Q1 2023 Avis Budget Group Inc Earnings Call

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Speaker 6: Greetings wecome to the Avis budget group first quarter 2023 conference call.

Speaker 6: At this time, all Mars is on to listen.

Speaker 6: So a person in our discussion. Follow the formal presentation.

Speaker 6: If anyone should require operators, this is D a conference. Please press start your own phone keyback.

Speaker 2: of the formal presentation. If anyone should require operators to assist during the conference, please press star zero on its own keypad. Please note this conference is being recorded. I will now turn the conference over to you host David Calibrium, Treasurer and Senior Vice President of Corporate Finance. You may begin.

Speaker 6: Please note, this conference is being recorded.

Speaker 6: I will now turn the conference over to gehichost daily caliriia. Treasurer and Senior Vice President of corporate findings.

Speaker 6: You maybe begagain.

Speaker 7: Good morning everyone and thank you for joining us on the call with meir our, Joe Ferraro, our Chief Executive Officer, and Brian choy, our Chief Financial Officer.

Speaker 3: Good morning everyone and thank you for joining us. I'm Nicole with Mirk, our Joe Ferraro, our Chief Executive Officer and Brian Choi, our Chief Financial Officer.

Speaker 7: Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and assumptions, uncertainties and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the Investor Relations section of our website.

Speaker 3: Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and assumptions, uncertainties and other factors are identified in our earnings release and other period-

Speaker 7: Accordingly, forward-looking statements should not be relied upon as a prediction of actual results and any or all of our forward-looking statements may provide to be inaccurate and we can make no guarantees about our future performance. We undertake no obligation to update or revise our forward-looking statements. On this call, we will discuss certain non-GAAP financial measures.

Speaker 3: We undertake no obligation to update or revise our forward-looking statements. On this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable GAAP measures. With that, I'd like to turn the call over to Joe.

Speaker 7: Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable GAAP measures. With that, I'd like to turn the call over to Joe.

Speaker 8: Thank you, David. Good morning everyone, and thank you for joining us today. Yesterday, we reported our first quarter results and it's clear that our company is off to a strong start in 2020. -three.

Speaker 4: Thank you, David. Good morning, everyone, and thank you for joining us today. Yesterday, we reported our first quarter results, and it's clear that our company is off to a strong start in 2023.

Speaker 9: We delivered the highest first quarter revenue in company history, at $2.6 billion, and generated 535 million of adjusted EBITDA.

Speaker 4: We've delivered the highest first quarter revenue in company history at $2.6 billion and generated $535 million of adjusted EBITDA.

Speaker 10: I want to thank all our employees for their hard work and dedication this quarter. We wanted to get off to a great start and our team fit just that. I not thank them for seting an ambitious pace right at the beginning of our fiscal year. On our last call I spoke about a return to normal seasonality, and anyone who's followed the rental car industry knows that the first quarter is our seasonally lowest quarter of the year.

Speaker 4: I want to thank all our employees for their hard work and dedication this quarter.

Speaker 4: We wanted to get it up to a great start and our team did just that. I want to thank them for setting an ambitious pace right at the beginning of our fiscal year. On our last call, I spoke about a return to normal seasonality and anyone who's followed the rental car industry knows that the first quarter is our seasonally lowest quarter of the year.

Speaker 9: We saw a terrific growth in rental transactions. As a matter of fact, it was the largest amount of transactions in the first quarter history of our company.

Speaker 4: We saw terrific growth in rental transactions. As a matter of fact, it was the largest amount of transactions in the first quarter of our history of our company.

Speaker 9: Demand was strong, with growth coming from commercial activity as well as international inbound travel.

Speaker 4: The man was strong with growth coming from commercial activity as well as international inbound travel.

Speaker 11: Both these segments started that growth in the middle of last year and the momentum continued to build into 2020. -three and.

Speaker 4: Both these segments started their growth in the middle of last year, and the momentum continued to build into 2023.

Speaker 9: In addition, there was great demand for our used cars and residual values improved throughout the quarter. Lastly, rate per day increased month-to month, as it would do normal in a precovid period.

Speaker 4: In addition, there was great demand for our use cars and residual values improved throughout the quarter.

Speaker 4: Lastly, rate per day increased month to month as it would do normal in a pre-COVID period.

Speaker 9: To be able to generate over five million of adjusted EBITDA during this period is an achievement that we're all proud of, and I have the pleasure today of telling you how we accomplish that. As usual, let's start with our Americas segment.

Speaker 4: To be able to generate over 500 million of adjusted EBITDA during this period is an achievement that we're all proud of, and I have the pleasure today of telling you how we accomplish that. As usual, let's start with our America's segment.

Speaker 9: In 2022. the first quarter was categorized by a very's first: six weeks due to amacron, followed by a robust period of demand post-presidence a weekend in mid-February.

Speaker 4: In 2022, the first quarter was categorized by a very soft first six weeks due to Omicron, followed by a robust period of demand post-President's Day weekend in mid-February.

Speaker 9: With the absence of new COVID-19 variance in 2023, we expected the first quarter demand to be significantly stronger year-over-year, led by commercial and international inbound demand, and planned accordingly.

Speaker 4: With the absence of new COVID variants in 2023, we expect the first quarter demand to be significantly stronger year-over-year, led by commercial and international inbound demand, and planned accordingly.

Speaker 9: Commercial transactions were up close to 20% and international inbound transactions were up more than 25% from the first quarter of 2022. it is clear that these two segments will be the drivers are a continued success throughout the year.

Speaker 4: Commercial transactions were up close to 20 percent, and international inbound transactions were up more than 25 percent from the first quarter of 2022.

Speaker 9: We have seen a rise in most of our commercial verticals, but especially in aerospace and defense, contracting technology and professional and financial services.

Speaker 4: It is clear that these two segments will be the drivers are continued success throughout the year.

Speaker 4: We have seen a rise in most of our commercial verticals, but especially in aerospace and defense contracting, technology, and professional and financial services. Cross-border inbound travel continued from EVIA, Latin America, Asia-Pacific, and Canada. Unrestricted travel from many countries began mid-last year.

Speaker 9: Cross-border inbound travel continued from EMEA, Latin America Asia, Pacific and Canada. Unrestricted travel from many countries began in midlast year and we've certainly seen the ramp-up from travel due to this pent-up demand.

Speaker 9: We expect both of these segments, along with continued growth in our right-hee business, will reprovide drivers' convenient access to our vehicles. The fuel log growth in the upcoming quarters and we are already seeing these trends continue into the second quarter.

Speaker 4: and we've certainly seen the ramp up from travel due to this pent up demand.

Speaker 4: We expect both of these segments, along with continued growth in our ride-held business, where we provide drivers convenient access to our vehicles to fuel our growth in the upcoming quarters, and we are already seeing these trends continue in the second quarter.

Speaker 9: We've also seen demand for our used cars continue to be strong. As we mentioned on our last call, we began to see improvement in the residual values in the first quarter, and that is continued. Rotation of our fleet is always a paramount importance, as getting out of older, low-mileage vehicles and replacing them with new vehicles provides a better product to our customers, both commercial and leisure.

Speaker 4: We've also seen demand for our used cars continue to be strong. As we mentioned on our last call, we began to see improvement in the residual values in the first quarter and that has continued.

Speaker 4: Rotation of our fleet is always of paramount importance as getting out of older, more mileage vehicles and replacing them with new vehicles provides a better product to our customers, both commercial and leisure. It minimizes maintenance and in-life costs and ensures our fleet is commercially ideal.

Speaker 9: It minimizes maintenance and in-life costs and ensures our fleet is commercially ideal.

Speaker 9: While we did not fully anticipate the significant turnaround in the strength of a used car market in the Americas, we ensured that we reacted appropriately given the opportunity.

Speaker 4: While we did not fully anticipate the significant turnaround in the strength of the used car market in the Americas, we ensured that we reacted appropriately given the opportunity.

Speaker 9: We obviously follow our vehicle dispositions closely on a market-by-market basis, But as a proxy, let me provide some data from the Mannheim used vehicle value index.

Speaker 4: We obviously follow our vehicle dispositions closely on a market by market basis, but as a proxy, let me provide some data from the Mannheim Use Vehicle Value Index.

Speaker 11: The index saw a seven consecutive month of decline, beginning in June of 2022. that reversed in January of 2023, which showed a one point five sequential uptick from December of 2022.

Speaker 4: The index saw seven consecutive months of decline beginning in June of 2022. That reversed in January of 2023, which showed a 1.5 sequential uptick from December of 2022.

Speaker 9: Now one month does not make a trend, but February 2023 saw a three point seven sequential increase. In March of 2023 saw another three point five sequential increase.

Speaker 4: Now, one month does not make a trend, but February of 2023 saw a 3.7 sequential increase and March of 2023 saw another 3.5 sequential increase.

Speaker 9: This development altered how we approached the quarter, and we pivoted quickly towards disposing of vehicles while refreshing our fleet.

Speaker 4: This development altered how we approach the quarter and we pivoted quickly towards exposing the vehicles while refreshing our fleet.

Speaker 9: The result of this was ensuring our rental days were in line with our fleet size, producing increased utilization as we continue to manage supply to be slightly inside the demand.

Speaker 4: The result of this was ensuring our rental days were in line with our fleet size, producing increased utilization as we continue to manage supply to be slightly inside of demand.

Speaker 9: These fleet actions provide a strong gain on sale while we pulled forward some of these gains from future quarters our actions acknowledgeed a strong demand from consumers but vehicles of our type.

Speaker 4: These fleet actions provide a strong gain on sale. While we pulled forward some of these gains from future quarters, our actions acknowledge the strong demand from consumers for vehicles of our type.

Speaker 9: Due to strong travel demand and well-balanced industry vehicle supply, we saw a healthy revenue per day in the low $70, only 2% below the record first quarter revenue per day we saw in 2020 -two, despite the increase in commercial travel.

Speaker 4: Due to strong travel demand and well-balanced industry vehicle supply, we saw a healthy revenue per day in the low 70 dollars. Only 2% below the record first quarter revenue per day, we saw in 2022 despite the increase in commercial travel.

Speaker 9: As Brian and I have been stressing on our previous calls, we continue to maintain discipline as asset managers and cented our actions to maximize return on invested capital by selling ag fleet at attractive prices during the quarter.

Speaker 4: As Brian and I have been stressing on our previous calls, we continue to maintain discipline as asset managers and set that our actions to maximize return on an invested capital by selling age fleet and attractive prices during the quarter.

Speaker 9: Additionally, I'd like to point out something that remains consistent with our initial business plan: rigid cost discipline. it'is the focus of managing our day-to-day expenses that enabled us to deliver adjusted EBITDA margins over 25% in the Americas, while making investments that will make us a leaner and more efficient company in the years to come.

Speaker 4: Additionally, I like to point out something that remains consistent with our initial business plan.

Speaker 4: Rigid cost discipline is the focus of managing our day-to-day expenses that enabled us to deliver adjusted EBITDA margins of over 25% in the Americas while making investments that will make us a leaner and more efficient company in the years to come.

Speaker 9: These strategies encompass investments in our people designed to enssure our ability to handle the peak summer period seamlessly, and systems which create the ability and better processing and ensuring their required digital customer applications to remoote the best in customer service.

Speaker 4: These strategies encompass investments in our people, designed to ensure our ability to handle the peak sum of periods seamlessly, and systems which creates stability in better processing and ensuring they require digital customer applications to promote the best in customer service. Our Touchless Experience allows Avis customers to choose their vehicle on their phone.

Speaker 9: Our touch's experience allows aviss customers to choose their a vehicle on their phone or exchange it upon arrival, while being sent a digital rental agreement which can be used to exit off facility through an automated execate process.

Speaker 4: or exchange it upon arrival while being sent a digital rental agreement, which can be used to exit our facility through an automated, exegate process.

Speaker 10: We are currently rolling out facial recognition technology.

Speaker 10: As well. That will allow all up first time a preferred customers to quickly and conveniently bypass our current counter verification process.

Speaker 4: We are currently rolling out facial recognition technology as well that will allow all of first time AVERT-PROFERD customers to quickly and conveniently bypass our current counter-verification process.

Speaker 9: In addition, after successful pilot, we are beginning to roll out an improvement to a budget choice application. Customers, on upon arrival at a budget facility, will be able to choose their vehicle from their reserve zone, take a picture of the license plate, which is then uploaded to their digital rental agreement and allows the custom and exit from nunmanned execate by use of their own.

Speaker 4: In addition, after a successful pilot, we are beginning to roll out an improvement to a budget choice application.

Speaker 4: Customers, upon arrival at a budget facility, will be able to choose their vehicle from their reserve zone, take a picture of the license plate, which is then uploaded to their digital rental agreement, and allows the customer exit from an unmanned exigate by use of their phone. Technology enhancements have always been an important aspect of our strategic plan.

Speaker 9: Technology enhancements have always been an important aspect of our strategic plan. We continuously improve our proprietary demand fleet pricing system to produce the most profitable outcome.

Speaker 4: We continuously improve our proprietary demand-fully pricing system to produce the most profitable outcome.

Speaker 9: Our mileage optimization technology allows us to minimize mileage accretion, and connected card technology facilitates automatic customer returns and accurate gas readings, producing both financial and customer benefits.

Speaker 9: Moving on to the income statement, results of these metrics in the Americas, revenue increased 16 million year-over-year Americas adjusted EBITDA during the same period decreased by approximately three million, due mostly to the anticipated increase from vehicle depreciation and interest.

Speaker 4: accurate gas readings, producing both financial and customer benefits.

Speaker 4: Moving on to the income statement results of these metrics. In the Americas, revenue increased 16 million year-over-year.

Speaker 4: America's adjusted EBITDA during the same period decreased by approximately 300 million to mostly to the anticipated increase from vehicle depreciation and interest.

Speaker 10: Last quarter we called out depreciation of vehicle interest as headwinds we would face in 2020. -three and.

Speaker 4: Last quarter, we called out the appreciation of vehicle interest as headwinds we were to face in 2023.

Speaker 9: The gain on sale from vehicle dispositions mitigated this significantly in the first quarter, but we do not expect this benefit to continue throughout the year.

Speaker 4: They gain on sale from vehicle dispositions mitigated this significantly in the first quarter. But we do not expect this benefit to continue throughout the year. We'll get into more detail on this during the Fleet portion of our Prepared remarks. So in summary, the Americas delivered a strong quarter with increased demand and key segments while improving our fleet rotation and taking advantage of a robust use car market.

Speaker 9: We'll get into more detail on this during the fleet portion of our prepared remarks. So in summary, the Americas delivered a strong quarter, with increased demand in key segment, S while improving our fleet rotation and taking advantage of a robust used car market, while rate per day increased month to-month in the quarter.

Speaker 10: With that, let's move on to our international segment, which had a record first quarter in adjusted EBITDA.

Speaker 10: Consistent with prior quarters. We've been seeing a steady recovery in days, combined with a robust rate per day of 14%, excluding exchange rate effects.

Speaker 9: The international country started to open up mid last year and react similarly to what we saw in the Americas in 2020 -two and.

Speaker 4: including exchange rate effects.

Speaker 4: The international country started to open up mid-last year and react similarly to what we saw in the Americas in 2022.

Speaker 10: While rental days in the first quarter was 16% higher than the first quarter of 2022, they were still 20% below the first quarter of 2019, implying when nowhere near optimal scale in this region.

Speaker 4: While rental days in the first quarter was 16% higher than the first quarter of 2022, they were still 20% below the first quarter of 2019, implying when nowhere near optimal scale in this region. However revenue per day is continued to remain robust with the international region seeing and at 8% year will be year gained and perhaps more encouragingly.

Speaker 9: However revenue per days continue to remain robust, with the iannational region seeing in an 8% year-over-year gained and, perhaps more encouragingly, a 2% sequential gain to the fourth quarter of 2020 -two.

Speaker 10: Adjusted EBITDA in the first quarter of 2023 was a record five million on a reported basis, including a seven million negative impact from currency exchange rate movements.

A 2% sequential gain to the fourth quarter of 2022. Adjusted EBITDA on the first quarter of 2023 was a record 50 million on a reported basis, including a 7 million negative impact from currency exchange rate movements.

Speaker 10: This is over the double the adjusted EBITDA generated in the first quarter of 2022 and a structural departure from the region, consistently reporting negative. First quarter adjusted EBITDA precooded.

This is over the double the adjusted EBIDA generated in the first quarter of 2022 and a structural departure from the region consistently reporting negative first quarter adjusted EBIDA pre-COVID. We continue to see strength and transatlantic inbound into EMIA but also international travel between the year

Speaker 9: We continue to see strength in transatlantic inbound into EMEA, but also international travel between the European countries.

Speaker 9: While it's early to comment on the demand pattern for the summer, like the airlines, we see increased inbound travel throughout the international countries and are encouraged by these early trends. We have confidence that our international teams will continue to deliver strong results in the upcoming quarters.

Speaker 10: Moving on to pleleet, we're as usual. We'll focus more in the Americas segment.

results in the upcoming quarters.

Speaker 9: As I mentioned earlier, a fleet disposition teams were busier than expected this quarter as a exited high-mileage vehicles to capitalize on a strong used car market and in pleading new ammodels to improve our rotation. This means younger and lower mileage cars, as well as optimizing the overall vehicle mix of our fleet, which allows for a product portfolio that our renters demand.

Moving on to flee, whereas usual we'll focus more on the America's segment.

As I mentioned earlier, a fleet disposition teams were busier than expected this quarter as they exited high mileage vehicles to capitalize on a strong use car market and inflating new amount to improve our rotation. This means younger and lower mileage cars as well as optimizing the overall vehicle mix of our fleet.

Speaker 9: Our OEM partners continue to come out with exciting new vehicle designs for both traditional internal combustion and, of course, electric.

which allows for a product portfolio that are renters demand. Our OEM partners continue to come out with exciting new vehicle designs for both traditional internal combustion and of course electric.

Speaker 9: While the selling price above disposed vehicles remain well above net book value into the peak tax refund season, we do not expect gains at these levels for the balance of the year.

While the selling price of our disposed vehicles remained well above net book value into the peak tax refund season, we do not expect gains at these levels for the balance of the year.

Speaker 10: The entry of additional monolyear 2023 vehicles in the quarter continued the upward trend of our straight line depreciation.

The entry of additional model year, 2020-23 vehicles in the quarter, continue the upward trend of our straight line depreciation.

Speaker 9: Despite the gain on sales this quarter we saw a significant pressure on a net monthly depreciation per vehicle.

Despite the gain on sales this quarter, we saw significant pressure on a net monthly depreciation per vehicle. We recorded $128 per unit.

Speaker 10: We recorded $128 per unit.

Speaker 9: fle costs per month in the first quarter of 2023, versus $20 in the first quarter of two thousand and 20 s-twoand.

Bleed costs per month in the first quarter of 2023 versus $20 in the first quarter of 2022.

Speaker 10: We saw a similar pressure in our vehicle interest per month per vehicle, which came in at $83 in the first quarter of 2023 versus $50 in the first quarter of 2020 -two.

We saw a similar pressure in our vehicle interest per month per vehicle which came in at $83 in the first quarter of 2023 versus $50 in the first quarter of 2022.

Speaker 9: As we guided, as we guided to our last earnings call. We expect our full year 2023 monthly vehicle interest per veicle to be roughly $100. So their additional headwinds overcome on the vehicle interest line.

As we guided to our last earnings call, we expect a full year, 2023, monthly vehicle interest per vehicle to be roughly $100. So there are additional headwinds to overcome on the vehicle interest line.

Speaker 10: We also mentioned, we'd rather run out of the incremental vehicle than have an unutilized vehicle on our lot this quarter. Our actions were consistent with that rhetoric. We continue to be consistent going forward. We run our business to be fleeted just under demand in order to optimize utilization and mitigate the headwinds of vehicle depreciation and interest.

We also mentioned we'd rather run out of the incremental vehicle than have an unutilized vehicle on our lot. This quarter our actions were consistent with that rhetoric. We continue to be consistent going forward. We run our business to be fleeted just under demand in order to optimize utilization and mitigate the headwinds of vehicle depreciation and interest.

Speaker 10: This stringgid management allowed for an improvement in utilization. It was strong fleet rotation and unexpected recalls during the quarter. We expect our fleet to continue to be in line with demand, inclusive of our summer peak.

This stringent management allowed for an improvement in utilization, he was strong fleet rotation and unexpected recalls during the quarter. We expect our fleet to continue to be in line with the man inclusive of our summer peak.

Speaker 9: Let me take a moment to talk about our ongoing electric vehicle strategy. As previously stated, we believe the road to electrification read solidly on the foundation of robust charging infrastructure.

Let me take a moment to talk about our ongoing electric vehicle strategy. As previously stated, we believe the road to electrification were at solidly on the foundation of a robust charging infrastructure.

Speaker 10: This is a necessary conditioned to support electrified plea. We continue to advance this strategy throughout the quarter by adding additional charging units at all locations through a partownnership with ebitcharge and SK group company.

This is a necessary condition to support electrified plea. We continue to advance this strategy throughout the quarter by adding additional charging units at all locations through a partnership with Evercharge, an SK Group Company.

Speaker 9: We can continue to acquire a diverse electric fleet from our numerous OEM partners which allows customers to reserve and select from variant product offerings to meet growing demand. These diverse offerings will help insulate us against residual value and potential recall pressures.

We can continue to acquire a diverse electric fleet from our numerous OEM partners, which allows customers to reserve and select from various product offerings to meet growing demand. These diverse offerings will help insulate us against residual value and potential repotential pressures.

Speaker 9: Before I conclude, I would like to make you aware of a new mocking initiative which sentus around a fresh, new advertising campaign for ravis, calledult plan on us simply said: for 75 years you've only had one plan. To make sure you keep yours. You can look for our campaign on various platforms, as well as signence throughout airports and off facilities in the near futurethis slogan is not only a message to our consumers, but a call to action for all of us here at Avis spludget group.

campaign for Davis called plan on us. Simply said, for 75 years, you've only had one plan to make sure you keep yours. You can look for our campaign on various platforms as well as signage throughout airports and our facilities in the near future.

This slogan is not only a message to our consumers, but a call to action for all of us here at Avis Budget Group.

Speaker 9: That concludes my prepared remarks, But before I turn over to byan, let me reiterate how proud I am of this thought to 2023. it's important to get abvigated early, and I believe we did just that. We're going to continue this momentum throughout the year and continue to show what a transforming company we are. While travel patterns are normalizing to more precovid seasonal levels, we do anticipate the strong sum of peak, with continued growth in both our commercial and inbound business.

That concludes my prepared remarks but before I turn it over to Brian , let me reiterate how proud I am of this start to 2023.

It's important to get out of the gate early, and I believe we did just that. We're going to continue this momentum throughout the year and continue to show what a transposing company we are.

While travel patterns are normalizing to more pre-COVID seasonal levels, we do anticipate a strong summer peak with continued growth in both our commercial and inbound business. With that, Brian will now discuss our liquidity and our outlook.

Speaker 10: With that, Brian will now discuss our liquidity and our outlook.

Speaker 10: Thank you, Joe. Good morning everyone. I will now discuss our liquidity and near-term outlook. My comments today will focus on our adjusted results, which are reconciled from our GAAP numbers in our press release.

Thank you, Joe. Good morning, everyone. I will now discuss our liquidity and near-turnout look. My comments today will focus on our adjusted results, which are reconciled from our gap numbers in our press release. I'd like to start off by addressing capital allocation. In the fourth quarter of 2022, we deployed over $750 million to purchase nearly 4 million shares of our common stock.

Speaker 10: I'd like to start off by addressing capital allocation. In the fourth quarter of 2022, we deployed over $75 million to purchase nearly four million shares of our common stock.

Speaker 10: But this quarter we chose to deploy our adjusted free cash flow temporarily in our vehicle programs in the first quarter of 2020. -three.

But this quarter, we chose to deploy our adjusted free cash flow temporarily in our vehicle programs in the first quarter of 2023.

Speaker 10: That's a substantial departure, but we've been consistent in saying that we will be nimble with how we allocate capital at Avis.

That's a substantial departure, but we've been consistent in saying that we will be nimble with how we allocate capital at Avis.

Speaker 10: This quarter is an example of that. In an uncertain macroeconomic environment with rising interest rates, we believe it prudent to be more cautious with capital deployment. We're fortunate to operate a business that generates cash on a daily basis, and accumulating that cash in our vehicle programs both lowers our vehicle interest expense, which is adjusted EBITDA accretive, while providing reoption value with immediate access to funds in the event we see attractive opportunities.

This quarter is an example of that. In an uncertain macroeconomic environment with rising interest rates, we believe it prudent to be more cautious with capital deployment.

We're fortunate to operate a business that generates cash on a daily basis and accumulating that cash in our vehicle programs both lowers our vehicle interest expense, which is adjusted EBITDA accretive, while providing free option value with immediate access to funds in the event we see attractive opportunities.

Speaker 10: Those opportunities may include: retiring high interest rate debt by acquiring blocks in the open market below par paying down tranches of corporate debt as they come due, contributing additional fleet equity into upcoming asop deals, allocating towards additional CapEx investments, tuck-in e acquisitions and, of course, share repurchases.

Those opportunities may include retiring high interest rate debt by acquiring blocks in the open market below par, paying down tranches of corporate debt as they come due, contributing additional fleet equity into upcoming ASOP deals allocating towards additional capex investments.

Speaker 10: Everything is on the table, but we're being patient.

Tuck in M&A acquisitions, and of course, share of purchases.

Speaker 10: And while we're being patient, the war chest builds So that when we act, we can do so confidently and aggressively.

Everything is on the table, but we're being patient. And while we're being patient, the war chest builds so that when we act, we can do so confidently and aggressively.

Speaker 10: As always, we will opportunistically allocate capital to those areas that best benefit all stakeholders of datvis budget group.

As always, we will opportunistically allocate capital to those areas that best benefit all stakeholders of Davis Budget Group.

Speaker 10: We continue to find ourselves in the privileged position of being in the strongest financial standing in the history of our company.

We continue to find ourselves in the privileged position of being in the strongest financial standing in the history of our company.

Speaker 10: Over the last 12 months, adjusted EBITDA was $3.9 billion.

Speaker 10: During the quarter, we voluntarily contributed nearly $5 million back into our vehicle programs, deployed over $5 million into investments in our systems operations, customer experience and electric vehicle capabilities, while having a net leverage ratio of about one timesou.

Over the last 12 months, adjusted EBITDA was $3.9 billion. During the quarter, we've voluntarily contributed nearly $500 million back into our vehicle programs, deployed over $50 million into investments in our systems, operations, customer experience, and electric vehicle capabilities, all while having a net leverage ratio of about one times. As of March 31st, we had available liquidity of a product.

Speaker 10: As of March thirty-first, we had available liquidity of approximately $1.4 billion, with additional borrowing capacity of $2.3 billion in our ABS facilities.

Speaker 10: Our corporate debt is well ladtered, with approximately 86% of our corporate debt having maturities in 2026 or beyond, and we are in compliance with all of our secure financing facilities around the world, with significant headroom on our maintenance covenants- stest as of the end of March.

Speaker 10: Let's move on the outlook.

Speaker 10: As you know, we've made the decision at the management team to forego giving formal annual guidance, to allow ourselves the flexibility to make agile decisions as the business environment changes.

and assess at the end of March.

Let's move on to Outlook. As you know, we've made the decision as a management team to forgo giving formal annual guidance to allow ourselves the flexibility to make agile decisions as the business environment changes.

Speaker 10: However I do want to provide some color around what we're seeing for the second quarter.

Speaker 10: As Joe mentioned earlier on the call, we are seeing a return to normal seasonality in the business.

However, I do want to provide some call-out around what we're seeing for the second quarter.

Speaker 10: For the second quarter that means a sequential increase in both rental days and revenue per day as we start getting into the summer season with Memorial day.

As Jill mentioned earlier on the call, we are seeing a return to normal seasonality in the business. For the second quarter, that means a sequential increase in both rental days and revenue per day as we start getting into the summer season with Memorial Day.

Speaker 10: Vehicle dispositions will slow in anticipation of peak summer demand, which means that there will be a convergence between gross and neck depreciation.

Vehicle dispositions will slow in anticipation of peak summer demand, which means that there will be a convergence between gross and net depreciation. Finally, our focus around cost control, combined with the increased throughput of rental days, will result in sequential operating leverage and margin expansion.

Speaker 10: Finally our focus around cost control, combined with the increased throughput of rental days, will result in sequential operating leverage and margin expansion.

Speaker 10: Historically from an adjusted EBITDA perspective, these normal trends translate to a sequential increase of 15 million to $2 million in adjusted EBITDA, from one Q to two Q.

Historically, from an adjusted EBITDA perspective, these normal trends translate to a sequential increase of $150 million to $200 million in adjusted EBITDA from 1Q to 2Q.

Speaker 10: We expect sequential adjusted EBITDA growth in that range for our base business in the upcoming quarter. But given the outsiz fleet gains we realized in Q1, our best estimate is that reported adjusted EBITDA for 2- Q2 three will be roughly $6 million.

We expect sequential adjusted EBITDA growth in that range for our base business in the upcoming quarter. But given the outsized fleet gains we realized in Q1, our best estimate is that reported adjusted EBITDA for 2Q23 will be roughly $600 million.

Speaker 10: With that, let's open up for questions.

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Speaker 6: And our first question come from the line of Stephanie Moore with Jeffrey.

And our first question comes from the line of Stephanie Moore with Jefferies.

And our first question comes from the line of Stephanie Moore with Jeffries. Please proceed with your question.

Speaker 6: Please foresee which you a question.

Speaker 12: Time this is Han to men on first Stephanie and you know congrat on another strong quarter. You know clearly a demand side Ed equation is you know been really strong but you know could you provide some color in the supply side. You has a been challenging at all the get your hands on new vehicle and then you know maybe just frame kind of. You know your best guess on kind of one that you know sort of normalize was.

Hi this is Hans Hoffman on for Stephanie and you know congrats on another strong quarter. You know clearly the demand side of the equation has you know been really strong but you know could you provide some color in the supply side you know has it been challenging at all to get your hands on new vehicles and then you know maybe just frame kind of you know your best guess and kind of when that you know sort of normalize.

Speaker 6: Want this CH. As you can tell, with some of the public documents, the supply side is is increased over prior year, but you have to think about what prior year was like. In prior year, was was the lowest amount of new cars that this industry is seen e maybe, I know, definitely in the last 5, certainly a lot long than that it was. There were challenges with chips and supply chain issues and things of that nature.

In prior year it was the lowest amount of new cars that this industry has seen. Maybe I know definitely in the last five, certainly a lot longer than that. There were challenges with chips and supply chain issues and things of that nature. So we are seeing more supply this year. But I have to tell you that there. We're still not out of the woods on what I would consider to be some cancellations of some delays.

Speaker 9: So we are seeing more, more supply this year, but I I have to tell you that there we're still not out of the woods on what I would consider to be some cancellations of some of the ways. There are still supply chain challenges has pertains, the parts and logistics. So things aren't real. You know, evening in that regard, when I think about some of that, some of the activities that are that have been going on of late, if you look at how many cars are being sold new into- just just sold new commercially into into our environment, it's really in line with where it was in 2021.

There are still supply chain challenges that pertains to parts and logistics. So things aren't real, you know, evening in that regard. When I think about some of the activities that have been going on of late, if you look at how many cars are being sold new into just sold new.

Speaker 13: So the, the OEM, S aren't over producing vehicles the way they might have done it in the past. I think there are challenges, as I said, that supply chain, maybe the electrification of some bleleets that you know, change their, their supply chain lines. And also I think you know the deal, ships over time have learned to, you know so- cars with less inventories.

commercially into the art environment. It's really in line with where it was in 2021. So the OEMs aren't overproducing vehicles the way they might have done it in the past. I think there are challenges, as I said, that supply chain may be the electrification of some fleets that change their supply chain lines.

And also, I think the dealerships over time have learned to sell cars with less inventories. So while we are getting more cars than we did at probably an all-time low last year, it's not by any chance going back to where it was pre-COVID, in my opinion. And I think that lasts for not only this year, but into next.

Speaker 14: So while I, while we are getting more cars- and we did at a probably a all time low last year- it's not by any chance going back to. You know where it was precooded, in my opinion, and I think that last for phenomeny this year but into next.

Speaker 12: Got it's. That's really helpful. And then you know clearly you guys are seeing, you know a lot of benefit from increased demand for commercial and international bound, because you know maybe comment on sort of how leisure F relative to your expectations and then kind of any sort of trends you're seeing in Q2.

Got it. That's really helpful. And then clearly you guys are seeing a lot of benefit from increased demand for commercial and international inbound. Maybe comment on how these are relative to your expectations and then any sort of trends you're seeing in Q2.

Speaker 9: Yes the trends are changing.

Speaker 9: What we're seeing here most closer resembles prepandemic than than during the pandemic. So it appears to us that things are getting back to normally. There were were, there were, which means that in the commercial months there's more commercial and in the leision months, obviously that would be more leisure. What we see for us here's this sequential improvement, as Brian said, in rental days, from quarter to quarter and even when, you know, even when you, when you look at price, somewhat similar in the same regard.

Yeah, you know the trends are changing.

Yeah, you know, the trends are changing. What we're seeing here most closely resembles

pre-pandemic than during the pandemic. So it appears to us that things are getting back to normally the way they were, which means that in the commercial months, there's more commercial, and in the leisure months, obviously there will be more leisure. What we see for us here is a sequential improvement, as Brian said.

in rental days from quarter to quarter. And even when you look at price, somewhat similar in the same regard. So we will be busier in the second than we were in the first, and we will be busier in the third than we were in the second. That's last year when you looked at what was going on, it was like kind of the second and third were almost kind of like the same as far as what the demand was looking.

Speaker 15: So we will be busier in the second than we were in the first and we would be busier in the third than we were in the second. That's last year when you looked at what was going on, it was like kind of you, the second and third, while almost kind of like the same. As far as you know what the demand was looking like, the leisure business and ETC. I think what we have seeing is this a rebound commercial and that helps to fulfill, that's helped to fill the first quarter and will help the bridge the, the activity towards towards the summer season.

Speaker 9: We've seen gains in a good number of of the counts that we do business with that are traveling more frequently than they had prior year. And as far as leisure demand, you know it's, it's being heavily weightyou know right now towards inbound business. Inbound business- if you think about last year, with the closure of a lot of the countries, especially over in Europe , and the fact that you needed to get tested before you came back to the United States until may, maybe early June - know there's this been pent up demand and last year the airlines weren't really ready to take on those route challenges when this, when everything changed so rapidly, the big planes that were flying normally- whyly, you know, overseas- were plying domestically and so that's took a while to to while to change and and you know, people needed to prepare and there was all sorts of disruptions in the European airports.

that are traveling more frequently than they had prior year. As far as leisure demand, it's being heavily weighted right now towards inbound business. Inbound business, if you think about last year, with the closure of a lot of the countries, especially over in Europe , and the fact that you needed to get tested before you came back to the United States up until May, maybe early June , there's just been pent-up demand.

And last year, the airlines weren't really ready to take on those root challenges when everything changed so rapidly. The big planes that were flying, normally flying overseas, were flying domestically. And so that took a while to change. And people needed to prepare. There was all sorts of disruption.

Speaker 9: So there's this heavy demand towards inbound. If I heard the other day that there's a 30% increase in U's passport applications this year, and that just goes to tell you how people, how people are thinking, So we've seen it on both sides. Travel into Europe - and I think when think about europethey're going to be heavily weightedmore towards inbound than ever before- and certainly travel into the United States coming from the countries that I mentioned in that remonks.

more towards inbound than ever before and certainly travel into the United States coming from the countries that I mentioned in our prepared remarks.

Speaker 16: Very helpful thanks.

Very helpful. Thanks.

Speaker 6: Our next question comes from the line of Adam joonus with morganden. Please fore see what's your question.

Our next question comes from the line of Adam Jonas with Morgan Stanley . Please proceed with your question.

Speaker 17: Hey guys, thanks for all the great detail. Brian , you might have covever this. I may have missed it. Did you have any? You want to call any hedging gains or any one-off items that might have lowered your interest expense in the quarter similar to your other publicly traded a competitor that that might not repeat going forward?

Hey guys, thanks for all the great detail. Brian , you might have covered this, I may have missed it. Did you have any, do you want to call it any hedging gains or any one-off items that might have lowered your interest expense in the quarter similar to your other publicly traded?

Speaker 18: To quantify yes, not even to miss it. There was nothing in the quarter and we don't anticipate anything going forward ither.

that a competitor that might not repeat going forward.

Yeah, Adam. I know you didn't miss it. There was nothing in the quarter and we don't anticipate anything going forward even.

Speaker 17: Fantastic and then just a follow-up. You guys have taken a bit more of a.

Fantastic. And then just to follow up, you guys have taken a bit more of a...

Speaker 17: Measured approach, I think, to getting into the TNC and EV market. I think mindful some of the infrastructure and OpEx.

Measured approach, I think, to getting into the TNC and EV market, I think mindful of some of the infrastructure and op-X.

Speaker 17: yessome of the unique qualities there to maintain a great user experience and of course your big private competitor who I would assume is on this call or otherwise would listen is not doing that and.

Yes, some of the unique qualities there to maintain a great user experience. And of course, you're your big private competitor who I would assume is on this call or otherwise would listen is not doing that. And um...

Speaker 17: And there's different theories. Such are why they might not be doing at or when they would decide to do it, because it just seems kind of inevitable at some point. But for this audience here, do you want to describe some of the things that could go wrong or that, while it's a great business opportunity for you, it helps your utilization and and again interripretfication, all sorts of benefits, including the tax benefits.

And there's different theories as to why they might not be doing it or when they would decide to do it because it just seems kind of inevitable at some point. But for this audience here, do you want to describe some of the things that could go wrong or that while it's a great business opportunity for you and helps your utilization and, again, electrification, all sorts of benefits, including the tax benefits.

Speaker 17: Some of the things that you.

Speaker 17: Would be cautious of, given your experiences though, maybe why you wouldn't go full headlong into this thing just on the OpEx side or otherwise infrastructure side you're addressing.

some of the things that you would be cautious of given your experiences to maybe why you wouldn't go full headlong into this thing, just on the OpEx side or otherwise infrastructure side that you're addressing. Thanks.

of the things that you would be cautious of given your experiences to maybe why you wouldn't go full head long into this thing, just some on the op-ex side or other I did for structure side that you're addressing. Thanks.

would be cautious of giving your experiences to maybe why you wouldn't go full head long into this thing, just some on the op-ex side or otherwise the infrastructure side that you're addressing. Thanks. Thanks Adam. Hey, this is Joe.

Speaker 19: Thanks San.

Speaker 20: I just joke.

Speaker 14: You know we look really stringently at per unit economics and everything we do has that in mind. So we've been in the right he business for a number of years now and I have to say our launchants on that business a pretty solid. As you know, we cascade cars into that arena So it's not the typical ccar that you would. You would get a and Avis facility, those cars casced.

You know, we look really stringently at per unit economics and everything we do has that in mind. So we've been in the right-hand business for a number of years now and I have to say our margins on that business are pretty solid. As you know, we cascade cars into that arena. So.

Speaker 9: We find that that's a good use of our vehicles and extends a like and allows us to have, you know, a good, good depreciation and benefits in that regard, a good and good drop throughs for a P and L. as far as electric, we've been talking a lot about infrastructure of being being really important to our company. We think about it. Right now it takes 20 minutes to clean a gas of vehicle and that obviously is not the case with the electric cars.

Speaker 9: So we had to make sure our vestments in our infrastructure they are soundly So that when we rent cars on airport, which we will, and I think that's the going to be the determining factor on a go forward basis, we get the same, you know, utilization or just about the same utilization that we're getting on a gas ars. So in other words, not having to find more cars to do the, not having to find more cars because of utilization drive.

basis. We can get the same utilization or just about the same utilization that we're getting on a gas car. So in other words, not having to buy more cars to do, not having to buy more cars because of utilization drive. So we've been looking at that very carefully. Right now, you know, our demand is improving on electric cars. We have a variedio

Speaker 9: So we've been looking at that very carefully right now. You know our demand is improving on on electric cars. We have a very amount of electric cars and off LE. We think it's important to get electric vehicles from all, from all the OEM's that are currently producing them. We have, we have orders coming in but, as you you said it, we are prudent in that regard because we going to make sure that we have the right amount of vehicles to satisfy the right amount of demand at the right locations.

amount of electric cars in our fleet. We think it's important to get electric vehicles from all the OEMs that are currently producing them. We have orders coming in, but as you said, we are prudent in that regard because we want to make sure that we have the right amount of vehicles to satisfy the right amount of demand at the right locations.

Speaker 9: So we'll be continue and watch that over time.

Speaker 21: Appreciate that job.

So we'll be continuing and watch that over time.

Speaker 18: Thanks everybody.

We'll be continuing to watch that over time. Appreciate that, Joe. Thanks, everybody.

Speaker 6: Our next question comes from the line of where I'm gittman, when JP Morgan. Please will see mat your question.

Our next question comes from the line of Ryan Gritman with JP Morgan. Please proceed with your question.

Speaker 22: Thanks for taking my questions. With regard to that voluntary cash contribution of nearly five million to vehicle programs in the quarter, where does this leave you now in terms of loan, the value or the equity component of your fleets? How much could you withdraw from these programs at this point if you wanted to, and do you intend to, operate at any different level of equity in the fleet versus prior, including in any future asop deals which could presumably lead to a structurally lower interest rate?

Hi, thanks for taking my questions. With regard to that voluntary cash contribution of nearly $500 million to vehicle programs in the quarter, where does this leave you now in terms of loan to value or the equity component of your fleets? How much could you withdraw from these programs at this point if you wanted to? And do you intend to operate at any different level?

equity in the fleet versus prior including in any future ASOP deals which could presumably lead to a structurally lower interest rate.

Speaker 10: And right. You know we don't typically guide to what we'll do within vehicle program because you know from our perspective the reason why we put that five million wasn't to optimize just for vehicle interest in the quarter. We view that as a better place to put our cash instead of cash on the balance sheet because it does temporary lowervehicle interest expense But as we've shown during the pandemic, it's easily accessible nearly overnight and we can deploy to any aspect of our capital deployment that we think isn T optimal.

Hey Ryan, you know we don't typically dive to what we'll do within vehicle programs because you know from our perspective the reason why we put that $500 million wasn't to optimize just for vehicle interest in the quarter. We view that as a better place to put our cash instead of cash on the balance sheet.

Speaker 10: So I think a question on that would be effectively guiding to kind of what we intend to do: a capital going forward and, as we've shown, where we're prettynimble with that in terms of how much cush in the fleet. I think that' shown. I think that the back to the hvelope quick way to do that is just take a look at what- and we report this every quar in the press release- just what our vehle Deb is and what our vehicle assets.

I think a question on that would be effectively guiding to kind of what we intend to do with a capital going forward and as we've shown, we're pretty nimble with that. In terms of how much cushion is in the fleet, I think that's shown, I think that the back of the envelope quickly to do that is just take a look at what, and we report this every quarter in the press release, just what our vehicle deck is and what our vehicle deck

Speaker 10: You can see how that's been growrown over time.

Speaker 22: Okay thanks. And then just lastly you, to ffollow up in some of those comments just there with regard to electric vehicles- wanted to get your thoughts on the deflation that we've been seen in new EV pricing inand the implications for residual risk et cetera. Obviously some pretty unprecedented declines and pricing for new and therefore use Tesla vehicles.

risk etc. Obviously some pretty unprecedented declines in pricing for new and therefore used Tesla vehicles. I'm not sure if you see that as a one-off or something that could impact other brands. I suppose you could take the view that this is a good thing for for Avis at least given you don't have

Speaker 22: I'm not sure if you see that as a one-off or something that could impact other brands. I suppose you could take to you that this is a good thing for aus at least give. You don't have so many ES currently and intend to ramp your purchases, but does it enter into your thinking at all when it comes to how you buy these vehicles, the types of volume purchased, discounts that you need, or risk versus program or or anything along those lines?

so many EVs currently and yet intend to ramp your purchases, but does it enter into your thinking at all when it comes to how you buy these vehicles, the types of you know volume purchase discounts that you need or risk versus program or or anything along those lines? As I said earlier we really look at per unit economics and think in and model

Speaker 23: yesas I said earlily we really look at per unit economics and think and model how long going to keep a car but we think we're going to get to the hicle when it's time for sale now admittedly some of those are not some of the electric vehicle prices have come into questionably I think the best way to go about it and the safest way to go about it to insulate ourselves that to have a very product offering So.

How long we're going to keep a car, but we think we're going to get to the vehicle when it's time for sale. Now, admittedly, some of the electric vehicle prices have come into question of late. I think the best way to go about it, and the safest way to go about it, to insulate ourselves, is to have a varied product offering. So this takes off as our initial

Speaker 14: We we don't put it. You know whatall our eggs in one basket at any given time. We spread we all OEMs want to sell us gas cardars and they want tosell electr cars. It part of what they do obviously, and we're in the business of accepting that, but we accept them in a way that determines you know what the price is going to be, what our demand is going to be.

We don't put all our eggs in one basket at any given time. We spread all the OEMs want to sell us gas cars and they want to sell us electric cars. What do they do, obviously? And we're in the business of accepting them. But we accept them in a way that determines what the price is going to be, what are the demand is going to be, how is this car going to go to matriculate into our system, what are the in-life vehicle costs going to be, and what is it going to be when we exit? If you open here you can see any financial quality and benefit.

Speaker 9: How is this card going to to matriculate into our system, what are the in light vehicle costs going to be and what is going to be when we exit? So admittedly, everything we do with fleet has this little bit of a cautious, you know- outlook towards it and that's how we run our businessit and we're confident that the you know we, we got into it the way we did.

So admittedly, everything we do with Fleet has this little bit of a cautious outlook towards it, and that's how we run our business. And we're confident that we got into it the way we did. We have enough demand. We're building our infrastructure. We believe the OEMs will start selling more and more of these over time where it has to be incorporated not just in an off-airport environment but an airport environment. That's what we're beefing up our emphasis.

Speaker 9: We have enough demand. We're building our infrastructure. We believe the OEMs will start selling more and more of these over time where it has to be incorporated, not just been in off airport environment, but an airport environment. That's what we would be ING on our infrastructure right now are. I think the best case that we say is we have very proudest offerings from many different OEMs and they seem to be hoped.

Speaker 24: Thank you.

Speaker 6: Our next question comes from the line of.

Speaker 6: Chris for una with George Bank. pleaseyou foresee mat your question.

Speaker 25: agood morning guys. Thanks for all the details so far, So as we think about kind of continued normalization.

Hey, good morning guys. Thanks for all the details so far. So as we think about kind of continued normalization.

Speaker 22: On the fleet side I'm curious as to whether or.

Speaker 25: Your whole period are kind of getting back to historical levels and also on the movie parts around shu.tt-ling. I know you guys.

on the fleet side. I'm curious as to whether the whole period are kind of getting back to historical levels and also on the moving parts around shuttling. I know you guys.

Speaker 14: Spent a lot of money on that every year. Is that starting to decline as we get more balanced supply and markets begin to become a little more predictable?

I spend a lot of money on that every year. Is that starting to decline as we get more balanced supply and markets begin to become a little more predictable? Thanks. Yeah, thanks, Chris. Starting off with the first part on hold periods. Hold periods have changed over time. I'm not sure that the hold periods that we had back in the 2019 or 2018 were exactly the right hold periods to have. I think we learned a lot going through 2019 and then going through the pandemic and what's commercially acceptable and what's not.

Speaker 9: Thanks expris you starting up over the ST ST part on whole periods. You know hope periods have changed over time. I'm not sure that the whole periods that we had back in the 2019 and 2000 and eighteteen were exactly the right whole periods that. I think we learned a lot, you know, going through 19 and then going through the pandemic and what's commercially acceptable and what's not so.

Speaker 9: I think those, you know, those are going to change over time and we are certainly looking at that. Obviously, the cars that we had in our fleet after, after the pandemic, they were a little older in nature and we did a lot of a reposition, you know, taking cars out and accepting new cars, in which rotates our fleet to a level that we feel gives us the best in life costs, you know, want to go forward basis.

Speaker 9: We continue to take advantage of that, obviously over time. But I think we, you know, getting back to the whole periods, ityou know what we had in 19 may not be exactlythe whole periods that we havetoday and plus we have different use case segments that we had, you know, in 19 that we had back in 19 as far as the shuttling costs and things of that nature, we did see quite a bit of that in the past.

Speaker 9: Los that we can do and they predictability of when cars were coming in and where they were coming as the O? Em start to get, you know, ought to get more in line with that production process. Then that starts to normalize as well. We Ve there yet totally I would say no, but we are have seen up an improvement from. You know what we thought were coming in last year, what actually happened you in the right cities and the like to compare to this year.

from what we thought were coming in last year and what actually happened in the right cities and the like to compare it to this year. And Chris, just to add to that, when we manage our holding periods, we take a look at the vehicles that our customers demand and we follow our MPS scores closely and that's higher than it ever was in the 2019 levels. So I think that it kind of corroborates what Joe was saying in that we can take a different approach to how long we hold vehicles going forward. Okay, very helpful. And then the follow-up, is there any way for us to kind of triangulate this international inbound versus international out, or domestic outbound in terms of, you know, there's a few more domestic folks going overseas again.

Speaker 10: In chystal said to that when we into our holding periods we take a look at kind of the vehicles that our customers demanded or IMP. We follow our MPS scores closely and that's kind of higher than it ever was in the 2019 levels. So I think that kind of corrobor with Joe is saying and that we can take a different approach to how long we hold the vehicles going forward.

Speaker 25: Okay very helpful. And then the follow-up. Is there any easway for us to kind of triangularly?

Speaker 25: This international inbound versus.

Speaker 25: International or domestic goutbound in terms of's a few more domestic folks going overseas again, there's also more coming in. We can look at the report RPD, but those are plended. Is there any? How do you guys look at? What's the offset of an American going overseas versus?

There's also more coming in. I mean we can look at the report of RPDs, but those are splendid. Is there any, how do you guys look at what's the offset of an American going overseas versus...

Speaker 25: Somewhat coming here and these changes that are underway, is that you think that's a dramatic impact to RPD either way?

someone coming here and these changes that are underway, is that, you think that's a dramatic impact to RPD either way?

Speaker 26: Well.

Speaker 9: I think we will see oversized demand going into Europe .

Speaker 9: Which would affect them, which would affect that mix, and if you think about what happened in the first quarter, with rate per day being up, I don't see that changing right. The mix, the mix that's going into Europe being more driven from outside, of outside of Europe or or like, is going to be going to be much bigger than probably we've had in the pastso that might have a mix benefit, for on the other side of the point, this is the bigger.

I think we will see oversized demand going into Europe , which would affect their mix. And if you think about what happened in the first quarter with rate per day being up, I don't see that changing. The mix that's going into Europe being more driven from outside of Europe or like is going to be much bigger than probably we've had in the past. So that might have a mixed benefit for you. On the other side of the coin, this is the bigger, the United States is obviously the bigger market and.

Speaker 9: The United States is obviously the bigger market and we've seen growth coming from various different channels, not just, not just Latin America or euro, but a Pac, because it opened up a little bit later in things of that nature. So probably alittle.

we've seen growth coming from various different channels, not just Latin America or Europe , but APAC because it opened up a little bit later and things of that nature.

Speaker 9: The minor effect in the U's of laradger effect the Europe .

Minor effect in the US, larger effect in Europe . Okay, very helpful. Thanks guys.

Speaker 25: Ok very helpful, thanks guys.

Speaker 6: Our next incomes from the line of John yearaly with North Coast research. Please foresee to your question.

All right, next question comes from the line of John Healy with North Coast Research. Please proceed with your questioning.

Speaker 6: I think you just wanted to ask the clarification question on the six million number for Q2. Could you maybe help us a little bit on the RPD expectations that's embedded in that number? I thought earlier in the call that you guys said that that pricing or RPD would be similar in Q2 to Q1. I want to make sure I heard that right and just any sort of framework you can help us with on the RPD side.

I just wanted to ask a clarification question on the 600 million number for Q2. Could you maybe help us a little bit on the RPD expectations that's embedded in that number? I thought earlier in the call that you guys said that pricing or RPD would be similar in Q2 to Q1. I want to make sure I heard that right. In just any sort of...

Speaker 10: John yes, the. I think when you look at it on the Americas, I think what Joe had said.

framework you can help us with on the RPD side. Hey John , yeah, I think when you look at it on the America, I think what Joe has said was that we're getting back to normal seasonality. So I think the increase that you see sequentially in RPD from, you know, one, two to two to you. The last normal year we had was 2019 and you can look back going forward. It's kind of a bit.

Speaker 10: Was that we're getting back to normal seasonality. So I think the increase that you see sequentially, an RPD from one Q to two q- the last normal year we had was two thousand and nineteen. You can look back going forward- is kind of 2% to 3% sequential increasement. I think that's what you can expect out of us. On a.

And two, three percent sequential increase. And I think that's what you can expect out of us, you know, on a consolidated basis for 2Q. And that's what's built into the 600 number. OK. Great. And then I just would love to get your thoughts on what the business looks like today in terms of a customer mixed standpoint.

Speaker 10: On a consolidated basis for two Q and that's what's built into the 600 milth number.

Speaker 6: Okay great. And then I just would love to get your thoughts on what the business looks like today in terms of a customer mix standpoint. Think we're all trying to figure out you know who's gain share, who's law share, what the business looks like, and I think your rental days are- this is an all time high this Q1. So we would love to think about just a leisure commercial and maybe the T n C business.

Speaker 9: If you could help us with how much each of those are contributing and maybe leisure, and incorporate maybe how those compare to prepandemic levels in terms of return to the contribution.

Speaker 27: Small start off.

pandemic levels in terms of return to the contribution. I'll start off.

Speaker 9: We saw. We saw growth in commercial business as compared to our total business in the first quarter. So we had a larger amount of commercial business the first quarter of this year than we did for first quarter of last year. We saw that starting last year John , during probably the third quarter period, was like October , maybe September October , and that will continue.

We saw our growth in commercial business as compared to our total business in the first quarter. So we had a larger amount of commercial business, the first quarter of this year than we did for the first quarter of last year. We saw that starting last year, John , probably the third quarter period was like October .

Speaker 28: So we haven't caligize that, you know, get and we do believe that that is a that a good piece of business for us because it goes in the midweek, which our midweek business has been pretty strong, and also give us an available deal vehicle to rent on the weekends and in the leisure periods. I think when you think about leis it's going to be traditionally around the more leisure periods that there are major holidays and and the summer, which we think the peak of the summer is going to be pretty large.

maybe September , October , and that will continue, so we haven't calibrated that yet. And we do believe that that is a good piece of business for us because it fills in the midweek, which our midweek business has been pretty strong, and also gives us an available vehicle to rent on the weekends and in the leisure periods.

I think when you think about leisure, it's going to be traditionally around the more leisure periods that there are. Major holidays and the summer, which we think the peak of the summer is going to be pretty large. So we think people who normally travel, who traveled last year, maybe in April and May because it was post-Omicron, and did it on a leisure basis are going to travel more in the traditional periods of time, which will be the back end.

Speaker 14: We think people who normally travel, who travel- last year maybe in April and may, because it was posted on a cron and did it on a leisure basis- are going to travel more in the traditional periods of time which will be the back end of this quarter and into the third. Also an El shoot of our commercial business that you get this blended customer right.

Speaker 14: A customer who rent on know Tuesday Wednesday, Thursday would actually stay, you know in where it is they travel to for the weekend to take in a show or an events or something along those lines. We do see, you know some know in more traditional periods of travel, commercial in the commercial months've added with this leisure, with this we know blended leisure, commercial mix and then very high level of leure as it pertain around the nor leisure, ODS.

see some more traditional periods of travel. Commercial and the commercial months were added with this blended leisure commercial mix, and then very high level of leisure as it pertained around more leisure periods. And I think you can see a resurgence of leisure this year, not just in

Speaker 14: And I think you see a resurgence, a leisure this year not just been you know the things that we saw last year which will beaches and golf and mountains of things of that nature, but what a come back of the cities as well.

Speaker 6: Great Thank you again.

Speaker 29: And we have reached the end of the question-and-ire succession. I'll now turn the call back over to Joel ferarrow for closing remarks.

Speaker 9: Okay So thank you everyone. To recap, we reported another strong earnings, with our best first quarter revenue in our company history, driven by increasing demand from our commercial and international inbound travel in the America, S and strong earnings from our international segment. We continue to invest in our electric vehicle strategy and have diverse fleet with the right infrastructure for hours in our customer benefit.

on back over to Joel Ferraro for close remarks.

Okay, so thank you everyone. To recap, we reported another strong earnings with our best first quarter revenue in our company history driven by increasing demand from our commercial and international inbound travel in the Americas and strong earnings from our international segment. We continue to invest in our electric vehicle strategy and have diverse fleet with the right infrastructure.

Speaker 30: All of this is possible, in my opinion, due to the hard work and dedicated employees. We got us off to a great start to the year and I know they are ready for an anticipated strong summer. Repeat, Thank you for your time and your interest in our company.

For hours in our customer benefit, all of this is possible in my opinion to do the hard work and dedicated employees who got us all through a great start to the year. And I know they were ready for an anticipated strong summer peak. Thank you for your time and your interest in our company. This concludes today's conference and you may disconnect your life at this time. Thank you for your participation.

Speaker 29: This concludes today's conference. You may disconnect your line at this time. Thank you for your participation.

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