Q4 2023 Avis Budget Group Inc Earnings Call

Operator: Greetings. Welcome to the Avis Budget Group fourth quarter 2023 conference call. At this time, all participants are in a list only mode.

Greetings and welcome to the Avis budget.

Speaker Change: Group fourth quarter 2023 conference call at this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please.

Operator: The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. Please note this conference is being recorded. I will now turn the conference over to David Calabria, Treasurer and Senior Vice President of Corporate Finance. Thank you. You may begin.

Speaker Change: Please note. This conference is being recorded I will now turn the conference over to David Calabria, Treasurer, and senior Vice President of corporate Finance.

You may begin.

David T. Calabria: Good morning, everyone, and thank you for joining us. On the call with me are Joe Ferraro, our Chief Executive Officer; Izzy Martins, our Chief Financial Officer; and Brian Choi, our Chief Transformation Officer. 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 Such risks and assumptions, uncertainties, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as in the Investor Relations section of our website. 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 prove to be inaccurate, and we can make no guarantees about our future performance. We undertake no obligation to update or revise our forward-looking statement.

David T. Calabria: Good morning, everyone and thank you for joining us on the call with me are Joe Ferraro, Our Chief Executive Officer is he Martin, our Chief Financial Officer, and Brian Choy, Our Chief transformation Officer.

David T. Calabria: Before we begin I would like to remind everyone that we will be discussing forward looking information, including potential future financial performance, which are subject to risks uncertainties and assumptions that could cause actual results to differ materially from such forward looking statements and information.

David T. Calabria: 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.

David T. Calabria: 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 prove 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.

David T. Calabria: 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 reconcile them to the closest comparable GAAP. With that, I'd like to turn the call over to David. Good morning, everyone, and thank you for joining us today.

David T. Calabria: 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 Jeff.

Jeff: Thank you David Good morning, everyone and thank you for joining us today.

Joe Ferraro: I want to welcome Izzy Martins, who has recently moved from a prior role as head of the Americas and is now our new Chief Financial Officer. He has been instrumental in delivering the record-setting performance in the Americas over these last three years, and his prior experience as the VP of Tax, Chief Accounting Officer, sets us up well for a new role. She and I have worked together for nearly 20 years, and I'm excited to leverage her experience and depth of knowledge as we grow this business profitably for the years to come. Before I get into our results, I'm happy to be talking to everyone on this conference call from our New World Headquarters. Although just a few miles from our previous building, our new state-of-the-art facility features advanced technologies as well as great opportunities for increased collaboration and thought development between the teams. And we believe this allows for increased productivity and performance benefits. We have been located in New Jersey for over 20 years, and we purposely stayed close to retain what I consider to be world-class talent while giving us a place we can be proud of and call home.

Jeff: I want to welcome Izzy Martens, who has recently moved from a prior role as head of the Americas and is now our new Chief Financial Officer.

Jeff: Is he has been instrumental in delivering the record setting performance in the Americas over these last three years and our prior experience as the VP of tax Chief Accounting officer, and CFO of the Americas sets us up well for a new role.

Jeff: She and I have worked together for nearly 20 years and I'm excited to leverage her experience and depth of knowledge as we grow this business profitably for the years to come.

Jeff: Before I get into our results I'm happy to be talking to everyone. On this conference call from our new World headquarters, Although just a few miles from our previous building our new state of the art facility features advanced technologies as well as great opportunities for increased collaboration and bought development between the teams.

Jeff: And we believe this allows for increased productivity and performance benefits. We have been located in new Jersey for over 20 years, and we purposely stayed close to retain what I consider to be world class talent, while giving us a place we can be proud of and call home I.

Joe Ferraro: I would like to thank our team that worked on finding this new home, as it is an impressive headquarters. Yesterday, we reported our fourth quarter and full year results. For the quarter, we delivered approximately $2.8 billion of revenue and $311 million of adjusted EBITDA. And for the full year, we achieved an all-time annual revenue record for a company of over $12 billion and our second highest adjusted EBITDA ever of approximately $2.5 billion. Looking at our fourth-quarter results, our expectations were to continue to see seasonality return to the industry and our business. As I've been stating on previous calls, it is apparent that the pre-pandemic seasonality as it relates to each of the quarters is now the norm again, but just at a much higher level of volume and price than previously. The transition from the third quarter to the fourth quarter is in line with this thinking and very much in line with last year.

I would like to thank our team that worked on finding this new home as it is an impressive headquarters.

Jeff: Yesterday, we reported our fourth quarter and full year results for the quarter, we did a little bit of approximately $2 8 billion of revenue and 311 million of adjusted EBITDA.

Jeff: And for the full year, we achieved an all time annual revenue record for our company of over $12 billion and our second highest adjusted EBITDA ever of approximately $2 5 billion.

Jeff: Looking at our fourth quarter results, our expectations were to continue to see seasonality returned to the industry and our business.

Jeff: As I've been stating on previous calls it is apparent that the pre pandemic seasonality as it relates to each of the quarters are now the norm again, but just at a much higher level of volume and price than previously.

The transition from the third quarter to the fourth quarter is in line with this thinking and very much in line with last year.

Joe Ferraro: We believe this continues into this year as well, with the months and quarters trending with historic seasonality. Volume was extremely strong, with October having the most vehicles rented in any month in the history of our company in the Americas, which led to increased activity and a strong holiday season, with Thanksgiving and Christmas being the largest we've experienced. And in Europe, we saw a volume increase year over year and, more importantly, an improvement in the decline as compared to 2019, more so than we did in the third quarter. All in all, our team performed extremely well in 2023, despite the challenges of inflationary and interest rate pressures, producing the most revenue generated in the history of our company and the second highest adjusted EBITDA.

Jeff: We believe this continues into this year as well with the months and quarters trending with historic seasonality.

Jeff: Volume was extremely strong with October having the most vehicles rented and any month in the history of our company in the Americas, which led to increased activity and a strong holiday season, with Thanksgiving and Christmas being the largest we've experienced.

Jeff: And in Europe, we saw volume increase year over year and more importantly, an improvement into decline as compared to 2019 more so than we did in the third quarter.

Jeff: All in all our team performed extremely well in 2023, despite the challenges of inflationary and interest rate pressures producing the most revenue generated in the history of our company and the second highest adjusted EBITDA.

Jeff: I want to thank the entire team for their hard work in getting us to this level of achievement. They took care of our customers producing record service level results maintained terrific cost discipline and ultimately produce earning result that we are all incredibly proud off.

Joe Ferraro: I want to thank the entire team for their hard work in getting us to this level of achievement, taking care of our customers, producing record service level results, maintaining terrific cost discipline, and ultimately producing earnings results that we are all incredibly proud of. Now moving on to the Americas results, as I mentioned earlier, demand in the Americas was strong, with October being the strongest month for vehicles rented in any month in the history of our company in the United States, with a combination of improved business and leisure, as travelers went on both business trips, ball getaways, and, at times, a combination of both, as business trips to see a client turned into a weekend getaway. We kicked off the winter season with increased activity and the strongest holiday seasons of Thanksgiving and Christmas we've ever experienced, with terrific growth in leisure demand as people traveled to see family or enjoyed vacations away from home.

Jeff: Now moving on to the Americas results as I mentioned earlier the demand in the Americas was strong with October being the strongest month, but vehicles rented in any month in the history of our company in the United States with a combination of improved commercial and leisure as travelers went on both business trips ball getaways and at <unk>.

Jeff: <unk> a combination of both as business trips to see a client turned into a weekend getaway.

Jeff: We kicked off the winter season with increased activity and the strongest holiday season of Thanksgiving and Christmas we've ever experienced with terrific growth in leisure demand as people travel to see family were enjoyed vacations away from home.

Joe Ferraro: Volume for the quarter was up 6% year-over-year and up over 17% versus 2019. We saw growth from our partnerships in both airline and association, as well as on our own dot coms. Our strategic marketing initiative and the Plan on Us campaign announced early in the year of 2023 was again deployed and drove record reservations. You may recall our tagline. At Avis, for 75 years, we've only had one plan: to make sure you keep yours.

Jeff: Volume for the quarter was up 6% year over year and up over 17% versus 2019, we saw growth from our partnerships in both airline and associations as well as on our own dot coms.

Jeff: A strategic marketing initiative and plan on US campaign announced early in the year.

Jeff: Of 2023 was again deployed and drove record reservations you.

Jeff: You may recall, our tagline at Avis. The 75 years, we've only had one plan to make sure you keep yours.

Jeff: This is more than a slogan, but a call to action for all of us and it seems to resonate well with our customers as this performed well again this quarter.

Joe Ferraro: This is more than a slogan, but a call to action for all of us, and it seems to resonate well with our customers, as demand performed well again this quarter. My last point on demand, as I stated on our last call, we had a summer season for the record books, and when you have a significant peak, you can sometimes see a drop that follows. But this has not been the case, as October and Christmas were the busiest on record as well.

Jeff: My last point on demand as I stated on our last call. We had a summer season for the record books and when you have a significant peak you can sometimes see a drop that balance but this has not been the case as October and Christmas will the busiest on record as well as apparent to us that consumers are traveling and choosing.

Joe Ferraro: It is apparent to us that consumers are traveling and choosing our brands, and there is no reason to expect this to change. As expected, pricing adjusted seasonally as we transitioned out of the summer peak. Pricing in the fourth quarter was down 7% year-over-year, but still up more than 20% from 2019. If you recall, there was a significant number of flight cancellations due to weather and system issues last year in December.

Jeff: Our brands and there is no reason to expect this to change.

Jeff: As expected pricing adjusted seasonally as we transitioned out of the summer peak.

Jeff: Pricing in the fourth quarter was down 7% year over year, but still up more than 20% from 2019.

Jeff: If you recall there were significant number of flight cancellations due to weather and system issues last year in December. This helped volume this year, but hurt our P. D. As we did not have the higher priced one ways that typically come from flight disruptions like we did last year.

Joe Ferraro: This helped volume this year, but hurt RPD, as we did not have the higher-priced one-ways that typically come from flight disruptions like we did last year. Pricing from a sequential change from the third quarter to the fourth quarter is in line with 2021 and 2022, with 2023 being down 9% quarter to quarter. America's pricing for the full year was nearly 30% higher over 2019.

Jeff: Pricing from a sequential change from the third quarter to the fourth quarter is in line with 2021 two.

Jeff: 2022, with 2023 being down 9% quarter to quarter Americas pricing for the full year was nearly 30% up over 2019.

Joe Ferraro: On our last call, I mentioned how headwinds from vehicle depreciation and vehicle interest would factor into the fourth quarter results. But, as usual, our teams did not abdicate responsibilities due to these factors and said, we continue to focus on cost discipline and deliver results that showcase the streamlined and lean operating structure we built during the pandemic. As we said before, we're keenly aware of the inflationary pressures we are seeing and will continue to combat rising costs with sustainable productivity gains driven by technology and data. Despite the headwinds, we achieved record rental days with revenues of $2.2 billion, adjusted EBITDA of $309 million, and adjusted EBITDA margins of over 14% while navigating through the seasonal transition from the summer peak. Looking at our operating costs, the team was met once again with significant challenges across several market dynamics.

Jeff: On our last call I mentioned, how headwinds from vehicle depreciation and vehicle interest would factor into the fourth quarter results, but as usual our teams did not abdicate responsibility is due to these factors. Instead, we continue to focus on cost discipline and delivered results that showcase the streamlined and lean operating structure, we built <unk>.

Jeff: During the pandemic.

Jeff: As we said before we're keenly aware of the inflationary pressures, we are seeing and will continue to combat rising costs with sustainable productivity gains driven by technology and data.

Jeff: Despite the headwinds we achieved record rental days with revenues of $2 2 billion adjusted EBITDA of $309 million and adjusted EBITDA margins over 14%, while navigating through the seasonal transition from the summer peak.

Jeff: Looking at our operating cost team was was met once again with significant challenges across several market dynamics.

Joe Ferraro: Vehicle Depreciation, which was still benefited by the supply chain shortages in the fourth quarter of 2022, showed more normalization in 2023, and we are faced with nearly 180 million of headwind this quarter. Interests continue to climb as well, with another $80 million of vehicle interest costs versus the fourth quarter of 2022. Utilization was negatively impacted due to the timing of vehicle deliveries slated for earlier in the year that came later and into the fourth quarter.

Jeff: Depreciation.

Jeff: It was still benefit by the supply chain shortages in the fourth quarter of 2022 showed more normalization in 2023, and we are faced with nearly a 180 million of headwind this quarter.

Jeff: Interests continue to climb as well with another $80 million of vehicle interest cost versus the fourth quarter of 2022.

Jeff: Utilization was negatively impacted due to the timing of vehicle deliveries slated for earlier in the year. They came later and into the fourth quarter.

Joe Ferraro: We have set this timing difference by selling more cars this quarter, the most cars in our fourth quarter history, but it was not quite enough to completely offset the new vehicle increases which were delayed from prior periods. And while utilization was challenged, the full year utilization is still in line with prior years, demonstrating our approach to supply and demand, and you should expect to see this stringent discipline continue in the new year. Overall, the Americas had a great quarter, generating $309 million in adjusted EBITDA, with record-setting fall and holiday periods resulting in demand up 6% above last year and 17% over 2019, with seasonally adjusted pricing from quarter to quarter and up over 20% versus 2019. Team ended its year with another great year with close to $2.2 billion in adjusted EBITDA.

Jeff: We have set this timing difference by selling more cars this quarter.

Jeff: Dinner, a fourth quarter history.

Jeff: But it was not quite enough to completely offset the new vehicle increases which were delayed from prior periods.

Jeff: And while the utilization was challenged for the full year utilization is still in line with prior year, demonstrating our approach to supply and demand and you should expect to see this stringent discipline continue in the new year.

Jeff: Overall, the Americas had a great quarter, generating 309 million and adjusted EBITDA with record setting fall and holiday periods, resulting in demands up 6% above last year and 17% over 2019 with seasonally adjusted pricing from quarter to quarter and up over 20% versus 2019.

Jeff: <unk>.

Jeff: Team ended with another great year with close to $2 2 billion and adjusted EBITDA.

Joe Ferraro: Going forward, as I mentioned, travel in general is strong, and we are expecting demand to grow as well during the course of this year. As we move from January to the remaining months in the quarter, we'll take advantage of both business and leisure activity, warm vacation destinations, and early Easter with improved inbound activity continuing through the spring and summer with elevated travel. Pricing for the first quarter, while expected to be down versus the prior year, will still be up a similar amount versus 2019 as we were in the fourth quarter and well above 2019 throughout the year while peaking in the third quarter and close to the prior year. Let's shift gears to international.

Jeff: <unk> forward as I mentioned travel in general is strong and we are expecting demand to grow as well with the course of this year as we moved from January to the remaining months in the quarter, we will take advantage of both business and leisure activity warm vacation destinations and early Easter with improved inbound activity continue.

Jeff: Going into the spring and summer with elevated travel pre.

Jeff: Pricing for the first quarter, while expected to be down versus prior year will still be up a similar amount versus 2019, as we were in the fourth quarter and well above 2019 throughout the year or peaking in the third quarter and close to prior year.

Speaker Change: Let's shift gears to international as we mentioned on our last call our view.

Joe Ferraro: As we mentioned on our last call, our view is that while post-recovery in Europe started later than the Americas, it would eventually follow a similar trajectory with continued recovery in days building through 2023 and into 2024. While we still believe this is the overall macro cost the industry will take, this quarter continues to show that it won't be a straight line. And while this still holds true, we did see an improvement this quarter with volume up 3% versus the prior year and only down 20% compared to the fourth quarter of 2019, this after being down in the 30% range in the third quarter as compared to 2019. Meanwhile, while Europe continued to have a slow return from domestic and cross-border segments, we saw a 12% increase compared to the fourth quarter of 2022 from international inbound travel.

Speaker Change: Was that while post recovery in Europe started later than the Americas would eventually follow a similar trajectory with continued recovery in days building through 2023 and into 2024.

Speaker Change: While we still believe this is the overall macro cost the industry will take.

This quarter continues to show that it won't be a straight line.

Speaker Change: And while there's still holds true we did see an improvement this quarter with volume up 3% versus prior year, and only down 20% compared to the fourth quarter of 2019.

Speaker Change: This after being down in the 30% range in the third quarter as compared to 2019.

Speaker Change: While Europe continued to have a slow return from domestic and cross border segments. We saw a 12% increase compared to the fourth quarter of 2022 from international inbound travelers.

Joe Ferraro: Again, instead of chasing volume, we have made the conscious business decision to forego low RPD business to concentrate on those transactions that meet our return on invested capital hurdles. RPD was only down 2%, excluding exchange rate effects, compared to the fourth quarter of 2022 and up almost 20% versus 2019 on a reported basis. Overall, and including exchange rate effects, international SOAR revenue of 5%.

Speaker Change: Again, instead of chasing volume, we've made the conscious business decision to forego low RPT business to concentrate on those transactions that meet our return on invested capital hurdles.

Speaker Change: R. P. D was only down 2%, excluding exchange rate effects compared to the fourth quarter of 2022 and up almost 20% versus 2019 on a reported basis.

Speaker Change: Overall, and including exchange rate effects international saw revenue up 5%.

Speaker Change: Our international team is also focused on the cost they could control. This focus resulted in our international direct operating expenses and SG&A to be down 3% compared to the fourth quarter 2022.

Joe Ferraro: Our international team was also focused on the costs they could control. This focus resulted in our international direct operating expenses and SG&A being down 3% compared to the fourth quarter of 2022. In an environment where monthly per unit fleet costs were up 52% and monthly interest costs a multiple of that, we remained disciplined, focused on margin-accretive business, and kept costs out in an inflationary environment. Full year adjusted EBITDA came in at $400 million with a 15% margin.

Speaker Change: In an environment, where monthly per unit fleet costs were up 52% and monthly interest costs a multiple of that we remain discipline focused on margin accretive business and kept cost out in an inflationary environment.

Speaker Change: Full year adjusted EBITDA came in at 400 million with a 15% margin.

Speaker Change: Yeah.

Joe Ferraro: While early, reservations going into 2024 are showing growth in both inbound from North America, as well as intra-Europe, with pricing slightly better than the first quarter of 2023. We continue to believe that there is substantial opportunity for recovery in this region, and the team is ready to capture it as it returns. Moving on to Fleet, where, as usual, we'll focus more on the America segment. We said last quarter that we expected our monthly depreciation to increase towards a gross depreciation of roughly $300 per vehicle. Our gains on the sale of vehicles in the quarter were approximately $50 million, which led to net depreciation of $272 per vehicle and gross depreciation of $306 per vehicle, a difference of $34 per vehicle.

Speaker Change: While early.

Speaker Change: Reservations going into 2024 showing growth in both inbound for North America, as well as intra Europe with pricing slightly better than the first quarter of 2023.

Speaker Change: We continue to believe that there is substantial opportunity for recovery in this region and the team is ready to capture it as it returns.

Speaker Change: Moving onto fleet, whereas usual focus more on the Americas segment.

Speaker Change: We said last quarter that we expected our monthly depreciation to increase towards gross depreciation of roughly $300 per vehicle our gains on sale of vehicles in the quarter were approximately $50 million, which led to net depreciation of 272 per vehicle and gross depreciation of 306 per vehicle.

Speaker Change: A difference of 34 per vehicle.

Joe Ferraro: As I mentioned earlier, we sold a record number of vehicles in the fourth quarter compared to other fourth quarters. This was driven in part by our forecast of a normalizing used car market, and we wanted to harvest gains on older model-year fleets while the opportunity was still there. But another factor that contributed to our outsized defleeting in the quarter was delayed deliveries of new fleet by several of our OEM partners. Given that new model year vehicles were delivered after the summer peak, it was necessary to exit older vehicles to right-size or fleet-size to demand.

Speaker Change: As I mentioned earlier, we sold a record number of vehicles in the fourth quarter compared to other fourth quarters. This was driven in part by our forecast of a normalizing used car market and we wanted to harvest gains on older model, Yeah fleets, while the opportunity was still there.

Speaker Change: But another factor that contributed to our outsize the bleeding in the quarter was delayed deliveries of nuclear by several of our OEM partners.

Speaker Change: Given that new model year vehicles will delivered after the summer peak it was necessary to exit older vehicles to rightsize, our fleet size to demand.

Joe Ferraro: We worked through most of that throughout the fourth quarter, but we'll continue to right-size into the first quarter of this year. As I stated in past earnings calls, fleet rotation and cycling of fleet is a critical element of fleet management. This addresses mileage and age as we bring in new vehicles while disposing of older units and creating a stabilization of cost and utilization over time. We did this throughout this past year and into the fourth quarter, and we'll continue to do this throughout the first quarter and balance of this year as we ensure our fleets are in line with demand, creating stability in our fleet management. There continues to be demand for vehicles of our type, as used cars still represent value to consumers as the price point is some $20,000 less than a new vehicle.

Speaker Change: We worked through most of that throughout the fourth quarter, but we'll continue to rightsize into the first quarter of this year.

Speaker Change: As I stated in past earnings calls fleet rotation and cycling of fleet is a critical element of fleet management, it's addresses mileage and age as we bring in new vehicles, while disposing of older units and creating a stabilization of cost and utilization over time.

Speaker Change: We did this throughout this past year and into the fourth quarter and we will continue to do this throughout the first quarter and balance of this year as we ensure our fleets are in line with demand, creating stability in our fleet management.

Speaker Change: There continues to be demand for vehicles of our type as used car still ribs represent a value consumers as the price point is some $20000 less than a new vehicle.

Joe Ferraro: Let's shift gears now to monthly vehicle interest. Our total company's monthly per unit interest costs were $106 per vehicle in the fourth quarter of 2023, compared to $62 per vehicle in the fourth quarter of 2022, a 70% increase. On a total company fleet size of more than $700,000, that equates to more than $90 million of additional cash outflow from interest expense from the fourth quarter of 2022. I said this the last time, but I feel it is important to reiterate.

Speaker Change: Let's shift gears now to monthly vehicle interest our total company's monthly per unit interest cost were 106 per vehicle in the fourth quarter of 2023 compared to 62 per vehicle in the fourth quarter of 2022% to 70% increase.

Speaker Change: On a total company fleet size more than 700000 that equates to more than $90 million of additional cash outflow from interest expense from the fourth quarter of 2022.

Speaker Change: I said this last time, but I feel it important to reiterate an environment where our call.

Joe Ferraro: In an environment where our car input costs are rising, both the cost of vehicles and the cost of finance, we must be hyper-vigilant in matching our vehicle supply to just under demand. And this year, it's more important than ever. Before I leave the fleet section, let me take a moment and talk about electric vehicles. We have always taken a prudent approach to fleet in general, and EVs are no exception. Our goal was to have a fleet size that is in line with demand and allows for flexibility and growth if required. Our strategy was to first develop the infrastructure to properly charge vehicles of this type in a way that allows for a seamless rental and efficient use of this asset. We have been on this for over a year now, and we are just about complete with most of our facility upgrades. As with ICE vehicles, we ensured we purchased vehicle types from a varied group of manufacturers.

Speaker Change: Input costs are rising both the cost of vehicles and the cost of finance, we must be hypervigilant in matching our vehicle supply the just under demand and this year, it's more important than ever.

Speaker Change: Before I leave the fleet section, let me take a moment and talk about Evs, we've always taken a prudent approach to fleet in general and E. BS are no exception.

Our goal was to have a fleet size that is in line with demand and allows for flexibility and growth at <unk>.

Speaker Change: Required.

Speaker Change: Our strategy was the first develop the infrastructure the properly charge vehicles of this type in a way that allows for a seamless rental and efficient use of this asset.

Speaker Change: We have been on this for over a year now and we are just about complete with most of our facility upgrades.

Speaker Change: As with ice vehicles, we ensured we purchased vehicle types varied group of manufacturers, having a varied inventory insulates us from maintenance related concerns and recalls in general and protects us from any residual value pressures that may be associated with vehicles of one make or model type.

Joe Ferraro: Having a varied inventory insulates us from maintenance-related concerns and recalls in general and protects us from any residual value pressures that may be associated with vehicles of one make or model type. Our goal has been to have customers experience our product, primarily at our airports, because this allows for a more certain profit outcome and additionally creates consistency for the staff to be trained on the rental logistics and readiness criteria while keeping per-unit economics in line with our expectations. We are quite comfortable with our EV strategy and supply-demand relationships, and we will continue to monitor this ever-changing environment should it be required. Turning to technology, which is a key aspect of our day-to-day performance and creates efficiency in the business and allows for an improved customer experience as we continue to iterate and redefine our systems and processes. We are incredibly focused on driving efficiency in our business, so much so that I asked Brian to head up our business transformation project.

Speaker Change: Our goal has been to have customers experience our product primarily at our airports because this allows for a more certain profit outcome and additionally creates consistency for the staff to be trained on the on the rental logistics and readiness criteria, while keeping per unit economics in line with our expectations.

Speaker Change: We are quite comfortable with our <unk> strategy and supply demand relationships and we will continue to monitor this ever changing environment should it be required.

Speaker Change: Yeah.

Speaker Change: Turning to technology, which is a key aspect of our day to day performance and creates efficiency in the business and allows for an improved customer experience as we continue to iterate and redefine our systems and processes.

Speaker Change: We are incredibly focused on driving efficiency in our business. So much so that I ask Brian to head up our business transformation process, a much needed step in our business evolution as we utilized data technology and machine learning to inform operational improvements and decision, making allowing for sustainable outcomes.

Joe Ferraro: A much-needed step in our business evolution as we utilize data, technology, and machine learning to inform operational improvements and decision-making, allowing for sustainable outcomes. In addition, over the past several years, we have continued to improve our proprietary demand fleet pricing system, which gives us tremendous insight on demand down to the vehicle location and prices our cars accordingly. The combination of rate strategy, forecast accuracy, and vehicle inventories produces an optimization that has been a large part of our revenue success and contribution margin. We believe this technology, combined with our pricing team and field experience, generates a significant advantage in managing supply and demand. Data analytics, combined with our own on-the-ground productivity system, has created efficiency in our location level throughput, increasing our performance well above levels experienced in 2019. This is one of the many reasons why our direct operating and SG&A expenses have stayed relatively consistent as a percent of revenue in an environment that is challenged by inflationary wage pressure.

Speaker Change: In addition over the past several years, we've continued to improve our proprietary demand fleet pricing system, which gives us tremendous insight on demand down to the vehicle location and prices are cars accordingly.

Speaker Change: The combination of rate strategy forecast accuracy and vehicle inventories produces an optimization that has been a large part of our revenue success and contribution margin.

Speaker Change: We believe this technology combined with our pricing team and field experience generates a significant advantage in managing supply and demand.

Speaker Change: Data analytics combined with our own on the ground productivity system has created efficiency and our location level throughput, increasing our performance well above levels experienced in 2019.

Speaker Change: This is one of the many reasons why a direct operating and SG&A expenses have stayed relatively consistent as a percent of revenue in an environment that is challenged by inflationary wage pressures.

Joe Ferraro: The modernization of our IT systems has provided benefits in system stability, producing record uptimes, allowing our partners to seamlessly create reservations, generating real-time demand and increased revenue. As you know, we have been early adopters of in-car telematics, which has improved our gas collections, provided asset control improvements, and provided an improved customer experience due to automated check-in upon return. On the customer experience side, our touchless process allows customers to choose their vehicles on their phone or exchange them upon arrival, creating a digital rental agreement which can be used to exit our facility through an automated exit gate process.

Speaker Change: The modernization of our it systems have provided benefits and system stability producing record up times, allowing our partners to seamlessly create reservations generating real time demand and increase revenue.

Speaker Change: As you know we have been early adopters have been car telematics, which has improved our gas collections provided asset control improvements and provide an improved customer experience due to automated checking upon return.

Speaker Change: On the customer experience side, our touchless process allows customers to choose their vehicles on their phone or exchange. It upon arrival, creating a digital rental agreement, which can be used to exit our facility through an automated exit gate process.

Joe Ferraro: Customers using this level of technology score us up to 10 points higher in MPS than traditional rental. Facial technology rolled out at a majority of our airport locations quickly transfers first-time Avis Preferred customers to their vehicles, thus bypassing our current counter-verification process. During the year, we have rolled out an improved budget fast break choice application. Customers, upon arrival at a budget facility, choose their vehicle from the reserve zone, take a picture of the license plate, allowing the rental agreement to be sent to them digitally for a quick exit at an unmanned gate. These technologies have improved our customer experience and enhanced our overall MPS scores to the record highs they are currently at. So to conclude, we had another great quarter culminating with record-setting full-year revenue and the second-highest adjusted EBITDA on record.

Speaker Change: Customers using this level of technology scores up to 10 points higher than M. P S than traditional rentals.

Speaker Change: She'll technology rolled out and the majority of our airport locations quickly transfer first time Avis preferred customers to their vehicles does bypassing our current count of verification process.

Speaker Change: The year, we have rolled out an improved budget fast-break choice application customers. Upon arrival at a budget facility choose their vehicles from the reserve zone take a picture of the license plate, allowing the rental agreement to be sent to them digitally for a quick exit at an unmanned gate.

Speaker Change: These technologies have improved our customer experience and enhance our overall NPS scores to the record highs they're currently at.

Speaker Change: So to conclude we had.

Speaker Change: And another great quarter, culminating with record setting full year revenue in the second highest adjusted EBITDA on record.

Speaker Change: Both the Americas and international employed stringent cost discipline, continuing to drive towards margin attainment with profitable revenue and cost efficiencies.

Joe Ferraro: Both the Americas and international employ stringent cost discipline, continuing to drive towards margin attainment with profitable revenue and cost-efficient operations. Demand is strong, but pricing dynamics have leveled to normal seasonality, and our team is focused and driven to once again deliver another strong year in 2024. The expectation is that the quarters will perform with the same seasonality we have seen in the past, with the second quarter larger than the first, and the third quarter representing another terrific summer peak, finishing with a strong fall and winter season.

Speaker Change: The demand environment is strong with pricing dynamics have level two.

Speaker Change: Normal seasonality and our team is focused and driven to once again deliver another strong year in 2020 for.

Speaker Change: The expectation is that the quarters perform with the same seasonality we have seen in the past with the second quarter larger than the first and the third quarter, representing another terrific summer peak, finishing with a strong fall and winter season.

Joe Ferraro: We expect prices to continue to moderate in the first half and adjust seasonally throughout the year while peaking in the third quarter, maintaining high elevated levels compared to 2019. And while fleet costs will present challenges, we will continue to deep lead our vehicles to keep them in line with demand, and our team is focused and driven to once again deliver another strong year. Before I turn it over to Izzy, I would like to take a minute and thank Brian for the last three years in his role as CFO and his great work helping us develop into the company we are today.

Speaker Change: We expect price to continue to moderate in the first half and it just seasonally throughout the year, while peaking in the third quarter, maintaining high elevated levels compared to 2019.

Speaker Change: And while fleet costs will present challenges, we will continue to deeply at our vehicles to keep them.

Speaker Change: In line with the demand and our team is focused and driven to once again deliver another strong year.

Speaker Change: Before I turn it over to Izzy I would like to take a minute and thank Brian for the last three years in his role as CFO and his great work, helping us develop into the company we are today and.

Joe Ferraro: And while I'm thankful for his past work, I'm even more excited about what he's going to bring in the future as our new Chief Transformation Officer, partnering with stakeholders both in our headquarters and in the field operations. Brian and his team are off to a running start, as many of these opportunities were identified during his time as CFO. I look forward to seeing the transformation group operationalize these efficiencies across our business and throughout the year. With that, I will turn it over to Brian.

Speaker Change: And while I'm thankful for his past work I'm, even more excited about what he's going to bring in the future as our new Chief transformation officer partner with stakeholders, both in our headquarters and in the field operations.

Speaker Change: Brian and his team are off to a running start as many of these opportunities were identified during his time as CFO I look forward to seeing the transformation group now operationalize these efficiencies across our business and throughout the year with that let me turn it over to Brian.

Brian: Thank you, Joe, for the kind words and for entrusting me to be your CFO during such a tumultuous period of our company's history. It's been an incredible learning experience, and I'm going to continue to lean on your guidance in this new role. I'm only comfortable taking on this position because I know the finance team here is left in very capable hands.

Brian A. Johnson: Thank you Joe for the kind words and for Entrusting me to be your CFO during such a tumultuous period of our company's history. It's been an incredible learning experience and I'm going to continue to lean on your guidance in this new role.

Brian A. Johnson: Only comfortable taking on disposition because I know the finance team here is left in very capable hands.

Izzy Martins: Let me now turn it over to our new CFO, Izzy, so she can introduce herself and take you through our liquidity analysis. Thank you, Brian and Joe, for your kind introductions. Good morning, everyone.

Speaker Change: I'll now turn it over to our new CFO is he so she can introduce herself and take you through our liquidity and outlook.

Speaker Change: Thank you, Brian and Jeff for your kind introduction and good morning, everyone. I look forward to getting to know you more our investor community in the coming months before I get into my prepared remarks, I wanted to take a minute to say how excited I warm to assume the CFO role I'm also truly honored to lead our talented finance team.

Izzy Martins: I look forward to getting to know you more, our investment community, in the coming months. Before I get into my prepared remarks, I want to take a minute to say how excited I am to assume the CFO role. I am also truly honored to lead our talented finance team that I have worked with for many years.

Speaker Change: And I have worked with for many years.

Speaker Change: Brian has done an exceptional job since he joined <unk> three years ago, and we will continue to support each other to drive sustainable margins for our company.

Izzy Martins: Brian has done an exceptional job since he joined our team three years ago, and we will continue to support each other to drive sustainable margins for our company. I will now discuss our liquidity and near-term outlook. My comments today will focus on our adjusted results, which are reconciled from our gap numbers in our press release. Let me start off by addressing capital allocation. Once again, we were quite active. We deployed nearly $260 million in the fourth quarter alone, repurchasing 1.4 million shares. That brings our total share buybacks throughout 2023 to nearly $900 million, or 4.3 million shares. We also paid a special dividend of $10 per share to our shareholders.

Speaker Change: 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.

Speaker Change: Let me start off by addressing capital allocation. Once again, we were quite active we deployed nearly 260 million in the fourth quarter alone repurchasing one 4 million shares that brings our total share buy backs throughout 2023 to nearly 900 million or 4.3.

Speaker Change: Chairs.

Speaker Change: We also paid a special dividend of $10 per share to our shareholders. This is the first cash dividend in our company history.

Speaker Change: In addition, we reinvest 330 million throughout the year into our core business to drive long term efficiencies and overall profitability. Examples of these investments include enhancing several operational facilities. It continue on migration of data to the cloud promoting.

Izzy Martins: This is the first cash dividend in our company's history. In addition, we've reinvested $330 million throughout the year into our core business to drive long-term efficiencies and overall profitability. Examples of these investments include enhancing several operational facilities, the continual migration of data to the cloud, promoting speed, reliability, and a more certain cost-back outcome, developing and enhancing technology to track and increase productivity, and lastly, but just as important, introducing and refining several technological solutions to streamline our customers' journey, enhance their experience, and allow increased throughput. Actually, we have reinvested nearly $800 million over the last three years in these areas, including our new state-of-the-art headquarters in Parsippany, New Jersey.

Speaker Change: Speed reliability, and a more certain cost back outcomes.

Speaker Change: All opinion enhancing technology to attract and increase productivity and lastly, but just as important introduce tempur fine and they find several technological solutions to streamline our customer stern enhance their experience and allow increased throughput.

Speaker Change: Actually we have reinvested nearly 800 million over the last three years in these areas, including our new state of the art headquarters in Parsippany, New Jersey, we intend in 'twenty 'twenty four to continually invest in our operational facilities and further implement technological improvement.

Izzy Martins: We intend in 2024 to continually invest in our operational facilities and further implement technological improvements to continuously improve our customer experience and overall efficiencies in our business to drive margin contributions. We continue to find ourselves in the privileged position of being in the strongest financial standing in the history of our company. Our net corporate leverage ratio was 1.7 times and continues to be well-laddered, with our corporate debt having maturities in 2026 or beyond. And, as expected, we are in compliance with all of our secured financing facilities around the world.

Speaker Change: To continuously improve our customer experience and overall efficiencies in our business to drive margin contribution.

Speaker Change: To be clear our capital allocation strategy is not changing and as always we will continue to look for best ways to allocate our capital and our continued balanced approach in 2024.

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

Speaker Change: As of December 31st we had available liquidity of approximately 800 million with additional borrowing capacity of approximately 900 million in our ABS facilities.

Izzy Martins: However, I wanted to give you insights on what we are seeing for the first quarter. We expect rental demand will continue to be strong with mid-single-digit growth compared to last year. Currently, there is a considerable amount of volatility in the used car market. However, we believe that it is prudent for our operations and healthy for the overall industry to exit vehicles despite the used car market conditions. As we've stated in the past, in an environment where our core input costs are rising, we prefer to run out of the incremental vehicle rather than have an unutilized vehicle on the line. You will continue to see us put this into practice as we defleet throughout the first quarter and the earlier part of the second quarter to maintain the fleet under demand throughout 2024. With that, let's open it up for any questions. Thank you. We will now be conducting a question and answer session, if you would like to ask a question. Thank you, and Brian, congrats on the transition here, and Izzy as well.

Speaker Change: Our net corporate leverage ratio was one seven times and continues to be well lathered with our corporate debt, having maturities in 2026 or beyond.

Speaker Change: And as expected we are in compliance with all of our secured financing facility around the world.

Speaker Change: Let's move on to outlook.

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

Speaker Change: However, I wanted to give you insights for what we are seeing the first quarter.

Speaker Change: We expect rental demand will continue to be strong with mid single digit growth compared to last year.

Speaker Change: We expect total company depreciation per unit will be about $325 per car.

Speaker Change: And as Joe mentioned earlier, we will continue to deeply throughout the quarter to rationalize our fleet and the delayed deliveries of the fourth quarter.

Apparently there is a considerable amount of volatility in the used car market. However, we believe that it is prudent for our operations and the healthy and healthy for the overall industry to exit vehicles. Despite the used car market condition.

Speaker Change: As we stated in the past in an environment, where our core input costs are rising both the cost of vehicles and the cost of finance that we must be hyper vigilant and matching our vehicle supply he just standard demand.

Operator: Just wanted to ask a question about... kind of deeply in Q1. How do you see that number faring compared to what you expect as we roll throughout the year? Are there some step-ups because maybe you're selling cars sooner?

Speaker Change: We prefer to run out of the incremental vehicle and have an unutilized vehicle and a lot.

Speaker Change: You will continue to see aspect to put this into practice as we deeply throughout the first quarter and the earlier part of the second quarter to maintain fleet tanker demand throughout 2024.

Izzy Martins: I'm just trying to understand that 325 number because it just seems like a big step-up from where we were in Q4. So you're right, when you went through the prepared remarks, actually Joe mentioned that America's per unit fleet costs were at $306 at the end of the fourth quarter. I mentioned that on a total company basis, I expect us to be closer to $325 per unit. We also said that our fourth-quarter gains were around $50 million, which is about $180 million or a 60% reduction, you know, despite the fact that we sold a lot more vehicles in the fourth quarter. So the way I would think about it for 2024 is that our gross depreciation and our net depreciation should align.

Speaker Change: In closing, let me reiterate that we anticipate our revenue to be in line with normal seasonality price to be well above 2019, peaking in the third quarter and anticipating a strong summer and we will continue to deeply despite fleet cost challenges driven by the uncertainty.

Speaker Change: Or volatility of residual values.

Speaker Change: With that let's open it up for any questions.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question excuse me. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, we ask that you. Please limit yourself to one question and one follow up question. My moment. Please while we poll for your questions.

Speaker Change: Our first questions come from the line of John Healy with Northcoast Research. Please proceed with your questions.

John Healy: Thank you and Brian Congrats on the transition here.

Izzy Martins: Now, your question about, you know, is that a huge step up? I don't expect the exit trend to be closer, you know, call it the lower 300, but in excess of the 300 that we had been saying, over time, I expect it to get to 325 and may not get to that 325 level by the end of the first quarter. But I think the more important thing is I do expect the gross and net depreciation to be more in alignment. John, let me just jump in here.

John Healy: He is well just wanted to ask a question about the plan to.

John Healy: Kind of deep sleep in Q1.

John Healy: 325 million and depreciation expense is that a go.

Speaker Change: Global number and.

Speaker Change: How do you see that number kind of bearing compared to what you expect that you know as we roll throughout the year or are there some.

Speaker Change: Step ups with maybe your selling cars sooner I'm just trying to understand that three 325 number because it just seems like a big step up from where we were in Q4.

Speaker Change: Okay. This is daisy thank you for that warm welcome.

Daisy: You're right. When you went through the prepared remarks actually Gill mentioned that the Americas our per unit fleet costs were $306 at the end of the fourth quarter I mentioned that on a total company basis, I expect us to be closer to $325 per union.

Joe Ferraro: Let me just jump in here for one second and just give you some strategies behind it. You know, when you think about managing a fleet in the long term, fleet rotation is extremely important. How you buy cars and deliver them into your business and then exit them out at the proper time, at the right place, is extremely critical. And I think over the long haul, when you think about buying and selling, one of the more important and overlooked aspects is how you rotate your fleet because it allows you to have or maintain a certain age level or mileage level that is both operationally prudent from an efficiency standpoint, as it turns out to be in light vehicle costs, as well as And we've been doing just that.

Daisy: We also said that our fourth quarter gains were around 50 million, which is about 180 million or 60% reduction.

Daisy: Despite the fact that we sold a lot more vehicles in the fourth quarter.

Daisy: If I had to think about it for 'twenty 'twenty four is that our gross depreciation and our net depreciation should align well. Your question about you know we've got a huge step up I don't expect us to be exited trend being closer you know call. It the lower 300, but in excess of the 300 that we had been bidding.

Daisy: Over time, I expect it to get to 325 and may not get to that 325 level by the end of the first quarter. The more important thing is I do expect the gross and net depreciation to be more in alignment.

Speaker Change: And John Let me just jump in here, let me just jump in here for one second and just give you some strategies behind it.

Joe Ferraro: I mentioned that throughout the entirety of last year, how we were rotating our fleet. You know, thinking about how where we came from in, you know, post-pandemic, where cars were scarce, and the aging and mileage were getting up there. It was important to right size, and we will continue to do that, even into the first quarter.

Speaker Change: When you think about managing fleet in the long term fleet rotation.

Speaker Change: It is extremely important.

Speaker Change: You buy cars and deliver them into your business and then exit cars out at the proper time.

Speaker Change: At the right place is is extremely critical and I think over the long haul when you think about buying and selling one of the more important an overlooked aspects is how you rotate your fleet because it allows you to have or maintain a certain age level or mileage level that is both operationally prudent from an efficiency standpoint as it turns out.

Brian: And frankly, you know, the way I look at it right now, we are going to get our fleet levels down as we continue to go from the first quarter, potentially into the second, until we get to the peak. And then a question for Brian. I just wanted, Brian, you could give us maybe some color on kind of early day learnings about some of the initiatives or efforts that you're trying to execute upon, any way to maybe conceptualize the areas of the business that are the first set of priorities for you, and, you know, any way to think about the totality of maybe cost savings potential. Sure. Hey John.

Speaker Change: B in light vehicle cost as well as you know from a customer acceptance and we've been doing that I mentioned that throughout the entirety of last year, how we we're rotating our fleet thinking about how where we came from in the.

Speaker Change: Post pandemic, where cars there were shortages of vehicles in the aging.

Speaker Change: And mileage was getting up there who was important to right size and we will continue to do that.

Speaker Change: Even into into the first quarter and frankly.

Speaker Change: The way I look at it right now we are going to get our fleet levels down as we continue to go from the first quarter potentially into the second until we get to the peak.

Speaker Change: Got it makes sense.

Brian: So, Joe highlighted a bit about the role during his prepared remarks, and I don't have too much more to add at this time. At a high level, though, let me describe it this way: I firmly believe that our teams are the best at what they do, given the resources that they have available, and I think our results have reflected that over time.

Speaker Change: And then a question for Brian I'm, just was hoping Brian you can give us some maybe some color on when our early day learnings about some of the initiatives or efforts that you're trying to execute upon any way to maybe conceptualize the areas of the business that are that the first set of priorities for the year and you know any way to think about the quality of that maybe cost savings potential.

Brian A. Johnson: Sure Hey, John.

Brian A. Johnson: So Joe highlighted a bit about the role during his prepared remarks, and I don't have too much more to add at this time at a high level, though let me describe it this way.

Brian A. Johnson: I firmly believe that our teams are the best at what they do given the resources that they have available and I think our results have reflected that over time.

Brian: But if we modernized the tools at their disposal, if we re-architected key functions of the business from a first principles perspective that fully leveraged the technology and data available to us today, I think our operators would deliver a step-function improvement in productivity and efficiency. And that's what the group here is going to be focused on, providing resources to our teams that are embedded in the day-to-day work processes to make them even better at what they do. But, you know, let me preempt some future questions on this.

But if we modernize the tools at their disposal, if we re architected keep functions of the business from a first principles perspective.

Brian A. Johnson: We have fully leveraged technology and data available to us today, I think our operators would deliver a step function improvement in productivity and efficiency.

Brian A. Johnson: And that's what the good thing here is going to be focused on providing resources to our teams that are embedded in the day to day workflow processes to make them even better at what they do.

But let me, let me preempt kind of future questions on this at for competitive reasons, we won't be providing regular updates on this going forward now we're going to take the same communication approach to this function as we did with our EG group a few years ago.

Brian: For competitive reasons, we won't be providing regular updates on this going forward. We're going to take the same communication approach to this function as we did with our EV group a few years ago. I would just say we'll let our actions and outcomes speak for themselves.

Brian A. Johnson: Just to say well, let our actions and outcomes speak for themselves.

Operator: Thank you, guys. Thank you. Our next questions come from the line of Adam Jonas with Morgan Stanley. Please proceed with your question. Thanks, everybody, and congratulations, Izzy and Brian.

Speaker Change: Got it.

Speaker Change: Thank you our next questions come from the line of Adam Jonas with Morgan Stanley. Please proceed with your questions.

Thanks, everybody and congrats.

Speaker Change: Brian.

Adam Michael Jonas: So your your net vehicle fleet.

Adam Michael Jonas: So your Net Vehicle Suite is around $30,000 per unit. Then I'm using your average 4Q fleet. So just, I'm using the 700,000 number on that versus 19,000 in 2019. So carrying cost divided by fleet size, and that might not be the perfect metric, but just bear with me.

Adam Michael Jonas: <unk> is.

Around $30000 per unit than I'm using your average <unk> fleet. So just I'm using the 700000 number on that versus <unk>.

Adam Michael Jonas: First is 19000 in 2019, so <unk>.

Adam Michael Jonas: Carrying costs divided by fleet size and that might not be the perfect metric, but just bear with me it's up 60%.

Izzy Martins: It's up 60% from 2019 to 2023, but yet your fleet cost guide is up less than half that, kind of into the low 300s. Why wouldn't depreciation per unit, fleet cost per unit mean revert closer to 400 bucks than 300 bucks? or to continue to err on the side higher given just the massive growth in the carrying cost per unit on your books. Thanks. Follow-up. Hi Adam. It's Izzy.

Adam Michael Jonas: From 2019 to 2023, but yet your fleet cost guide.

Adam Michael Jonas: Is up less than half that kind of into the low three hundreds that why wouldnt depreciation per unit.

Adam Michael Jonas: Fleet cost per unit mean revert closer to 400 Bucks and 300 Bucks.

Adam Michael Jonas: You know where are you now.

Adam Michael Jonas: Continue to err on the side higher given just a massive growth in the carrying cost per unit on your books.

Speaker Change: I can follow up.

Hi, Adam it's Izzy. Thank you for that question I think what we see right now given they he I increase to that $325 that we're seeing I don't disagree that as time progresses. As you know, we evaluate our monthly depreciation actually depreciation rate on a monthly basis.

Izzy Martins: Thank you for that question. I think what we see right now, given the increase to the $325 that we're seeing, I don't disagree that as time progresses, as you know, we evaluate our monthly depreciation, and actually depreciation rates on a monthly basis. So if things change, we will be changing, but based on what we're seeing right now, $325 is what we expect in the near term for 2024. Adam, just to add to that side, this is Brian.

Izzy Martens: So if things change, we will be changing but based on what we're seeing right now the $325 is what we expect in the near term for 2024.

Adam just to add to that sorry. This is Brian yes, the carrying cost is up 60% higher silver over buying the cars is more expensive, but we were selling the cars is.

Brian: Yes, the carrying cost is up 60%, so where we're buying the cars is more expensive, but where we're selling the cars is higher as well, and depreciation reflects kind of that total carrying cost, so you won't see a one-for-one step up that way. Okay, thanks, Brian. This is a follow-up. Hertz has really struggled with collision and repair challenges with their EV fleet. Now, obviously, I know you don't disclose the EV fleet, and you're not gonna do that on this call, and I respect that they're a multiple higher than you in terms of the intensity of that fleet, particularly relative to the infrastructure, but how much of a, would you, are you kind of, let's say, confronting some of the similar challenges in collision and repair? And if so, how much of a headwind has that been for you, and how are you mitigating it?

Brian A. Johnson: Higher as well and depreciation reflects kind of the total carrying costs. So you won't see a one for one step up that way.

Speaker Change: Okay. Thanks, Brian just as a follow up Hertz has really struggled with collision and repair challenges.

Speaker Change: Were there any fleet now obviously that there I know you don't disclose the EDI fleet, you're not going to do that on this call and I respect that there are multiple higher than than you in terms of the intensity of that fleet, particularly relative to the infrastructure, but how much of that would you argue kind of let's say confronting some of the similar challenges on collision repair.

Speaker Change: And if so how much of a headwind has that been for you and how are you mitigating it. Thanks.

Joe Ferraro: Thanks. Thanks Adam. This is Joe. Let me just say this: we haven't experienced any out-of-the-norm headwinds associated with our EB supply chain or maintenance-related issues. I think if you think about what we tried to do with EBs, when I was visiting and talking to our OEM partners back in 2021, they all talked about how there was going to be a larger portion of EBs coming in on our future buys. And I left those meetings thinking that we had to first and foremost figure out how we were going to charge them. If you think about providing a vehicle to a consumer, you can't provide a vehicle without gas, and you certainly can't provide a vehicle at this time without a charge.

Joe Ferraro: Thanks, Adam it's Joe.

Joe Ferraro: Let me just say this we haven't experienced any any out of the norm headwinds associated with our E. B.

Joe Ferraro: Our supply chain of maintenance related issues I think if you think about what we tried to do with Evs.

Joe Ferraro: When I was visiting in talking to our OEM partners, where back in 2021. They all talked about you know how that was going to be a larger portion of evs coming in in our on our future buys and I left those meetings thinking that we had a first and foremost figure out how we were going to charge them. If you think about <unk>.

Joe Ferraro: Providing of vehicles to a consumer you can't you can't provide a vehicle without gas and you certainly can't provide a vehicle and this and this time without without a charge. So we spent a lot of time doing that and then we dealt with a lot of Oems. So.

Joe Ferraro: So we spent a lot of time doing that. And then we dealt with a lot of OEMs, so we wanted a varied approach to the fleet, like we do with ICE cars. We think it has a material benefit on supply chain or maintenance and damage-related expenses over the long haul. It insulates us from recalls that may pop up from time to time, and it gives customers a more diverse product offering.

Joe Ferraro: We wanted a varied approach to fleet like we do with ice cars. We think it has a material benefit on our supply chain or maintenance and damage related expenses over the long haul it insulates us from recalls that may pop up from time to time and it gives customers a more diverse product offering we were watching.

Joe Ferraro: We were watching, you know, what the demand curves were like for buying new electric cars versus gas cars, and there was uncertainty from us and from a rental standpoint about what demand would really be like in the rental environment because it was clear that people were buying them and charging them at their homes, but what was it going to be like when they took a car out on the road? And part of our strategy was to align and try to get as many of these rented at our airports in the places that would develop, like the West Coast and more of the Sunshine States. So we, you know, we went in with, like we do regular cars, a more conservative approach on how we wanted to buy them, how many we wanted to have, while learning the logistics around what happens with them, how long it takes to charge them and get them ready for rental I hope that helps. And you're right about your earlier comment. It's not a meaningful part of our fleet.

Joe Ferraro: The demand curves will like from buying new E V by buying new car Evs versus gas cars and there was uncertainty from Austin from a rental standpoint about what demand would really be like.

Joe Ferraro: In the rental environment, because it was clear that people were buying them and charging them at their homes, but what was it going to be like when they took a call out on the road and part of our a part of our strategy was to align and try to get as many of these rented at our airports in the places that would develop like the west coast and more of the Sunshine State. So we.

Joe Ferraro: We went in and a like we do regular cars more of a conservative approach on how we wanted to buy them. How many we wanted to have while learning the logistics around what happens with them.

Joe Ferraro: How long it takes to charge them and get them ready for rental the maintenance and damage associated with products and tried to rent them and segments that had the best possible drop.

Joe Ferraro: Drop through I hope that helps and you're right about your earlier comment it signed a meaningful part of our fleet size.

Operator: Thanks, Joe. Thank you. Our next questions come from the line of Chris Stathopoulos with SIG. Please proceed with your question. Good morning, thanks for taking my question. Joe, America's RPD, I understand the comp issue last year with the operational challenges experienced by some of the U.S. airlines here, but could you perhaps expand or give a finer detail on how core price is tracking through 4Q and how it's tracking into. The Bulletproof Executive 2013, You know, I think there's something here that's this strong.

Joe Ferraro: Joe.

Thank you. Our next question is coming from the line of Chris Stefan <unk> uplift with <unk>. Please proceed with your questions.

Chris Agnew: Oh good morning, Thanks for taking my question.

Chris Agnew: Joe the Americas, our PD I get the comp issue last year with the operational challenges experienced by some of the U S Airlines here, but could you, perhaps expand or give a finer detail on how core pricing.

Chris Agnew: Track through <unk> and how it's tracking.

Speaker Change: You <unk> so far thank you.

Joe Ferraro: Demand that we're seeing is mostly coming out of the Americas in the last year and the year prior to that. So there is this demand curve that we are seeing, which causes us to have a lot of cars that we put on the road. And once you have a lot of demand, we have our system, which is DFP. It's our proprietary system that measures forecasting and prices in the marketplace and the amount of inventory that we have and gives us our best optimal price. One thing that I'm pretty pleased with is the fact that for the past 11 quarters, 11 quarters, our pricing has maintained at a level above 2019. Now, that's a long period of time.

Speaker Change: Sure.

Speaker Change:

Speaker Change: You know I think theirs is.

Speaker Change: This strong.

Speaker Change: Demand.

Speaker Change: That we're seeing mostly coming out of the Americas in the last year and the year prior to that so there is there is this this demand curve that we are seeing which causes us to have a lot of cars that we put on the road and once you have a lot of demand. We had these we have our system, which as DSP, it's our propriety.

Speaker Change: Terry system, which kind of measures forecasting and prices in the marketplace and the amount of inventory that we have and gives us the best optimal price.

Speaker Change: One thing that I that I.

Joe Ferraro: And during that period of time, obviously, there were those supply imbalances in the early years post-COVID that created this enormous rate generation. Now, that is normalized, and seasonality is certainly more apparent. I think as we go forward, you're going to see those elevated prices compared to 2019. But when I look at our advanced reservations going out, that hasn't seemed to change, certainly from a leisure standpoint. And if you think about, you know, sometimes not spoken about, our commercial book of business, which has grown since 2019, I know a lot of travel companies are talking about getting back to 2019. But our commercial business has grown since 2019, and especially the strategic ones, which are the long term, larger commercial businesses, have all come with a relative price increase. So the way I see it, you know, the first quarter kind of being like a little more of the same as how we were compared to 2019. But I fully expect the prices compared to 19 to be elevated.

Speaker Change: I'm pretty pleased with is the fact that for the past 11 quarters 11 quarters. Our pricing has maintained at a level above 2019, and that's a long period of time and during that period of time, obviously, but it was so those supply imbalances in the early years post COVID-19 that created this.

Ms Rachel.

Speaker Change: Great generation that is normalized and seasonality is certainly more apparent I think as we go forward youre going to see those elevated prices compared to 2019 I look at our advanced reservations going out that hasnt seemed to change.

Speaker Change: Certainly from a leisure standpoint, and if you think about art, sometimes not spoken about our commercial book of business, which has grown since 2019 I know a lot of travel companies are talking about that getting back to 2019, but our commercial business has grown since 2019 and.

Speaker Change: Especially on the strategic ones, which are the long term.

Speaker Change: Larger commercial business have all come with a with a relative price increase so the way I see it.

Speaker Change: First quarter kind of be like a little more of the same of how we were compared to 2019.

Speaker Change: I fully expect the prices compared to 19 to be elevated and I do believe that once we get into the peak.

Joe Ferraro: And I do believe that once we get into the peak, if we continue to do what I said earlier about rationalizing and rotating our fleet out, that it gets close to 2023 levels. Okay, thank you. And as a follow-up for you, Joe, or perhaps Brian, or both, you know, there's a lot of moving parts here around these various enterprise-level initiatives. If you could... Perhaps, you know, just size those for us, the top three to five projects, rank order, and, you know, KPIs, and more importantly, you know, how do we, you know, where and sort of how should we think about those ultimately flowing Yeah, thanks. I'll start, and Brian can add a little color.

Speaker Change: We continue to do what I said earlier about about rationalizing rotating our fleet out that it gets close to the 2023 levels.

Speaker Change: Okay. Thank you and as a follow up for you, Joe or perhaps Brian or both you know theres a lot of moving parts here around these various enterprise level initiatives if you could.

Speaker Change: Perhaps just size those for us the top three to five projects rank order and Kpis and more importantly, how do we.

Speaker Change: We're in sort of how should we think about those ultimately flowing through our PD.

Speaker Change: We're a direct operating costs. Thank you.

Speaker Change: Yes. Thanks.

I'll start and Brian can add a little color, we've been we've been talking about and using the word transforming over the past number of calls we have been heavily involved in.

Joe Ferraro: You know, we've been talking about and using the word transforming in the past number of calls. We've been heavily involved in generating efficiency in our business through operational drop through through cost efficiencies. We spent an inordinate amount of time looking at our productivity systems and how we developed and improved the rate of efficiency, especially as it relates to, you know, cleaning and renting cars. If you look at our overall performance, our productivity is better than what we were in 2019, with many more rentals. So I think we've established the framework of that level of activity. When you think about our in-life vehicle maintenance-related costs, just in general, as we deep bleated, as I talked earlier about rotating some of our fleet out, as we deep bleated some of our age and mileage cars, you know, we've seen a definite improvement in how we organize around our in-life maintenance-related costs, also with, you know, differenti So we've done, we've done that, we've improved our overall operating efficiency of our systems. But I think you know, what gets me excited about the Brian role, and I'll turn it over to him, is that, you know, we no longer, what we believe is, our people need to be data miners.

Speaker Change: Generating efficiency in our business through and an operational drop throughs through cost efficiencies.

Speaker Change: We spent an inordinate amount of time looking at our productivity systems, and how we develop and improve the amount of rate of of efficiency, especially as it pertains to <unk>.

Speaker Change: Cleaning and renting cars, if you look at our overall performance our productivity is better than we were in 2019 with many more rentals.

Speaker Change: So I think we've established the framework of our of that level of activity. When you think about our in light vehicle maintenance related costs just in general as we deep bleed it as I talked earlier about rotating some of our fleet out as we deep bleed at some of our age and mileage cars, we've seen a definite.

Speaker Change: And how we organize around our in life are maintenance related costs also with differentiators and processes and procedures to organize around particular spend as it pertains to tires and glass and vehicle parts and things of that nature.

Speaker Change: So we've done we've done that we've been proved our overall operating efficiency of our systems and I think what gets me excited about the Brian role and I'll turn it over to him is that.

Speaker Change: We no longer what we believe is our people need to be data miners. So as Brian talked about earlier getting the information that technology that data in front of them makes all boats rise at the same level and allows them to do what they do best and that's operationally execute so you'll see you'll see a continuation of that and a more normalization or.

Joe Ferraro: So, as Brian talked about earlier, getting the information, the technology, and the data in front of them makes all boats rise at the same level and allows them to do what they do best, and that's, you know, operationally execute. So, you'll see a continuation of that and more normalization around our business while we get into some of the other things that deal with revenue generation through advanced segmentation or fleet dynamics on how we buy, purchase, and sell cars. Hope that that helps. Brian. Yeah, I think Joe touched on all of it, just maybe with a little color.

Our business, while we get into some of the other things that deal with revenue generation through advanced segmentation or fleet dynamics on how we buy and purchase and sell cars I hope that helps Brian Yeah, I think Joe touched on all of it just maybe a little color.

Brian: You know, I would think of the big towers that we have on our operational cost front as being the initial focus of the group. So, think of supply chain, workforce planning, and our real estate portfolio. And these are big buckets of cost that you see inflationary pressures on. And what we need to do is have 100% visibility and have that disseminate across our organization so that our operators can make timely business decisions.

Brian A. Johnson: I would think of the big towers that we have on our operational cost sponsors being the initial.

Brian A. Johnson: Our focus of the group, so think of supply chain workforce planning and our real estate portfolio and these are the big buckets of cost that you see inflationary pressures and what we need to do is have a 100% visibility and.

Brian A. Johnson: And and.

Brian A. Johnson: And how that disseminate across our organization so that our operators can make a timely business decisions and you'll.

Brian: And you'll see our focus around that kind of dovetail with the revenue side of things as the year progresses. But right now, we're focused more on the cost side of things. And in terms of sizing it, we're not getting into putting out numbers out there right now.

Brian A. Johnson: You'll see our focus around that kind of dovetail with the.

Brian A. Johnson: The revenue side of things as the year progresses, but right now we're focused more on the cost side of things and in terms of sizing. It we're not getting into is it putting out numbers out there right now.

Operator: Okay, thank you. Thank you. Our next questions come from the line of Ryan Brinkman with J.P. Morgan. Please proceed with your question.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you our next questions come from the line of Ryan Brinkman with J P. Morgan. Please proceed with your questions Hi.

Ryan J. Brinkman: Great. Thanks for taking my questions. I wanted to start on some questions around the typically negative income tax rate in the quarter and any benefits you might have received from the Inflation Reduction Act that could have contributed to that. What is the potential, do you think, to maybe continue to generate such credits in the future? How does the timing of the credits work?

Ryan J. Brinkman: Great. Thanks for taking my questions I wanted to start on some questions around the typically negative income tax rate in the quarter and any benefits you might have received from the inflation reduction act that could have contributed to that you know what is the potential do you think to maybe continue to generate such credits in the future. How does the timing of the credits work I think when consumers buy.

Izzy Martins: I think when consumers buy EVs under the IRA, it is essentially like a refundable credit extended at the time of purchase, but for corporates, maybe it's more of a traditional and so maybe it results initially in an increase to deferred tax assets rather than immediately converting to cash. I would be interested in if you have any of the details around how the mechanics of that work and then how should this inform our modeling of tax rates, do you think, going forward? Hi Ryan, it's Izzy.

Ryan J. Brinkman: <unk> under the IR rate is essentially like a refundable credit extended at the time of purchase but for corporates, maybe it's more of a traditional credit.

Ryan J. Brinkman: So maybe results initially didn't increase to deferred tax assets rather than immediately convert to cash but would be interested if you have any of the details around how the mechanics of that works and then how should this inform our modeling of tax rate do you think going forward. Thanks.

Ryan J. Brinkman: Hi, Ryan its Izzy. Thank you for the question I think there is a lot there to unpack. So let me just start with what happened in the fourth quarter. So as you mentioned the inflation reduction Act does allow us to take credits on hybrid and EV and the other piece that's happening that decline again not as Anne.

Izzy Martins: Thank you for the question. I think there's a lot there to unpack. So, let me just start with what happened in the fourth quarter.

Izzy Martins: So, as you mentioned, the Inflation Reduction Act does allow us to take credits on hybrids and EVs. And the other piece that's happening that's kind of not as One for One is the fact that full expensing is phasing out as of right now, right? There's still a chance that the government reassesses that and, you know, brings back just full expensing. But in 2023, it starts phasing out. So as we went through the years, not only the current year but the future years, we felt it was prudent to actually record that credit. Now, you hit the nail on the head. It is a deferred tax asset, so it has an indefinite life.

Ryan J. Brinkman: Now.

Ryan J. Brinkman: One for one is the fact that it's full expensing is phasing out as of right now right. There's still a chance that the government reassessing that and you know.

Ryan J. Brinkman: Brings back chest full expensing that in 2023 it starts phasing out so as we were going through the year is not only the current year, but the future years, we felt it was prudent to actually record that credit now.

Ryan J. Brinkman: You hit the nail on the head it is a deferred tax asset. So it has an indefinite life, we wont use it in the current year, most likely but we have the ability to use it in future years. When he comes from a modeling perspective, I think the best way to look at it and when we file our K, you'll see it but I think the best rate.

Izzy Martins: We won't use it in the current year, most likely, but we have the ability to use it in future years. When it comes from a modeling perspective, I think the best way to look at it, and when we file our K, you'll see it, but I think the best rate to model would be around 26% for 2023, and I would say for 2024, it should hover around that, maybe, you know, up one or two. I hope that was helpful. Yes,

Ryan J. Brinkman: To model would be around 26% and for 'twenty, three and I would say for 'twenty four it should have been around that maybe.

Speaker Change: One or two points I hope that was helpful. Very helpful. Thank you and then just as a somewhat related follow up did the benefits that you received and relate more to the purchase of <unk>.

Ryan J. Brinkman: Very helpful. Thank you. And then, as a somewhat related follow-up, you know, do the benefits that you're receiving relate more to the purchase of plug-in hybrid electric vehicles rather than battery electric vehicles with no internal combustion engine?

Speaker Change: Plug in hybrid electric vehicles, rather than battery electric vehicles with no internal combustion engine. What is the split there in your E. D fleet now between Babs N T have and said you know what kind of residual trend are you seeing out there for <unk> versus <unk>, because theres been a lot of discussion about growing demand for our hybrid amidst dicello.

Ryan J. Brinkman: What is the split there in your EV fleet now between BEVs and P-HEVs and, you know, what kind of residual trend are you seeing out there for P-HEVs versus BEVs? Because there's been a lot of discussion about growing demand for hybrids amidst decelerating demand for EVs. And I just wonder if maybe you've sidestepped some of that EV depreciation exposure that your competitors have seen, benefiting from the IRA but not being hurt by the depreciation via your BEV strategy. What could you say there? I'll just start, and then I'll throw it over to Izzy for more of the appreciation aspect.

Speaker Change: <unk> demand for Evs and I, just wonder if maybe you sidestep some of that E. D depreciation exposure that your competitors have seen them.

Speaker Change: Benefiting from the IR ray, but not being hurt by the depreciation.

Speaker Change: Via your Bev strategy, what what could you say that.

Speaker Change: Yeah, I'll just start and then I'll throw it over is even more of the depreciation aspect I will tell you that we have vehicle makes and models of all types and especially around the hybrid.

Joe Ferraro: I will tell you that we have vehicle makes and models of all types, and especially around the hybrid PF. So, you know, we, we, we, it's really early on those. We've gotten those in late during this past year, and I can tell you the cuts or acceptance on them is pretty strong. But I think it's too early for us to kind of give a feel for how they are doing, whether it be from a residual value effect because we haven't sold many, or a supply chain effect as far as maintenance damage. And Ryan, none of those, call them mixed or anything of that nature, would have any impact as to how we calculate the credit under the IRA.

Speaker Change: So we it's really early on those we've gotten those in late during this during this.

Speaker Change: Last year I can tell you the customer acceptance on them is pretty strong, but I think it's it's early for us to kind of give a feel of how they are doing whether it be from it.

Speaker Change: Residual value.

Speaker Change: Because we havent sold many or a supply chain effect as far as maintenance and damage and Ryan none of those on the.

Speaker Change: Call it mix or anything of that nature would have any impact as to how we calculate the credit under the I R E.

Izzy Martins: That's helpful. Thanks. Maybe, just very finally, I wanted to get your thoughts on, you know, budget trucks as they relate to electrification. Obviously, it's very early days there, too, but with vehicles like the E-Transit and Bright Drop beginning to enter, there's been more discussion about those being in, you know, commercial fleets that operate on the same paths or routes every day. Just curious what any implications, maybe it makes more sense to proceed slowly thereafter with some of the depreciation we've seen on the past car side, but I do think the commercial side might be a little bit different. Just curious how you're thinking about electrification as relates to budget trucks. Great question!

Speaker Change: That's helpful. Thanks, maybe just very finally I wanted to get your thoughts on you know.

Speaker Change: Budget trucks as might relate to electrification, obviously very early days, there too, but with vehicles like the <unk> and bright dropped beginning to enter you know there's been more discussion about those being in commercial fleets that operate in the same.

Pads or routes everyday just just curious what if any implications maybe it makes more sense to proceed slowly thereafter, some of the depreciation we've seen on the pass car side, but I do think the commercial side might be a little bit different just curious how youre thinking about electrification as it relates to budget trucks.

Speaker Change: Great question, we normally get question about that but in our.

Joe Ferraro: We normally get questions about that, but, you know, our budget truck business has a large part of it as last mile delivery, and you're very right about there being a business aspect to having, you know, some electrification of vehicles in that business. To answer your question, we have explored it. We have some in our fleet currently today, and like we explored the, you know, the EBs in the rental fleet, it's a little – this is a little bit different because you actually know the consumer who's renting it for you. It's the large package companies that go around and are skilled at, you know, managing their productivity and their teams. The only thing that we always look for in scenarios like that is that they do operate in somewhat, you know, urban settings, so we are prudent about that, but we have some in our fleet now, and we have explored that.

Speaker Change: Our budget truck business has a large part of it is last mile delivery and you're very right about is there is there a a business aspect to having.

Speaker Change: Some electrification of vehicles in that business.

Speaker Change: To answer your question, we have explored it we have some in our fleet currently today and like like we explored the.

Speaker Change: Ah <unk> in the in the in the rental fleet. It's a little this is a little bit different because you actually know the consumer who is ready to get it for you. It's a large package companies that go out and have skilled debt.

Speaker Change: Managing their their productivity and their teams and the only thing that we always look for in scenarios like that they do operate in.

Speaker Change: Somewhat urban settings. So we are we are prudent about that but we have we have some in our fleet now when we have explored that and so far the acceptance as you know from a consumer from the from a business standpoint, the people who are renting was pretty popular again early.

Joe Ferraro: And so far, the acceptance is, you know, from a consumer – from a business standpoint, the people who are renting are pretty popular. Again, early on outside cost, but we haven't really seen anything materialize that I would be apprehensive about currently. Great, thank you.

Speaker Change: On an outside costs, but we haven't really seen anything materialize that I would be apprehensive about currently.

Speaker Change: Great. Thank you.

Operator: Thank you. The next question comes from the line of Chris Walker with Deutsche Bank. Please proceed with your question. Hey, good morning, everyone, and yeah, congratulations to Brian and Izzy on the new role. Um, I was hoping we could talk a little bit about, I guess, your mix, Joe. You mentioned normalization a lot. Clearly, we're kind of seeing it throughout. Can you give us any sense of either where you are trending through the fourth quarter, where you are now, or where you expect to be in 2024 on commercial versus leisure broadly? It's something you normally put in the K, which isn't out yet. Maybe you can give us some commentary there. You know, kind of what you see for a like price if we took all this mixing adjustment away.

Speaker Change: Thank you. Our next question comes from the line of Christopher Walker with Deutsche Bank. Please proceed with your questions.

Chris Agnew: Hey, good morning, everyone and.

Chris Agnew: Congratulations to Bryan and easy on the new roles.

Chris Agnew:

Chris Agnew: Was hoping you could talk a little bit about.

Chris Agnew: Yes your mix Joe in your you mentioned normalization a lot clearly, where we're kind of seeing it throughout the.

Chris Agnew: The business can you give us any sense kind of on where you're either where you trended through the fourth quarter, where you're at now or where do you expect to be in 'twenty four on kind of commercial versus leisure broadly I know, it's something I think you normally put in the K, which isn't out yet so maybe any commentary you can give us there.

Chris Agnew: Kind of what you see like for like pricing. If we if we took all this mix adjustment away.

Joe Ferraro: Yeah, okay. So, like I said, I think the underlying business economics as it pertains to the consumer are strong. And we will continue to see that throughout 2024 as it relates, Chris, to both demand and price. So let's start off with demand. Demand we saw in 2023, we had the best summer on record, yet we come out of it, and we have the strongest October and a good holiday season. I think the fourth quarter depicts that segmentation of travel. October, you would say, well, why would that be the busiest? Well, it has the biggest impact on both commercial and leisure travel in any given month. Commercial because there's a lot of business travel, a lot of conventions. Leisure because fall getaways and, like I said, some combination of both, which I think is incredibly powerful.

Chris Agnew: Okay.

Chris Agnew: So like I said I think the underlying bill.

Chris Agnew: Business economics as it pertains to the consumer I think are strong and we will continue to see that throughout 2024 as it pertains to Chris to both demand and price. So let's start off with demand demand. We saw in 2023, we had the best summer on record yet we come out of it and we have the strongest October and the and.

Have a good holiday season, I think the fourth quarter depicts.

Chris Agnew: That's that segmentation of travel October you would say well why would that be the business while at the busiest well. It has the biggest impact of both commercial and leisure in any given month commercial because there's a there's a lot of business travel lot of conventions leisure because boral getaways in and like I said some combination of both.

Chris Agnew: Which I think is incredibly powerful.

Joe Ferraro: You have a person who goes on a business trip to a city, and we saw the cities start to develop bigger and bigger books of business last year than they had in the past. So he goes on a business trip to a city and then takes in a weekend football game or something. I mean, we've seen that combination of commercial that leads to leisure, and I do think that's pretty powerful when it comes to rental and rental demand. And we have a good number of commercial accounts. We have, like I said, more business than we did in 2019. I think you'll start seeing that kind of normalized from the big jumps that we had, what we saw in previous years, you know, the commercial and leisure spread. But price, as I said, we signed a lot of our, you know, in 2023, larger commercial accounts at a price improvement, which is helpful. It's the first time we could say that, probably, many years prior, that was not the case.

Chris Agnew: <unk>, who goes on a business trip to way to a city and we saw the cities start to develop a bigger and bigger books of business last year and then we had in the past. So it goes on a business trip to a city and then takes it a weekend football game or something I mean, we've seen that combination of commercial that leads to leisure and I do think that's pretty powerful when it.

Chris Agnew: Comes to rental and rental demand.

Chris Agnew: <unk>.

Chris Agnew: And we have a good number of commercial accounts, we have like I said more business than we did in 2019, I think you'll start seeing that kind of normalize from the big jumps that we had what we saw in previous years, you know the commercial and leisure spread but.

Chris Agnew: But price as I said, we signed a lot of our you know in 2023, a larger commercial accounts at a price at a price improvement which is helpful. In the first time, we could say that probably in in many years. Prior that I was not the case. So we have we have done that on a go forward basis and I think the overall demand my last comment the macro sub search.

Joe Ferraro: So we have done that on a go-forward basis. And I think the overall demand, my last comment, the macro stuff surrounding demand, you know, TSA volume has been up. If you look at TSA volume for the whole year, it was kind of flat to 19 until you got to the fourth quarter. And then it went up.

Chris Agnew: <unk> demand.

Chris Agnew: TSA volume has been up is look at the last if.

Chris Agnew: If you look at TSA volume for the whole year. It was kind of flat to 19 until you got to the fourth quarter and then it came up and then what are the airlines talking about now or travel in general will be amount of seats that are going to be available in the first quarter in the second quarter that theyre showing going into going to various destinations are up between four 5%. So the dim.

Joe Ferraro: And then, you know, what are the airlines talking about now or, you know, about travel in general? Well, the amount of seats that are going to be available in the first quarter and the second quarter that they're showing going into various destinations is up between 4% and 5%. So the demand economics is good. Now you say, well, how about the price? I think we took advantage of the supply-demand challenges that were faced in the industry in those post-COVID years. A person who had the most cars and the price in the places that mattered most and had the best price, you know, seemingly could win in that environment, and we did that. And now the price is coming down and more normalizing. The fleets are not the same as they were back then, but I think they are extremely rational, right? You hear what I'm trying to do in the first quarter?

Chris Agnew: Manned economics are good now you say well how is how is price.

Chris Agnew: I think we took advantage.

Chris Agnew: Of the supply demand.

Chris Agnew: Challenges that we're faced in the industry and those post COVID-19 years person, who had most cars and the price in the places that matter most that had the best pricing.

Chris Agnew: Seemingly could win that environment, and we did that and now prices coming down and more normalizing. The fleets are not the same as they were back then but I think extremely rational right you hear what I'm trying to do in the first quarter had a little bit of a delivery issue were right sizing that and doing it immediately.

Joe Ferraro: We had a little bit of a delivery issue; we're, you know, right-sizing that and doing it immediately. I think as fleets kind of get more in line as you go to the traditional peaks, which I believe will be elevated. You know, the holiday periods and the summer season, those traditional peaks, people want to get out, and I believe those to be elevated, and that's going to support prices. Now you say, well, it's going to be well over 19, I can tell you that, and I believe as you get closer to these peaks, it will normalize to what we saw back in 2023. Hope that helps. Yeah, yeah, super helpful.

Chris Agnew: I think as fleets kind of getting more in line as you as you go to the traditional peaks, which I believe will be elevated the holiday periods in the summer season, those traditional peaks people want to get out in the end and I believe those to be elevated and that's going to support price now where you say well, it's going to be well over 19, I can tell you that and I believe as you can.

Chris Agnew: Closer to these peaks and more normalized to what we saw back in 2023.

Speaker Change: Hope that helps.

Speaker Change: Yeah, Yeah, it's super helpful. Thanks, Joe just as a follow up.

Joe Ferraro: Thanks, Joe. Just as a follow-up. It's pretty clear, you guys, game market share, and I don't know if it's possible to look at it by segment. But how durable do you think those gains are, Joe?

Speaker Change: It's pretty clear you guys gained gain market share and I don't know if.

Speaker Change: It's possible, we'll get it by segment, but how durable do you think those gains are Joe I mean, theres reasons for it most of which are you know you you guys are are terrific operators.

Joe Ferraro: I mean, there are reasons for it, most of which are, you know, you guys are terrific operators, www.thevenusproject.com, Optimizes Their Fleet a Little Differently. Yeah, you know, we don't really, you know, ever talk about market share as a company strategy or something that we're driving. It's an outcome of, you know, how you perform in business is really, is really that and, you know, I think over the years, what we've tried to do is, you know, insulate ourselves by how we, we, we look at our segments and how we manage our business. Now, inbound business is very, very strong, right? And it wasn't apparent in prior years.

Speaker Change: Like you said had the right cars and things like that but do you think it's sustainable if.

Speaker Change: No one or more of your competitors.

Speaker Change: Maybe optimizing their fleet a little differently.

Joe Ferraro: Yeah, we don't really.

Joe Ferraro: Ever talk about market share as a as a company strategy or it's something that we're driving it's an outcome of.

Joe Ferraro: How you perform it business is really is really that and I.

Joe Ferraro: I think over the years, what we've what we've tried to do is insulate ourselves by the by how we we.

Joe Ferraro: We we look at our segments and how we manage our business right now inbound business is very very strong right and it wasn't apparent than in prior years and I believe that that certainly will continue what other people do with their fleets in there and there and how they how they go about us.

Joe Ferraro: And I believe that that, you know, certainly will continue. What other people do with their fleets and their and their and how they go about it is, is, is, is not something that I'm going to, you know. I would suggest that we do here look at our own business, our own internal metrics, how we believe we need to grow it. We have performance strategies, we have performance metrics that we manage and look at, and, you know, market share, for me, is kind of an outcome.

Joe Ferraro: It's not something that.

Joe Ferraro: I would suggest.

Joe Ferraro: <unk> that we do here, we look at our own business our own internal.

Joe Ferraro: Metrics, how we believe we need to grow it we set our strategies. We are performance metrics that we manage and look at and you know market share for me is kind of an outcome.

Operator: Okay. Thanks, Jeff. Thank you. Our final questions will come from the line of Stephanie Moore with Jeffries. Please proceed with your questions. Hi, good morning.

Speaker Change: Okay. Thanks, Jeff.

Speaker Change: Yeah.

Stephanie Moore: Thank you our final question will come from the line of Stephanie more with Jefferies. Please proceed with your questions.

Stephanie Moore: Yeah.

Stephanie Moore: Hi, good morning, Thank you.

Izzy Martins: Thank you. So, I think, you know, I appreciate the color provided on the DPU expectations in 2024. You know, I think there's understandably a lot of moving pieces that go into net DPU, but can you talk about the levers that can be pulled to help mitigate outsized increases or on DPU going forward? Or maybe ask another way, you know, how can investors get comfortable that there's not incremental pressure on earnings from here as the year progresses? Thanks. Hi Stephanie, it's Izzy.

Stephanie Moore: So I think you know I appreciate the color provided on that GPU application.

Stephanie Moore: Or you know understandably a lot of moving pieces that go into that ETE is but can you talk about the levers that can be pulled to help mitigate outsized increases our <unk> going forward or maybe asking another way you know how can investors get comfortable that there's not incremental pressure to earnings from here as the year progresses.

Speaker Change: I think it's and Hi, Stephanie says Hey, I think it's one of those things said and as we were preparing for this is how we're thinking about how the first quarter the second quarter in the third quarter kindness progress. So your question about the $325 that we're saying for the total company as you can imagine.

Izzy Martins: I think it's one of those things that, as we were preparing for this, we were thinking about how the first quarter, the second quarter, and the third quarter kind of progressed. So your question about the $325 that we're saying for the total company, as you can imagine, there are many, not many, but there are levers that we think about. We think about the mix of the fleet, how long we're going to hold on to the fleet, how many miles we are putting in it, as Brian stated in the prior question, right? It has a lot to do also with how the used car market is performing. So there are times when there are ups and downs in the used car market, but of course, we're always trying to, as I said earlier, trying to actually depreciate them to no gain or loss.

Speaker Change: And you know theres, many not many but there are levers that we think about we think about the mix of the fleet how long they hold onto the fleet, how many mileage I read putting unit as Brian stated in the prior in the prior question right. It has a lot to do also how the used car market is performing.

Speaker Change: Times, there's ups and downs of the used car market, but of course, we're always trying to as I said earlier trying to actually depreciate no gain or loss, so really as the coming months.

Izzy Martins: So really, as the coming months progress, as we see what happens in the first quarter, and we're not just only going to de-fleet in the first quarter; we're going to de-fleet as well in the second quarter, we'll continue to evaluate it, but our assumptions right now are that our total company depreciation per unit will be in the range of $325. And then just as a quick follow-up on RPD, so just as a clarification, so it sounds like you expect normal seasonality in RPD throughout the year and continue to use 2019 as that benchmark from, let's just say, a spread standpoint. So are you saying that the spread should remain pretty consistent as we move throughout 2019, and we move throughout 2024 versus 2019 levels, just following normal seasonality? Yeah, that's what I would suggest.

Speaker Change: Kress as we see what happens in the first quarter and we're not just only going to deeply in the first quarter, we're going to deeply as well in the second quarter will continue to evaluate it.

Speaker Change: Our assumptions right now is that our total company depreciation per unit, well and will be in the range of $325.

Speaker Change: Got it and then just as a quick follow up on our T V.

Speaker Change: So just as a clarification it sounds like you expect normal seasonality in RPE throughout the year.

And he is 2019 at that benchmark.

Speaker Change: Brian standpoint.

Speaker Change: Are you, saying that the rent it remained pretty consistent as we move throughout 2019, we move throughout 2024 versus 2019 levels following normal seasonality.

Speaker Change: Yeah, that's what I would suggest it would be.

Joe Ferraro: Yeah, it would be, you know, the second quarter being better than the first and the third quarter being the pinnacle. That's, that's not going to change. It's just going to be at a more elevated level than it was, you know, pre-pandemic. Great, thank you so much. Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Joe Ferraro for a closing comment. Thank you. So to recap, we reported our best full-year revenue in our company's history and our second highest adjusted EBITDA ever. We believe demand will continue to be strong and prices elevated well above 2019 levels as we manage efficiency improvements while keeping our vehicle supply tight. I want to take this time to thank all of our employees around the world for their tireless efforts in helping us achieve these results. And I'm excited to see what we can accomplish in 2024.

Speaker Change: The second quarter being better than the first and the third quarter being the pinnacle.

Speaker Change: That's not going to change, it's just going to be certainly a more elevated level than it was.

Speaker Change: Pre pandemic.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to Joe Ferraro for closing remarks.

Joe Ferraro: Thank you so to recap we reported our best full year revenue in our company's history, and our second highest adjusted EBITDA ever we believe demand to continue to be strong and price elevated are well above the 2019 levels as we manage efficiency improvements, while keeping our vehicle supply tight I want to take this time to thank all of our employees around the world for their tireless efforts and help.

Joe Ferraro: Being us achieve these results and I am excited to see what we can accomplish in 2024 as always thank you for your time and interest in our company and be safe with this weather.

Joe Ferraro: As always, thank you for your time and interest in our company, and be safe in this weather. Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Speaker Change: Thank you that does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time and enjoy the rest of your day.

Yeah.

Speaker Change: [noise].