AVIS BUDGET GROUP INC

Previous wording

The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q and with our 2023 Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including those discussed in “Forward-Looking Statements.” See “Forward-Looking Statements” and “Risk Factors” for additional information. Unless otherwise noted, all dollar amounts in tables are in millions.

Current wording

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q and with our 2024 Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including those discussed in “Forward-Looking Statements.” See “Forward-Looking Statements” and “Risk Factors” for additional information. Unless otherwise noted, all dollar amounts in tables are in millions.

Previous wording

We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 736,000 vehicles in third quarter 2024. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

Current wording

We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 631,000 vehicles in first quarter 2025. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

Previous wording

We categorize our operations into two reportable business segments: Americas, consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in certain areas in which we do not operate directly; and International, consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in certain areas in which we do not operate directly.

Current wording

We categorize our operations into two reportable business segments: Americas, consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly; and International, consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.

Previous wording

We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, cost of new vehicles, used car values, and an economic downturn that may impact travel demand, all of which may be exacerbated by the ongoing military conflicts in the Middle East and Eastern Europe. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.

Current wording

We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, cost of new vehicles, used car values, increases in the number of personal injury claims and cost per incident, and an economic downturn that may impact travel demand, all of which may be exacerbated by ongoing military conflicts, including in Eastern Europe. Additionally, uncertainty remains with respect to tariffs and tax regulations, and this uncertainty has had and may continue to have impacts on our operations. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.

Previous wording

We assess performance and allocate resources based upon the separate financial information of our operating segments. In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which our segments operate and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; any impairment charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; and income taxes.

Current wording

We assess performance and allocate resources based upon the separate financial information of our operating segments. We aggregate certain of our operating segments into our reportable segments. In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the segments operate, and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenues and Adjusted EBITDA, which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; long-lived asset impairment and other related charges; other fleet charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, net, which includes amounts recorded in excess of $5 million, related primarily to unprecedented self-insurance reserves for allocated loss adjustment expense, class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; severe weather-related damages in excess of $5 million, net of insurance proceeds; and income taxes. We have revised our definition of Adjusted EBITDA to exclude other fleet charges. We did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these.

Previous wording

Our strategy continues to primarily focus on customer experience and costs to strengthen our Company, maximize profitability, and deliver stakeholder value. During the three months ended September 30, 2024, we generated revenues of $3.5 billion, net income of $238 million and Adjusted EBITDA of $503 million. These results were primarily driven by consistent year-over-year volume, decreased revenue per day, and increased fleet and interest costs.

Current wording

During the three months ended March 31, 2025:

Previous wording

•Our revenues totaled $9.1 billion, a decrease of $165 million year-over-year, primarily due to decreased revenue per day, partially offset by an increase in volume.

Current wording

•Our revenues totaled $2.4 billion, a decrease of $121 million year-over-year, primarily due to decreased revenue per day and volume.

Previous wording

•Our net income was $137 million, representing a decrease of $1.2 billion year-over-year, primarily due to increased fleet and interest costs.

Current wording

•Our net loss attributable to Avis Budget Group, Inc. was $505 million, representing a decrease of $391 million year-over-year, primarily due to increased fleet costs.

Previous wording

•Our Adjusted EBITDA was $729 million, representing a decrease of $1.5 billion year-over-year.

Current wording

•Our Adjusted EBITDA loss was $93 million, representing a decrease of $105 million year-over-year.

Previous wording

Our consolidated condensed results of operations comprised of the following:

Current wording

Our condensed consolidated results of operations comprised of the following:

Previous wording

Revenues decreased $84 million, or 2%, during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 2% decrease in revenue per day, excluding exchange rate effects, partially offset by a $6 million positive impact from currency exchange rate movements. Total expenses increased 12% during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to increased fleet and interest costs. Our effective tax rates were a provision of 27.7% and 17.2% for the three months ended September 30, 2024 and 2023, respectively. As a result of these items, our net income decreased by $389 million compared to the similar period in 2023. For the three months ended September 30, 2024 and 2023, we reported earnings per diluted share of $6.65 and $16.78, respectively.

Current wording

Revenues decreased $121 million or 5% during the three months ended March 31, 2025 compared to the similar period in 2024, primarily due to a 2% decrease in revenue per day, excluding exchange rate effects, a $23 million negative impact from currency exchange rate movements, and a 1% decrease in volume. Total expenses increased 15% during the three months ended March 31, 2025, compared to the similar period in 2024, primarily due to increased fleet costs. Our effective tax rates were a benefit of 25.6% and 20.4% for the three months ended March 31, 2025 and 2024, respectively. As a result of these items, our net loss attributable to Avis Budget Group, Inc. decreased by $391 million compared to the similar period in 2024. For the three months ended March 31, 2025 and 2024, we reported diluted loss per share of $(14.35) and $(3.21), respectively.

Previous wording

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:

Current wording

Following is a more detailed discussion of the results of each of our reportable segments, corporate and other, and reconciliation of net loss to Adjusted EBITDA:

Previous wording

Revenues decreased during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 2% decrease in volume, a 1% decrease in revenue per day and a $4 million negative impact from currency exchange rate movements.

Current wording

Revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024, primarily due to a 3% decrease in revenue per day, a $4 million negative impact from currency exchange rate movements and a 1% decrease in volume.

Previous wording

Adjusted EBITDA decreased during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet and interest costs.

Current wording

Adjusted EBITDA decreased during the three months ended March 31, 2025 compared to the similar period in 2024, primarily due to higher per-unit fleet costs.

Previous wording

Revenues decreased during the nine months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 3% decrease in revenue per day and a $6 million negative impact from currency exchange rate movements, partially offset by a 1% increase in volume.

Current wording

Revenues decreased during the three months ended March 31, 2025 compared to the similar period in 2024, primarily due to a 3% decrease in volume, a $19 million negative impact from currency exchange rate movements, partially offset by a 1% increase in revenue per day, excluding exchange rate effects.

Previous wording

The increase in liabilities exclusive of liabilities under vehicle programs is primarily due to the increase in corporate indebtedness from the issuance of senior notes. See “Liquidity and Capital Resources,” and Note 10 – Long-term Corporate Debt and Borrowing Arrangements to our Consolidated Condensed Financial Statements.

Current wording

The increase in total liabilities exclusive of liabilities under vehicle programs is primarily due to the increase in corporate indebtedness from the issuance of a floating rate term loan due December 2025. See “Liquidity and Capital Resources,” and Note 10 – Long-term Corporate Debt and Borrowing Arrangements to our Condensed Consolidated Financial Statements. The decrease in liabilities under vehicle programs is primarily due to the repayment of debt. The decrease in total stockholders’ equity is primarily due to the increase in our net loss.

Previous wording

During 2024, our Avis Budget Rental Car Funding (AESOP) subsidiary issued approximately $2.4 billion of asset-backed notes with expected final payment dates ranging from April 2026 to December 2029, and a weighted average interest rate of 5.46%. In March and April 2024, AESOP amended and restated its asset-backed variable-funding financing facilities. The proceeds from these borrowings will be used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States. In February 2024, we amended our European rental fleet securitization program to increase its capacity to approximately €1.9 billion and extend its maturity to September 2026. We also added £200 million to our capacity under the program. The program is used to finance fleet purchases for certain of our European operations.

Current wording

During 2025, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued approximately $358 million of asset-backed notes with expected final payment dates ranging from August 2027 to February 2029 and a weighted average interest rate of 8.01%. The proceeds from these borrowings were used to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States.

Previous wording

Our Board of Directors has authorized the repurchase of up to approximately$8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023. Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments and other factors. The Stock Repurchase Program may be suspended, modified or discontinued at any time without prior notice. The Stock Repurchase Program has no set expiration or termination date. During the nine months ended September 30, 2024, we repurchased approximately 0.1 million shares of common stock at a cost of approximately $8 million (excluding excise taxes due under the Inflation Reduction Act of 2022) under the Stock Repurchase Program. As of September 30, 2024, approximately $794 million of authorization remained available to repurchase common stock under the Stock Repurchase Program.

Current wording

Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in February 2023 (the “Stock Repurchase Program”). Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments and other factors. The Stock Repurchase Program may be suspended, modified or discontinued at any time without prior notice. The Stock Repurchase Program has no set expiration or termination date. During the three months ended March 31, 2025, we did not repurchase shares of common stock under the Stock Repurchase Program. As of March 31, 2025, approximately $757 million of authorization remained available to repurchase common stock under the Stock Repurchase Program.

Previous wording

The decrease in cash provided by operating activities during the nine months ended September 30, 2024 compared with the similar period in 2023 is primarily due to the decrease in our net income.

Current wording

Cash provided by operating activities during the three months ended March 31, 2025 is consistent with the similar period in 2024.

Previous wording

The decrease in cash used in investing activities during the nine months ended September 30, 2024 compared with the similar period in 2023 is primarily due to the decrease in our investment in vehicles.

Current wording

The decrease in cash used in investing activities during the three months ended March 31, 2025 compared with the similar period in 2024 is primarily due to the decrease in our net investment in vehicles.

Previous wording

The decrease in cash provided by financing activities during the nine months ended September 30, 2024 compared with the similar period in 2023 is primarily due to the increase in our payments under vehicle programs, partially offset by the increase in our net corporate borrowings.

Current wording

The decrease in cash provided by financing activities during the three months ended March 31, 2025 compared with the similar period in 2024 is primarily due to the increase in our net payments under vehicle programs.

Previous wording

At September 30, 2024, we had approximately $23.9 billion of indebtedness, including corporate indebtedness of approximately $6.0 billion and debt under vehicle programs of approximately $17.9 billion. For information regarding our debt and borrowing arrangements, see Notes 1, 10 and 11 to our Consolidated Condensed Financial Statements.

Current wording

At March 31, 2025, we had approximately $23.1 billion of indebtedness, including corporate indebtedness of approximately $5.9 billion and debt under vehicle programs of approximately $17.2 billion. For information regarding our debt and borrowing arrangements, see Note 1 – Basis of Presentation, Note 10 – Long-term Corporate Debt and Borrowing Arrangements and Note 11 – Debt Under Vehicle Programs and Borrowing Arrangements to our Condensed Consolidated Financial Statements.

Previous wording

Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions or a worsening of the United States and worldwide economies, or by increases in interest rates, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally. We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used-vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market.

Current wording

Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions, a worsening of the United States and worldwide economies or by increases in interest rates, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally. We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs, including due to a decrease in the fair value of our fleet, under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market.

Previous wording

As of September 30, 2024, we had $602 million of available cash and cash equivalents and access to available borrowings under our revolving credit facility of approximately $536 million, providing us with access to approximately $1.1 billion of total liquidity.

Current wording

As of March 31, 2025, we had $516 million of available cash and cash equivalents and access to $559 million of available borrowing capacity under our revolving credit facility and approximately $57 million under our uncommitted facilities, providing us with access to approximately $1.1 billion of total liquidity.

Previous wording

Our future contractual obligations have not changed significantly from the amounts reported within our 2023 Form 10-K with the exception of our commitment to purchase vehicles, which decreased by approximately $2.9 billion from December 31, 2023, to approximately $3.9 billion as of September 30, 2024 due to existing fleet levels. Changes to our obligations related to corporate indebtedness and debt under vehicle programs are presented above within the section titled “Liquidity and Capital Resources—Debt and Financing Arrangements” and also within Notes 10 and 11 to our Consolidated Condensed Financial Statements.

Current wording

Our future contractual obligations have not changed significantly from the amounts reported within our 2024 Form 10-K with the exception of our commitment to purchase vehicles, which increased by approximately $1.2 billion from December 31, 2024, to approximately $7.5 billion as of March 31, 2025 due to new model year vehicle purchases. Changes to our obligations related to corporate indebtedness and debt under vehicle programs are presented above within the section titled “Liquidity and Capital Resources—Debt and Financing Arrangements” and also within Note 10 – Long-term Corporate Debt and Borrowing Arrangements and Note 11 – Debt Under Vehicle Programs and Borrowing Arrangements to our Condensed Consolidated Financial Statements.

Previous wording

For detailed information regarding new accounting standards and their impact on our business, see Note 1 to our Consolidated Condensed Financial Statements.

Current wording

For detailed information regarding new accounting standards and their impact on our business, see Note 1 – Basis of Presentation to our Condensed Consolidated Financial Statements.