Avis Budget Group (CAR) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $3.5 billion, down 2% year-over-year, with net income of $238 million and Adjusted EBITDA of $503 million, both significantly lower than the prior year due to higher fleet and interest costs.

• For the nine months ended September 30, 2024, revenue totaled $9.1 billion (down 2%), net income was $137 million (down 90%), and Adjusted EBITDA was $729 million (down 67%) compared to the same period in 2023.

• Maintained focus on higher margin business, passing on lower-margin, brand-agnostic rentals to optimize returns in a high-cost environment.

• Model year 2025 fleet buy is nearly complete, with anticipated holding costs well below recent years as OEM supply normalizes and significant savings expected.

• Robust demand in both Americas and International segments, with holiday season reservations trending strong.

Financial highlights

• Q3 Adjusted EBITDA was $503 million, down 45% year-over-year due to non-recurring fleet gains in the prior year and higher vehicle interest and holding costs.

• Americas revenue was $2.64 billion (down 4%) with $384 million Adjusted EBITDA (down 48%); International revenue was $840 million (up 1%) with $139 million Adjusted EBITDA (down 29%).

• Total expenses in Q3 rose 12% year-over-year, driven by a 56% increase in vehicle depreciation and lease charges and a 16% rise in vehicle interest costs.

• Pulled forward vehicle sales led to a $40 million loss versus $145 million gain last year, impacting EBITDA by over $185 million.

• Earnings per diluted share were $6.65 for Q3 2024 (down from $16.78 in Q3 2023).

Outlook and guidance

• Expect historically high vehicle utilization in Q4, with Americas utilization projected to surpass any previous Q4.

• Model year 2025 fleet buy to lower holding costs; anticipate starting 2025 with fewer cars than 2024.

• Holiday demand (Thanksgiving, Christmas) is strong; pricing expected to transition seasonally in Americas and flatten internationally.

• Management continues to focus on customer experience, cost control, and expects further restructuring expenses of approximately $10 million in 2024.

• Remain focused on achieving at least $1 billion in Adjusted EBITDA for the year, excluding fleet losses.