Avis Budget Group (NasdaqGS:CAR) Q4 2025 Earnings call February 19, 2026 08:30 AM ET Company ParticipantsAndrew Percoco - Executive DirectorBrian Choi - CEODaniel Cunha - EVP and CFODavid Calabria - SVP, Corporate Finance and TreasurerJosh Young - Vice PresidentStephanie Moore - Managing DirectorConference Call ParticipantsChristopher Stathoulopoulos - Senior Equity Research AnalystJohn Healy - Managing Director and Senior Research AnalystOperatorWelcome to the Avis Budget Group Q4 earnings call. At this ti ...

Financial Data and Key Metrics Changes - The company reported a third-quarter loss of $37 million compared to earnings of $67 million in the same quarter last year, resulting in a loss of $0.18 per non-voting share versus earnings of $0.35 per share previously [9] - Adjusted EBITDA for the moving and storage segment decreased by 11%, approximately $42 million, reflecting a similar decline in operating cash flows for the quarter [9][10] - A significant increase in depreciation and losses from the disposal of rental units contributed to a $75 million cost increase compared to the same quarter last year [10][12] Business Line Data and Key Metrics Changes - Equipment rental revenues increased by $8 million, or just under 1%, primarily from the in-town portion of the business [11] - Storage revenues rose by $18 million, or 8%, with average revenue per foot improving by just under 7% and same-store revenue per occupied foot up by 5% [13] - The company added 16 new storage locations, translating to about 1.5 million new net rentable square feet [15] Market Data and Key Metrics Changes - The company has been adding self-storage units faster than they are being rented, resulting in a surplus of unrented units [5] - Same-store occupancy decreased by 490 basis points to just over 87%, with a significant portion of this decrease attributed to the removal of delinquent units [14] Company Strategy and Development Direction - The company plans to open more U-Haul dealership locations to utilize excess fleet capacity and improve transaction rates [4] - There is a focus on investing in digital tools to meet customer expectations and enhance service delivery [6] - The company is strategically slowing down the pace of development in self-storage while still pursuing opportunities in markets with potential growth [78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to excessive acquisition costs of vans and pickups, which have negatively impacted earnings [4] - The company is optimistic about future cargo van purchases being at a lower average cost, which may alleviate some financial pressures [11] - Management expressed confidence in filling more storage units and improving overall performance despite current challenges [88] Other Important Information - The company invested $770 million in real estate acquisitions and development during the first nine months of fiscal 2026, a decrease of $444 million compared to the previous year [15] - Cash and availability from existing loan facilities totaled $1.475 billion as of December 2025 [16] Q&A Session Summary Question: Discussion on pressures in the one-way market and U-Box program - Management noted that consumer anxiety leads to shorter transaction distances, affecting the one-way rental market and U-Box usage [22][23] Question: Clarification on depreciation changes - Management explained that depreciation rates for box trucks decrease over time, while adjustments for pickup and cargo vans are made based on resale market conditions [25][26] Question: Capacity reductions from competitors - Management indicated that competitors are likely reducing fleet and outlets, positioning the company to capture demand when the market improves [30][31] Question: Expense management and future strategies - Management is focused on budget control and expects to see results in the current and next fiscal year, while also addressing rising personnel costs [38][39] Question: U-Box warehouse capacity in major markets - Management confirmed ongoing construction and property ownership in key metropolitan areas to enhance U-Box service availability [44][49] Question: Future vehicle acquisition and depreciation - Management provided insights on the remaining cargo vans and the expected loss on sale for the 2024 model year vehicles [54][56] Question: Fleet expenditure reduction and self-storage development - Management discussed the need to balance fleet purchases with sales to avoid future imbalances, while also slowing down self-storage development to a more manageable pace [70][78]

Core Insights - RTX reported strong financial performance in Q4 and full-year 2025, with adjusted sales of $24.2 billion in Q4 and $88.6 billion for the full year, reflecting a year-over-year increase of 12% and 11% respectively on an organic basis [1][2] - The company highlighted durable demand in commercial aerospace and defense sectors, with a record backlog of $268 billion, up 23% year-over-year, indicating strong future growth potential [3][6] Q4 Performance - Adjusted segment operating profit for Q4 rose 9% to $2.9 billion, while adjusted EPS was $1.55, up 1% despite higher corporate expenses and tax rates [1] - Free cash flow for Q4 was reported at $3.2 billion, contributing to a total of $7.9 billion for the full year, which was an increase of $3.4 billion from 2024 [5][2] Full-Year 2025 Results - Full-year adjusted EPS was $6.29, up 10% year-over-year, with significant contributions from commercial OE (10% growth), commercial aftermarket (18% growth), and defense (8% growth) [2] - The company achieved a book-to-bill ratio of 1.56 for the year, with commercial orders accounting for approximately $161 billion and defense awards totaling $107 billion [6] 2026 Guidance - RTX provided guidance for 2026, projecting adjusted sales between $92 billion and $93 billion, representing 5% to 6% organic growth [10] - Adjusted EPS is expected to be in the range of $6.60 to $6.80, with operational performance anticipated to contribute positively despite headwinds from lower pension income and a higher share count [11] Segment Performance - Collins Aerospace reported Q4 sales of $7.7 billion, up 3% adjusted and 8% organically, driven by commercial OE and aftermarket strength [14] - Pratt & Whitney's Q4 sales increased 25% to $9.5 billion, with significant growth across all channels, including a 30% rise in military engine sales [14] - Raytheon experienced a 7% increase in Q4 sales to $7.7 billion, supported by higher volume in defense systems [14] Investment and Capacity Expansion - RTX plans to invest $10.5 billion in combined CapEx and R&D for 2026, including $3.1 billion in CapEx, to support capacity and technology advancements [4][14] - The company noted progress in its GTF fleet management plan, with a significant reduction in aircraft-on-ground levels and increased MRO output [13]

Acquisition Overview - Deere & Company has agreed to acquire Tenna, a US-based construction technology company, for an undisclosed amount, with the transaction subject to regulatory approval and expected completion by February 2026 [1] - Following the acquisition, Tenna will operate independently under its existing tradename, focusing on expanding its mixed-fleet management model [2] Technology and Operations - Tenna's technology integrates operations across job sites, equipment shops, and office locations, helping contractors manage resources effectively [3] - The platform automates workflows and enables near real-time monitoring of assets, providing insights on equipment status and trends to support decision-making [3] Company Background and Market Strategy - Deere & Company, established in 1837, manufactures construction, agricultural, and forestry machinery, and has recently updated its backhoe range to enhance operator comfort and jobsite visibility [4] - During its Investor Day 2025, Deere announced a target of 10% compound annual growth rate in net sales from 2025 to 2030 and plans to launch in-house designed excavators for the North American market in mid-2026, with excavators representing approximately 40% of earthmoving equipment sales [5] Financial Performance - In the fourth quarter of fiscal 2025, Deere's Construction and Forestry segment sales increased by 27% due to higher shipment volumes, while operating profit grew by 6%, although growth was tempered by increased production costs [6]

The state of play is is very clear. Waymo also has a partnership with Uber in different markets. You now have a partnership in Nashville.Just explain the rationale for you on why this is a great go to market for Robotaxi. Well, as you know, we've been saying for a while, we think self-driving cars are going to be huge, The market expanding for rideshare. It's a really good product.And then when we looked at potential partners, of course, Waymo, you know, has to be at the top of the list. The great thing abo ...

Q2 2025 Financial Performance - Revenue decreased by 7% year-over-year, from $2.4 billion in Q2 2024 to $2.2 billion in Q2 2025, driven by lower fleet and pricing[10] - RPU decreased by 2% year-over-year, from $1,425 in Q2 2024 to $1,400 in Q2 2025, but was flat excluding fleet mix impact[10] - RPD decreased by 5% year-over-year, from $58.80 in Q2 2024 to $55.65 in Q2 2025, driven by market pricing and fleet mix shift[10] - DPU decreased significantly by 58% year-over-year, from $595 in Q2 2024 to $251 in Q2 2025, exceeding the North Star target by 16%[10] - Adjusted Corporate EBITDA improved from $(460) million in Q2 2024 to $1 million in Q2 2025, driven by lower vehicle depreciation and DOE[10] - Adjusted Free Cash Flow increased from $(553) million in Q2 2024 to $327 million in Q2 2025, driven by profitability improvement and increased vehicle funding advance rates[10] Operational Metrics - Transaction Days decreased by 3% year-over-year, from 39.7 million in Q2 2024 to 38.7 million in Q2 2025, reflecting strategic fleet reduction[10] - Average Fleet decreased by 6% year-over-year, from 577,000 in Q2 2024 to 543,000 in Q2 2025, aligning fleet size with demand[10] - Vehicle Utilization improved by 300 bps year-over-year, from 80% in Q2 2024 to 83% in Q2 2025, driven by fleet management and improved operations[10] - DOE per Transaction Day decreased by 1% year-over-year, from $36.25 in Q2 2024 to $36.03 in Q2 2025, driven by cost discipline and productivity[10]

Core Insights - Pratt & Whitney and Cebu Pacific have signed a long-term EngineWise™ maintenance services agreement for Cebu Pacific's GTF engine fleet, aligning maintenance costs with engine utilization [1][2] - The 12-year agreement supports Cebu Pacific's fleet expansion, including a historic order for up to 152 A321neo aircraft and engines for 15 A320neo family aircraft [2] - The agreement enhances Cebu Pacific's operational efficiency by providing access to technical expertise, fleet data, and business intelligence [3] Company Overview - Cebu Pacific is the largest airline in the Philippines, operating 37 domestic and 26 international destinations with a fleet of 98 aircraft, including Airbus A320, A321, A330, and ATR models [5] - The airline currently operates 56 Pratt & Whitney powered aircraft and has a long-standing relationship with Pratt & Whitney dating back to the 1990s [4] Industry Context - The GTF engine technology allows for up to a 20% reduction in fuel burn compared to previous-generation engines, leading to significant savings in fuel efficiency, lower emissions, and reduced operating costs for airlines [4] - Pratt & Whitney, as part of RTX, is a leader in aircraft engine design and service, supporting over 90,000 engines globally [6][7]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $1.8 billion, with adjusted EBITDA loss of $325 million, an improvement from a loss of $567 million in the prior year, resulting in a 9% margin improvement year over year [32][34] - Depreciation per unit (DPU) decreased by 45% year over year, with DPU for the quarter at $353 per month, and expectations to drop below $300 in Q2 2025 [34][35] - Direct operating expenses (DOE) per day decreased by 4% quarter over quarter and 1% year over year on a volume-adjusted basis [35] Business Line Data and Key Metrics Changes - The fleet was down 8% year over year, with a focus on tighter fleet management to capitalize on strong residual values [22][43] - Retail car sales saw a record quarter, with an increase in average selling price through the retail channel positively impacting depreciation per unit [15][16] - The company is focusing on increasing net margins by managing reconditioning costs and capturing more finance and insurance commissions [16] Market Data and Key Metrics Changes - Overall demand remains solid, but there are potential macroeconomic headwinds; corporate, government, and US inbound segments are moderating, while leisure bookings are up year over year [25][61] - The rental car index for April was up 8%, indicating rising residual values in the wholesale market [56] Company Strategy and Development Direction - The company is focused on disciplined fleet management, revenue optimization, and rigorous cost management as part of its transformation strategy [7][8] - The strategy includes a shift towards a younger fleet, with over 70% of the core US rental fleet being 12 months old or newer, aimed at reducing costs and improving utilization [10][12] - The company is leveraging technology partnerships to enhance fleet management and customer experience, including collaborations with Palantir and Amadeus [18][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic uncertainties but remains confident in the company's strategy and ability to adapt [20][46] - The company expects to achieve its North Star metrics, which could unlock over $1 billion of EBITDA run rate by 2026 [45][47] - Management is optimistic about rising residual values and solid demand, particularly in leisure segments, while remaining cautious about potential headwinds [47][42] Other Important Information - The company amended its revolving credit facility, extending the maturity date and maintaining strong liquidity of $1.2 billion at the end of Q1 [36][37] - The company is pursuing various transactions to optimize liquidity, including an ATM equity offering to start deleveraging [41][40] Q&A Session Summary Question: About fleet overfitting and residuals in retail vs wholesale - Management clarified that while there was temporary overfitting at the local market level due to early vehicle deliveries, overall fleet management remains tight [52][54] - Residual values are rising, with retail sales skewed towards higher values, and wholesale markets showing quicker price movements [55][56] Question: Geographic demand variations and corporate spending - Management noted no major geographic differences in demand but acknowledged a dip in corporate and government segments, with seasonal demand expected to pick up [60][61] Question: Fleet activity in April and May - The company continues to take deliveries and expects a mid to high single-digit increase in fleet size in Q2 compared to Q1 [66] Question: Balance of cost-cutting and revenue generation - Management emphasized the importance of maintaining customer experience while controlling costs, with improvements in Net Promoter Scores indicating success in this area [72][73] Question: Fleet strategy and RPD - The company is focusing on diversifying revenue streams and improving unit economics, with a tighter fleet aimed at producing more demand than can be satisfied [78][82]