Sign in

You're signed outSign in or to get full access.

AB

AVIS BUDGET GROUP, INC. (CAR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 printed revenue of $2.710B, adjusted EBITDA loss of $101M, and diluted EPS of $(55.66); results were driven by a one-time non‑cash impairment of ~$2.47B and other related charges as CAR accelerated its Americas fleet rotation and shortened vehicle useful lives .
  • Utilization improved YoY by ~2.6 ppts to 67.7% company-wide (Americas +2.4 ppts; International +2.6 ppts), while pricing was down ~2% YoY with December flat, reflecting strong holiday leisure demand and tight fleets .
  • Liquidity remains solid: ~$1.1B available plus ~$2.8B of fleet funding capacity; corporate maturities are well laddered .
  • Management guided to ≥$1.0B adjusted EBITDA in FY 2025; Q1 2025 is expected to be an adjusted EBITDA loss of ~$(100)M with fleet cost/vehicle depreciation per unit per month (DPU) easing from ~$400 in Q1 to < $350 in Q2 and ~$300 exiting 2025, implying normalization ahead .
  • CEO transition announced: Joe Ferraro to Board Advisor effective June 30, 2025; Brian Choi to become CEO on July 1, 2025; Jagdeep Pahwa named Executive Chairman—an organizational catalyst into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Holiday leisure was robust; the U.S. Christmas period set a company record, and MLK weekend was strong, with December pricing exiting flat YoY as fleets were kept inside demand .
  • Vehicle utilization improved meaningfully: Americas 67.4% (+2.4 ppts YoY), International 68.3% (+2.6 ppts YoY), driven by disciplined fleet management and operational enhancements .
  • International optimization: inbound/cross-border leisure demand continued to support revenue per day, and CAR’s demand fleet pricing system is fully operational in Europe with rollout to Pacific in progress .

What Went Wrong

  • A one-time non‑cash long‑lived asset impairment of ~$2.47B plus ~$180M of vehicle carrying value write‑downs, tied to accelerated fleet rotation and shortened useful lives, drove the GAAP loss and negative adjusted EBITDA in Q4 .
  • Per‑unit fleet costs per month rose sharply total company from $277 to $397 YoY in Q4; higher depreciation and vehicle-related operating costs pressured margins despite utilization gains .
  • Pricing was down ~2% YoY in Q4 overall (Americas ~2%), reflecting industry over‑fleeting earlier in 2024 before CAR’s tightening actions; management expects pricing to improve seasonally from April onward .

Financial Results

Quarterly Performance (chronological: oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$3,048 $3,480 $2,710
Adjusted EBITDA ($USD Millions)$214 $503 $(101)
Diluted EPS ($USD)$0.41 $6.65 $(55.66)
Net Income (Loss) ($USD Millions)$14 $237 $(1,958)
Adjusted EBITDA Margin (%)7.0% (calc; cites revenue/EBITDA )14.5% (calc; cites )-3.7% (calc; cites )

Year-over-Year Comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$2,764 $2,710
Adjusted EBITDA ($USD Millions)$311 $(101)
Diluted EPS ($USD)$7.10 $(55.66)
Vehicle Utilization (Total)65.1% 67.7%
Revenue per Day (Total, $)$65.78 $64.79
Per‑Unit Fleet Costs per Month (Total, $)$277 $397

Segment Breakdown (Q4 2023 → Q4 2024)

SegmentRevenue ($USD Millions) Q4 2023Revenue ($USD Millions) Q4 2024Adjusted EBITDA ($USD Millions) Q4 2023Adjusted EBITDA ($USD Millions) Q4 2024
Americas$2,167 $2,117 $309 $(63)
International$597 $593 $28 $(11)
Corporate & Other——$(26) $(27)
Total$2,764 $2,710 $311 $(101)

KPIs (Q4 2023 → Q4 2024)

KPIAmericas Q4 2023Americas Q4 2024International Q4 2023International Q4 2024Total Q4 2023Total Q4 2024
Rental Days (000s)31,009 30,877 11,018 10,956 42,027 41,833
Revenue per Day ($)69.89 68.57 54.22 54.15 65.78 64.79
Vehicle Utilization (%)65.0% 67.4% 65.7% 68.3% 65.1% 67.7%
Per‑Unit Fleet Costs per Month ($)272 430 291 304 277 397

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD)FY 2025n/a≥$1,000MInitiated (raise vs no prior)
Adjusted EBITDA ($USD)Q1 2025n/a≈$(100)MInitiated
Fleet Cost/DPU ($ per vehicle per month, total co.)Q1 2025n/a≈$400Initiated
Fleet Cost/DPU ($ per vehicle per month, total co.)Q2 2025n/a< $350Initiated
Fleet Cost/DPU ($ per vehicle per month, total co.)Exit 2025n/a≈$300Initiated
Liquidity/ABS capacity2025n/a~$1.1B liquidity; ~$2.8B ABS capacityDisclosure (not formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Demand Fleet Pricing/TechSequential pricing recovery; machine-learning DFP expanding internationally; self-service kiosks; connected car improvements Europe DFP fully deployed; new consumer app launched; pilots for digital tools to lift utilization DFP fully operational in Europe; app rollout continuing; scaling digital tools to improve utilization and repairs Strengthening execution
Supply chain/Vehicle costsModel year ‘25 buy tracking “well below” recent years; holding cost normalization over time MY25 buy largely complete; prices closer to pre‑COVID; target ROIC discipline MY25 buy “more affordable” enabling normalized fleet costs; accelerated rotation to reduce DPU Normalizing costs
Tariffs/Macro riskRecession playbook; cushion in vehicle programs >$1B Calendar effects/hurricanes; holiday demand strong Tariff scenario analysis: higher new car prices could support used values; CAR highly flexible to macro shifts Monitoring; manageable
Regional trendsAmericas: focus price>volume; International: inbound/cross‑border up; utilization higher Americas: fleets tighter; International: inbound +14%; utilization +3 ppts Americas: record Christmas/MLK; International: utilization +2.6 ppts; price flat Demand resilient
Legal/InsuranceLegal matters embedded in adjusted metrics; per‑rental‑day cost efficiencies Insurance/self‑insurance noted in reconciliations; OpEx per rental day flat YoY Legal matters $57M in Q4 adj. EBITDA recon; OpEx impacted by rotation workstreams; normalization expected in 2025 Transient headwinds
Capital allocationReinvest, buybacks timed to cash gen; >$800M liquidity Issued $700M notes; ~$1.2B liquidity; ~$3.2B ABS capacity; repurchased ~526k shares Feb Term Loan A $500M (temporary); ~$1.1B liquidity; ~$2.8B ABS capacity; repurchased ~450k shares in Q4 Balanced, flexible

Management Commentary

  • “We took the necessary actions to accelerate our fleet rotation in the Americas segment, which will create more certainty in our fleet costs and better position us for sustainable growth for 2025 and beyond… I am confident in our ability to generate no less than $1 billion of Adjusted EBITDA in 2025.” — CEO Joe Ferraro .
  • “The 2025 buy is virtually complete… The model year vehicles are more affordable… by year‑end, we expect the average age and miles of our Americas fleet to be back to pre‑pandemic levels.” — CEO Joe Ferraro .
  • “In the first quarter of 2025, we expect all‑in fleet cost per unit per month to be approximately $400… second quarter… under $350… exit the year… around $300 per vehicle per month.” — CFO Izzy Martins .

Q&A Highlights

  • Free cash flow cadence: With ≥$1B adjusted EBITDA target, management expects “really strong” 2025 FCF after interest, capex, and taxes; working capital expected positive .
  • Fleet mix and pricing: Rotation removes higher‑cost MY23–24 vehicles without shrinking into lower‑margin classes; pricing expected to improve seasonally as fleet remains inside demand .
  • Disposition channels: ~70% non‑auction channels; RubyCar online brand scaling; auction used tactically vs. MMR outcomes .
  • Tariff scenarios: Higher new‑car prices could support used values; CAR’s fleet/logistics flexibility mitigates risks .
  • Normalized hold period/DPU: Hold periods trending back toward historical norms; exit‑2025 DPU target around ~$300/month .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable at time of analysis due to a service request limit error; therefore, we cannot assess beats/misses vs. consensus. Management’s 2025 outlook (≥$1B adjusted EBITDA) provides a forward anchor in lieu of consensus context .
    Note: S&P Global estimates retrieval was unavailable; no values to disclose.

Key Takeaways for Investors

  • The Q4 GAAP loss and adjusted EBITDA deficit were driven by a deliberate, one‑time non‑cash impairment to reset fleet costs; underlying demand and utilization were strong, especially over the holidays, supporting the 2025 earnings normalization narrative .
  • MY25 fleet buy is “more affordable” and nearly complete; planned DPU trajectory ($400→< $350→~$300) implies margin recovery as depreciation normalizes and maintenance/repair intensity drops with younger fleet .
  • Tight fleet discipline is improving price outcomes and utilization; expect seasonal pricing uplift from April onward and higher summer peak performance, with Q1 softness a calendar/fleet cost effect already telegraphed .
  • Liquidity and ABS flexibility (~$1.1B + ~$2.8B capacity) plus temporary Term Loan A provide room to opportunistically spot‑buy and accelerate rotation without compromising balance sheet resiliency .
  • International mix (inbound/cross‑border leisure) remains favorable; DFP and the new app are enhancing contribution margins and direct channel conversion—structural tech tailwinds to revenue quality .
  • Organizational transition to Brian Choi as CEO and Jagdeep Pahwa as Executive Chairman supports continuity of the transformation agenda (fleet analytics, operational efficiency, pricing systems) into 2025 .
  • Near‑term trading setup: headline impairment is behind; watch Q1 DPU and adjusted EBITDA loss (~$(100)M) vs. plan and any tariff-related OEM pricing signals. Medium‑term thesis hinges on fleet cost normalization and utilization/productivity gains driving ≥$1B adjusted EBITDA in FY 2025 .