CAR Q2 2021 Earnings

Call Details

• Call Title: Avis Budget Group Q2 2021 Earnings Call
• Date: August 4, 2021 at 12:30 PM UTC
• Management Team:
  • David Calabria (Treasurer and Senior Vice President of Corporate Finance)
  • Joe Ferraro (Chief Executive Officer)
  • Brian Choi (Chief Financial Officer)

Call Summary

Financial Performance

• The company reported a sequential and multi-year rebound that produced the best revenue, adjusted EBITDA, and margin in the company's 75-year history.
• Combined adjusted EBITDA swung from a $382M loss in Q2 2020 to a $624M gain in Q2 2021, representing approximately a $1.0B turnaround over one year.
• Americas revenue increased by $1.4B year over year, and Americas adjusted EBITDA increased by approximately $870M year over year for an incremental margin of 62%.
• Compared to Q2 2019, Americas revenue was up roughly $350M and adjusted EBITDA was up roughly $490M on a two-year basis.
• International adjusted EBITDA improved from a $140M loss in Q2 2020 to an $8M gain in Q2 2021, a roughly $148M improvement on about $200M of revenue gains.
• International revenue remained over $300M below Q2 2019 levels while adjusted EBITDA decline versus 2019 was roughly $30M, reflecting cost and fleet rationalization.

Guidance

• The company is targeting $1.5B of adjusted EBITDA for calendar year 2021 as an internal objective to capture current pricing and cost momentum.
• The prior objective of delivering over $1.0B in adjusted EBITDA when revenues normalized to 2019 levels remains a reference point, but the company said it is not building a go-forward model assuming current elevated RPD levels persist.
• Executives explicitly stated that Avis does not set rental car prices and that price discovery is driven by consumer demand and industry supply dynamics.
• CFO clarified that the $1.5B comment is for 2021 and that the company is not providing updated multi-year or 2022 guidance due to ongoing macro and supply uncertainties.
• Management cautioned that the current elevated RPD represents a catch-up in profitability and that sustainability of these levels is unknown.
• The company will continue to prioritize a cost-first approach to preserve resilience in weak demand environments and high drop-through in strong demand environments.