car-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 001-10308


Avis Budget Group, Inc.
(Exact name of registrant as specified in its charter)

Delaware

06-0918165

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

379 Interpace Parkway

Parsippany,

07054

(Address of principal executive offices)

(Zip Code)

(973)

496-4700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01	CAR	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock was 35,647,164 shares as of April 26, 2024.

Table of Contents


		Page
PART I	Financial Information
Item 1.	Financial Statements
	Consolidated Condensed Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 (Unaudited)	4
	Consolidated Condensed Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited)	5
	Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited)	6
	Consolidated Condensed Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited)	8
	Notes to Consolidated Condensed Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34
PART II	Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
	Signatures	36

Table of Contents

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q may be considered “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by any such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such as “believes,” “expects,” “anticipates,” “will,” “should,” “could,” “may,” “would,” “intends,” “projects,” “estimates,” “plans,” “forecasts,” “guidance,” and similar words, expressions or phrases. The following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements. These factors include, but are not limited to:

•the high level of competition in the mobility industry, including from new companies or technology, and the impact such competition may have on pricing and rental volume;

•a change in our fleet costs, including as a result of a change in the cost of new vehicles, resulting from inflation or otherwise, manufacturer recalls, disruption in the supply of new vehicles, including due to labor actions or otherwise, shortages in semiconductors used in new vehicle production, and/or a change in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;

•the results of operations or financial condition of the manufacturers of our vehicles, which could impact their ability to perform their payment obligations under our agreements with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make vehicles available to us or the mobility industry as a whole on commercially reasonable terms or at all;

•levels of and volatility in travel demand, including future volatility in airline passenger traffic;

•a deterioration in economic conditions, resulting in a recession or otherwise, particularly during our peak season or in key market segments;

•an occurrence or threat of terrorism, pandemic diseases such as COVID-19, natural disasters, military conflicts, including the ongoing military conflicts in the Middle East and Eastern Europe, or civil unrest in the locations in which we operate, and the potential effects of sanctions on the world economy and markets and/or international trade;

•any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business, including as a result of a global pandemic such as COVID-19, inflation, the ongoing military conflicts in the Middle East and Eastern Europe, and any embargoes on oil sales imposed on or by the Russian government;

•our ability to successfully implement or achieve our business plans and strategies, achieve and maintain cost savings and adapt our business to changes in mobility;

•political, economic or commercial instability in the countries in which we operate, and our ability to conform to multiple and conflicting laws or regulations in those countries;

•the performance of the used vehicle market from time to time, including our ability to dispose of vehicles in the used vehicle market on attractive terms;

•our dependence on third-party distribution channels, third-party suppliers of other services and co-marketing arrangements with third parties;

•risks related to completed or future acquisitions or investments that we may pursue, including the incurrence of incremental indebtedness to help fund such transactions and our ability to promptly and

Table of Contents

effectively integrate any acquired businesses or capitalize on joint ventures, partnerships and other investments;

•our ability to utilize derivative instruments, and the impact of derivative instruments we utilize, which can be affected by fluctuations in interest rates, fuel prices and exchange rates, changes in government regulations and other factors;

•our exposure to uninsured or unpaid claims in excess of historical levels and our ability to obtain insurance at desired levels and the cost of that insurance;

•risks associated with litigation or governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and consumer privacy, labor and employment, and tax;

•risks related to protecting the integrity of, and preventing unauthorized access to, our information technology systems or those of our third-party vendors, licensees, dealers, independent operators and independent contractors, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, compliance with privacy and data protection regulation, and the effects of any potential increase in cyberattacks on the world economy and markets and/or international trade;

•any impact on us from the actions of our third-party vendors, licensees, dealers, independent operators and independent contractors and/or disputes that may arise out of our agreements with such parties;

•any major disruptions in our communication networks or information systems;

•risks related to tax obligations and the effect of future changes in tax laws and accounting standards;

•risks related to our indebtedness, including our substantial outstanding debt obligations, recent and future interest rate increases, which increase our financing costs, downgrades by rating agencies and our ability to incur substantially more debt;

•our ability to obtain financing for our global operations, including the funding of our vehicle fleet through the issuance of asset-backed securities and use of the global lending markets;

•our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, or to obtain a waiver or amendment of such covenants should we be unable to meet such covenants;

•significant changes in the assumptions and estimates that are used in our impairment testing for goodwill or intangible assets, which could result in a significant impairment of our goodwill or intangible assets; and

•other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.

We operate in a continuously changing business environment and new risk factors emerge from time to time. New risk factors, factors beyond our control, or changes in the impact of identified risk factors may cause actual results to differ materially from those set forth in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Moreover, we do not assume responsibility if future results are materially different from those forecasted or anticipated. Other factors and assumptions not identified above, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and “Risk Factors” in Item 1A in this quarterly report and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2024 (the “2023 Form 10-K”), may cause actual results to differ materially from those projected in any forward-looking statements.

Table of Contents

Although we believe that our assumptions are reasonable, any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual results could differ materially from past results and/or those anticipated, estimated or projected. We undertake no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data)

(Unaudited)


	Three Months Ended March 31,
		2024		2023
Revenues		$	2,551	$	2,557

Expenses
Operating		1,344		1,307
Vehicle depreciation and lease charges, net		636		265
Selling, general and administrative		325		324
Vehicle interest, net		239		133
Non-vehicle related depreciation and amortization		61		56

Interest expense related to corporate debt, net		83		73

Restructuring and other related charges		3		4
Transaction-related costs, net		1		—
Other (income) expense, net		1		(2)
Total expenses		2,693		2,160

Income (loss) before income taxes		(142)		397
Provision for (benefit from) income taxes		(29)		85
Net income (loss)		(113)		312
Less: net income attributable to non-controlling interests		1		—
Net income (loss) attributable to Avis Budget Group, Inc.		$	(114)	$	312

Comprehensive income (loss) attributable to Avis Budget Group, Inc.		$	(158)	$	302

Earnings (loss) per share
Basic		$	(3.21)	$	7.88
Diluted		$	(3.21)	$	7.72

See Notes to Consolidated Condensed Financial Statements (Unaudited).

Table of Contents

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions, except par value)

(Unaudited)


		March 31, 2024		December 31, 2023
Assets
Current assets:
	Cash and cash equivalents	$	522	$	555
	Receivables, net	1,032		900
	Other current assets	779		684
Total current assets		2,333		2,139

Property and equipment, net		709		719
Operating lease right-of-use assets		2,750		2,654
Deferred income taxes		1,811		1,868
Goodwill		1,088		1,099
Other intangibles, net		658		670
Other non-current assets		450		441
Total assets exclusive of assets under vehicle programs		9,799		9,590

Assets under vehicle programs:
	Program cash	73		85
	Vehicles, net	22,020		21,240
	Receivables from vehicle manufacturers and other	431		443
	Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party	1,205		1,211
		23,729		22,979
Total Assets		$	33,528	$	32,569

Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable and other current liabilities	$	2,669	$	2,627
	Short-term debt and current portion of long-term debt	405		32
Total current liabilities		3,074		2,659

Long-term debt		5,032		4,791
Long-term operating lease liabilities		2,234		2,117
Other non-current liabilities		509		528
Total liabilities exclusive of liabilities under vehicle programs		10,849		10,095

Liabilities under vehicle programs:
	Debt	3,241		3,496
	Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party	15,949		15,441
	Deferred income taxes	3,325		3,418
	Other	672		462
		23,187		22,817
Commitments and contingencies (Note 12)

Stockholders’ equity:
	Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, in each period	—		—
	Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, in each period	1		1
	Additional paid-in capital	6,610		6,634
	Retained earnings	3,738		3,854
	Accumulated other comprehensive loss	(140)		(96)
	Treasury stock, at cost—101 and 102 shares, respectively	(10,724)		(10,742)
Stockholders’ equity attributable to Avis Budget Group, Inc.		(515)		(349)
	Non-controlling interests	7		6
Total stockholders’ equity		(508)		(343)
Total Liabilities and Stockholders’ Equity		$	33,528	$	32,569

See Notes to Consolidated Condensed Financial Statements (Unaudited).

Table of Contents

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


			Three Months Ended March 31,
			2024		2023
Operating activities
Net income (loss)			$	(113)	$	312
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Vehicle depreciation		562		477
	Amortization of right-of-use assets		302		251
	(Gain) loss on sale of vehicles, net		39		(250)
	Non-vehicle related depreciation and amortization		61		56

	Stock-based compensation		7		8
	Amortization of debt financing fees		12		9

	Net change in assets and liabilities:
		Receivables	(8)		34
		Income taxes and deferred income taxes	(34)		66
		Accounts payable and other current liabilities	46		82
	Operating lease liabilities		(299)		(250)
	Other, net		14		24
Net cash provided by operating activities			589		819

Investing activities
Property and equipment additions			(53)		(44)
Proceeds received on asset sales			1		—
Net assets acquired (net of cash acquired)			(1)		(3)


Net cash used in investing activities exclusive of vehicle programs			(53)		(47)

Vehicle programs:
	Investment in vehicles		(4,081)		(3,880)
	Proceeds received on disposition of vehicles		2,610		2,283
	Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		(254)		(105)
	Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party		260		71
			(1,465)		(1,631)
Net cash used in investing activities			(1,518)		(1,678)

Table of Contents

Avis Budget Group, Inc.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)

(In millions)

(Unaudited)


		Three Months Ended March 31,
		2024		2023
Financing activities
Proceeds from long-term borrowings		$	651	$	—
Payments on long-term borrowings		(10)		(7)
Net change in short-term borrowings		—		2

Repurchases of common stock		(15)		(51)
Debt financing fees		(11)		(2)


Net cash provided by (used in) financing activities exclusive of vehicle programs		615		(58)

Vehicle programs:
	Proceeds from borrowings	6,614		5,270
	Payments on borrowings	(6,296)

SEC Form 10-Q filed by Avis Budget Group Inc.