Avis Budget Group, Inc. (
NASDAQ: CAR) today
announced second quarter 2020 financial results, with a Net loss of
$481 million and an Adjusted net loss of $388 million. Total
Revenues were down 67% year-over-year.
Throughout the quarter, we increased the
magnitude of our cost removal actions, and currently are targeting
over $2.5 billion on an annualized basis. Adjusted EBITDA for the
second quarter was a loss of $382 million, but sequentially
improved each month as we adjusted to market dynamics and right
sized our fleet. The quarter culminated with an Adjusted EBITDA
loss of $28 million for June, highlighted by positive Adjusted
EBITDA of $3 million in the Americas segment.
Our liquidity at the end of the quarter was $1.5
billion. We estimated cash burn would be approximately $900
million, including $100 million in previously scheduled debt
retirements. Our second quarter cash burn was $580 million, an
improvement of $320 million, or 36%, to our prior estimates, due to
continued vigilance around expense control and stronger than
anticipated vehicle fleet disposals.
We capitalized on a rapidly recovering used car
market and sold nearly double the number of vehicles targeted in
our second quarter operational plan. In the U.S., vehicle sold in
the month of June exceeded the prior year by 30%. Ending fleet for
the quarter was down 26% year-over-year. We finished June with
global utilization in the 50% range and maintain the ability to
flex our fleet size up or down allowing us to react to increased
demand or further travel disruptions. Per-unit fleet costs were
$221 per month, a 17% reduction year-over-year.
“I am grateful for the professionalism and
dedication of our team members who persevered through a historic
and challenging period to deliver for our company,” said Joe
Ferraro, Avis Budget Group Chief Executive Officer. “We
accomplished this by quickly identifying the impact that COVID-19
would have on our business, taking immediate actions to shrink our
fleet to match demand, executing a debt financing transaction to
build additional liquidity, cutting over $1 billion in expenses
across our business and launching a campaign to address the safety
of our employees and customers. We believe our quick and targeted
action has positioned us to both navigate the pandemic and
capitalize on consumer demand as it returns.”
Q2 Financial Actions to Mitigate
COVID-19 Impact
We continued to take aggressive action by
raising liquidity and reducing cash burn, and we are focused on
remaining flexible to position our operations to bounce back when
demand recovers.
- We reduced our cost base to match current revenue trends,
removing more than $2.5 billion of annualized costs compared to the
initial $400 million we announced in late March. Second quarter
expenses were 47% lower than prior year, as we removed over $1
billion of costs.
- We disposed of more than 100,000 vehicles and cancelled over
185,000 incoming vehicle orders around the world in the quarter,
with June ending fleet down 26% year-over-year. We averaged a
significant gain on disposal per unit for the quarter.
- We obtained an amendment to our credit agreement, approved by
97% of our lenders, which provided a covenant waiver and increased
the amount of authorized debt by $750 million.
- We completed an offering of $500 million of senior secured
notes to provide additional liquidity, and secured an inaugural $35
million floor plan financing facility to accelerate direct to
consumer vehicle sales.
- We reduced the size of our workforce, offering comprehensive
separation packages and have furloughed employees around the world
totaling over 60% of our pre-pandemic headcount. Also, we reduced
compensation for our senior leadership, froze merit increases,
eliminated the 401(k) match for highly compensated employees, and
suspended hiring.
Avis Safety Pledge and Budget Worry-Free
Promise: Keeping Our Customers and Employees Safe
Earlier this month, we announced the launch of a
coalition designed to enhance the cleanliness and disinfection of
our rental facilities and vehicles.
- The coalition includes RB, which is the maker of Lysol, medical
professionals with expertise in public health and COVID-19, and Hip
Hop Public Health, a national nonprofit organization that creates
engaging content to drive behavioral change and supplements our
employee training for consistent, responsible habits.
- A team of scientists from Lysol, which manufactures the first
products to receive EPA approval and validation for efficacy
against COVID-19, is providing guidance to optimize the
effectiveness of our cleaning protocols. We are utilizing Lysol
products to replace or supplement existing CDC-recommended and
EPA-certified products currently in use.
- We are increasing our app-based Mobile Select product and
facilities with automated exit gates to provide our customers with
contactless, self-service car rental transactions.
- Our facilities utilize plexiglass shields along with signage
and floor markings to encourage safety habits and social
distancing.
- We have provided our staff with masks, hand sanitizer, and
gloves and are making that protective equipment available to all
customers.
- Our employees have received enhanced safety protocols and we
instituted daily health self-assessments before each shift. We
encouraged anyone who feels ill to stay home with an enhanced sick
leave policy. In the U.S., we check staff temperatures before
beginning work. We offer free COVID-19 testing to all
employees.
Outlook
Revenues in the second quarter showed sequential
improvement, down 78% in April and finished June down 59% from
prior year. Revenue improvement has been more robust in our
off-airport locations and is close to pre-pandemic levels. We
expect the velocity of improvement to moderate in the third quarter
but anticipate utilization will continue to improve as we further
match fleet with demand.
“Since the beginning of April, we have seen
consistent sequential week-over-week increases in rental volume,
with both the Americas and International having their best volume
to date last week due to increased leisure activity,” said Joe
Ferraro, Avis Budget Group Chief Executive Officer. “Coupled with
the significant reduction of vehicles as we right size our fleet to
current demand, we anticipate both positive cash flow and Adjusted
EBITDA for the remainder of 2020.”
Investor Conference Call
We will host a conference call to discuss second
quarter results on July 29, 2020, at 8:30 a.m. (ET). Investors may
access the call at ir.avisbudgetgroup.com or by dialing (877)
407-2991 and a replay will available on our website and at (877)
660-6853 using conference code 13706253.
About Avis Budget Group
Avis Budget Group, Inc. is a leading global
provider of mobility solutions, both through its Avis and Budget
brands, which have more than 11,000 rental locations in
approximately 180 countries around the world, and through its
Zipcar brand, which is the world's leading car sharing network with
more than one million members. Avis Budget Group operates most of
its car rental offices in North America, Europe and Australasia
directly, and operates primarily through licensees in other parts
of the world. Avis Budget Group is headquartered in Parsippany,
N.J. More information is available at avisbudgetgroup.com.
Forward-Looking Statements
Certain statements in this press release
constitute “forward-looking statements.” Any statements that refer
to outlook, expectations or other characterizations of future
events, circumstances or results, including all statements related
to our future results, impact from the coronavirus, cost-saving
actions, and cash flows are forward-looking statements. Various
risks that could cause future results to differ from those
expressed by the forward-looking statements included in this press
release include, but are not limited to, the severity and duration
of the COVID-19 outbreak and resulting economic conditions and
related restrictions, the high level of competition in the mobility
industry, changes in our fleet costs, including as a result of a
change in the cost of new vehicles, manufacturer recalls and/or the
value of used vehicles, disruption in the supply of new vehicles,
disposition of vehicles not covered by manufacturer repurchase
programs, our ability to realize our estimated cost savings on a
timely basis, or at all, the financial condition of the
manufacturers that supply our rental vehicles which could affect
their ability to perform their obligations under our repurchase
and/or guaranteed depreciation arrangements, any further
deterioration in economic conditions generally, particularly during
our peak season and/or in key market segments, any further
deterioration in travel demand, including airline passenger
traffic, any occurrence or threat of terrorism, the current and any
future pandemic diseases or other natural disasters, any changes to
the cost or supply of fuel, risks related to acquisitions or
integration of acquired businesses, risks associated with
litigation, governmental or regulatory inquiries or investigations,
risks related to the security of our information technology
systems, disruptions in our communication networks, changes in tax
or other regulations, a significant increase in interest rates or
borrowing costs, our ability to obtain financing for our global
operations, including the funding of our vehicle fleet via
asset-backed securities markets, any fluctuations related to the
mark-to-market of derivatives which hedge our exposure to exchange
rates, interest rates and fuel costs, our ability to meet the
covenants contained in the agreements governing our indebtedness,
and our ability to accurately estimate our future results and
implement our cost savings actions. Other unknown or unpredictable
factors could also have material adverse effects on the Company’s
performance or achievements. Important assumptions and other
important factors that could cause actual results to differ
materially from those in the forward-looking statements are
specified in Avis Budget Group’s Annual Report on Form 10-K for the
year ended December 31, 2019 and Quarterly Report on Form 10-Q for
the three months ended March 31, 2020 and in other filings and
furnishings made by the Company with the Securities and Exchange
Commission (the "SEC") from time to time. The Company undertakes no
obligation to publicly update any forward-looking statements to
reflect subsequent events or circumstances.
Non-GAAP Financial Measures and Key
Metrics
This release includes financial measures such as
Adjusted EBITDA and Adjusted free cash flow, as well as other
financial measures that exclude certain items that are not
considered generally accepted accounting principles (“GAAP”)
measures as defined under SEC rules. Important information
regarding such measures is contained on Table 1, Table 4, Table 5
and Appendix I of this release. The Company and its management
believe that these non-GAAP measures are useful to investors in
measuring the comparable results of the Company period-over-period.
The GAAP measures most directly comparable to Adjusted EBITDA,
Adjusted free cash flow, Adjusted pretax income (loss), Adjusted
net income (loss) and Adjusted diluted earnings (loss) per share
are net income (loss), net cash provided by operating activities,
income (loss) before income taxes, net income (loss) and diluted
earnings (loss) per share, respectively. Foreign currency
translation effects on the Company’s results are quantified by
translating the current period’s non-U.S. dollar-denominated
results using the currency exchange rates of the prior period of
comparison including any related gains and losses on currency
hedges. Per-unit fleet costs, which represent vehicle depreciation,
lease charges and gain or loss on vehicle sales, divided by average
rental fleet, are calculated on a per-month basis.
| Contact |
| David Calabria |
| IR@avisbudget.com |
| PR@avisbudget.com |
###Tables Follow
|
Table 1 |
|
|
|
Avis Budget Group, Inc. |
|
SUMMARY DATA SHEET |
|
(In millions, except per share data) |
| |
| |
|
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
| |
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
| Income Statement and Other
Items |
|
|
|
|
|
|
|
|
|
|
|
| |
Revenues |
$ |
760 |
|
|
$ |
2,337 |
|
(67)% |
|
$ |
2,513 |
|
|
$ |
4,257 |
|
|
(41)% |
| |
Income (loss) before income taxes |
(609 |
) |
|
81 |
|
n/m |
|
(874 |
) |
|
(55 |
) |
|
n/m |
| |
Net income (loss) |
(481 |
) |
|
62 |
|
n/m |
|
(639 |
) |
|
(29 |
) |
|
n/m |
| |
Earnings (loss) per share - diluted |
(6.91 |
) |
|
0.81 |
|
n/m |
|
(8.96 |
) |
|
(0.39 |
) |
|
n/m |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Adjusted Earnings Measures (non-GAAP) (A) |
|
|
|
|
|
|
|
|
|
|
|
| |
Adjusted EBITDA |
(382 |
) |
|
175 |
|
n/m |
|
(469 |
) |
|
174 |
|
|
n/m |
| |
Adjusted pretax income (loss) |
(488 |
) |
|
75 |
|
n/m |
|
(679 |
) |
|
(18 |
) |
|
n/m |
| |
Adjusted net income (loss) |
(388 |
) |
|
61 |
|
n/m |
|
(491 |
) |
|
2 |
|
|
n/m |
| |
Adjusted earnings (loss) per share - diluted |
(5.60 |
) |
|
0.79 |
|
n/m |
|
(6.90 |
) |
|
0.01 |
|
|
n/m |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As
of |
|
|
|
|
|
|
|
|
| |
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
|
| Balance Sheet Items |
|
|
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents |
$ |
1,258 |
|
|
$ |
686 |
|
|
|
|
|
|
|
|
| |
Vehicles, net |
10,810 |
|
|
12,177 |
|
|
|
|
|
|
|
|
| |
Debt under vehicle programs |
10,540 |
|
|
11,068 |
|
|
|
|
|
|
|
|
| |
Corporate debt |
3,903 |
|
|
3,435 |
|
|
|
|
|
|
|
|
| |
Stockholders' equity |
(153 |
) |
|
656 |
|
|
|
|
|
|
|
|
| Segment Results |
|
|
|
|
|
|
|
|
|
|
|
| |
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
| |
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
565 |
|
|
$ |
1,627 |
|
|
(65)% |
|
$ |
1,822 |
|
|
$ |
2,954 |
|
|
(38)% |
|
International |
195 |
|
|
710 |
|
|
(73)% |
|
691 |
|
|
1,303 |
|
|
(47)% |
|
Corporate and Other |
— |
|
|
— |
|
|
n/m |
|
— |
|
|
— |
|
|
n/m |
|
Total Company |
$ |
760 |
|
|
$ |
2,337 |
|
|
(67)% |
|
$ |
2,513 |
|
|
$ |
4,257 |
|
|
(41)% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
(233 |
) |
|
$ |
152 |
|
|
n/m |
|
$ |
(263 |
) |
|
$ |
187 |
|
|
n/m |
|
International |
(140 |
) |
|
39 |
|
|
n/m |
|
(180 |
) |
|
18 |
|
|
n/m |
|
Corporate and Other |
(9 |
) |
|
(16 |
) |
|
n/m |
|
(26 |
) |
|
(31 |
) |
|
n/m |
|
Total Company |
$ |
(382 |
) |
|
$ |
175 |
|
|
n/m |
|
$ |
(469 |
) |
|
$ |
174 |
|
|
n/m |
| |
|
|
|
|
|
|
|
|
|
|
|
| _______ |
|
n/m |
Not meaningful. |
|
(A) |
See Table 5 for reconciliations
of non-GAAP measures and Appendix I for definitions. |
|
Table 2 |
|
|
|
Avis Budget Group, Inc. |
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(In millions, except per share data) |
| |
| |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Revenues |
$ |
760 |
|
|
$ |
2,337 |
|
|
$ |
2,513 |
|
|
$ |
4,257 |
|
| |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
| |
Operating |
622 |
|
|
1,172 |
|
|
1,680 |
|
|
2,243 |
|
| |
Vehicle depreciation and lease
charges, net |
374 |
|
|
543 |
|
|
833 |
|
|
1,028 |
|
| |
Selling, general and
administrative |
132 |
|
|
313 |
|
|
383 |
|
|
597 |
|
| |
Vehicle interest, net |
87 |
|
|
90 |
|
|
170 |
|
|
171 |
|
| |
Non-vehicle related
depreciation and amortization |
71 |
|
|
66 |
|
|
140 |
|
|
133 |
|
| |
Interest expense related to
corporate debt, net: |
|
|
|
|
|
|
|
| |
Interest expense |
51 |
|
|
48 |
|
|
99 |
|
|
90 |
|
| |
Early extinguishment of debt |
3 |
|
|
— |
|
|
7 |
|
|
— |
|
| |
Restructuring and other
related charges |
28 |
|
|
23 |
|
|
72 |
|
|
44 |
|
| |
Transaction-related costs,
net |
1 |
|
|
1 |
|
|
3 |
|
|
6 |
|
| Total
expenses |
1,369 |
|
|
2,256 |
|
|
3,387 |
|
|
4,312 |
|
| |
|
|
|
|
|
|
|
|
| Income
(loss) before income taxes |
(609 |
) |
|
81 |
|
|
(874 |
) |
|
(55 |
) |
| Provision for
(benefit from) income taxes |
(128 |
) |
|
19 |
|
|
(235 |
) |
|
(26 |
) |
| Net income
(loss) |
$ |
(481 |
) |
|
$ |
62 |
|
|
$ |
(639 |
) |
|
$ |
(29 |
) |
| |
|
|
|
|
|
|
|
|
| Earnings
(loss) per share - diluted |
|
|
|
|
|
|
|
| |
Basic |
$ |
(6.91 |
) |
|
$ |
0.81 |
|
|
$ |
(8.96 |
) |
|
$ |
(0.39 |
) |
| |
Diluted |
$ |
(6.91 |
) |
|
$ |
0.81 |
|
|
$ |
(8.96 |
) |
|
$ |
(0.39 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted
average shares outstanding |
|
|
|
|
|
|
|
| |
Basic |
69.6 |
|
|
76.0 |
|
|
71.3 |
|
|
75.9 |
|
| |
Diluted |
69.6 |
|
|
76.4 |
|
|
71.3 |
|
|
75.9 |
|
|
Table 3 |
|
|
|
Avis Budget Group, Inc. |
|
KEY METRICS SUMMARY |
| |
| |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Rental Days (000’s) |
11,968 |
|
|
29,166 |
|
|
(59)% |
|
35,425 |
|
|
53,875 |
|
|
(34)% |
| |
|
Revenue per Day, excluding
exchange rate effects (A) |
$ |
47.22 |
|
|
$ |
55.77 |
|
|
(15)% |
|
$ |
51.45 |
|
|
$ |
54.83 |
|
|
(6)% |
| |
|
Average Rental Fleet |
399,083 |
|
|
454,608 |
|
|
(12)% |
|
408,010 |
|
|
425,808 |
|
|
(4)% |
| |
|
Vehicle Utilization |
33.0 |
% |
|
70.5 |
% |
|
(37.5) pps |
|
47.7 |
% |
|
69.9 |
% |
|
(22.2) pps |
| |
|
Per-Unit Fleet Costs per
Month, excluding exchange rate effects (A) |
$ |
226 |
|
|
$ |
289 |
|
|
(22)% |
|
$ |
246 |
|
|
$ |
292 |
|
|
(16)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Rental Days (000’s) |
6,024 |
|
|
14,877 |
|
|
(60)% |
|
17,092 |
|
|
27,333 |
|
|
(37)% |
| |
|
Revenue per Day, excluding
exchange rate effects (A) |
$ |
33.69 |
|
|
$ |
47.70 |
|
|
(29)% |
|
$ |
42.06 |
|
|
$ |
47.65 |
|
|
(12)% |
| |
|
Average Rental Fleet |
164,360 |
|
|
228,561 |
|
|
(28)% |
|
178,558 |
|
|
213,127 |
|
|
(16)% |
| |
|
Vehicle Utilization |
40.3 |
% |
|
71.5 |
% |
|
(31.2) pps |
|
52.6 |
% |
|
70.9 |
% |
|
(18.3) pps |
| |
|
Per-Unit Fleet Costs per
Month, excluding exchange rate effects (A) |
$ |
220 |
|
|
$ |
217 |
|
|
1% |
|
$ |
224 |
|
|
$ |
220 |
|
|
2% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Rental Days (000’s) |
17,992 |
|
|
44,043 |
|
|
(59)% |
|
52,517 |
|
|
81,208 |
|
|
(35)% |
| |
|
Revenue per Day, excluding
exchange rate effects (A) |
$ |
42.69 |
|
|
$ |
53.04 |
|
|
(20)% |
|
$ |
48.39 |
|
|
$ |
52.42 |
|
|
(8)% |
| |
|
Average Rental Fleet |
563,443 |
|
|
683,169 |
|
|
(18)% |
|
586,568 |
|
|
638,935 |
|
|
(8)% |
| |
|
Vehicle Utilization |
35.1 |
% |
|
70.8 |
% |
|
(35.7) pps |
|
49.2 |
% |
|
70.2 |
% |
|
(21.0) pps |
| |
|
Per-Unit Fleet Costs per
Month, excluding exchange rate effects (A) |
$ |
224 |
|
|
$ |
265 |
|
|
(15)% |
|
$ |
239 |
|
|
$ |
268 |
|
|
(11)% |
| _______ |
|
|
|
|
|
|
| Refer to Table 6
for key metrics calculations and Appendix I for key metrics
definitions. |
|
(A)The following metrics include changes in
currency exchange rates: |
|
|
| |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Revenue per Day |
$ |
47.16 |
|
|
$ |
55.77 |
|
|
(15)% |
|
$ |
51.42 |
|
|
$ |
54.83 |
|
|
(6)% |
| |
|
Per-Unit Fleet Costs per Month |
$ |
225 |
|
|
$ |
289 |
|
|
(22)% |
|
$ |
246 |
|
|
$ |
292 |
|
|
(16)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Revenue per Day |
$ |
32.46 |
|
|
$ |
47.70 |
|
|
(32)% |
|
$ |
40.43 |
|
|
$ |
47.65 |
|
|
(15)% |
| |
|
Per-Unit Fleet Costs per Month |
$ |
212 |
|
|
$ |
217 |
|
|
(2)% |
|
$ |
216 |
|
|
$ |
220 |
|
|
(2)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Revenue per Day |
$ |
42.24 |
|
|
$ |
53.04 |
|
|
(20)% |
|
$ |
47.84 |
|
|
$ |
52.42 |
|
|
(9)% |
| |
|
Per-Unit Fleet Costs per Month |
$ |
221 |
|
|
$ |
265 |
|
|
(17)% |
|
$ |
237 |
|
|
$ |
268 |
|
|
(12)% |
|
Table 4 (page 1 of 2) |
|
|
|
Avis Budget Group, Inc. |
|
CONSOLIDATED CONDENSED SCHEDULES OF CASH FLOWS AND ADJUSTED
FREE CASH FLOWS |
|
(In millions) |
|
CONSOLIDATED CONDENSED SCHEDULE OF CASH FLOWS |
| |
| |
Six Months Ended June 30, 2020 |
| Operating
Activities |
|
|
Net cash provided by operating activities |
$ |
350 |
|
| |
|
| Investing
Activities |
|
|
Net cash used in investing activities exclusive of vehicle
programs |
$ |
(120 |
) |
|
Net cash provided by investing activities of vehicle programs |
437 |
|
|
Net cash provided by investing activities |
$ |
317 |
|
| |
|
| Financing
Activities |
|
|
Net cash provided by (used in) financing activities exclusive of
vehicle programs |
$ |
351 |
|
|
Net cash provided by (used in) financing activities of vehicle
programs |
(575 |
) |
|
Net cash provided by (used in) financing activities |
$ |
(224 |
) |
| |
|
| Effect of changes in exchange
rates on cash and cash equivalents, program and restricted
cash |
(4 |
) |
| Net change in cash and cash
equivalents, program and restricted cash |
439 |
|
| Cash and cash
equivalents, program and restricted cash, beginning of period
(A) |
900 |
|
| Cash and cash
equivalents, program and restricted cash, end of period
(B) |
$ |
1,339 |
|
|
CONSOLIDATED SCHEDULE OF ADJUSTED FREE CASH FLOWS
(C) |
| |
| |
Six Months Ended June 30, 2020 |
| Loss before income taxes |
$ |
(874 |
) |
| Add-back of non-vehicle
related depreciation and amortization |
140 |
|
| Add-back of debt
extinguishment costs |
7 |
|
| Add-back of restructuring and
other related costs |
72 |
|
| Add-back of non-operational
charges related to shareholder activist activity |
4 |
|
| Add-back of
transaction-related costs |
3 |
|
| Add-back of COVID-19
charges |
80 |
|
| Working capital and other |
182 |
|
| Capital expenditures (D) |
(78 |
) |
| Tax payments, net of
refunds |
(5 |
) |
| Vehicle programs and related
(E) |
795 |
|
| Adjusted free cash
flow |
$ |
326 |
|
| |
|
| Acquisition and related
payments, net of acquired cash (F) |
$ |
(39 |
) |
| Borrowings, net of debt
repayments |
471 |
|
| Restructuring and other
related payments |
(69 |
) |
| Transaction-related
payments |
(3 |
) |
| COVID-19 payments, net |
9 |
|
| Non-operational payments
related to shareholder activist activity |
(3 |
) |
| Issuance of common stock |
15 |
|
| Repurchases of common
stock |
(118 |
) |
| Change in program cash |
(128 |
) |
| Change in restricted cash |
(1 |
) |
| Foreign exchange effects,
financing costs and other |
(21 |
) |
| Net change in cash and
cash equivalents, program and restricted cash (per
above) |
$ |
439 |
|
|
Table 4 (page 2 of 2) |
|
|
|
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO ADJUSTED FREE CASH FLOW |
| |
| |
Six Months Ended June 30, 2020 |
| Net cash provided by
operating activities (per above) |
$ |
350 |
|
|
Investing activities of vehicle programs |
437 |
|
|
Financing activities of vehicle programs |
(575 |
) |
|
Capital expenditures |
(64 |
) |
|
Proceeds received on sale of assets and nonmarketable equity
securities |
4 |
|
|
Change in program cash |
128 |
|
|
Change in restricted cash |
1 |
|
|
Acquisition and disposition-related payments |
(21 |
) |
|
Non-operational payments related to shareholder activist
activity |
3 |
|
|
COVID-19 payments, net |
(9 |
) |
|
Restructuring and other related payments |
69 |
|
|
Transaction-related payments |
3 |
|
| Adjusted free cash
flow (per above) |
$ |
326 |
|
| |
_______ |
| (A) |
Consists of cash and cash
equivalents of $686 million, program cash of $211 million and
restricted cash of $3 million. |
| (B) |
Consists of cash and cash
equivalents of $1,258 million, program cash of $79 million and
restricted cash of $2 million. |
| (C) |
See Appendix I for the definition
of Adjusted free cash flow. |
| (D) |
Includes $14 million of cloud
computing implementation costs. |
| (E) |
Includes vehicle-backed
borrowings (repayments) that are incremental to amounts required to
fund incremental (reduced) vehicle and vehicle-related assets. |
| (F) |
Excludes $21 million of vehicles
purchased as a part of North America licensee acquisitions, which
were financed through incremental vehicle-backed borrowings. |
|
Table 5 (page 1 of 2) |
| |
|
Avis Budget Group, Inc. |
|
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP
MEASURES |
|
(In millions, except per share data) |
The accompanying press release includes certain
non-GAAP (generally accepted accounting principles) financial
measures as defined under SEC rules. To the extent not provided in
the press release or accompanying tables, we have provided the
reasons we present these non-GAAP financial measures and a
description of what they represent in Appendix I. For each non-GAAP
financial measure a reconciliation to the most comparable GAAP
financial measure is calculated and presented below with
reconciliations of net income (loss), income (loss) before income
taxes and diluted earnings (loss) per share to Adjusted EBITDA and
our Adjusted earnings measures.
| |
|
|
June 30, 2020 |
| Reconciliation of net loss to Adjusted
EBITDA: |
Three Months Ended |
|
Six Months Ended |
| |
|
|
|
|
| |
Net loss |
$ |
(481 |
) |
|
$ |
(639 |
) |
| |
Benefit from income taxes |
(128 |
) |
|
(235 |
) |
| |
Loss before income taxes |
(609 |
) |
|
(874 |
) |
| |
|
|
|
|
|
| |
Add certain items: |
|
|
|
| |
COVID-19 charges (A) |
73 |
|
|
80 |
|
| |
Restructuring and other related charges |
28 |
|
|
72 |
|
| |
Acquisition-related amortization expense |
16 |
|
|
29 |
|
| |
Early extinguishment of debt |
3 |
|
|
7 |
|
| |
Non-operational charges related to shareholder activist activity
(B) |
— |
|
|
4 |
|
| |
Transaction-related costs, net |
1 |
|
|
3 |
|
| |
Adjusted pretax loss |
(488 |
) |
|
(679 |
) |
| |
|
|
|
|
| |
Add: |
Non-vehicle related depreciation and amortization (excluding
acquisition-related amortization expense) |
55 |
|
|
111 |
|
| |
|
Interest expense related to corporate debt, net (excluding
early extinguishment of debt) |
51 |
|
|
99 |
|
| |
Adjusted EBITDA |
$ |
(382 |
) |
|
$ |
(469 |
) |
| |
|
|
|
|
|
| Reconciliation of net loss to adjusted net
loss: |
|
| |
|
|
|
|
|
| |
Net loss |
$ |
(481 |
) |
|
$ |
(639 |
) |
| |
Add certain items, net of tax: |
|
|
|
| |
|
COVID-19 charges |
55 |
|
|
60 |
|
| |
|
Restructuring and other related charges |
22 |
|
|
55 |
|
| |
|
Acquisition-related amortization expense |
12 |
|
|
22 |
|
| |
|
Early extinguishment of debt |
3 |
|
|
6 |
|
| |
|
Non-operational charges related to shareholder activist
activity |
— |
|
|
3 |
|
| |
|
Transaction-related costs, net |
1 |
|
|
2 |
|
| |
Adjusted net loss |
$ |
(388 |
) |
|
$ |
(491 |
) |
| |
|
|
|
|
|
| |
Loss per share - Diluted |
$ |
(6.91 |
) |
|
$ |
(8.96 |
) |
| |
|
|
|
|
|
| |
Adjusted diluted loss per
share |
$ |
(5.60 |
) |
|
$ |
(6.90 |
) |
| |
|
|
|
|
|
| |
Shares used to calculate Adjusted diluted
loss per share |
69.6 |
|
|
71.3 |
|
| _______ |
| (A) |
For three months
ended June 30, 2020 consists of $72 million within operating
expenses and $1 million within selling, general and administrative
expenses, net in our consolidated condensed results of operations.
Primarily consisting of $30 million of minimum annual guaranteed
rent in excess of concession fees, $28 million of losses associated
with vehicles damaged in overflow parking lots and $15 million of
incremental cleaning supplies to sanitize vehicles and facilities,
and overflow parking for idle vehicles. Six months ended June 30,
2020 consists of $79 million within operating expenses and $1
million within selling, general and administrative expenses, net in
our consolidated results of operations. Primarily consisting of $33
million of losses associated with vehicles damaged in overflow
parking lots, $30 million of minimum annual guaranteed rent in
excess of concession fees and $17 million of incremental cleaning
supplies to sanitize vehicles and facilities, and overflow parking
for idle vehicles. |
| (B) |
Reported within
selling, general and administrative expenses in our Consolidated
Statements of Operations. |
|
Table 5 (page 2 of 2) |
| |
|
|
|
| |
|
|
June 30, 2019 |
| Reconciliation of net income (loss) to
Adjusted EBITDA: |
Three Months Ended |
|
Six Months Ended |
| |
|
|
|
|
| |
Net income (loss) |
$ |
62 |
|
|
$ |
(29 |
) |
| |
Provision for (benefit from) income taxes |
19 |
|
|
(26 |
) |
| |
Income (loss) before income
taxes |
81 |
|
|
(55 |
) |
| |
|
|
|
|
|
| |
Add certain items: |
|
|
|
| |
|
Restructuring and other related charges |
23 |
|
|
44 |
|
| |
|
Acquisition-related amortization expense |
14 |
|
|
31 |
|
| |
|
Transaction-related costs, net |
1 |
|
|
6 |
|
| |
|
Gain on sale of equity method investment in China (A) |
(44 |
) |
|
(44 |
) |
| |
Adjusted pretax income (loss) |
75 |
|
|
(18 |
) |
| |
|
|
|
|
| |
Add: |
Non-vehicle related depreciation and amortization (excluding
acquisition-related amortization expense) |
52 |
|
|
102 |
|
| |
|
Interest expense related to corporate debt, net (excluding
early extinguishment of debt) |
48 |
|
|
90 |
|
| |
Adjusted EBITDA |
$ |
175 |
|
|
$ |
174 |
|
| |
|
|
|
|
|
| Reconciliation of net income (loss) to
adjusted net income: |
|
| |
|
|
|
|
|
| |
Net income (loss) |
$ |
62 |
|
|
$ |
(29 |
) |
| |
Add certain items, net of tax: |
|
|
|
| |
|
Restructuring and other related charges |
18 |
|
|
34 |
|
| |
|
Acquisition-related amortization expense |
10 |
|
|
22 |
|
| |
|
Non-operational charges related to shareholder activist
activity |
1 |
|
|
5 |
|
| |
|
Gain on sale of equity method investment in China |
(30 |
) |
|
(30 |
) |
| |
Adjusted net income |
$ |
61 |
|
|
$ |
2 |
|
| |
|
|
|
|
|
| |
Earnings (loss) per share -
Diluted |
$ |
0.81 |
|
|
$ |
(0.39 |
) |
| |
|
|
|
|
|
| |
Adjusted diluted earnings per
share |
$ |
0.79 |
|
|
$ |
0.01 |
|
| |
|
|
|
|
|
| |
Shares used to calculate Adjusted diluted
earnings per share |
76.4 |
|
|
76.4 |
|
| _______ |
| (A) |
Reported within
operating expenses in our Consolidated Statements of
Operations. |
|
Table 6 |
|
Avis Budget Group, Inc. |
|
KEY METRICS CALCULATIONS |
|
($ in millions, except as noted) |
| |
| |
|
Three Months Ended June 30, 2020 |
|
Three Months Ended June 30, 2019 |
| |
|
Americas |
|
International |
|
Total |
|
Americas |
|
International |
|
Total |
| Revenue
per Day (RPD) |
|
|
|
|
|
|
|
|
|
|
|
| |
Revenue |
$ |
565 |
|
|
$ |
195 |
|
|
$ |
760 |
|
|
$ |
1,627 |
|
|
$ |
710 |
|
|
$ |
2,337 |
|
| |
Currency exchange rate
effects |
— |
|
|
8 |
|
|
8 |
|
|
— |
|
|
— |
|
|
— |
|
| |
Revenue excluding exchange rate
effects |
565 |
|
|
203 |
|
|
768 |
|
|
1,627 |
|
|
710 |
|
|
2,337 |
|
| |
Rental days (000's) |
11,968 |
|
|
6,024 |
|
|
17,992 |
|
|
29,166 |
|
|
14,877 |
|
|
44,043 |
|
| |
RPD excluding exchange rate
effects (in $'s) |
$ |
47.22 |
|
|
$ |
33.69 |
|
|
$ |
42.69 |
|
|
$ |
55.77 |
|
|
$ |
47.70 |
|
|
$ |
53.04 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Vehicle
Utilization |
|
|
|
|
|
|
|
|
|
|
|
| |
Rental days (000's) |
11,968 |
|
|
6,024 |
|
|
17,992 |
|
|
29,166 |
|
|
14,877 |
|
|
44,043 |
|
| |
Average rental fleet |
399,083 |
|
|
164,360 |
|
|
563,443 |
|
|
454,608 |
|
|
228,561 |
|
|
683,169 |
|
| |
Number of days in period |
91 |
|
|
91 |
|
|
91 |
|
|
91 |
|
|
91 |
|
|
91 |
|
| |
Available rental days
(000's) |
36,316 |
|
|
14,957 |
|
|
51,273 |
|
|
41,369 |
|
|
20,799 |
|
|
62,168 |
|
| |
Vehicle utilization |
33.0 |
% |
|
40.3 |
% |
|
35.1 |
% |
|
70.5 |
% |
|
71.5 |
% |
|
70.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Per-Unit
Fleet Costs |
|
|
|
|
|
|
|
|
|
|
|
| |
Vehicle depreciation and lease
charges, net |
$ |
269 |
|
|
$ |
105 |
|
|
$ |
374 |
|
|
$ |
394 |
|
|
$ |
149 |
|
|
$ |
543 |
|
| |
Currency exchange rate
effects |
1 |
|
|
3 |
|
|
4 |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
$ |
270 |
|
|
$ |
108 |
|
|
$ |
378 |
|
|
$ |
394 |
|
|
$ |
149 |
|
|
$ |
543 |
|
| |
Average rental fleet |
399,083 |
|
|
164,360 |
|
|
563,443 |
|
|
454,608 |
|
|
228,561 |
|
|
683,169 |
|
| |
Per-unit fleet costs (in
$'s) |
$ |
677 |
|
|
$ |
661 |
|
|
$ |
672 |
|
|
$ |
866 |
|
|
$ |
651 |
|
|
$ |
794 |
|
| |
Number of months in
period |
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
| |
Per-unit fleet costs per month
excluding exchange rate effects (in $'s) |
$ |
226 |
|
|
$ |
220 |
|
|
$ |
224 |
|
|
$ |
289 |
|
|
$ |
217 |
|
|
$ |
265 |
|
| |
|
Six Months Ended June 30, 2020 |
|
Six Months Ended June 30, 2019 |
| |
|
Americas |
|
International |
|
Total |
|
Americas |
|
International |
|
Total |
| Revenue
per Day (RPD) |
|
|
|
|
|
|
|
|
|
|
|
| |
Revenue |
$ |
1,822 |
|
|
$ |
691 |
|
|
$ |
2,513 |
|
|
$ |
2,954 |
|
|
$ |
1,303 |
|
|
$ |
4,257 |
|
| |
Currency exchange rate
effects |
— |
|
|
28 |
|
|
28 |
|
|
— |
|
|
— |
|
|
— |
|
| |
Revenue excluding exchange rate
effects |
1,822 |
|
|
719 |
|
|
2,541 |
|
|
2,954 |
|
|
1,303 |
|
|
4,257 |
|
| |
Rental days (000's) |
35,425 |
|
|
17,092 |
|
|
52,517 |
|
|
53,875 |
|
|
27,333 |
|
|
81,208 |
|
| |
RPD excluding exchange rate
effects (in $'s) |
$ |
51.45 |
|
|
$ |
42.06 |
|
|
$ |
48.39 |
|
|
$ |
54.83 |
|
|
$ |
47.65 |
|
|
$ |
52.42 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Vehicle
Utilization |
|
|
|
|
|
|
|
|
|
|
|
| |
Rental days (000's) |
35,425 |
|
|
17,092 |
|
|
52,517 |
|
|
53,875 |
|
|
27,333 |
|
|
81,208 |
|
| |
Average rental fleet |
408,010 |
|
|
178,558 |
|
|
586,568 |
|
|
425,808 |
|
|
213,127 |
|
|
638,935 |
|
| |
Number of days in period |
182 |
|
|
182 |
|
|
182 |
|
|
181 |
|
|
181 |
|
|
181 |
|
| |
Available rental days
(000's) |
74,258 |
|
|
32,497 |
|
|
106,755 |
|
|
77,071 |
|
|
38,576 |
|
|
115,647 |
|
| |
Vehicle utilization |
47.7 |
% |
|
52.6 |
% |
|
49.2 |
% |
|
69.9 |
% |
|
70.9 |
% |
|
70.2 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Per-Unit
Fleet Costs |
|
|
|
|
|
|
|
|
|
|
|
| |
Vehicle depreciation and lease
charges, net |
$ |
601 |
|
|
$ |
232 |
|
|
$ |
833 |
|
|
$ |
747 |
|
|
$ |
281 |
|
|
$ |
1,028 |
|
| |
Currency exchange rate
effects |
1 |
|
|
8 |
|
|
9 |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
$ |
602 |
|
|
$ |
240 |
|
|
$ |
842 |
|
|
$ |
747 |
|
|
$ |
281 |
|
|
$ |
1,028 |
|
| |
Average rental fleet |
408,010 |
|
|
178,558 |
|
|
586,568 |
|
|
425,808 |
|
|
213,127 |
|
|
638,935 |
|
| |
Per-unit fleet costs (in
$'s) |
$ |
1,476 |
|
|
$ |
1,345 |
|
|
$ |
1,436 |
|
|
$ |
1,755 |
|
|
$ |
1,318 |
|
|
$ |
1,609 |
|
| |
Number of months in
period |
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
| |
Per-unit fleet costs per month
excluding exchange rate effects (in $'s) |
$ |
246 |
|
|
$ |
224 |
|
|
$ |
239 |
|
|
$ |
292 |
|
|
$ |
220 |
|
|
$ |
268 |
|
| _______ |
| Our calculation of
rental days and revenue per day may not be comparable to the
calculation of similarly-titled metrics by other companies.
Currency exchange rate effects are calculated by translating the
current-year results at the prior-period average exchange rates
plus any related gains and losses on currency hedges. |
|
|
|
Appendix I |
|
Avis Budget Group, Inc. |
|
DEFINITIONS OF NON-GAAP MEASURES AND KEY
METRICS |
Adjusted EBITDAThe accompanying
press release presents Adjusted EBITDA, which represents income
(loss) from continuing operations before non-vehicle related
depreciation and amortization, any impairment charges,
restructuring and other related charges, early extinguishment of
debt costs, non-vehicle related interest, transaction-related
costs, net charges for unprecedented personal-injury legal matters,
non-operational charges related to shareholder activist activity,
gain on sale of equity method investment in China, COVID-19 charges
and income taxes. Net charges for unprecedented personal-injury
legal matters and gain on sale of equity method investment in China
are recorded within operating expenses in our consolidated
condensed statement of operations. Non-operational charges
related to shareholder activist activity include third party
advisory, legal and other professional service fees and are
recorded within selling, general and administrative expenses in our
consolidated results of operations. COVID-19 charges include
unusual, direct and incremental costs due to the COVID-19 global
pandemic such as minimum annual guaranteed rent in excess of
concession fees for the period, overflow parking for idle vehicles,
incremental cleaning supplies to sanitize vehicles and facilities,
and losses associated with vehicles damaged in overflow parking
lots and are recorded within operating expenses in our consolidated
condensed statement of operations. We have revised our definition
of Adjusted EBITDA to exclude COVID-19. We did not revised prior
years' Adjusted EBITDA amounts because there were no other charges
similar in nature to these. Adjusted EBITDA includes stock-based
compensation expense and deferred financing fee amortization
totaling $9 million and $12 million in second quarter 2020 and
2019, respectively and totaling $13 million and $23 million in the
six months ended June 30, 2020 and 2019, respectively.
We believe that Adjusted EBITDA is useful to
investors as a supplemental measure in evaluating the aggregate
performance of our operating businesses and in comparing our
results from period to period. Adjusted EBITDA is the measure that
is used by our management, including our chief operating decision
maker, to perform such evaluation. Adjusted EBITDA is also a
component in the determination of management's compensation.
Adjusted EBITDA should not be considered in isolation or as a
substitute for net income or other income statement data prepared
in accordance with GAAP and our presentation of Adjusted EBITDA may
not be comparable to similarly-titled measures used by other
companies. A reconciliation of Adjusted EBITDA from net income
(loss) recognized under GAAP is provided on Table 5.
Adjusted Earnings Non-GAAP
MeasuresThe accompanying press release and tables present
Adjusted pretax income (loss), Adjusted net income (loss) and
Adjusted diluted earnings (loss) per share, which exclude certain
items. We believe that these measures referred to above are useful
to investors as supplemental measures in evaluating the aggregate
performance of the Company. We exclude restructuring and other
related charges, transaction-related costs, costs related to early
extinguishment of debt and certain other items as such items are
not representative of the results of operations of our business
less a provision for income taxes derived utilizing applicable
statutory tax rates for each item. A reconciliation of our Adjusted
earnings Non-GAAP measures from the appropriate measures recognized
under GAAP is provided on Table 5.
Adjusted Free Cash
FlowRepresents Net Cash Provided by Operating Activities
adjusted to reflect the cash inflows and outflows relating to
capital expenditures, the investing and financing activities of our
vehicle programs, asset sales, if any, and to exclude debt
extinguishment costs, transaction-related costs, restructuring and
other related charges, COVID-19 charges and non-operational charges
related to shareholder activist activity. We have revised our
definition of Adjusted Free Cash Flow to exclude COVID-19 charges
and have not revised prior years' Adjusted Free Cash Flow amounts
as there were no other charges similar in nature to these. We
believe this change is meaningful to investors as it brings the
measurement in line with our other non-GAAP measures. We believe
that Adjusted Free Cash Flow is useful to management and investors
in measuring the cash generated that is available to be used to
repay debt obligations, repurchase stock, pay dividends and invest
in future growth through new business development activities or
acquisitions. Adjusted Free Cash Flow should not be construed as a
substitute in measuring operating results or liquidity, and our
presentation of Adjusted Free Cash Flow may not be comparable to
similarly-titled measures used by other companies. A reconciliation
of Adjusted Free Cash Flow to the appropriate measure recognized
under GAAP is provided on Table 4.
Available Rental DaysDefined as
Average Rental Fleet times the numbers of days in a given
period.
Average Rental FleetRepresents
the average number of vehicles in our fleet during a given period
of time.
Currency Exchange Rate
EffectsRepresents the difference between current-period
results as reported and current-period results translated at the
prior-period average exchange rates plus any related currency
hedges.
Net Corporate DebtRepresents
corporate debt minus cash and cash equivalents.
Net Corporate
LeverageRepresents Net Corporate Debt divided by Adjusted
EBITDA for the twelve months prior to the date of calculation.
Per-Unit Fleet CostsRepresents
vehicle depreciation, lease charges and gain or loss on vehicles
sales, divided by Average Rental Fleet.
Rental DaysRepresents the total
number of days (or portion thereof) a vehicle was rented during a
24-hour period.
Revenue per DayRepresents
revenues divided by Rental Days.
Vehicle UtilizationRepresents
Rental Days divided by Available Rental Days.
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