CAR Q1 2022 Earnings

Call Details

• Call Title: Avis Budget Group Q1 2022 Earnings Call
• Date: May 3, 2022 at 12:30 PM UTC
• Management Team:
  • David Calabria (Senior Vice President of Corporate Finance)
  • Joe Ferraro (Chief Executive Officer)
  • Brian Choi (Chief Financial Officer)

Call Summary

Financial Performance

• The company generated $810 million of adjusted EBITDA in Q1 2022, which the presenter stated is higher than full year adjusted EBITDA of 2019.
• Americas revenue increased by over $900 million year over year in Q1 2022, and Americas adjusted EBITDA increased by $702 million for an incremental margin of 76%.
• Compared to Q1 2019, Americas revenue increased by $673 million and adjusted EBITDA increased by $775 million for an incremental margin of 115% versus that prior period.
• Consolidated domestic RPD printed at $72.76 for the quarter and was described as down sequentially for the second quarter in a row versus prior quarters.
• Consolidated utilization for the quarter was 69%, which was stated to be roughly in line with Q1 2019 but with meaningful month-end improvement in March 2022.
• International adjusted EBITDA was $23 million in Q1 2022, improving from negative $50 million in Q1 2021 for a $73 million improvement on $140 million of revenue gains, representing a 52% contribution margin.

Guidance

• The company continues to forego formal annual guidance to preserve operational flexibility and did not provide full-year numeric guidance on the call.
• For Q2 2022, the company believes Americas rental days will be above Q2 2019 and RPD will be above Q2 2021.
• Management stated that consolidated monthly per-unit depreciation will normalize starting next quarter and expects a straight-line exit near $230 per month per vehicle by year-end.
• CFO noted that depreciation costs will increase sequentially in Q2 due to fewer dispositions, but that consolidated monthly depreciation should remain lower than current straight-lining.
• The company expressed confidence that if current trends hold through summer, it could exceed its record full-year adjusted EBITDA for 2021 and deliver the highest full-year adjusted EBITDA in company history in 2022.
• Management declined to provide specific numeric sensitivity for ABS interest rate exposure on the call, advising investors to model using current disclosed capital structure metrics.