Avis Budget Group, Inc. (NASDAQ:CAR) Q2 2019 Earnings Conference Call - Final Transcript

Aug 06, 2019 • 08:30 am ET


Avis Budget Group, Inc. (NASDAQ:CAR) Q2 2019 Earnings Conference Call - Final Transcript


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Greetings and welcome to the Avis Budget Group Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, David Calabria. Please go ahead, sir.

David T. Calabria

Good morning, everyone and thank you for joining us. On the call with me are Larry De Shon, our Chief Executive Officer; and John North, our Chief Financial Officer.

Before we begin, I would like to remind everyone that we will be discussing forward-looking information that involve risks, uncertainties and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks, assumptions, uncertainties and other factors are identified in our earnings release and other periodic filings with the SEC as well as the Investor Relations section of our website. We undertake no obligation to update or revise our forward-looking statements. Our comments today will focus on our adjusted results.

We believe that our efficiency performance is better demonstrated using these non-GAAP financial measures, which are reconciled from the GAAP numbers in our press release and in the new investor presentation also available on our website.

With that, I'd like to turn the call over to Avis Budget Group's Chief Executive Officer, Larry De Shon.

Larry D. De Shon

Thank you, David, and good morning, everyone. Yesterday, we reported record second quarter revenues of $2.3 billion, driven by a 2% increase in rental days, a 2% increase in US rental car pricing and a $6 million increase in ancillary revenue year-over-year. Along with higher revenues, we had an 8% reduction in per unit fleet cost and a 70 basis point improvement in fleet utilization. We generated adjusted EBITDA of $175 million, a 9% improvement over the second quarter of last year or a 16% improvement in constant currency. We achieved all of this while still improving our Net Promoter Scores by 990 basis points in the Americas and 650 basis points in International for the quarter compared to prior year. We continued our strategy to grow profitable revenue, while investing in mobility initiatives to spur innovation and to unlock incremental profit opportunities.

This morning, I will provide an overview of our results in the Americas and International segments, discuss some of the progress we have made with innovation and mobility initiatives and then give an update on our outlook for the summer and the remainder of 2019. Continuing the trend, we have experienced for the last several quarters, the Americas delivered strong results with margin expanding more than 250 basis points and adjusted EBITDA growing $45 million compared to the prior year.

The biggest contributor to the outperformance was a 10% reduction in per unit fleet cost due to robust used vehicle values, our growing development and use of alternative disposition channels and the effectiveness of our proprietary fleet management system that optimizes vehicle purchase and disposal decisions. We are beginning to operationalize our mileage optimization initiative using technology and vehicle connectivity to more effectively manage vehicle usage, reduce fleet cost and deploy our right car, right customer rental