Avis Budget Group Removes over $1 Billion in Expenses in Second Quarter to Mitigate Impacts of COVID-19

PARSIPPANY, N.J., July 28, 2020 (GLOBE NEWSWIRE) — Avis Budget Group, Inc. (NASDAQ: CAR) today announced second quarter 2020 financial results, with a Net loss of $481 million and an Adjusted net loss of $388 million. Total Revenues were down 67% year-over-year.

Throughout the quarter, we increased the magnitude of our cost removal actions, and currently are targeting over $2.5 billion on an annualized basis. Adjusted EBITDA for the second quarter was a loss of $382 million, but sequentially improved each month as we adjusted to market dynamics and right sized our fleet. The quarter culminated with an Adjusted EBITDA loss of $28 million for June, highlighted by positive Adjusted EBITDA of $3 million in the Americas segment.

Our liquidity at the end of the quarter was $1.5 billion. We estimated cash burn would be approximately $900 million, including $100 million in previously scheduled debt retirements. Our second quarter cash burn was $580 million, an improvement of $320 million, or 36%, to our prior estimates, due to continued vigilance around expense control and stronger than anticipated vehicle fleet disposals.

We capitalized on a rapidly recovering used car market and sold nearly double the number of vehicles targeted in our second quarter operational plan. In the U.S., vehicle sold in the month of June exceeded the prior year by 30%. Ending fleet for the quarter was down 26% year-over-year. We finished June with global utilization in the 50% range and maintain the ability to flex our fleet size up or down allowing us to react to increased demand or further travel disruptions. Per-unit fleet costs were $221 per month, a 17% reduction year-over-year.

“I am grateful for the professionalism and dedication of our team members who persevered through a historic and challenging period to deliver for our company,” said Joe Ferraro, Avis Budget Group Chief Executive Officer. “We accomplished this by quickly identifying the impact that COVID-19 would have on our business, taking immediate actions to shrink our fleet to match demand, executing a debt financing transaction to build additional liquidity, cutting over $1 billion in expenses across our business and launching a campaign to address the safety of our employees and customers. We believe our quick and targeted action has positioned us to both navigate the pandemic and capitalize on consumer demand as it returns.”

Q2 Financial Actions to Mitigate COVID-19 Impact

We continued to take aggressive action by raising liquidity and reducing cash burn, and we are focused on remaining flexible to position our operations to bounce back when demand recovers.

  • We reduced our cost base to match current revenue trends, removing more than $2.5 billion of annualized costs compared to the initial $400 million we announced in late March. Second quarter expenses were 47% lower than prior year, as we removed over $1 billion of costs.
  • We disposed of more than 100,000 vehicles and cancelled over 185,000 incoming vehicle orders around the world in the quarter, with June ending fleet down 26% year-over-year. We averaged a significant gain on disposal per unit for the quarter.
  • We obtained an amendment to our credit agreement, approved by 97% of our lenders, which provided a covenant waiver and increased the amount of authorized debt by $750 million.
  • We completed an offering of $500 million of senior secured notes to provide additional liquidity, and secured an inaugural $35 million floor plan financing facility to accelerate direct to consumer vehicle sales.
  • We reduced the size of our workforce, offering comprehensive separation packages and have furloughed employees around the world totaling over 60% of our pre-pandemic headcount. Also, we reduced compensation for our senior leadership, froze merit increases, eliminated the 401(k) match for highly compensated employees, and suspended hiring.

Avis Safety Pledge and Budget Worry-Free Promise: Keeping Our Customers and Employees Safe

Earlier this month, we announced the launch of a coalition designed to enhance the cleanliness and disinfection of our rental facilities and vehicles.

  • The coalition includes RB, which is the maker of Lysol, medical professionals with expertise in public health and COVID-19, and Hip Hop Public Health, a national nonprofit organization that creates engaging content to drive behavioral change and supplements our employee training for consistent, responsible habits.
  • A team of scientists from Lysol, which manufactures the first products to receive EPA approval and validation for efficacy against COVID-19, is providing guidance to optimize the effectiveness of our cleaning protocols. We are utilizing Lysol products to replace or supplement existing CDC-recommended and EPA-certified products currently in use.
  • We are increasing our app-based Mobile Select product and facilities with automated exit gates to provide our customers with contactless, self-service car rental transactions.
  • Our facilities utilize plexiglass shields along with signage and floor markings to encourage safety habits and social distancing.
  • We have provided our staff with masks, hand sanitizer, and gloves and are making that protective equipment available to all customers.
  • Our employees have received enhanced safety protocols and we instituted daily health self-assessments before each shift. We encouraged anyone who feels ill to stay home with an enhanced sick leave policy. In the U.S., we check staff temperatures before beginning work. We offer free COVID-19 testing to all employees.


Revenues in the second quarter showed sequential improvement, down 78% in April and finished June down 59% from prior year. Revenue improvement has been more robust in our off-airport locations and is close to pre-pandemic levels. We expect the velocity of improvement to moderate in the third quarter but anticipate utilization will continue to improve as we further match fleet with demand.

“Since the beginning of April, we have seen consistent sequential week-over-week increases in rental volume, with both the Americas and International having their best volume to date last week due to increased leisure activity,” said Joe Ferraro, Avis Budget Group Chief Executive Officer. “Coupled with the significant reduction of vehicles as we right size our fleet to current demand, we anticipate both positive cash flow and Adjusted EBITDA for the remainder of 2020.”

Investor Conference Call

We will host a conference call to discuss second quarter results on July 29, 2020, at 8:30 a.m. (ET). Investors may access the call at ir.avisbudgetgroup.com or by dialing (877) 407-2991 and a replay will available on our website and at (877) 660-6853 using conference code 13706253.

About Avis Budget Group

Avis Budget Group, Inc. is a leading global provider of mobility solutions, both through its Avis and Budget brands, which have more than 11,000 rental locations in approximately 180 countries around the world, and through its Zipcar brand, which is the world’s leading car sharing network with more than one million members. Avis Budget Group operates most of its car rental offices in North America, Europe and Australasia directly, and operates primarily through licensees in other parts of the world. Avis Budget Group is headquartered in Parsippany, N.J. More information is available at avisbudgetgroup.com.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements.” Any statements that refer to outlook, expectations or other characterizations of future events, circumstances or results, including all statements related to our future results, impact from the coronavirus, cost-saving actions, and cash flows are forward-looking statements. Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, the severity and duration of the COVID-19 outbreak and resulting economic conditions and related restrictions, the high level of competition in the mobility industry, changes in our fleet costs, including as a result of a change in the cost of new vehicles, manufacturer recalls and/or the value of used vehicles, disruption in the supply of new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, our ability to realize our estimated cost savings on a timely basis, or at all, the financial condition of the manufacturers that supply our rental vehicles which could affect their ability to perform their obligations under our repurchase and/or guaranteed depreciation arrangements, any further deterioration in economic conditions generally, particularly during our peak season and/or in key market segments, any further deterioration in travel demand, including airline passenger traffic, any occurrence or threat of terrorism, the current and any future pandemic diseases or other natural disasters, any changes to the cost or supply of fuel, risks related to acquisitions or integration of acquired businesses, risks associated with litigation, governmental or regulatory inquiries or investigations, risks related to the security of our information technology systems, disruptions in our communication networks, changes in tax or other regulations, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our global operations, including the funding of our vehicle fleet via asset-backed securities markets, any fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, our ability to meet the covenants contained in the agreements governing our indebtedness, and our ability to accurately estimate our future results and implement our cost savings actions. Other unknown or unpredictable factors could also have material adverse effects on the Company’s performance or achievements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Avis Budget Group’s Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the three months ended March 31, 2020 and in other filings and furnishings made by the Company with the Securities and Exchange Commission (the “SEC”) from time to time. The Company undertakes no obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

Non-GAAP Financial Measures and Key Metrics

This release includes financial measures such as Adjusted EBITDA and Adjusted free cash flow, as well as other financial measures that exclude certain items that are not considered generally accepted accounting principles (“GAAP”) measures as defined under SEC rules. Important information regarding such measures is contained on Table 1, Table 4, Table 5 and Appendix I of this release. The Company and its management believe that these non-GAAP measures are useful to investors in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Adjusted EBITDA, Adjusted free cash flow, Adjusted pretax income (loss), Adjusted net income (loss) and Adjusted diluted earnings (loss) per share are net income (loss), net cash provided by operating activities, income (loss) before income taxes, net income (loss) and diluted earnings (loss) per share, respectively. Foreign currency translation effects on the Company’s results are quantified by translating the current period’s non-U.S. dollar-denominated results using the currency exchange rates of the prior period of comparison including any related gains and losses on currency hedges. Per-unit fleet costs, which represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet, are calculated on a per-month basis.