Avis Budget Group (CAR) Provides Preliminary Q1 Results, Update on April Trends

Avis Budget Group, Inc. (NASDAQ: CAR) today provided preliminary First Quarter 2020 Financial Results as well as a further business update related to COVID-19 to supplement our earlier press release issued on March 23, 2020.

Preliminary First Quarter ResultsJanuary and February started out exceptionally strong with Revenue up 9%, continuing the momentum from the end of 2019, and suggesting that 2020 was shaping up to potentially be a record year. March results were significantly impacted as shelter in place orders effectively eliminated travel activity globally.

For the First Quarter of 2020, we expect to report total Revenue of $1.7 to $1.8 billion, a 9% decrease at the midpoint, as rental volume was impacted in the second half of March. We expect our net loss to be between $(155) and $(165) million and Adjusted EBITDA to be between $(85) and $(95) million, compared to Adjusted EBITDA of $(1) million in the First Quarter of 2019.

(*consensus sees Q1 revenue of $1.76 billion)

Rental days were in a range of 34.4 to 34.6 million, Revenue per Day was in a range of $50 to $51, and Per-Unit Fleet Costs were in a range of $250 to $255. The results are preliminary and final results for the First Quarter may change. See "Forward-Looking Statements" for further information.

Current Revenue TrendsApril revenue appears to have stabilized, down approximately 80% from the prior year. We are planning for similar levels of decline in May but are anticipating a recovery in the following months as travel restrictions are eased. Our current reservations show improvement in June and sequentially increase over the balance of the summer.

We believe renting a vehicle will continue to be a safe, clean and attractive alternative when people return to normal way of life. We clean our cars before every rental transaction with disinfectant that is CDC-recommended and EPA certified to be effective against human coronavirus, including novel pathogens such as COVID-19.

Both of our Americas and International segments are experiencing lower Revenue per Day due in part to longer length of rental as customers are opting for more monthly rentals. The majority of our current revenue is comprised of leisure vehicle rentals, light commercial vehicles and mini-leases which all have a longer holding period.

Update on Mitigation PlansIn March, we committed to over $400 million of annualized cost removal and mitigation. Since then, we have exceeded our target on an annualized basis by taking unprecedented actions to preserve liquidity, remove costs and shrink the size of our vehicle fleet.

All non-essential capital and operating expenditures were eliminated and we are continuing to negotiate with partners and suppliers for further reductions. We have reduced or furloughed approximately 70% of our global workforce, or approximately 21,000 employees. Also, we have reduced base compensation at the level of vice presidents and above, froze merit increases, eliminated our 401(k) match for highly compensated employees, and canceled all future hiring.

We aggressively reduced the size of our global fleet beginning in March and continuing in April, and currently estimate that we will end June with over 20% fewer units than the prior year. Our vehicle dispositions will occur through both traditional methods and by utilizing our alternative distribution strategy by selling directly to dealers and consumers. Finally, we have negotiated a significant number of new vehicle cancellations to improve utilization and shrink the fleet size.

As a result of these unprecedented actions, we believe we will achieve an estimated $2.0 billion in annualized cost removal and mitigation through our actions to date, and we are prepared to take additional actions as appropriate.

Balance Sheet, Liquidity and Financial CovenantsAs of March 31, 2020, we had access to $1.4 billion of available cash and cash equivalents and estimate available borrowings under our revolving credit facility to be approximately $225 million after taking into account requirements for letters of credit, providing us with access to an estimated $1.6 billion of total liquidity.

We have no meaningful corporate debt maturities until 2023 and have no material fleet financing maturities in 2020. As a result, based on current operational assumptions, we believe we have adequate liquidity for the balance of 2020 and into 2021.

In light of the current unprecedented circumstances, we have entered into discussions with our senior secured lenders to both seek a waiver of our financial covenant and to increase the amount of first lien debt permitted under our credit agreement.

We will continue to evaluate opportunistic financing, as well as accessing funds made available through the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, which was passed at the end of March.

Earnings Release AnnouncementWe plan to report final first quarter 2020 results after the market close on Monday, May 4, 2020, and to host a conference call for institutional investors to discuss these results on Tuesday, May 5, 2020 at 7:00 a.m. Eastern time.

Investors may access the call at ir.avisbudgetgroup.com, or by dialing (877) 407-2991. Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at ir.avisbudgetgroup.com following the call. A telephone replay will be available from 11:00 a.m. Eastern time on May 5, 2020 until 10:00 p.m. on May 19, 2020 at (877) 660-6853 using conference code 13702810.

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