# Avis Budget Group, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Avis Budget Group, Inc.](/companies/car.md) (CIK 723612)
- Form: 10-Q
- Filed: 2024-11-01
- Accepted by EDGAR: Nov 1, 2024, 09:37 ET
- Period: 2024-09-30
- Accession: 0000723612-24-000052
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/723612/000072361224000052/car-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/723612/000072361224000052/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $3.48bn | us-gaap:Revenues |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $9.08bn | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2024-07-01 to 2024-09-30 | $367.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-01-01 to 2024-09-30 | $1.04bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $95.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $266.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $91.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $74.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $237.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $137.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $6.65 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $3.84 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $6.67 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $3.86 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 35,700,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 35,800,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $2.75bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $25.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-09-30 | $602.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $2.32bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $32.75bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $3.33bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-09-30 | $5.46bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-09-30 | $540.0m | us-gaap:DebtCurrent |
| Short-term borrowings | at 2024-09-30 | $540.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-09-30 | −$238.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 34,482 characters.

*The following discussion should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q and with our 2023 Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including those discussed in “Forward-Looking Statements.” See “Forward-Looking Statements” and “Risk Factors” for additional information. Unless otherwise noted, all dollar amounts in tables are in millions.*

### OVERVIEW

### Our Company

We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 736,000 vehicles in third quarter 2024. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

### Our Segments

We categorize our operations into two reportable business segments: *Americas*, consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in certain areas in which we do not operate directly; and *International*, consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in certain areas in which we do not operate directly.

### Business and Trends

Our strategy continues to primarily focus on customer experience and costs to strengthen our Company, maximize profitability, and deliver stakeholder value. During the three months ended September 30, 2024, we generated revenues of $3.5 billion, net income of $238 million and Adjusted EBITDA of $503 million. These results were primarily driven by consistent year-over-year volume, decreased revenue per day, and increased fleet and interest costs.

We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, cost of new vehicles, used car values, and an economic downturn that may impact travel demand, all of which may be exacerbated by the ongoing military conflicts in the Middle East and Eastern Europe. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.

### RESULTS OF OPERATIONS

We measure performance principally using the following key metrics: (i) rental days, which represent the total number of days (or portion thereof) a vehicle was rented, (ii) revenue per day, which represents revenues divided by rental days, (iii) vehicle utilization, which represents rental days divided by available rental days, with available rental days being defined as average rental fleet times the number of days in the period, and (iv) per-unit fleet costs, which represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet. Our rental days, revenue per day and vehicle utilization metrics are all calculated based on the actual rental of the vehicle during a 24-hour period. We believe that this methodology provides management with the most relevant metrics in order to effectively manage the performance of the business. Our calculation may not be comparable to the calculation of similarly titled metrics by other companies. We present currency exchange rate effects to provide a method of assessing how our business performed excluding the effects of foreign currency rate fluctuations. Currency exchange rate effects are calculated by translating the current period results at the prior period average exchange rate plus any related gains and losses on currency hedges.

We assess performance and allocate resources based upon the separate financial information of our operating segments. In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which our segments operate and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; any impairment charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; and income taxes.

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

During the nine months ended September 30, 2024:

- Our revenues totaled $9.1 billion, a decrease of $165 million year-over-year, primarily due to decreased revenue per day, partially offset by an increase in volume.
- Our net income was $137 million, representing a decrease of $1.2 billion year-over-year, primarily due to increased fleet and interest costs.
- Our Adjusted EBITDA was $729 million, representing a decrease of $1.5 billion year-over-year.

### Three Months Ended September 30, 2024 vs. Three Months Ended September 30, 2023

Our consolidated condensed results of operations comprised of the following:

|  | Three Months Ended September 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| **Revenues** | $3,480 | $3,564 | $(84) | (2%) |
| **Expenses** |  |  |  |  |
| Operating | 1,575 | 1,543 | 32 | 2% |
| Vehicle depreciation and lease charges, net | 806 | 517 | 289 | 56% |
| Selling, general and administrative | 367 | 397 | (30) | (8%) |
| Vehicle interest, net | 241 | 208 | 33 | 16% |
| Non-vehicle related depreciation and amortization | 58 | 55 | 3 | 5% |
| Interest expense related to corporate debt, net: |  |  |  |  |
| Interest expense | 95 | 80 | 15 | 19% |
| Early extinguishment of debt | — | 1 | (1) | n/m |
| Restructuring and other related charges | 6 | 2 | 4 | n/m |
| Transaction-related costs, net | — | 3 | (3) | n/m |
| Other (income) expense, net | 3 | 1 | 2 | n/m |
| Total expenses | 3,151 | 2,807 | 344 | 12% |
| **Income before income taxes** | 329 | 757 | (428) | (57%) |
| Provision for income taxes | 91 | 130 | (39) | (30%) |
| **Net income** | 238 | 627 | (389) | (62%) |
| Less: net income attributable to non-controlling interests | 1 | 1 | — | n/m |
| **Net income attributable to Avis Budget Group, Inc.** | $237 | $626 | $(389) | (62%) |

n/m - Not Meaningful

Revenues decreased $84 million, or 2%, during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 2% decrease in revenue per day, excluding exchange rate effects, partially offset by a $6 million positive impact from currency exchange rate movements. Total expenses increased 12% during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to increased fleet and interest costs. Our effective tax rates were a provision of 27.7% and 17.2% for the three months ended September 30, 2024 and 2023, respectively. As a result of these items, our net income decreased by $389 million compared to the similar period in 2023. For the three months ended September 30, 2024 and 2023, we reported earnings per diluted share of $6.65 and $16.78, respectively.

Operating expenses increased to 45.2% of revenue during the three months ended September 30, 2024 compared to 43.3% during the similar period in 2023, primarily due to an increase in fleet costs. Vehicle depreciation and lease charges increased to 23.2% of revenue during the three months ended September 30, 2024 compared to 14.5% during the similar period in 2023, primarily due to increased per unit fleet costs, excluding exchange rate effects, driven by increased depreciation rates and a decrease in the gain on sale of vehicles. Selling, general and administrative costs decreased to 10.5% of revenue during the three months ended September 30, 2024 compared to 11.1% during the similar period in 2023, primarily due to decreased commissions and other selling, general and administrative costs. Vehicle interest costs increased to 6.9% of revenue during the three months ended September 30, 2024, compared to 5.8% during the similar period in 2023, primarily due to rising interest rates.

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA:

|  | Three Months Ended September 30, 2024 Revenues | Adjusted EBITDA | 2023 Revenues | Adjusted EBITDA |
| --- | ---: | ---: | ---: | ---: |
| Americas | $2,640 | $384 | $2,736 | $740 |
| International | 840 | 139 | 828 | 196 |
| Corporate and Other (a) | — | (20) | — | (29) |
| Total Company | $3,480 | $503 | $3,564 | $907 |
| Reconciliation of Net income to Adjusted EBITDA: |  |  |  |  |
|  |  | **2024** |  | **2023** |
| Net income |  | $238 |  | $627 |
| Provision for income taxes |  | 91 |  | 130 |
| Income before income taxes |  | 329 |  | 757 |
| Add: Non-vehicle related depreciation and amortization |  | 58 |  | 55 |
| Interest expense related to corporate debt, net: |  |  |  |  |
| Interest expense |  | 95 |  | 80 |
| Early extinguishment of debt |  | — |  | 1 |
| Restructuring and other related charges |  | 6 |  | 2 |
| Transaction-related costs, net |  | — |  | 3 |
| Other (income) expense, net (b) |  | 3 |  | 1 |
| Reported within operating expenses: |  |  |  |  |
| Cloud computing costs |  | 12 |  | 8 |
| Adjusted EBITDA |  | $503 |  | $907 |

(a) Includes unallocated corporate overhead which is not attributable to a particular segment.

(b) Primarily consists of gains or losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

### Americas

|  | Three Months Ended September 30, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenues | $2,640 | $2,736 | (4%) |
| Adjusted EBITDA | 384 | 740 | (48%) |

Revenues decreased during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 2% decrease in volume, a 1% decrease in revenue per day and a $4 million negative impact from currency exchange rate movements.

Operating expenses increased to 45.9% of revenue during the three months ended September 30, 2024 compared to 44.1% during the similar period in 2023, primarily due to an increase in fleet costs. Vehicle depreciation and lease charges increased to 23.2% of revenue during the three months ended September 30, 2024 compared to 13.2% during the similar period in 2023, primarily due to increased per-unit fleet costs, driven by increased depreciation rates and a decrease in the gain on sale of vehicles. Selling, general and administrative costs decreased to 9.0% of revenue during the three months ended September 30, 2024 compared to 9.3% during the similar period in 2023, primarily due to decreased commissions and other selling, general and administrative costs. Vehicle interest costs increased to 7.5% of revenue during the three months ended September 30, 2024 compared to 6.4% during the similar period in 2023, primarily due to rising interest rates.

Adjusted EBITDA decreased during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet and interest costs.

### International

|  | Three Months Ended September 30, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenues | $840 | $828 | 1% |
| Adjusted EBITDA | 139 | 196 | (29%) |

Revenues increased during the three months ended September 30, 2024, compared to the similar period in 2023, primarily due to a 5% increase in volume and a $10 million positive impact from currency exchange rate movements, partially offset by a 5% decrease in revenue per day, excluding exchange rate effects.

Operating expenses increased to 41.4% of revenue during the three months ended September 30, 2024 compared to 39.4% during the similar period in 2023, primarily due to an increase in volume. Vehicle depreciation and lease charges increased to 23.1% of revenue during the three months ended September 30, 2024 compared to 18.7% during the similar period in 2023, primarily due to increased per-unit fleet costs, excluding exchange rate effects, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles. Selling, general and administrative costs decreased to 13.8% of revenue during the three months ended September 30, 2024 compared to 14.2% during the similar period in 2023 primarily due to decreased other selling, general and administrative costs. Vehicle interest costs increased to 5.2% of revenue during the three months ended September 30, 2024 compared to 4.1% during the similar period in 2023, primarily due to rising interest rates.

Adjusted EBITDA decreased during the three months ended September 30, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet and interest costs and a $3 million negative impact from currency exchange rate movements.

### Nine Months Ended September 30, 2024 vs. Nine Months Ended September 30, 2023

Our consolidated condensed results of operations comprised of the following:

|  | Nine Months Ended September 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| **Revenues** | $9,079 | $9,244 | $(165) | (2%) |
| **Expenses** |  |  |  |  |
| Operating | 4,451 | 4,325 | 126 | 3% |
| Vehicle depreciation and lease charges, net | 2,175 | 1,157 | 1,018 | 88% |
| Selling, general and administrative | 1,040 | 1,099 | (59) | (5%) |
| Vehicle interest, net | 724 | 513 | 211 | 41% |
| Non-vehicle related depreciation and amortization | 177 | 163 | 14 | 9% |
| Interest expense related to corporate debt, net: |  |  |  |  |
| Interest expense | 266 | 221 | 45 | 20% |
| Early extinguishment of debt | 1 | 1 | — | n/m |
| Restructuring and other related charges | 23 | 7 | 16 | n/m |
| Transaction-related costs, net | 2 | 3 | (1) | n/m |
| Other (income) expense, net | 6 | 3 | 3 | n/m |
| Total expenses | 8,865 | 7,492 | 1,373 | 18% |
| **Income before income taxes** | 214 | 1,752 | (1,538) | (88%) |
| Provision for income taxes | 74 | 377 | (303) | (80%) |
| **Net income** | 140 | 1,375 | (1,235) | (90%) |
| Less: net income attributable to non-controlling interests | 3 | 2 | 1 | n/m |
| **Net income attributable to Avis Budget Group, Inc.** | $137 | $1,373 | $(1,236) | (90%) |

n/m - Not Meaningful

Revenues decreased $165 million or 2% during the nine months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 4% decrease in revenue per day, excluding exchange rate effects, and a $4 million negative impact from currency exchange rate movements, partially offset by a 2% increase in volume. Total expenses increased 18% during the nine months ended September 30, 2024, compared to the similar period in 2023, primarily due to increased fleet and interest costs. Our effective tax rates were a provision of 34.6% and 21.5% for the nine months ended September 30, 2024 and 2023, respectively. As a result of these items, our net income decreased by $1.2 billion compared to the similar period in 2023. For the nine months ended September 30, 2024 and 2023, we reported earnings per diluted share of $3.84 and $34.71, respectively.

Operating expenses increased to 49.0% of revenue during the nine months ended September 30, 2024 compared to 46.8% during the similar period in 2023, primarily due to an increase in volume. Vehicle depreciation and lease charges increased to 24.0% of revenue during the nine months ended September 30, 2024 compared to 12.5% during the similar period in 2023, primarily due to increased per unit fleet costs, excluding exchange rate effects, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles. Selling, general and administrative costs decreased to 11.5% of revenue during the nine months ended September 30, 2024, compared to 11.9% during the similar period in 2023, primarily due to decreased marketing costs and other selling, general and administrative costs. Vehicle interest costs increased to 8.0% of revenue during the nine months ended September 30, 2024 compared to 5.5% during the similar period in 2023, primarily due to rising interest rates.

Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of Net income to Adjusted EBITDA:

|  | Nine Months Ended September 30, 2024 Revenues | Adjusted EBITDA | 2023 Revenues | Adjusted EBITDA |
| --- | ---: | ---: | ---: | ---: |
| Americas | $6,994 | $614 | $7,180 | $1,887 |
| International | 2,085 | 172 | 2,064 | 372 |
| Corporate and Other (a) | — | (57) | — | (80) |
| Total Company | $9,079 | $729 | $9,244 | $2,179 |
| Reconciliation of Net income to Adjusted EBITDA: |  |  |  |  |
|  |  | **2024** |  | **2023** |
| Net income |  | $140 |  | $1,375 |
| Provision for income taxes |  | 74 |  | 377 |
| Income before income taxes |  | 214 |  | 1,752 |
| Add: Non-vehicle related depreciation and amortization |  | 177 |  | 163 |
| Interest expense related to corporate debt, net: |  |  |  |  |
| Interest expense |  | 266 |  | 221 |
| Early extinguishment of debt |  | 1 |  | 1 |
| Restructuring and other related charges |  | 23 |  | 7 |
| Transaction-related costs, net |  | 2 |  | 3 |
| Other (income) expense, net (b) |  | 6 |  | 3 |
| Reported within operating expenses: |  |  |  |  |
| Cloud computing costs |  | 33 |  | 24 |
| Legal matters, net |  | 7 |  | 5 |
| Adjusted EBITDA |  | $729 |  | $2,179 |

(a) Includes unallocated corporate overhead which is not attributable to a particular segment.

(b) Primarily consists of gains or losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

### Americas

|  | Nine Months Ended September 30, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenues | $6,994 | $7,180 | (3%) |
| Adjusted EBITDA | 614 | 1,887 | (67%) |

Revenues decreased during the nine months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 3% decrease in revenue per day and a $6 million negative impact from currency exchange rate movements, partially offset by a 1% increase in volume.

Operating expenses increased to 49.3% of revenue during the nine months ended September 30, 2024 compared to 47.1% during the similar period in 2023, primarily due to an increase in volume. Vehicle depreciation and lease charges increased to 23.7% of revenue during the nine months ended September 30, 2024 compared to 11.0% during the similar period in 2023, primarily due to increased per-unit fleet costs, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles. Selling, general and administrative costs were approximately 9.5% of revenue during the nine months ended September 30, 2024 compared to 9.7% during the similar period in 2023, primarily due to decreased marketing costs and other selling, general and administrative costs. Vehicle interest costs increased to 8.7% of revenue during the nine months ended September 30, 2024 compared to 6.0% during the similar period in 2023, primarily due to rising interest rates.

Adjusted EBITDA decreased during the nine months ended September 30, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet and interest costs, and approximately $2 million negative impact from currency exchange rate movements.

### International

|  | Nine Months Ended September 30, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenues | $2,085 | $2,064 | 1% |
| Adjusted EBITDA | 172 | 372 | (54%) |

Revenues increased during the nine months ended September 30, 2024 compared to the similar period in 2023, primarily due to a 5% increase in volume, a $2 million positive impact from currency exchange rate movements, partially offset by a 4% decrease in revenue per day, excluding exchange rate effects.

Operating expenses increased to 46.4% of revenue during the nine months ended September 30, 2024 compared to 44.8% during the similar period in 2023, primarily due to an increase in volume. Vehicle depreciation and lease charges increased to 24.8% of revenue during the nine months ended September 30, 2024 compared to 17.7% during the similar period in 2023, primarily due to increased per-unit fleet costs, excluding exchange rate effects, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles. Selling, general and administrative costs were approximately 15.5% of revenue during the nine months ended September 30, 2024 compared to 15.6% during the similar period in 2023. Vehicle interest costs increased to 5.6% of revenue during the nine months ended September 30, 2024 compared to 3.9% during the similar period in 2023, primarily due to rising interest rates.

Adjusted EBITDA decreased during the nine months ended September 30, 2024 compared to the similar period in 2023, primarily due to higher per-unit fleet and interest costs, and approximately $11 million negative impact from currency exchange rate movements.

### FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We present separately the financial data of our vehicle programs. These programs are distinct from our other activities as the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the generation or acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.

### FINANCIAL CONDITION

|  | September 30, 2024 | December 31, 2023 | Change |
| --- | ---: | ---: | ---: |
| Total assets exclusive of assets under vehicle programs | $9,647 | $9,590 | $57 |
| Total liabilities exclusive of liabilities under vehicle programs | 11,651 | 10,095 | 1,556 |
| Assets under vehicle programs | 23,102 | 22,979 | 123 |
| Liabilities under vehicle programs | 21,327 | 22,817 | (1,490) |
| Total stockholders’ equity | (229) | (343) | 114 |

The increase in liabilities exclusive of liabilities under vehicle programs is primarily due to the increase in corporate indebtedness from the issuance of senior notes. See “Liquidity and Capital Resources,” and Note 10 – Long-term Corporate Debt and Borrowing Arrangements to our Consolidated Condensed Financial Statements.

The decrease in liabilities under vehicle programs is primarily due to the repayment of debt.

### LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below.

In February 2024, we issued €600 million of 7.000% euro-denominated Senior Notes due February 2029, at par, with interest payable semi-annually. In April 2024, we used net proceeds from the offering to redeem all of our outstanding 4.750% euro-denominated Senior Notes due January 2026 plus accrued interest, with the remainder being used for general corporate purposes.

In May 2024, we issued an additional €200 million 7.250% euro-denominated Senior Notes due July 2030, at 100.25% of their face value, with interest payable semi-annually. Net proceeds from the offering were used for general corporate purposes.

In September 2024, we issued $700 million of 8.250% Senior Notes due January 2030, at par, with interest payable semi-annually. In October 2024, we used net proceeds from the offering to repay the outstanding borrowings under our floating rate term loan due 2029, with the remainder being used for general corporate purposes.

During 2024, our Avis Budget Rental Car Funding (AESOP) subsidiary issued approximately $2.4 billion of asset-backed notes with expected final payment dates ranging from April 2026 to December 2029, and a weighted average interest rate of 5.46%. In March and April 2024, AESOP amended and restated its asset-backed variable-funding financing facilities. The proceeds from these borrowings will be used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States. In February 2024, we amended our European rental fleet securitization program to increase its capacity to approximately €1.9 billion and extend its maturity to September 2026. We also added £200 million to our capacity under the program. The program is used to finance fleet purchases for certain of our European operations.

Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023. Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments and other factors. The Stock Repurchase Program may be suspended, modified or discontinued at any time without prior notice. The Stock Repurchase Program has no set expiration or termination date. During the nine months ended September 30, 2024, we repurchased approximately 0.1 million shares of common stock at a cost of approximately $8 million (excluding excise taxes due under the Inflation Reduction Act of 2022) under the Stock Repurchase Program. As of September 30, 2024, approximately $794 million of authorization remained available to repurchase common stock under the Stock Repurchase Program.

### CASH FLOWS

The following table summarizes our cash flows:

| Cash provided by (used in): | Nine Months Ended September 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $2,746 | $3,035 | $(289) |
| Investing activities | (2,696) | (6,930) | 4,234 |
| Financing activities | (43) | 3,978 | (4,021) |
| Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash | (2) | (4) | 2 |
| Net increase in cash and cash equivalents, program and restricted cash | 5 | 79 | (74) |
| Cash and cash equivalents, program and restricted cash, beginning of period | 644 | 642 | 2 |
| Cash and cash equivalents, program and restricted cash, end of period | $649 | $721 | $(72) |

39

The decrease in cash provided by operating activities during the nine months ended September 30, 2024 compared with the similar period in 2023 is primarily due to the decrease in our net income.

The decrease in cash used in investing activities during the nine months ended September 30, 2024 compared with the similar period in 2023 is primarily due to the decrease in our investment in vehicles.

The decrease in cash provided by financing activities during the nine months ended September 30, 2024 compared with the similar period in 2023 is primarily due to the increase in our payments under vehicle programs, partially offset by the increase in our net corporate borrowings.

### DEBT AND FINANCING ARRANGEMENTS

At September 30, 2024, we had approximately $23.9 billion of indebtedness, including corporate indebtedness of approximately $6.0 billion and debt under vehicle programs of approximately $17.9 billion. For information regarding our debt and borrowing arrangements, see Notes 1, 10 and 11 to our Consolidated Condensed Financial Statements.

### LIQUIDITY RISK

Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses. The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations. Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.

Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions or a worsening of the United States and worldwide economies, or by increases in interest rates, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally. We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used-vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market.

As of September 30, 2024, we had $602 million of available cash and cash equivalents and access to available borrowings under our revolving credit facility of approximately $536 million, providing us with access to approximately $1.1 billion of total liquidity.

Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings. As of September 30, 2024, we were in compliance with the financial covenants governing our indebtedness. For additional information regarding our liquidity risks, see Part I, Item 1A, “Risk Factors” of our 2023 Form 10-K.

### CONTRACTUAL OBLIGATIONS

Our future contractual obligations have not changed significantly from the amounts reported within our 2023 Form 10-K with the exception of our commitment to purchase vehicles, which decreased by approximately $2.9 billion from December 31, 2023, to approximately $3.9 billion as of September 30, 2024 due to existing fleet levels. Changes to our obligations related to corporate indebtedness and debt under vehicle programs are presented above within the section titled “Liquidity and Capital Resources—Debt and Financing Arrangements” and also within Notes 10 and 11 to our Consolidated Condensed Financial Statements.

### CRITICAL ACCOUNTING ESTIMATES

### Accounting Policies

The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principles (GAAP), we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they relate to future events and/or events that are outside of our control. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented within the section titled “Critical Accounting Estimates” of our 2023 Form 10-K are the accounting policies (related to goodwill and other indefinite-lived intangible assets, vehicles, income taxes and public liability, property damage and other insurance liabilities) that we believe require subjective and complex judgments that could potentially affect reported results. There have been no significant changes to those accounting policies or our assessment of which accounting policies we would consider to be critical accounting policies.

### New Accounting Standards

For detailed information regarding new accounting standards and their impact on our business, see Note 1 to our Consolidated Condensed Financial Statements.

## Market risk

As filed, 1,265 characters.

We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and fuel prices. We assess our market risks based on changes in interest and currency exchange rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates. We used September 30, 2024 market rates to perform a sensitivity analysis separately for each of these market risk exposures. We have determined, through such analyses, that the impact of a 10% change in interest or currency exchange rates on our results of operations, balance sheet and cash flows would not be material. Additionally, we have commodity price exposure related to fluctuations in the price of unleaded fuel. We anticipate that such commodity risk will remain a market risk exposure for the foreseeable future. We determined that a 10% change in the price of unleaded fuel would not have a material impact on our earnings for the period ended September 30, 2024. For additional information regarding our long-term borrowings and financial instruments, see Notes 10, 11 and 16 to our Consolidated Condensed Financial Statements.

## Controls and procedures

As filed, 938 characters.

(a) *Disclosure Controls and Procedures.* Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024.

(b) *Changes in Internal Control Over Financial Reporting.* During the third quarter of 2024, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 211 characters.

During the quarter ended September 30, 2024, we had no material developments to report with respect to our risk factors. For additional information regarding our risk factors, please refer to our 2023 Form 10-K.

Filed Nov 1, 2024.
Source: SEC EDGAR, the filing index for accession 0000723612-24-000052. Last ingested by Listed: Nov 4, 2026, 09:47 ET. No prices; not investment advice.