Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Avis Budget Group Inc (CAR, Financial) reported strong third-quarter revenue of nearly $3.5 billion and adjusted EBITDA of $503 million.
- The company successfully improved vehicle utilization, with the Americas segment achieving a utilization rate of nearly 72%, more than 1 point higher than the third quarter of 2023.
- The model year 2025 fleet buy is progressing well, with expected holding costs below recent years, positioning the company for a more profitable future.
- International operations saw a 5% increase in rental days and a 14% growth in higher-margin inbound and intra-European cross-border volumes.
- The company launched a new customer app in October, enhancing user experience and aiming to increase app downloads, boost conversion rates, and drive revenue growth through direct channel reservations.
Negative Points
- Price was down 2% for the quarter overall, with the Americas nearly flat, indicating pricing pressures in the market.
- The company faced a $40 million loss from pulling forward vehicle sales in the quarter, compared to $145 million of gains last year, resulting in a significant year-over-year variance.
- Straight-line depreciation increased, resulting in more than $100 million in incremental fleet expense year-over-year.
- Vehicle interest was a $33 million headwind in the quarter, with expectations for similar impacts in the fourth quarter.
- Rental days were slightly less than anticipated, leading to a nearly $85 million reduction in year-over-year revenue.
Q & A Highlights
Q: Can you provide insights on the expected trend of fleet costs and how it compares to historical levels?
A: Izilda Martins, CFO, explained that while fleet costs are expected to trend back towards historical levels, they may not reach the low levels seen in 2019. The focus remains on keeping fleet costs inside of demand and maintaining flexibility to adjust fleet size as needed.
Q: How is Avis Budget Group positioned in the evolving landscape of autonomous vehicles and ride-sharing?
A: CEO Joseph Ferraro stated that Avis is actively participating in the ride-share segment and is monitoring developments in autonomous vehicles. The company is well-positioned to handle such transitions due to its infrastructure and expertise in fleet management.
Q: What impact did the recent hurricanes have on Avis Budget Group's operations, and how does it affect the broader rental car market?
A: Joseph Ferraro noted that hurricanes initially disrupt operations due to airport closures and flight cancellations. However, they also create demand for rentals from relief workers and local residents, which can tighten fleet availability and positively impact pricing.
Q: How does Avis Budget Group plan to maintain pricing power in a potentially lower-cost environment?
A: Ferraro emphasized the company's focus on maintaining margins by managing costs effectively and prioritizing higher-margin business. Initiatives include improving operational efficiencies and leveraging technology to enhance fleet utilization and pricing strategies.
Q: What is the outlook for Avis Budget Group's fleet buy and its impact on holding costs?
A: Ferraro highlighted that the 2025 fleet buy is progressing well, with expectations of lower holding costs as new vehicles are integrated. The company remains disciplined in fleet acquisitions, focusing on deals that meet acceptable returns on investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
