Avis Budget Group Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Babcock - Bank of America - Analyst : Hi Good morning and thank you for taking my questions. First one just on utilization, I know you talked about fleeting levels, and that's obviously a huge driver of utilization, but I was also wondering what you need to do operationally to continue running at higher utilization rates, while still meeting demand. And then also if you could talk about, if there's a level of utilization where it gets incrementally more difficult to run the fleet.

Question: John Babcock - Bank of America - Analyst : Okay, thank you. And then just my follow on question here, I know you, talked about tariffs still an evolving target, obviously, out of curiosity though, I mean, with some of the signs that vehicle prices are starting to move higher, could you just talk about how that might impact your fleeting plans for all the year 26 vehicles and also if you could just remind us when those negotiations start, that would be helpful.

Question: John Babcock - Bank of America - Analyst : Okay, thank you, Joe.

Question: Stephanie Moore - Jefferies LLC - Analyst : Hi, good morning. Thank you. I wanted to touch a little bit on what you're seeing from a competitive standpoint if you feel like there has been any major change in the competitive landscape across the Americas and particularly. Thank you.

Question: Stephanie Moore - Jefferies LLC - Analyst : Got it. Appreciate that, appreciate the color and then maybe just one follow up to the prior question. If, maybe you could provide a little bit of insight. Joe, clearly you've been with Avis for some time and we will certainly miss you on these calls, but if you go back and think about other periods or maybe we've seen rising new vehicle pricing or higher acquisition costs and what levers you have at your disposal to potentially offset those higher costs. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:30PM, CAR.OQ - Q1 2025 Avis Budget Group Inc Earnings Call

Question: Stephanie Moore - Jefferies LLC - Analyst : Thank you, really appreciate the time.

Question: Christopher Stathoulopoulos - Susquehanna International - Analyst : Good Morning everyone. Joe, so, a lot of the companies are actually most of the companies here within travel and leisure from. Airlines lodging cruise lines have had a bit of a bit more cautious view on the year. You sound a little bit more optimistic. So the soft guide of no less than a billion dollars, that you're still holding to, what gives you the confidence, that you can hit that? Is it the work that you've done? On the fleet renewal procurement technology, and then, what are you seeing, just what are you seeing with respect to demand and, could you remind us of your booking window? I think typically the way I think about it is, 30 days or in, I just want to understand how you're looking at demand into the second quarter and summer travel season. Thanks.

Question: Christopher Stathoulopoulos - Susquehanna International - Analyst : Okay, and then along those lines on free cash flow, do you think that you can realize positive free cash flow for the year, first quarter you were at a loss of just around half a -- around $500 million, I realized there was about $400 million of that in the financing side for the vehicles. Given all the work that you've done with respect to the fleet and the turn and the residual, values, your thoughts around free cash flow for the year. Thank you.

Question: Christopher Stathoulopoulos - Susquehanna International - Analyst : Okay, thank you.

Question: Jash Patwa - JPMorgan Chase & Co - Analyst : Hi, good morning. This is Jash Patwa, on for Ryan Brinkman. Thanks for taking our questions. Joe, congratulations on an exceptional career and best wishes for the next chapter of your life. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:30PM, CAR.OQ - Q1 2025 Avis Budget Group Inc Earnings Call I just wanted to start off, on tariffs. Could you maybe give us a sense of tariffs implications from a DOE standpoint? Any insights helping us find the sensitivity of DOE to tariff-induced inflation and vehicle parts and perhaps any other areas outside of fleet values that may be impacted due to tariffs. Thanks and have a follow up.

Question: Jash Patwa - JPMorgan Chase & Co - Analyst : But that's very helpful. Thank you for that. And just as a follow on, I'd like to explore how you're balancing buybacks versus deleveraging. On one hand, there's the opportunity to capitalize on the current share price and acquire shares ahead of any potential rally and used car prices, which might occur in response to tariff related new vehicle price hikes. On the other hand, there's the potential to secure favorable pricing on debt refinancing expected by 2026. Which could be facilitated by debt deleveraging and might alleviate pressure on your earnings multiple as well. Just curious how you weighing these considerations in your capital allocation strategy. Thank you.

Question: Jash Patwa - JPMorgan Chase & Co - Analyst : Got it. Thank you and good luck.

Question: Dan Levy - Barclays Capital Inc - Analyst : Hi, good morning. Thanks for taking the questions. Want to start first with a question on the DPU maybe you could give us a sense of how much your DPU in the first quarter benefited from the one-time charge of just under $400 million and then maybe you can give us a sense the assumptions you've laid out for $325 in the second quarter and $300 million by the start of the fourth quarter, what you are assuming within that for residuals, how much of that is residuals versus how much of that is just getting the better economics on your new vehicles.

Question: Dan Levy - Barclays Capital Inc - Analyst : Any expectations on residuals within the 325 and 300? That assumes some strength continuing.

Question: Dan Levy - Barclays Capital Inc - Analyst : Okay, thank you. And then, as a follow up, The playbook for the summer peak, given some of the macro uncertainty and, maybe seeming lack of visibility, it is the plan that given if assuming residuals continue, that if the strength just isn't there in the rental market that you will quickly given you can take advantage of good residuals, and so in a way it's almost like a natural hedge.

Question: Dan Levy - Barclays Capital Inc - Analyst : Great. Thank you.

Question: Lizzie Dove - Goldman Sachs & Co. LLC - Analyst : Hi there. I just wanted to ask about RPD in America to start off. I think you said positive sequential trends consistent with seasonal patterns. I think usually it's somewhere in the like 4% to 5% range sequentially, which would put RPD down 4% year on year in the Americas. Is that the right way to think about things, or, yeah, the 2Q. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:30PM, CAR.OQ - Q1 2025 Avis Budget Group Inc Earnings Call

Question: Lizzie Dove - Goldman Sachs & Co. LLC - Analyst : Got it. And then just a couple of clarifying points on the guidance. So I might have just missed it. I didn't hear you reiterate the at least $500 million of cash flow for this year. So I just want to make sure if that's still the case. And then on the at least a billion dollars which you did reiterate for this year on EBITDA. I know this kind of questions and kind of asked but just to put a finer point on it. I know it's hard to look at tariffs in a vacuum because there's obviously a lot of, secondary impacts there, but just what exactly you kind of factoring in there from like gains on sale, RPD, the kind of consumer environment that gives you confidence in that billion or like I guess like how to think about a normalized EBITDA run rate if without the kind of tariff piece of things.

Question: Lizzie Dove - Goldman Sachs & Co. LLC - Analyst : Got it thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:30PM, CAR.OQ - Q1 2025 Avis Budget Group Inc Earnings Call

Question: Chris Woronka - Deutsche Bank - Analyst : Hey, good morning everyone. Joe, I know it's your last call, so, just again wanted to wish you all the best and, appreciate all the insights over the years. I guess my first question, I know you've covered a lot of ground on, scenarios for 2026 fleet, and I know it's very early, but yeah, I want to drill down a little bit on your thoughts if there would be opportunities to lock in model 26s at some point at a at a price that's let's just say comparable to '25. Yes, how hard, how hard would you look at leaning into that, from a, just from a commitment and capital standpoint again, I know it's a hypothetical scenario, but any thoughts would be great. Thanks.

Question: Chris Woronka - Deutsche Bank - Analyst : Okay, fair enough. And just as a follow up, I obviously a lot of questions about RPD and, direction of demand and all that, but, I was hoping we could drill down maybe a little bit of the mix and. I know there's historically been a spread between leisure and commercial pricing, and I'm curious as to whether, mix had a big impact for you either in Q1 or whether you expected to in Q2, and then, kind of secondarily to that, are you doing anything differently with respect to, channels of demand and might include rideshare, third party, etc. Thanks.

Question: Chris Woronka - Deutsche Bank - Analyst : Okay, very good. Thanks, Joe. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:30PM, CAR.OQ - Q1 2025 Avis Budget Group Inc Earnings Call