Avis Budget Group, Inc. (CAR) on Q1 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Avis Budget Group First Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce David Calabria, Treasurer and Senior Vice President of Corporate Finance. Thank you, you may begin. David Calabria: Good morning, everyone, and thank you for joining us. On the call with me are Joe Ferraro, our Chief Executive Officer; and Brian Choi, our Chief Financial Officer. Joe Ferraro: Thank you, David. Good morning, everyone, and thank you for joining us today. For the past two earnings calls, we've been consistent with our message that Avis Budget Group would not be content with simply surviving this crisis. Our entire organization rallied around a mission to do the hard things necessary during the adversity of 2020 to best position ourselves for a potential recovery in 2021. While the full recovery in rental days is still further off, with commercial and air travel still not back to historic levels, our first quarter results illustrate what could be when that day occurs. In the Americas, rental days were down 23% year-over-year and down 27% versus 2019. For context, this level of decline is still significantly higher than the disruption we faced during the Great Recession of 2009. Yet despite that headwind, due to the structural cost reductions we've implemented, all the benefits of a healthy pricing environment and improved vehicle costs through our fleet disposition strategy, all fell directly to the bottom line. The results being that for the first time since this pandemic, I can tell you that the Americas segment achieved a higher adjusted EBITDA this quarter than in the first quarter of 2019 and their best first quarter adjusted EBITDA margin in our company's history. Today, I'll review how we delivered those results and why I believe this is just the beginning of our recovery. Brian Choi: Thank you, Joe, and good morning, everyone. I will now discuss our liquidity and near-term outlook. My comments today will focus on our adjusted results, which are reconciled from our GAAP numbers in both our press release and earnings call presentation. I'd like to start off by addressing domestic revenue per day. A topic has received increased attention from the media recently. Let me be very clear. We, at Avis, do not set rental car prices. We discover price as determined by consumer demand and the availability of supply in the industry. At this time, what we are seeing is increased consumer demand due to people sheltering in place for a year and tight inventory across the industry. Due to, one, the deep leading necessary to survive the pandemic; and two, delayed access to new vehicles due to the semiconductor shortage. Put those two things together and it's understandable that prices will be impacted upwards. So let me put this in some context, at least from the Avis Budget Group's perspective, we're a seasonal business, so instead of picking 1 quarter or another, let's look at things annually. Also, we're currently in a very unusual period where outside macroeconomic influences are affecting our business. So let's look at the normalized period. We went back and looked at what America's RPD has done across the span of the last normalized economic cycle. We define this as the 9-year period from 2010 to 2019. Post-Great Recession and pre-pandemic. For the full year of 2010, the Americas segment achieved an RPD of $57. For the full year 2019, the Americas segment achieved an RPD of roughly $57, an increase of 0% over the past 9 years. In the same 2010 to 2019 period, the average hotel room night, as measured by Bloomberg and STR, is up over 30%. PRASM in this period, as measured by reported metrics of the public airline carriers, is up 40%. The fact that the price of an Avis rental day is flat over all these years is even more remarkable given the significant increase we've seen in the price of new cars, our largest input cost. Now for competitive reasons, we're not going to disclose how much that's gone up for Avis specifically, but as a proxy for the magnitude of increase, look at what's happened to the average transaction price of new cars as measured by TrueCar. ATP, which is an MSRP, this is where consumers actually clear a purchase, has gone from roughly $29,000 to over $35,000 in this period, an increase of over 20%. Given all of this data, I firmly believe that a rental car from Avis is one of the best value propositions offered to the American consumer in the travel sector. So yes, we are seeing some upward movement in price today but this is a bit of catch-up given the previous decade. And even at higher levels, this is an amazing bargain for the consumer. Operator: Our first question has come from the line of John Healy with Northcoast Research. Please proceed with your question. John Healy: Thank you, and congratulations on truly a fast and amazing turnaround that you guys have been able to put together over the last 12 months. I wanted to ask just a little bit about the summer. I know qualitatively, you've described the fleet situation. But quantitatively, I mean what are the realistic scenarios in terms of what the fleet could get to kind of at peak, especially in the Americas? And really, what sort of utilization level can the business max out at largely? So sort of have some color on those items. Joe Ferraro: Yes. John, this is Joe. Listen, the first thing I want to say about fleet, it's a very fluid situation, as you know. When you take a look at our overall fleet, where we finished the quarter here, it's about averages. And sometimes those averages can be misleading. So if you think about last quarter, we had a pretty good October, then the challenges came in November and December. So held on to cars in the early part of the quarter, got rid of them late. And this quarter was about the same, started off kind of down and then finish with -- as I said with the velocity that was just really terrific in the month of March. If you would look at our overall fleet situation right now, we have more cars than we did at the end of last quarter and more cars than those averages show. I would say this, our deliveries were what we expected in the month of March. We got most of our deliveries in the quarter during that period of time. And April is pretty much where we thought -- what we thought back then. If you think about where we were last year, we were sitting on this call last year during the pandemic, and there were questions from all of you as well as investors, like how are you going to get out of the cars. And we did just that. We got out of our fleet and we rightsized our business, and enabled us to be in this position that we are today. So I'm not apologizing to the fact that we sold some cars at the end of last year and maybe even earlier in January when things weren't looking so great. But we believe that we have the ability to flex our fleet. As far as utilization goes, we invest very much in the last quarter in our fleet. And gun and ran a service down to really truly historic levels for our company. We believe that, that will give us the ability to have significant improvements in utilization. You saw some of that in -- certainly in March, and we'll see that as we go forward. So I will say it's very fluid. And -- but we're working hard with the OEMs every day to understand where we are and what they could do, whether that means, what's getting canceled or what's getting delayed or what's getting substituted. And we'll deal with that, we'll deal with those situations as they develop. John Healy: Great. And then just one kind of capital allocation question. This isn't a question I thought I'd be asking for another two years. But given how you started the year, what you guys did in Q4 and how you're talking about Q2, I would think this business should be able to generate some decent free cash flow this year. And as you kind of look out to that $1 billion target that you guys have put out there. Obviously, that's at some point in the future. But how should we think about cash flow usage? And maybe how you would earmark kind of maybe how you likely utilize some of that cash flow that comes through the doors over the next four to six quarters? Brian Choi: Yes. John, it's Brian here. I'll take that one. So I think we've historically said that 3 times to 4 times leverage is what we're comfortable with, and I think that makes sense today. We're going to get there primarily by expanding our EBITDA. But we'll also use free cash flow opportunistically to pay down stub tranches of debt where it makes sense. I also believe that despite the recent stock movement upwards, Avis remains a great investment. And you'll see during this relief period, we were only allowed to purchase $10 million of stock under our restricted payments basket, and we took advantage of that this quarter. So I think we're undervalued. And I'd like to resume our share buyback program, funded by free cash flow, obviously, when permitted. So kind of going back to what we had done historically. Operator: Our next question comes from the line of Hamzah Mazari with Jefferies. Please proceed with your question. Mario Cortellacci: This is Mario Cortellacci filling in for Hamzah. I just wanted to talk about pricing. And I guess the question is just how sustainable do you think these prices are going forward? And do you think the pricing dynamic in the industry now has structurally changed post-COVID as some of the industry has won some lessons throughout the past year? Brian Choi: Mario, let me start off with this one and Joe will add his comments. So I was an investor during the last co-round of this pricing scrutiny. And I don't want the discussions to devolve into what's pricing doing this quarter or this month and then this week and then so on. That's really not the focus of this team. So obviously, our pricing team optimizes our demand fleet pricing model. We do the hand-to-hand combat necessary to capture what's out there in terms of price. But we, as a team, we're focused around cost discipline and executing operationally, like that's the meat and potatoes of this business, the price is gravy. So we're not going to be providing percentage commentary on pricing dynamics outside of what we normally state in our reported financials. But listen, like, I understand where you're coming from. What you're reading out there isn't wrong. In technical terms, I'd categorize the price environment right now is strong to quite strong. But I'm going to let Joe fill in. Joe Ferraro: Yes. Thanks, Mario. So if you take a look at where we were, and we finished the fourth quarter with price, I think, in the Americas, up 3%. And this month, we -- and this quarter, we finished up 12%. If you dissect the quarter, I'm not going month by month, we started off at a much lower base and finished off, frankly, higher. We've seen that translate as we move forward into the early signs of the second quarter. I think what you're seeing now is a lot of pent-up demand, right? And what we saw in March, in particular, with some of the key destinations, travel destinations that people wanted to go to, whether those would be beach vacations or mountain vacations is being very, very strong. And that hasn't changed. There are -- there's still demand out there. I will say this about the Easter holiday. It happened -- this year was kind of the tail end of March. And if you think about Easter, in general, it happened in 2019, like in the second week of March, maybe even later. And Easter in -- I'm sorry, second week of April. And Easter in April is always much better than Easter in March because you have more states that will be -- could be active in that as people plan around it. And Easter in March is really about traveling to a specific destination. I will say this, we were really pleased with our results over Easter. That's in the indication of holidays. As a matter of fact, it was not only better than prior year. Obviously, but better than 2019. So we think that there's still significant demand surrounding vacation destinations and vacation periods and as the summer breaks, that will certainly continue. Mario Cortellacci: Great. And just one follow-up on the cost takeout. And I guess, could you just update us on how much of the cost takeout you think will be permanent and how much will come back? Or maybe asked a different way, you guys have talked about the $1 billion in EBITDA as we reached pre-COVID revenue levels. How much permanent cost takeout does that apply? Brian Choi: Yes, Mario, like we're not going to get into specifics around that. And as Joe mentioned in the prepared remarks, we're continuing our efforts around cost rationalization. But this isn't something where we run some numbers and then say, okay, here it is, we're done. Like this is now just a continuous ongoing exercise. It's just how we live now. So the entire team, both operations and finance, we're aligned in getting more visibility around costs. So that we can manage and optimize the results. But instead of like telling you what we're going to do, I would rather deliver on our initiatives and show you with the quarterly numbers we print. It's what we've done during the pandemic, and we'll continue to do that going forward. Operator: Our next question is come from the line of Michael Millman with Millman Research Associates. Please proceed with your question. Michael Millman: So to touch on something you didn't want to touch on. But enterprises, I'm sure you remember, was a least reputed to have margins in the 17%, even 18% area in the days before. There are a lot of cost takeouts. So looking at that and looking at where you are would kind of suggest there is a lot more upside than you're hinting at, I think. And I don't know if you want to comment on that or not or say that the enterprise numbers are wrong? Brian Choi: No. Sorry, it's Brian here. I'll comment on that by not commenting on that. But what I'll say is that, listen, the upside that you're seeing right now is based on a stronger RPD that we're seeing, right? And when we gave that $1 billion target, that outlook was given under the assumption that revenue was back to 2019 levels, not just in absolute dollars of the roughly $9.2 billion but the construction of that revenue in terms of days and rate. So I still stand by that previous comment, and we're not offering updated targets based on new assumptions to RPD at this time. Joe Ferraro: Yes. I'm just going to jump in here and just say this, Michael. I think what we've tried to show both you and our investment community is that over the last three quarters, now all three have been kind of COVID-related quarters. But if you look at the last three, the Americas segment has had record margin, both in the third, the fourth and now the first. And that doesn't happen by chance. So there are things that we've done internally with our business and on our processes to gain some efficiency. And we're pretty proud of that. Michael Millman: I have a somewhat related question. If indeed, production -- oil production increases, presumably, if this will have an adverse effect on used car prices, is there some direct relationship between what happens with new autos and what happens with used car prices, which are setting all kinds of records, as you're aware? Joe Ferraro: Yes. You're right. Used car values are really high right now. Last year, if you just think about what's going on with -- in general, there's -- the manufacturers had, rightfully so, issues as it related to supply chain and COVID in building and manufacturing vehicles. And that continued pretty much throughout -- and as new cars throughout 2020. And then early on in '21, got hit with semiconductor issues and inclement weather in Texas, which builds a lot of parts. And unfortunately, they -- new car inventories have been challenged. Same thing goes for used cars, right? Used cars are also in high demand. When you think about our industry in general, what we do, we really provide a 1-year-old used car to a consumer. And the fact that the industry bought less cars in 2020, and we'll see what shakes out in '21, we think the values that we've seen in the used car arena will continue. Brian Choi: And just to add to that, of course, there's a relationship between new car production and used car values, but I'd just like to remind you that all throughout 2011 to 2019 before the pandemic, there was a very healthy SAAR environment and still record used car prices. Operator: Our next questions come from the line of Billy Kovanis with Morgan Stanley. Please proceed with your questions. Billy Kovanis: Congrats on the Strong quarter. Just wondering if you could provide any more color around some of the demand trends, especially in some of those high leisure vacation destinations like Florida, Hawaii and anything on sort of forward bookings here? And any commentary around how the trends have sort of changed from early Q1 into sort of May now? Joe Ferraro: Yes. Thanks, Billy. This is Joe. You're right on about that. The trends that we've seen have changed a bit. When you think about us in the scheme of things, car rental in general, the first thing people book are airlines, followed by hotels and then cars. So we're always kind of last on that on that chain, which is the reason why our bookings are historically predominantly closer in. And that was much more evident during the pandemic, the height of it, because people were uncertain about what was going to be open and what was not going to be open as far as states and travel. That still is the case. I mean you could still see our closing bookings, especially around those travel destinations being closed in. But what I will say is this, over the last month, probably towards like maybe middle of March and some part of April, we've seen a definite shift in the booking patterns and that people are now booking further out. So in other words, if someone was going to rent-a-car for on a Friday, they might book it on a Wednesday, et cetera. We're seeing people now book. If you look at over 30 days out into the future, at a much greater clip than obviously they did last year and a greater clip than they did in 2019, which just kind of shows you that the demand curves are starting to change a bit. And it's -- you can see it just about everywhere. Operator: Our next questions come from the line of Brian Johnson with Barclays. Please proceed with your questions. Brian Johnson: One quick question to follow-up on that last comment and then kind of midterm industry dynamics question prompted by Brian's history, which I agreed with. Just short term, do you have any metrics around how much of your summer capacity is already booked, looking at kind of the July, August period versus a -- not 2020, obviously, but a typical summer? Joe Ferraro: It's not really as meaningful right now since we sit here in the beginning of May. What I will tell you is that what we've seen is an improvement in bookings around further out around the holiday season, which gives you -- those are always a precursor to what normally happens in June and July and August. So I will say that, but not as meaningful right now, as you would imagine, but definitely some improvement and we've seen around those traditional travel periods and traditional travel destinations. Brian Johnson: Okay. And then following up, Brian, on your comment about car rental prices being stuck forever around $42 per day, depending which RPD, very little CPI over time compared to other travel categories. Let's -- obviously, the summer is a unique supply/demand imbalance. But when we go out a year or two and things perhaps normalize, at least from the automaker supply, so do you see the industry just going back to its old ways of sporadic price wars, OEMs dumping on -- sedans on to whichever car rental company is desperate enough to take it. Travel shopping apps pushing price down in a very efficient market? Or is there some kind of meaningful change that could come out of this period, back to one of the earlier questions, would make this a more industry with a better return and more consistent return on capital? Brian Choi: Sure. Well, Brian, I can't speak for the entire industry, but I'll tell you kind of how we're looking at it and what we're -- at least what we're hoping for. I do think that well, actually, let's go back to the -- when you said the OEMs were using this kind of the rental car industry as a dumping ground. I think maybe that was true like more than 10 years ago, maybe more than 5 years ago, but there's been a real concert effort by the OEM to be more rational around kind of their fleet sales, and we feel like that's gotten to a much, much better place. In fact, you'll see even from the prior years kind of the allocated inventory towards the rental car industry, the fleet industry has been kind of structurally shrinking over the last few years, even pre-pandemic. For us, at least, what we've realized, at Avis, is that you can do a lot more with less. And so we want to be disciplined going forward around the things we can control, which is, like I said, around price and operating efficiently in terms of how we use our fleet to capture some of those, maybe those rate benefits that we're seeing today. I would like to think that the industry, as a whole, which has gone through a near death experience, some more than others, have realized this overall. So I'm hopeful. I think that's what's going to happen. That's what we see right now. But like you said, only time will tell. Operator: Our next question is come from the line of Aileen Smith with Bank of America. Please proceed with your questions. Aileen Smith: I think some of us on the call have seen the headlines yesterday with comments from someone close to the industry talking about how rental car companies are actually going into the auction market and purchasing used vehicles in an effort to match supply to demand. From my understanding, this is something that you guys have done in the past to manage appropriate fleet levels. So from your perspective, would you say that you're being more aggressive on that front than you've been in the past? Or does it appear to be more so coming from your competitors? And can you walk us through how you get comfortable on purchasing and using and depreciating used vehicles in your fleet, particularly in comparison to how disciplined you guys are in doing that for new vehicles? Joe Ferraro: Yes. I'll take that, Aileen. Thank you. Yes, there's been a lot written of late about used car purchases. Let me say this historically, at our company, we've always purchased used cars. I think our strategy is, in general, our strategy has been -- can we use them in a specific area? Do they make sense on a certain make model basis? Can they cover over maybe a peak period that we weren't -- that we saw some close in demand? But in general, it's not a large part of our purchase by any stretch. And I think the reason why is we always look at the fundamentals of what is it going to cost us? How many mileage? What the kind of -- what's the mileages on the vehicles, et cetera. So we've use them more or less as a filling. They're not a big part of our strategic purchase by any stretch, but there's a place for them. If we could take a car in, I'd say, has a certain amount of miles on it and we can extend the life by a couple of months and take it over a peak period of time we're in a certain area, yes, it's going to be something that we would do. But very mindful of what the residual value of that vehicle is going to be when we exited. And that's very important to us. And if you looked at our per-unit fleet cost over the years, we think we've shown you that, that's how we would operate in that regard. I'm just going to take one other step further because there's always -- there's a lot of questions on fleet, and certainly, there's uncertainty here. But I just want to say this, we've been operating fleet and supply and demand for a long period of time. We have decades worth of experience doing this, both in our headquarters building and in the field itself. We have great systems and our demand fleet pricing, that gives us the ability to anticipate where demand is going to be in cities and states, and we use that -- and we put that in a number of years ago. We've had some great success in doing that. And I think you asked me this on the last one, we deal with 15 or so manufacturers and over 100 make models. And we do that for a couple of reasons. The first is, it gives us the opportunity to supply cars to customers that actually want to rent them and potentially buy them. And just as important, it insulates us against changes in the dynamics of supply whether that be recalls that we saw in 2014 and '15, when the 1/3 of our fleet was put on hold, we were able to get through that. And additionally for something like this where there's uncertainty around semiconductors. Brian Choi: Aileen, I'll add to that just a bit just going back to that article that you had mentioned. So the way that I read the article is that there's a lot of demand out there for rental cars and certain of our -- certain players in the industry are kind of going to the option to match supply to demand, right? And of course, that's what we try and do. But the overarching principle and whether we in-fleet a vehicle is the cash-on-cash unit economic returns. If that makes sense, we will in-fleet the vehicle. So when it does, we do, but we see like what's happening in the used car market, that's increased dramatically as well. So like Joe says, this isn't something that we're going to be cavalier about in terms of like going out and purchasing a bunch of used cars, we will do it like in pockets where it makes sense on like more of a one-off basis, I'd say. Joe Ferraro: That's right. Aileen Smith: Great. That's very helpful commentary. And then as a follow-up question to that, around fleet cost per unit. One of the dynamics that clearly help fleet cost per unit over the past several quarters has been significant gains on vehicles that you're selling into the auction channel as you've made efforts to de fleet. I'm sure we'll get some of this detail in the queue. But if we think about the dynamic in the first quarter,and future quarters for this year where you are defleeting less aggressively or actually increasing the size of your fleet, are you still recording meaningful gain on sale of vehicles and capitalizing on record used vehicle pricing? Or is what we're seeing in the fleet cost per unit more a structural depreciation number? Brian Choi: Yes, Aileen, I think if you look at the queue, we separate that out between what our like kind of book depreciation is and then a gain. What you'll notice is that we haven't made any significant changes at all in terms of like how we're depreciating the vehicles. The swings that you're seeing is basically just the realized price on the vehicles that we sell. So you're right. As we start kind of decreasing the volume of fleet sales because we need those vehicles to rent, you'll see that normalize. I wouldn't say back to kind of historic levels where we are at 2019 and before, but maybe slightly higher than what you're seeing right now. Operator: Our next questions come from the line of Chris Woronka with Deutsche Bank. Please proceed with your questions. Chris Woronka: Maybe we could talk a little bit about buckets of demand. I mean, leisure has obviously been well covered, but as you think about post-summer and you're thinking about fleet decisions for the fall and even into early next year, do you have a view on what happens some of the various buckets of commercial demand, mainly on the corporate side? And then the related question to that is kind of maybe on ride share, obviously, we read about a shortage of drivers. That was a segment that I think you were beginning to tap more into pre-COVID. Where do you see opportunities on that shaking out, on the ride share rentals? Joe Ferraro: Yes. You're right. We've seen pockets of demand, quite frankly, in the month of March and it surrounded, as I said, most of the leisure locations that you would think of, that being Florida and Arizona and the Carolinas as well as ski destinations of Utah and Denver. And then Hawaii kind of opened up kind of tail end of the quarter, and we saw that there as well. Those places are still very popular going out as leisure demand has been very, very strong. You're right. As we exit the summer season, what is demand going to be like, and that involves some of the other segments, which most likely is commercial. And what's the -- what do we anticipate there? That's really hard to read right now. I will say this, our commercial business has sequentially improved month-over-month as more people get back to their offices and start traveling a bit. The length of rental that we have on commercial business has -- is seemingly still pretty high. So that's been a positive. I think it's breadth that really much predicated on when will our commercial clients get back to their offices. And then how do they feel about travel in the back half. We do our own internal polling of the accounts that we do business with, and they're all kind of in that range. After the summer, we think we're getting people back to the buildings and the offices, and then we'll start thinking about travel maybe in the latter part of the year. So there is probably some anticipation of that. As far as inbound business, which is from long length business, pretty good as far as our profitability. That's been all but basically shut down. We've seen some growth in some of the South American countries coming up. But the European inbound, Canadian inbound because they're virtually shut down, has been kind of stagnant. When that happens is anyone's guess. There was talk the other day about the EU opening up, the Americans being able to fly there and hopefully vice versa. But that's kind of a wait and see for us as far as we could tell. And lastly, on your ride-hail question, we have grown our ride-hail business significantly over the past couple of years. We have a terrific partner who we work with daily. And that business, we continue to -- we see as an opportunity to grow. I think lastly, the truck business or the truck segment, terrific growth in overall our commercial business for truck. And the e-commerce business, as we said many times on the calls previously, has grown tremendously with van utilization, et cetera. And that hasn't stopped. So we think that will continue throughout the rest of the year. Chris Woronka: Okay. Terrific. I appreciate all that color. And the follow-up question is on unit labor costs. We read about a lot of headlines about that impacting various consumer-facing businesses. Can you talk a little bit about what you're seeing at the ground level and are you confident that the -- any increase in hourly wages is not going to significantly derail the margin progress? Joe Ferraro: Yes, it's a great question. Yes, we've -- yes, we read about that as well. And obviously, it's something that we're thinking about, right? Just to give you some context. We've been dealing with cost of living adjustments and minimum wage increases, over the past number of years. And especially in certain states out West, et cetera. And we've been able to deal with that. We work on -- have been on productivity level evaluations of all our business. We've continually looked at how to make our processes cleaner and smoother, which allow us to deal with higher levels of productivity than we had in the past. So yes, we are certainly aware of that. We will monitor that as time goes on. But it's something that as it stands right now, isn't a giant watch out. Brian Choi: Yes. Chris, we've been spending a lot of time, like Joe said, during the pandemic when this wasn't an issue at all. Investing in the systems, the processes, the technology in order to kind of maximize productivity to be able to do more with less. So yes, it is something we're monitoring, but something that we feel good about. Operator: We have reached the end of the question-and-answer session. I would like to turn the call back over to Joe Ferraro for any closing remarks. Joe Ferraro: Yes. Thank you, and thank you for joining us today. So to summarize, we delivered an outstanding quarter performance this year and with the Americas delivering the highest adjusted EBITDA margins in the company's first quarter history and International showing extreme resiliency through stringent cost control. Our financial position remains strong, and we'll continue to capitalize on the continued recovery as travel demand returns. I want to thank all of you for your interest in our company, and I look forward to speaking with you again shortly. Thank you. Operator: Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.
Avis Budget Group Inc. (NASDAQ:CAR) Faces Financial Challenges and Leadership Changes
Avis Budget Group Inc. (NASDAQ:CAR) is a prominent player in the car rental industry, competing with giants like Hertz and Enterprise. The company has recently been in the spotlight due to significant financial losses and changes in its leadership structure.
- Significant financial losses: Avis Budget reported a loss of $55.66 per share in Q4 2024, a drastic downturn from the $7.10 profit per share in the same quarter the previous year.
- Leadership transition: CEO Joe Ferraro is set to become a Board Advisor, with Brian Choi, the current Chief Transformation Officer, taking over as CEO on July 1, 2025.
- Stock volatility: The company's stock price has seen considerable fluctuations, with a recent drop of 0.38% to $93.83, amidst a turbulent period marked by an investigation into potential securities law violations. Avis Budget Group Inc. operates under several brands, including Avis and Budget, and has been under scrutiny due to significant financial losses and leadership changes.
On February 20, 2025, Krominga Lynn, a director at Avis Budget, sold 1,405 shares of the company's common stock at $95 per share. This transaction, reported on Form 4, leaves Lynn with 1,950 shares. This sale comes amid a turbulent period for Avis Budget, as highlighted by the Schall Law Firm's investigation into potential securities law violations.
Avis Budget's financial performance has raised concerns, with the company reporting a loss of $55.66 per share in Q4 2024, a stark contrast to the $7.10 profit per share in the same quarter the previous year. This financial downturn, as reported by Levi & Korsinsky, has led to a significant drop in the company's stock price, which fell by over 6% following the announcement.
The company is also undergoing a leadership transition, with CEO Joe Ferraro set to become a Board Advisor by June 30, 2025. Brian Choi, the current Chief Transformation Officer, will assume the CEO role on July 1, 2025. These changes, coupled with the financial losses, have contributed to the stock's volatility, which is currently priced at $93.83, down 0.38% today. Avis Budget's market capitalization stands at approximately $3.29 billio*, with a trading volume of 777,499 shares. The stock has experienced significant fluctuations over the past year, reaching a high of $132.25 and a low of $65.73. As the company navigates these challenges, investors and stakeholders are closely monitoring its next moves.
Avis Budget Group Inc. (NASDAQ:CAR) Faces Financial Challenges and Leadership Changes
Avis Budget Group Inc. (NASDAQ:CAR) is a prominent player in the car rental industry, competing with giants like Hertz and Enterprise. The company has recently been in the spotlight due to significant financial losses and changes in its leadership structure.
- Significant financial losses: Avis Budget reported a loss of $55.66 per share in Q4 2024, a drastic downturn from the $7.10 profit per share in the same quarter the previous year.
- Leadership transition: CEO Joe Ferraro is set to become a Board Advisor, with Brian Choi, the current Chief Transformation Officer, taking over as CEO on July 1, 2025.
- Stock volatility: The company's stock price has seen considerable fluctuations, with a recent drop of 0.38% to $93.83, amidst a turbulent period marked by an investigation into potential securities law violations. Avis Budget Group Inc. operates under several brands, including Avis and Budget, and has been under scrutiny due to significant financial losses and leadership changes.
On February 20, 2025, Krominga Lynn, a director at Avis Budget, sold 1,405 shares of the company's common stock at $95 per share. This transaction, reported on Form 4, leaves Lynn with 1,950 shares. This sale comes amid a turbulent period for Avis Budget, as highlighted by the Schall Law Firm's investigation into potential securities law violations.
Avis Budget's financial performance has raised concerns, with the company reporting a loss of $55.66 per share in Q4 2024, a stark contrast to the $7.10 profit per share in the same quarter the previous year. This financial downturn, as reported by Levi & Korsinsky, has led to a significant drop in the company's stock price, which fell by over 6% following the announcement.
The company is also undergoing a leadership transition, with CEO Joe Ferraro set to become a Board Advisor by June 30, 2025. Brian Choi, the current Chief Transformation Officer, will assume the CEO role on July 1, 2025. These changes, coupled with the financial losses, have contributed to the stock's volatility, which is currently priced at $93.83, down 0.38% today. Avis Budget's market capitalization stands at approximately $3.29 billio*, with a trading volume of 777,499 shares. The stock has experienced significant fluctuations over the past year, reaching a high of $132.25 and a low of $65.73. As the company navigates these challenges, investors and stakeholders are closely monitoring its next moves.
Avis Budget Group, Inc. (NASDAQ:CAR) Earnings Preview: Key Financial Insights
- Anticipated Earnings Report: Wall Street expects an EPS of -$0.50 and revenue of around $2.72 billion for the quarter ending December 2024.
- Financial Metrics: CAR showcases a P/E ratio of 7.8, a price-to-sales ratio of 0.26, and an enterprise value to sales ratio of 2.47.
- Financial Health Concerns: The company has a negative debt-to-equity ratio of -112.74 and a current ratio of 0.70, indicating potential liquidity issues.
Avis Budget Group, Inc. (NASDAQ:CAR) is a leading global provider of mobility solutions, operating through its well-known Avis and Budget brands. With approximately 10,250 rental locations across 180 countries, the company plays a significant role in the car rental industry. As it prepares to release its quarterly earnings on February 11, 2025, Wall Street anticipates an earnings per share (EPS) of -$0.50 and revenue of around $2.72 billion.
The upcoming earnings report is crucial for CAR, as highlighted by Zacks Investment Research, which suggests the company might surpass earnings estimates. Despite a projected year-over-year decline in earnings due to lower revenues for the quarter ending December 2024, there is potential for positive stock movement if actual results exceed expectations. However, a miss could negatively impact the stock price.
CAR's financial metrics provide insight into its current market position. The company has a price-to-earnings (P/E) ratio of 7.8, indicating a relatively low valuation compared to its earnings. Its price-to-sales ratio is 0.26, suggesting modest market valuation of its sales. The enterprise value to sales ratio is 2.47, reflecting the company's total valuation in relation to its sales.
The company's financial health is further illustrated by its enterprise value to operating cash flow ratio of 8.28, which indicates cash flow efficiency. The earnings yield stands at 12.82%, offering a substantial return on investment relative to its share price. However, CAR faces challenges with a negative debt-to-equity ratio of -112.74, indicating a high level of debt compared to its equity, and a current ratio of 0.70, suggesting potential liquidity issues in meeting short-term obligations.
The management's discussion during the earnings call on February 12, 2025, will be pivotal in assessing the sustainability of any immediate price changes and future earnings expectations. Investors will closely monitor the company's strategies to address its financial challenges and capitalize on its market position.
Avis Budget Group, Inc. (NASDAQ:CAR) Earnings Preview: Key Financial Insights
- Anticipated Earnings Report: Wall Street expects an EPS of -$0.50 and revenue of around $2.72 billion for the quarter ending December 2024.
- Financial Metrics: CAR showcases a P/E ratio of 7.8, a price-to-sales ratio of 0.26, and an enterprise value to sales ratio of 2.47.
- Financial Health Concerns: The company has a negative debt-to-equity ratio of -112.74 and a current ratio of 0.70, indicating potential liquidity issues.
Avis Budget Group, Inc. (NASDAQ:CAR) is a leading global provider of mobility solutions, operating through its well-known Avis and Budget brands. With approximately 10,250 rental locations across 180 countries, the company plays a significant role in the car rental industry. As it prepares to release its quarterly earnings on February 11, 2025, Wall Street anticipates an earnings per share (EPS) of -$0.50 and revenue of around $2.72 billion.
The upcoming earnings report is crucial for CAR, as highlighted by Zacks Investment Research, which suggests the company might surpass earnings estimates. Despite a projected year-over-year decline in earnings due to lower revenues for the quarter ending December 2024, there is potential for positive stock movement if actual results exceed expectations. However, a miss could negatively impact the stock price.
CAR's financial metrics provide insight into its current market position. The company has a price-to-earnings (P/E) ratio of 7.8, indicating a relatively low valuation compared to its earnings. Its price-to-sales ratio is 0.26, suggesting modest market valuation of its sales. The enterprise value to sales ratio is 2.47, reflecting the company's total valuation in relation to its sales.
The company's financial health is further illustrated by its enterprise value to operating cash flow ratio of 8.28, which indicates cash flow efficiency. The earnings yield stands at 12.82%, offering a substantial return on investment relative to its share price. However, CAR faces challenges with a negative debt-to-equity ratio of -112.74, indicating a high level of debt compared to its equity, and a current ratio of 0.70, suggesting potential liquidity issues in meeting short-term obligations.
The management's discussion during the earnings call on February 12, 2025, will be pivotal in assessing the sustainability of any immediate price changes and future earnings expectations. Investors will closely monitor the company's strategies to address its financial challenges and capitalize on its market position.
Avis Budget Group’s Stock a Catalyst Call Buy Idea at Deutsche Bank
Deutsche Bank's analysts maintained their Hold rating for Avis Budget Group (NASDAQ:CAR) with a price target of $260.00, while opening a Catalyst Call Buy Idea on the stock.
The analysts noted that Avis shares currently seem undervalued, highlighting their positive operational metrics. They suggest that the market might be overestimating potential future challenges related to pricing or asset depreciation.
The upcoming Q3/23 results, set to be released after the market closes on November 1, along with the November 2 conference call, could prompt a positive market reaction for several reasons. These include low current expectations, anticipated positive trends for October, potential aggressive share repurchases by Avis since mid-September, and potential impacts of the UAW strike on used car prices.
