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

Aug 06, 2019 • 08:30 am ET

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

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Presentation
Executive
Larry D. De Shon

experience.

We have finished implementing our revenue management system across all locations in the United States, which resulted in a 2% increase in overall US rental car pricing. Website revenue grew 8% in the quarter compared to last year with prepaid reservations accounting for nearly 40% of reservations. Our strategy to improve ancillary revenue drove the highest quarterly rates since 2016. Ancillary sales increased approximately $6 million in the quarter due to more small business rentals and our revised rental sales agent incentive program, which is in place at over 100 locations nationwide. This program is a success for both our customers and our employees as we see increased net promoter scores.

In our International business, adjusted EBITDA was $39 million, $21 million lower than prior year in constant currency. With the significant portion of the variance due to lower organic rates. We continue to see rate pressure due to a reduction in intra-European travel and uncertainty around Brexit. Our International team is taking steps to respond by growing our light commercial vehicle operations, which provide more consistent rental demand. The growth of light commercial vehicle business and the integration of our 2018 acquisitions of Morini and Turiscar contributed to a 3% growth in rental days in the quarter. Commercial segment rental days showed positive year-over-year growth with mid-market and small business accounts both up 9%. As we pointed out earlier, we delivered a substantial 650 basis point improvement in Net Promoter Scores for the quarter, ending June with even higher scores exemplifying our continued focus on improving the overall customer experience.

With that, I'd like to update you on the progress we've made on our strategic mobility and innovation initiatives. Regarding our progress on Connected Car, we have 165,000 vehicles connected globally with plans to reach more than 200,000 by year-end. We've expanded our relationship with ID Systems and Continental to deploy a third-party Connected Car technology, while collaborating with a number of our OEM partners to achieve connectivity using their end vehicle systems. We started to see tangible results from our Connected Fleet, including well over $1 of incremental fuel recovery on each Connected Car rental, which more than pays for the cost of the technology.

Further, we've seen a nearly two day improvement in the recovery of overdue vehicles as connectivity allows us to locate our cars faster. In addition, connectivity facilitates our mileage optimization initiatives and allows us to explore additional use cases, including self-service and fleet monitoring and management. It's been a multi-year journey for us to reach this proof of concept at scale, but the returns are there and we see a path towards accelerating monetization in 2020.

We remain at the forefront of rental car app development to enhance our customer experience. We recently added the industry's first in-rental split billing feature into the Avis app, which allows the customer to utilize more than one payment method during a rental. Since the release of this feature mid-May, we are already seeing more ancillary