Avis Budget Group(US:CAR)2021-11-02 17:34Financial Data and Key Metrics Changes - In Q3 2021, Avis Budget Group achieved over $1 billion in adjusted EBITDA, surpassing previous historic results [5][20] - Revenue in the Americas increased by $1.3 billion year-over-year, with adjusted EBITDA rising by nearly $750 million, resulting in an incremental margin of 58% [10] - The company generated over $1.7 billion in adjusted EBITDA in the first nine months of 2021 [20] Business Line Data and Key Metrics Changes - In the Americas segment, rental days were down single digits compared to 2019, with September being the best month yet [9] - Utilization in the Americas was 72%, flat compared to both the prior quarter and Q3 2019 [10] - The International segment saw adjusted EBITDA improve from $6 million in Q3 2020 to $128 million in Q3 2021, with a contribution margin of 70% [14] Market Data and Key Metrics Changes - The Americas booking patterns for Q4 and the holiday season appear robust, currently outpacing 2019 levels [11] - In the APAC region, rental days returned to levels similar to the height of the pandemic due to strict lockdowns [12] - EMEA rental days improved from being down in the high 40s compared to 2019 in Q2 to down in the very high 30s in Q3 [14] Company Strategy and Development Direction - The company is focused on continuous improvement and operational efficiency, aiming to maintain cost discipline while maximizing contribution margins [10][20] - Avis is investing in technology to enhance customer experience, including connected cars and automated rental processes [17] - The company is committed to reducing greenhouse gas emissions by over 30% over the next 10 years, with plans to increase the number of electric vehicles in its fleet [42] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, noting that while challenges remain, the worst of the pandemic appears to be behind them [19] - The company is not providing formal annual guidance but expects to deliver over $2 billion in EBITDA for the full year 2021 [27] - Management emphasized the importance of flexibility in decision-making to maximize long-term shareholder value [28] Other Important Information - The company retired $235 million of senior notes and repurchased 11.6 million shares for $994 million, representing a 16% reduction in outstanding shares [22][23] - As of September 30, the company had available liquidity of $1.3 billion, including $900 million in cash [25] Q&A Session Summary Question: Fleet size increase and production pressures - Management confirmed that the increase in fleet size was primarily due to new vehicles, with ongoing discussions with OEM partners to manage production challenges [30][31] Question: Technology initiatives and margin benefits - Management highlighted the development of technology solutions like Avis QuickPass, which enhances customer experience and operational efficiency [34][35] Question: Electric vehicle strategy - Management acknowledged the industry's shift towards electrification and confirmed ongoing discussions with OEM partners to optimize electric vehicle offerings [40][42] Question: Capital management strategy and share repurchase - Management reiterated a balanced approach to capital allocation, emphasizing the importance of share buybacks while also considering investments in technology and fleet management [44][45] Question: Model year 2022 vehicle acquisition and depreciation - Management indicated that while acquisition costs for new vehicles will be higher, they are focused on optimizing unit economics and managing depreciation effectively [47][49] Question: Impact of international travel restrictions removal - Management noted an increase in booking patterns from international travelers, particularly from Europe, and highlighted the potential for higher revenue per day from this segment [54][55] Question: Business vs. leisure travel mix - Management observed a sequential growth in commercial business, with longer rental periods helping to improve utilization [57][58] Question: Negotiations with commercial accounts - Management emphasized high retention rates among corporate accounts and the importance of fleet availability and condition in negotiations [60][62]