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Avis Budget Group Removes More than $2.5 billion of Costs Setting the Stage for Future Recovery

February 22, 2021 Car Rentals No Comments Email Email

Avis Budget Group, Inc. today announced financial results for the fourth quarter and full-year ended December 31, 2020.

Despite revenue being down 37% for the fourth quarter compared to the prior year, and a net loss of $90 million, we generated positive Adjusted EBITDA of $74 million through disciplined cost removal of more than $500 million. We have now had back-to-back quarters of positive Adjusted EBITDA and continue to show our ability to adapt throughout the pandemic. We are particularly encouraged by the fact that during this challenging travel environment, the Americas generated their highest fourth-quarter Adjusted EBITDA margins in the history of our Company.

Full-year revenue was down 41% compared to the prior year, net loss was $684 million and Adjusted EBITDA was a loss of $175 million due to travel restrictions broadly implemented in response to the COVID-19 pandemic.

Our liquidity position at the end of the year was $1.3 billion after returning more than $600 million back into our vehicle programs. We continue to be in a strong position to fund the purchase of our 2021 fleet appropriately.

“I am incredibly proud of the performance of our Company during the most challenging year in Avis Budget Group’s history. I want to thank our employees who helped deliver a safe environment for our customers throughout the pandemic.” said Joe Ferraro, Avis Budget Group Chief Executive Officer. “The fact that the Americas achieved its best fourth quarter Adjusted EBITDA margin on the lowest fourth-quarter revenue base in our Company’s history serves as a proof point that our focus on cost savings will continue to deliver results.”

Q4 and Full-Year Highlights

  • As a response to the pandemic, we created our Avis Safety Pledge and Budget Worry-Free Promise to keep our customers and employees safe. We have expanded our partnerships to enhance the cleanliness and disinfection of our rental facilities and vehicles.
  • We continue to expand contactless rentals for our Avis Preferred customers through our app, which also enhances the rental experience.
  • We reduced our cost base to match current revenue trends, removing more than $500 million of costs for the quarter, and more than $2.5 billion of costs for 2020.
  • We profitably disposed of approximately 40,000 and approximately 250,000 vehicles globally, including a record 18,000 and 127,000 vehicles sold through alternative channels in the U.S., for the quarter and full year, respectively.
  • In April, we obtained an amendment to our credit agreement, approved by 97% of our lenders, which provided a covenant holiday and increased the amount of authorized debt.
  • In May, we completed a senior secured notes offering of $500 million and subsequently in August, a senior unsecured notes offering of $350 million, using the proceeds to pay off $100 million of existing notes and provide additional liquidity.
  • In August, we completed an offering of $650 million of asset-backed securities with a weighted average interest rate of 2.28%, our lowest rate since 2013 for our fleet financing. In January, we also completed an offering of $700 million of asset-backed securities with a weighted average interest rate of 2.42%

Outlook

While we will continually monitor the rollout of the vaccine and its impact on the demand for the travel industry, we cannot predict when increases in the travel industry will occur. Due to these macro uncertainties, we are not providing guidance at this time. However, we remain optimistic about those factors we can control in 2021 and specifically around our ability to minimize cost accretion as revenues return. We believe these actions will position us to be a structurally more profitable company when travel demand normalizes.

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