $2,337 but improved sequentially each month. April was $175 down 78%, May was down 68%, and June finished down 59%. ($382) – Americas Revenue decre
Slide 9: YTD 2020 Results
YTD 2020 Results Revenue & Other Metrics $ Millions Revenue $ Millions Adjusted EBITDA Reported Reported •• Year-to-date Revenue decreased 40% to $2.5b in $174 constant currency. – Americas Revenue decreased 38% to $4,257 ($469) $1.8b, with Rental Days down 34% and Revenue per Day down 6%. (41%) $2,
Slide 10: Significant Cost Removal Efforts
Significant Cost Removal Efforts • Second quarter expenses finished 47% lower than the prior year, as we removed over $1.0 billion of costs in the last three months. • We have removed more than $2.5 billion in annualized costs and continue to look for additional savings. • Major Actions: • People: W
Slide 11: Dramatic Fleet Actions
Dramatic Fleet Actions • We capitalized on a rapidly recovering used car market to shrink the fleet, selling nearly double the number of vehicles targeted in our second quarter operational plan at a significant gain on disposal per unit. • Worldwide, we disposed of more than 100,000 vehicles and can
Slide 12: Ability to Match Fleet to Demand
Ability to Match Fleet to Demand • Unlike other travel-related industries, we have repeatedly demonstrated our ability to rapidly scale fleet to match demand. Total Company – Average Fleet vs. Rental Days 20% 10% % Change YoY 0% (10%) (20%) (30%) Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-
Slide 13: Agenda
Agenda • Company Overview • Financial Results & Update • Liquidity and Leverage Summary • Fleet Debt & ABS Tutorial • Safety & Strategy 13
Slide 14: Liquidity and Cash Burn
Liquidity and Cash Burn • We had targeted a Q2 burn of $900 million, but burned $580 million for the quarter, an improvement of $320 million or 36%. • We ended the quarter with $1.5 billion in liquidity. • We anticipate both positive cash flow and Adjusted EBITDA for the remainder of 2020. Illustrat
Slide 15: Corporate Debt Overview
Corporate Debt Overview Covenant Relief and Financial Management • On April 27th, we amended our Credit Agreement providing for the suspension of their leverage maintenance covenant through June 2021 and allowing additional first lien indebtedness of $750 million. • On May 12th, we issued $500 milli
Slide 16: Agenda
Agenda • Company Overview • Financial Results & Update • Liquidity and Leverage Summary • Fleet Debt & ABS Tutorial • Safety & Strategy 16
Slide 17: Fleet Debt Overview
Fleet Debt Overview Structural Highlights • Our vehicle securitization debt is comprised of ABS term debt and bank conduit facilities around the world. • We were in compliance with all requirements as of the end of the quarter, and did not require equity injections. • Our ABS maturities have a six m
Slide 18: ABS Structure – One Vehicle Example
ABS Structure – One Vehicle Example 110 • Assume a vehicle is purchased for $100 and financed through our ABS structure 100 100 at 80%, or $80. Illustrative Vehicle / Debt Value (in dollars) • GAAP depreciation is ~1% per month; 90 over 18 months is ~18%, resulting in a residual value of $82. 82 80
Slide 19: ABS Depreciation vs Residual Decline
ABS Depreciation vs Residual Decline ABS Minimum ABS Compliance ABS Monthly Effective Our GAAP Net 1% Residual Value Drop from Residual Month Monthly Depreciation NBV Depreciation Rate Book Value our GAAP Net Book Value Value 0 - $25,000 1.67% $25,000 - $25,000 … 10 418 20,825 2.00% 22,500 225 22,27
Slide 20: Maintenance Covenant Performance
Maintenance Covenant Performance 115.0% 110.0% 105.0% 100.0% 95.0% Mark-to-Market Test Disposition Test AESOP Minimum Required Performance • The required mark to market test for our AESOP program utilizes a three month weighted average of vehicle values in our fleet compared to NADA Black Book value
Slide 21: Agenda
Agenda • Company Overview • Financial Results & Update • Liquidity and Leverage Summary • Fleet Debt & ABS Tutorial • Safety & Strategy 21
Slide 22: Our Unwavering Commitment to Safety
Our Unwavering Commitment to Safety The Avis Safety Pledge is our commitment to keep you safe. We’ve built strategic partnerships with RB, the maker of Lysol, and health experts to provide the latest guidance and best practices for disinfecting vehicles, training our employees and helping to protect
Slide 23: Longer Term: Six Areas of Strategic Focus
Longer Term: Six Areas of Strategic Focus • Our strategic priorities remain unchanged despite the pandemic. Local Market, Ride-hail, and Alternative Disposition Customer Experience Package delivery Channels Connected Cars and International Integration Organizational Efficiencies Technology 23
Slide 24: Appendix
Appendix
Slide 25: Definitions
Definitions This presentation includes certain non-GAAP (generally accepted accounting principles) financial measures as defined under SEC rules. We have provided below reasons why we present these non-GAAP financial measures and a description of what they represent. The GAAP measures most directly
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of net income (loss) to Adjusted EBITDA (in millions): Three Months Ended June 30, 2020 2019 Net income (loss) $ (481) $ 62 Provision for (benefit from) income taxes (128) 19 Income (loss) before income taxes (609) 81 Add certain items: COVID-19 cha
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of net income (loss) to adjusted net income (loss) (in millions, except per share data): Three Months Ended June 30, 2020 2019 Net income (loss) $ (481) $ 62 Add certain items, net of tax: COVID-19 charges 55 - Restructuring and other related charge
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of net income (loss) to Adjusted EBITDA (in millions): Twelve Months Ended June 30, 2020 2019 Net income (loss) $ (308) $ 197 Provision for (benefit from) income taxes (224) 106 Income (loss) before income taxes (532) 303 Add certain items: Restruct