Avis - Investor Presentation - November 2012 FINAL

7/29/2019 Avis - Investor Presentation - November 2012 FINAL

1/33

Presentation to Investors

November 2012


2/33

2

Forward-Looking Statements

Statements about future results made in this presentation constitute forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of 1995.Such forward-looking statements include projections.

These statements are based on current expectations and the current economicenvironment. Forward-looking statements and projections are inherently subject tosignificant economic, competitive and other uncertainties and contingencies, many ofwhich are beyond the control of management. The Company cautions that thesestatements are not guarantees of future performance. Actual results may differ materiallyfrom those expressed or implied in the forward-looking statements.

Important assumptions and other important factors that could cause actual results to differmaterially from those in the forward-looking statements and projections are specified in theCompany's most recently filed Form 10-K, most recently filed Form 10-Q and other SECfilings.

You are cautioned not to place undue reliance on these forward-looking statements, whichspeak only as of the date stated, or if no date is stated, the date of our last earnings

conference call.This presentation includes certain non-GAAP financial measures as defined under SECrules. Important information regarding such measures is contained within this presentation,including in the Glossary section.


3/33

3

The Business Today

Investing in Profi table Growth Initiatives

Driving Revenue and Earnings

Strong Financial Performance

Driving Sustained, Profitable Growth


4/33

4

Avis Budget Provides Vehicle Rental Services Worldwide

10,000locations

10,000locations

490,000vehicles490,000vehicles

28 mill iontransactions

28 mill iontransactions

125 mil lionrental days125 mil lionrental days

$7 billionannual

revenue


5/33

5

Locations in More Than 175 Countries

Owned and joint-venture territories

Licensed territories(a) Source: Airport authorities, Euromonitor

A Global Leader in the Car Rental Industry

#2

#1

#1#1

#1#1

#2

Share position

#2


6/33

6

Diversified Revenue Sources

Avis vs. BudgetCommercial vs.

LeisureOn-Airport vs.

Off-Airport

30%70% 50%50% 30%70%

U.S. vs.International

40%60%


7/33

7

The Business Today

Investing in Profi table Growth Initiatives





8/33

8

$4.5

$5.0

$5.5

$6.0

2008 2009 2010 2011

Solid Post-Recession Revenue Recovery

Note: Results exclude Avis Europe

LTM Revenue($ in billions)


9/33

9

2009 2010 2011

(a) Pro forma to include Avis Europe; convertedto US$ at average 2011 exchange rates(b) Includes Asia-Pacific, Latin America, Middle East and Africa

Substantial Worldwide Licensee Revenue Stream

Licensee Revenue(a)

($ in millions)

$123 $125$132

North America

Europe

OtherInternational(b)


10/33

10

$1,181

$342

$83

$922

Cash FlowFrom

Operations

CapitalExpenditures

VehiclePrograms

Free CashFlow

Free Cash Flow of More Than $900 Mil lion Since 2007

Note: Data is cumulative for years 2007-2011(a) Excluding vehicle depreciation(b) Including vehicle depreciation

- =+(a)

($ in millions)

(b)


11/33

11

2012 Year-to-Date Results

(a) Excluding the acquisition of Avis Europe, volume increased 4%, revenue increased 3% and Adjusted EBITDA increased 13%(b) Excluding certain items

Strategic Initiatives Contr ibuting toRecord Growth and Profitabili ty

+34%+33%

+39% +41%

Volume Revenue AdjustedEBITDA

DilutedEPS

(a,b) (b)

(a)


12/33

12

Investing in Profitable Growth Initiatives

The Business Today





13/33

13



Strategically

Accelerate

Growth

Expand Our

Global

Footprint

Put the

Customer

First

Drive

Efficiency

Throughout

theOrganization

Key Messages


14/33

14

Numerous Init iatives for Accelerated Growth

InitiativeExpandsMargins 2012 Results

(a)

` Grow international inbound ; +7% volume` Grow small-business rentals ; +8% volume` Grow ancillary revenues ; +7% revenue` Co-brand local market locations (b) ; +121 locations

(a) North America; year-to-date as of September 30, 2012(b) 590 locations in total, representing over half of our local market footprint


15/33

15

Brands

Growth

Opportunity

Synergies

` Enables us to control our brand proposition globally

Expanding with the Acquisition of Avis Europe

15

` Expanding Budget in Europe is a significant opportunity

` Increases our presence in faster-growing markets

` Provides meaningful cost and revenue synergies


16/33

16

Annual Savings

($ in millions)

`Cost savings

` Inbound volume

` Performance Excellence

` Ancillary sales

` Cost savings` Expand Budget


European Integration Plan to Generate Significant Benefits

` Drive Budget growth

` Fleet optimization

` Cost savings


Phase I(2012)

Phase II(2012-15)

Phase III(>2015)

$40

$55-$75


17/33

17

Building a Fully Integrated Demand/Fleet/Pricing System

ProfitImprovement

Define

` Processes

` Input variables

` Constraints

2012

Implement andRefine

` Pricing module

` Fleet optimization

` Review, analyzeand adjust

2013

Harvest

` North Americain 2014

` International in2015

2014/15

Expect to Generate More Than $50 Mill ion ofIncremental EBITDA by 2014


18/33

18

Empowerment

Loyalty

Transparency

Trusted Relationship

` Empowering customers withAvis Preferred Select & Go

Improve the Customer Experience to Drive Profits

18

` Simplifying our customer materials for better transparency

` Investing in our brands to drive revenue and loyalty

` Capturing a higher share ofourcustomers rental spend


19/33

19


The Business Today

Investing in Profitable Growth Initiatives




20/33

20

Revenue to Increase by Approximately 24% in 2012

$5,541

2011 2012E

EMEAEMEA

$7,300

Revenue($ in millions)

$5,900

Note: 2012 estimate as of November 2, 2012


21/33

21

$260

$283

$312

$347$361

$324

$262

$200

$250

$300

$350

$400

2005 2006 2007 2008 2009 2010 2011 2012

North America Per-Unit Fleet Costs to Decline 6-8% in 2012

LTM Monthly Per-Unit Fleet CostsNorth America

2012E$240-$245

1% 8% 26% 55% 65% 53% 52% 60%Risk %

Note: 2012 estimate as of November 2, 2012


22/33

22

Lower Vehicle Borrowing Rates

5.8%

4.9%

4.0%

2010 2011 2012E

ABS Term Debt Average Rates (a)

Expect to generate more than $25 million of annualinterest savings year-over-year due to lower rates

(a) U.S. only


23/33

23

Strong Revenue and Earnings Growth Expected

2012 Estimate(a)

Growth vs. 2011(b)

Revenue $7,300 24%

Adjusted EBITDA 825 840 36%

Non-vehicle D&A 110

Interest expense 265

Pretax income 450 465 41%

Income taxes 167 172

Net income $283 $293 40%

Diluted EPS $2.35 $2.45 45%

(a) As of November 2, 2012; excludes certain items such as acquisition-related costs, restructuring costs and amortization of intangible assets(a) recognized in purchase accounting(b) Based on mid-point of range

($ in millions, except per-share amounts)

Expect Free Cash Flow of at least $375 Million


24/33

24

2013 Outlook

` Expect demand trends in North America will be similar to 2012

` Rapid Budget growth targeted in Europe

Anticipate macroeconomic challenges in Europe

` Full-year benefit from synergies implemented in 2012 will add$15 to $20 mill ion to Adjusted EBITDA

` Asia-Pacific will benefit from the Apex acquisition

` Expect North America fleet costs to increase by at least

$100 mil lion

` Corporate and vehicle interest costs should decline

Note: As of November 2, 2012


25/33

25

` Not satisfied with our current pricing

`The used car market appears to have peaked

` Pricing has histor ically risen during periods of cost-push

$30

$10

Average Daily Rate Per-unit Fleet Costs

Adjusted EBITDA Impact of a 1% Change in Driver

AverageDaily Rate

Per-unitFleet Costs

North America

($ in millions)

Maximizing Pricing Opportunit ies


26/33

26

Long-Term EarningsGrowth Opportunity

Growth in developed markets 2% - 4%Incremental growth from developing markets 1% - 3%

Ancillary revenues 1% - 2%

Fleet and yield optimization 1% - 3%

Productivity growth 2% - 4%

Other strategic initiatives 1% - 3%

Inflationary cost increases (2%) - (4%)

Deployment of free cash flow 5% - 2%

11% - 17%

Multiple Sources of Long-Term Earnings Growth


27/33

27



Strategically

Accelerate

Growth

Expand Our

Global

Footprint

Put the

Customer

First

Drive

Efficiency

Throughout

theOrganization

Key Messages


28/33


29/33

29

$30

$13 $12$10

$15

$6 $5$4

Average Daily Rate Rental Days Utilization Per-unit Fleet CostsAverage DailyRate

Rental Days Utilization Per-unitFleet Costs

Adjusted EBITDA Impact of a 1% Change in Driver($ in millions)

North America International

A-1

$45

$19$17

$14

Substantial Margin Improvement


30/33

30

No Corporate Debt Maturities Until 2014

$700

$250

$725

$130

2012 2013 2014 2015 2016 2017 2018 2019 2020

Term loan Senior notes Convertible notes

$300

($ in millions)

Note: As of November 8, 2012; pro forma for the planned fourth quarter redemption of 7.75% notes due 2016

$1,425

$250

$380

$50

$450

A-2


31/33

31

Well-Laddered ABS Term Maturities

($ in millions)

Note: Data are U.S. only as of September 30, 2012

$300

$530 $510

$960 $950 $920

$350

2012 2013 2014 2015 2016 2017 2018

Refinancing completed

A-3


32/33

32

7.1%

0%

2%

4%

6%

8%

10%

12%

2006 2007 2008 2009 2010 2011

Substantial Margin Improvement

Note: Excluding the acquisition of Avis Europe(a) Excluding certain items

Margins haveimproved490 bps

since 2006

LTM Adjusted EBITDA Margin(a)

12.0%

2.3%

A-4


33/33

Avis - Investor Presentation - November 2012 FINAL

Documents

Transcript of Avis - Investor Presentation - November 2012 FINAL