Q1 2024 Avis Budget Group Inc Earnings Call

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Greetings and welcome to the Avis budget first group first quarter.

Operator: Welcome to the Avis Budget Group first quarter earnings call and release conference call. At this time, all participants will be in listen-only mode.

Tony earnings call release Conference call.

Speaker Change: At this time, all participants will be in listen only mode.

Speaker Change: A brief question and answer session will follow today's formal presentation.

Speaker Change: If anyone should require operator assistance during this morning's conference. Please press star zero from your telephone keypad.

Speaker Change: As a reminder, today's conference is being recorded.

Operator: A brief question and answer session will follow today's formal presentation. If anyone should require operator assistance during this morning's conference, please press star zero from your telephone keypad. As a reminder, today's conference is being recorded. At this time, I'll turn the conference over to David Calabria, Treasurer and Senior Vice President of Corporate Finance. Mr. Calabria, you may begin your presentation. Good morning, everyone, and thank you for joining us

Speaker Change: At this time I'll turn the conference over to David Calabria Treasurer.

David T. Calabria: Treasury Treasurer, and senior Vice President of corporate Finance, Mr. Calabria, you may begin your presentation.

David T. Calabria: Good morning, everyone and thank you for joining us on the call with me are Joe Ferraro, Our Chief Executive Officer, and Izzy Martin Our Chief Financial Officer before we begin I would like to remind everyone that we will be discussing forward looking information.

David T. Calabria: On the call with me are Joe Ferraro, our Chief Executive Officer, and Izzy Martins, our Chief Financial 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 information. Such risks and assumptions, uncertainties, and other factors are identified in our earnings release and other periodic filings with the SEC, as well as in 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. 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.

David T. Calabria: <unk> 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 in any or all of our forward looking statements may prove to be inaccurate and we can make no guarantees about our future performance.

David T. Calabria: Undertake no obligation to update or revise our forward looking statements.

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 their reconciliations to the closest comparable gap measures. With that, I'd like to turn the call over to Joe. Thank you, David. Good morning, everyone, and thank you for joining us today.

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 reconciliations to the closest comparable GAAP measures with that I'd like to turn the call over to Joe.

Joseph A. Ferraro: Thank you David Good morning, everyone and thank you for joining us today.

Joseph A. Ferraro: Yesterday, we reported our first quarter results, which delivered quarterly revenue of more than $2.5 billion and adjusted EBITDA of $12 million. This is a substantial decline from our first quarter of 2023 adjusted EBITDA of $535 million, and we will spend time on this call discussing the underlying impacts and takeaways. At a high level, though, to accurately portray the business this quarter and beyond, we need to bifurcate the impacts of non-reoccurring fleet gains, higher vehicle interest, and decisions made to right-size our fleet, as we discussed on our last call, versus comparisons with a healthy overall revenue environment and our ongoing earnings potential.

Joseph A. Ferraro: Yesterday, we reported our first quarter results, which delivered quarterly revenue of more than $2 5 billion and adjusted EBITDA of $12 million.

Joseph A. Ferraro: This is a substantial decline from our first quarter of 2023, adjusted EBITDA of $535 million and we will spend time on this call discussing the underlying impacts and takeaways.

Joseph A. Ferraro: At a high level, though it's accurately portrayed the business this quarter and beyond we need to bifurcate the impacts of nonrecurring fleet gains higher vehicle interest and decisions made to rightsize our fleet as we discussed on our last call versus comparisons with a healthy overall revenue environment and our ongoing earnings potential.

Joseph A. Ferraro: We took the necessary steps to right-size our fleet this past quarter by selling a record number of vehicles to allow for increased utilization and flexibility. Conversely, the demand environment for our business remains robust, as demonstrated by our record first quarter rental volume, and we saw sequential improvements to our RPD throughout the months of the first quarter, with March finishing down 3%, with stronger exit trends, which we believe is a positive sign for future prices. We'll get into greater detail on this later in the call.

Joseph A. Ferraro: We took the necessary steps to rightsize our fleet this past quarter by selling a record amount of vehicles to allow for increased utilization and flexibility. Conversely, the demand environment for our business remains robust as demonstrated by our record first quarter rental volume and we saw sequentially improvement store RPT throughout the months.

Joseph A. Ferraro: The first quarter with March, finishing down 3% with stronger exit trends, which we believe is a positive sign future pricing.

Joseph A. Ferraro: But right now, I'd like to take a moment to thank our employees across the world for their efforts thus far in 2024. We worked hard to manage both our fleet size and our operating costs in order to appropriately position ourselves for the second quarter and summer peak. But thanks to their efforts, I believe we're now ready to move forward and capture what I believe will be a strong peak season, both domestically and internationally. Let's begin, as we usually do, with the details around our America segment.

Speaker Change: We will get into greater detail on this later in the call, but right now I'd like to take a moment to thank our employees across the world for their efforts. Thus far in 2024, we worked hard to manage both our fleet size and our operating costs in order to appropriately position ourselves for the second quarter and summer peak, but thanks to their efforts I believe we're now ready to move.

Speaker Change: Forward and capture what I believe will be a strong peak season, both domestically and internationally.

Speaker Change: Let's begin as we usually do with the details around our Americas segment.

Speaker Change: The Americas earn Neely.

Joseph A. Ferraro: The Americas aren't nearly $2 billion of revenue in the first quarter with $ 44 million of adjusted EBIT. As I mentioned earlier, demand in the Americas was strong, with a record amount of transaction days, even in our off-peak season. We've said on previous calls that when people get on planes, they get in cars, and for the quarter, TSA volumes were consistently higher than the first quarter of 2023. This showed in our volume being up 5% year over year.

Speaker Change: $2 billion of revenue in the first quarter with 44 million of adjusted EBITDA as I mentioned earlier the demand in the Americas was strong with a record amount of transaction days, even though our off peak season.

Speaker Change: We've said on previous calls when people get on planes, they get in cars and for the quarter TSA volumes were consistently higher than the first quarter of 2023. This showed in our volume being up 5% year over year.

Joseph A. Ferraro: Our sales team has been busy renewing key partnerships that continue to add to the rental day growth while contributing to improve margins. In general, we have seen growth in the aerospace, professional, and tech industries, as well as our commercial customers continuing to support leisure activities, a combination of a business trip with other leisure activities. Our commercial customer retention rate is nearly 100%, demonstrating the trust and loyalty our partners have in our company.

Speaker Change: Our sales team has been busy with renewing key partnerships that continue to add to the rental day growth, while contributing to improve margins in general we've seen growth in the aerospace professional and tech industries as well as our commercial customers continuing to support leisure activity a combination of a business trip with all the leisure activity.

Speaker Change: Our commercial customer retention rate is nearly 100% demonstrate the trust and loyalty our partners have in our company.

Joseph A. Ferraro: We also saw continued improvement in pricing throughout the quarter. Pricing was down 6% compared to the first quarter of 2023 and up 25% compared to the first quarter of 2019. When looking sequentially, we ended the past fourth quarter down 7% in price, which is what we saw in January, but as the quarter progressed, we saw a continued improvement with March finishing down less than 4%. This has continued into April, and we believe this trend will continue to allow us to exit the second quarter roughly flat year over year, which is a good starting point as we begin the third quarter, which is the busiest of the year.

Speaker Change: We also saw a continued improvement through pricing throughout the quarter pricing was down 6% compared to the first quarter of 2023 and up 25% compared to the first quarter of 2019.

Speaker Change: When looking sequentially, we ended the past fourth quarter down 7% in pricing, which is what we saw in January but as the quarter progressed. We saw a continued improvement March finishing down less than 4%. This is continued into April and we believe this trend will continually allowing us to exit the second quarter roughly flat year over year.

Speaker Change: Which is a good starting point as we did in the third quarter, our busiest of the year. We have said in the past when industry fleet is inside of demand pricing benefits and currently we see this happening in the market.

Joseph A. Ferraro: We have said in the past when the industry fleet is inside of demand, pricing benefits, and currently, we see this happening in the market. We made the conscious decision to accelerate our fleet dispositions so that we can maintain a more normalized utilization closer to historical norms. Our plan was to attack it quickly and get our fleet size issue mostly behind us while keeping costs in control. In the U.S., we sold a record number of vehicles in the first quarter. And with April's dispositions, we will have disposed of over 50% of our anticipated annual sales.

Speaker Change: We made the conscious decision to accelerate our fleet dispositions. So that we can maintain a more normalized utilization closer to historical norms.

Speaker Change: <unk> was to attack it quickly and get our fleet size issue, mostly behind us while keeping cost in control in the U S. We sold the historic.

Speaker Change: Record number of vehicles in the first quarter and with April's dispositions, we will have disposed of over 50% over anticipated annual sales. We believe this was a critical step in driving both near and longer term utilization.

Joseph A. Ferraro: We believe this was a critical step in driving both near and longer-term utilization. Demand for our vehicles of our type persists, and used cars still represent value to consumers at a price point that can be more than $20,000 less than a new vehicle. We are used car generators and help fill this consumer need.

Speaker Change: Demand for our vehicles of this of archived persists and used car still represent a value to consumers at a price point that can be more than $20000 less than a new vehicle we.

Speaker Change: Our used car generators and helped build this consumer need our disposition strategy in the first four months of the year sets the base Foundation for our fleet, while allowing the flexibility to optimize the transition into the spring and summer seasons.

Joseph A. Ferraro: Our disposition strategy in the first four months of the year sets the basic foundation for our fleet while allowing the flexibility to optimize the transition into the spring and summer seasons. Our utilization for the quarter was approximately 66%, but that does not give the full picture of the quarter. As we disposed of cars, our utilization continued to improve. Our March utilization was approximately 70%, bringing us closer to the goal of being at historic norms and exiting the first quarter in line with where we started the second quarter last year.

Speaker Change: Our utilization for the quarter was approximately 66%, but that does not give the full picture of the quarter as we dispose of course, our utilization continues to improve our March utilization was approximately 70%, bringing it closer to the goal of being at historic norms and exiting the first quarter in line with where we started.

Speaker Change: The second quarter last year.

Joseph A. Ferraro: We expect to be finished with our deep bleeding actions this month and our hive of focus to keep our utilization around seasonally historic levels. In fact, we anticipate our quarterly utilization to improve as the quarter progresses and ultimately eclipse last year's summer peak. Before I leave the fleet, let me take a moment and talk about our upcoming fleet negotiations.

Speaker Change: We expect to be finished with our deep leading action this month and our hyper focus to keep our utilization around seasonally historic levels. In fact, we anticipate our quarterly utilization to improve as the quarter progresses, and ultimately eclipse last year's summer peak.

Speaker Change: Before I leave the fleet, let me take a moment and talk about our upcoming fleet negotiations. They are just beginning.

Joseph A. Ferraro: They're just beginning, but there are signs that fleet buys will be more affordable. As the OEMs continue to make more cost-effective vehicles for consumers, we expect to benefit from that as well. As always, discussions with early impartners are focused around getting the right vehicles for our business at the most affordable price.

Speaker Change: There are signs that the pre buy will be more affordable as the Oems continue to make more cost effective vehicles for consumers, we expect to benefit from that as well.

Speaker Change: As always discussion with our OEM partners are focused around getting the right vehicles for our business at the most affordable prices.

Speaker Change: It's early stages, but we'll have more information in future calls regarding our 2025 model yet purchases.

Joseph A. Ferraro: So to recap, the Americas had revenue of nearly $2 billion and adjusted EBITDA of $44 million. We took the necessary actions to align the fleet by exiting a record number of vehicles in the quarter, allowing for increased utilization of flexibility. On a year-over-year basis, price improved sequentially from the fourth quarter down seven to down six in the first quarter, which would march better than that. These strong exit trends allow us to anticipate ending the second quarter about flat. And as I said earlier, that's a good place to start the summer and our busiest quarter of the year.

Speaker Change: So to recap the Americas had revenue of nearly 2 billion and adjusted EBITDA of $44 million, we took the necessary actions to align the fleet by exiting a record number of vehicles in the quarter, allowing for increased utilization of flexibility on a year over year basis price improved sequentially from the fourth quarter down seven to down six in the firm.

Speaker Change: Quarter, which with much better than that.

Speaker Change: Strong exit trends allow us to anticipate ending the second quarter or about flat and as I said earlier, that's a good place to start to summer in our busiest quarter of the year, we expect that the third quarter pricing could improve over the prior year given that travel demand continues to be robust.

Joseph A. Ferraro: We expect that the third quarter pricing could improve over the prior year, given that travel demand continues to be robust. Let's shift gears to international travel, which continues to see a slow but steady improvement in volumes post-pandemic. Rental days were up 4% compared to the first quarter of 2023, and they are only down 17% compared to the first quarter of 2019. This is an improvement from being down 20% in the fourth quarter of 2020. Last year, we said travel from country to country had been returning at a slower pace.

Speaker Change: Let's shift gears to international.

Speaker Change: We continue to see a slow but steady improvement in volumes post pandemic rental days were up 4% compared to the first quarter of 2023.

Speaker Change: Only down 17% compared to the first quarter of 2019. This is an improvement from down 20% in the fourth quarter of 2023.

Speaker Change: Last year, we said travel from country to country and returning at a slower pace. However, we are seeing improvements with into European cross border travel being up 11% compared to last year. Additionally, our international inbound volume was up 17% compared to last year as we stated in the Americas, our sales team was busy utilize.

Joseph A. Ferraro: However, we are seeing improvements, with inter-European cross-border travel being up 11% compared to last year. Additionally, our international inbound volume was up 17% compared to last year. As we stated in the Americas, our sales team was busy utilizing the power of our brands to generate higher margin volume as customers of this type, especially in North America, keep their cars longer and have a propensity to take additional ancillary products. With the increased volume growth, we generated revenues of $558 million, or a 3% increase compared to last year.

Speaker Change: The power of our brands to generate higher margin volume as customers of this type, especially from North America keep their cars longer and their propensity to take additional ancillary products.

Speaker Change: With the increased volume growth, we generated revenues of $558 million or 3% increase compared to last year.

Joseph A. Ferraro: And initial bookings for the second quarter of 2024 and into early summer in Europe are trending positively as well compared to last year, as we see volumes continuing to improve from rebounding inbound and cross-border demand heading into our peak. However, pricing for the quarter was down less than 1% compared to last year. But just like in the Americas, there's a greater story behind the numbers.

Speaker Change: And initial bookings for the second quarter of 2024 and into early summer in Europe are trending positively as well compared to last year as we see volumes continuing to improve from rebounding inbound cross border demand heading into our peak.

Speaker Change: Pricing for the quarter was down less than 1% compared to last year, but just like in the Americas is the greatest story behind the number January pricing started off being down 3% compared to prior year and improved the being slightly positive in March as we took advantage of the improved volume and higher priced core cross border activity.

Joseph A. Ferraro: January pricing started off being down 3% compared to the prior year and improved to being slightly positive in March as we took advantage of the improved volume and higher price cross-border activity. Additionally, a rollout of a proprietary demand fleet pricing system in international will be completed in June, and we expect to start seeing benefits with this rollout. Our system, which has been utilized in the Americas for many years now, is designed to improve contribution margin as it aligns demand with inventory and prices cars down to specific locations, both maximizing utilization and price.

Speaker Change: Additionally, our rollout of our proprietary demand fleet pricing system and international will be completed in June and we expect to start seeing benefits with this rollout our system, which has been utilized in the Americas for many years now is designed to improve contribution margin as it aligns demand inventory and prices <unk>.

Speaker Change: Pick locations, while maximizing utilization and price.

Joseph A. Ferraro: Fleet utilization was also positive in the quarter, and this will continue into the second quarter, as well as into the summer season. We continue to believe that there's substantial opportunity for recovery in this region, and the team is ready to capture it as it returns.

Speaker Change: Fleet utilization was also positive in the quarter and this will continue into the second quarter as well as into the summer season. 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.

Joseph A. Ferraro: Turning to technology, where we believe we are leaders in our industry at consistently looking for and executing ways to enhance our productivity and efficiency. On last call, we talked about projects that could improve our operating expenses. While we have many, I wanted to highlight a few of these on this call. We have been using data analytics and on-the-ground systems to increase throughput and enhance productivity. These systems and processes allow for better forecasting and scheduling needs down to the location and by day to optimize labor mix, such as full-time, part-time, and outsourced opportunities for jobs like shuttling our vehicles to and from locations. In the first quarter, we faced wage inflation of nearly 3% compared to the first quarter of 2023. However, our labor initiatives improved productivity by nearly 10%.

Speaker Change: Turning to technology. We believe we are leaders in our industry are consistently looking for and executing ways to enhance our productivity and efficiency.

Speaker Change: Last call, we talked about projects that could improve our operating expenses, while we have many I wanted to highlight a few of these on this call.

Speaker Change: We have been using data analytics and on the ground systems to increase throughput and enhance productivity. These systems and processes allow for better forecasting and scheduling needs down to the location and by day to optimize labor mix, such as full time part time and outsourced opportunities for jobs like shuttling vehicles tuned from locations.

Speaker Change: In the first quarter, we face wage inflation of nearly 3% compared to the first quarter of 2023, However, our labor initiatives improved productivity by nearly 10%. We expect these savings to flow through the balance of the year.

Joseph A. Ferraro: We expect these savings to flow through the balance of the year. We're also using analytics when looking at in-line vehicle costs such as tires, glass, and parts. In fact, we now have more visibility to leverage purchase power with our vendors, ensuring we use the most cost-effective part for each service. This better insight on purchasing and parts enables us to better manage these variable costs. The actions we took against these analytics decreased parts costs by over 20% this quarter.

Speaker Change: We're also using analytics when looking at in light vehicle costs, such as tires glass parts in fact.

Speaker Change: We now have more visibility to leverage purchase power with our vendors, ensuring we use the most cost effective part for each service this better insight on purchasing and parts enables us to better manage these variable cost. The actions. We took against these analytics decreased parts costs by over 20%. This quarter. We expect these savings to continue.

Joseph A. Ferraro: We expect these savings to continue throughout the year. We're also continuing to optimize our connected car capability. In the past, we've talked about improved gas collection from customers, but it also improves asset control on vehicles. We have an automated process for our shared service center that assists with vehicle loss prevention and the improved recovery of our vehicles.

Speaker Change: Throughout the year.

Speaker Change: We're also continuing to optimize our connected car capability in the past we've talked about improved gas collection from customers, but it also improves our asset control on vehicles, we have an automated process for our shared service center that assist with vehicle loss prevention and the improved recovery of our vehicles. The system provides improved insights designed to reduce the <unk>.

Joseph A. Ferraro: This system provides improved insights designed to reduce the downtime of our vehicles, provide better reporting, as well as reduce costs associated with these types of incidents. We're also piloting new functionality. We have cameras that capture the vehicle from multiple angles at both the exit and return of the rental. Our system reviews each video feed to assess any incremental damage to our asset. When new damage is identified, the system submits recommendations to our damage management portal showing video events of the damage.

Speaker Change: Downtime of our vehicles provide better reporting as well as reducing costs associated with these types of incidents.

Speaker Change: We're also piloting new functionality, we have cameras captured the vehicle from multiple angles simple the exit and return of rental.

Speaker Change: Our system reviews, each video feed to access any incremental damage to our asset when the new damages identified the system Smiths recommendations to our damage management portal showing video evidence of the damage. The solution will increase the amount of damage. We are detecting shortens the length of time necessary move the damage to our collection <unk>.

Joseph A. Ferraro: The solution will increase the amount of damage we are detecting, shorten the length of time necessary to move the damage through our collection process, reduces dependencies on our supply chain to provide estimated repair costs, and shortens the downtime if the damage is discovered to improve vehicle utilization and overall customer recovery. On each of our calls, I typically talk about our Tuxos Avis QuickPass process and our customers' ability to check in and check out on their rental using a unique QR code at our exit gate.

Speaker Change: <unk> reduces dependencies on our supply chain to provide estimated repair costs and shortens the downtime after damages discovered to improve vehicle utilization and overall customer recoveries.

Speaker Change: On each of our calls I typically talk about our touch us EBIT quick pass process, and our customers' ability to check in and check out on their rental using a unique QR code at our exit gates.

Joseph A. Ferraro: We are continually adding new features and are currently testing a new form of assistance where a customer can utilize their smartphone to have an associate quickly attend to their needs while on the lot. We look to roll this out throughout the remainder of the year. Our Avis QuickPass service has been the preferred customer experience over the last few years, and we'll continue to invest in this product. I'm also excited to say our team has now rolled out more than 60 European locations with self-service kiosks, allowing a customer to bypass the counter in an unsecured lot environment and obtain their keys by using biometrics to identify who they are.

Speaker Change: We are continually adding new features.

Speaker Change: And are currently testing a new form of assistance, where a customer can utilize their smartphone to have an associate quickly attentive to their needs while on a lot.

Speaker Change: We look to roll this out throughout the remainder of the year already this quick past service has been the preferred customer experience over the last few years and will continue to invest in this product.

Speaker Change: I'm also excited to say our team has now rolled out more than 60 European locations with self service kiosk, allowing a customer to bypass the counter in an unsecured lot environment and obtain their keys by using biometrics to identify who they are these initiatives will help to reduce cost while enhancing the overall customer experience.

Joseph A. Ferraro: These initiatives will help to reduce costs while enhancing the overall customer experience. So to conclude, we disposed of the most vehicles in our first quarter history to better align supply with demand and give us flexibility as we move into the summer peak. We achieved our second highest first quarter revenue in our history, all while maintaining strong cost discipline. Travel demand continues to be strong. Our utilization is aligned with historic norms, price continues to stabilize, and we expect to exit the second quarter. Christ lacked a prior year, and we continue to believe that the spring and summer seasons will be strong.

Speaker Change: <unk>.

Speaker Change: So to conclude we dispose of the most vehicles in our first quarter history to better align supply with demand and give us flexibility as we move into the summer peak, we achieved our second highest first quarter revenue in our history, all while maintaining strong cost discipline travel demand continues to be strong our utilization is lined with him.

Speaker Change: Toric norms.

Speaker Change: <unk> continues to stabilize and we expect to exit the second quarter with price flat to prior year and we continue to believe that the spring and summer seasons will be strong.

Joseph A. Ferraro: And I know that our team is focused on driving our performance, especially as we head into the busiest seasons of the year. With that, I'll turn it over to Izzy to discuss our earnings, liquidity, and out... Thank you, Joe. And good morning, everyone.

Speaker Change: And I know that our team is focused to drive our performance, especially as we head into the busiest seasons of the year.

Speaker Change: With that I'll turn it over to <unk> to discuss our earnings liquidity and outlook. Thank you Joe and good morning, everyone. My comments today will focus on our adjusted results, which are reconciled from our GAAP numbers in our press release as reflected in our earnings release, we earned $12 million of adjusted EBITDA in the <unk>.

Izilda P. Martins: My comments today will focus on our adjusted results, which are reconciled from our gap numbers in our press release. As reflected in our earnings release, we earned $12 million of adjusted EBITDA in the quarter. Let me start by detailing the year-over-year variances in fleet and interest costs. Last year, we had more than $600 million in fleet gains, of which $250 million was in the first quarter. These oversized fleet gains were a holdover coming out of the pandemic, and the gains will not replicate in 2024, given that these were a byproduct of the post-pandemic supply chain imbalance.

Speaker Change: Let me start by detailing the year over year variances in fleet and interest at heart.

Speaker Change: Last year, we had more than 600 million of fleet gains of which $250 million in the first quarter.

Speaker Change: These oversight Lee Gainsborough holdover coming out of the pandemic and the gains will not replicate in 2024 given that these were a byproduct in the post pandemic supply chain imbalance.

Izilda P. Martins: One of our priorities was to right-size our fleet as soon as possible by driving record vehicle sales. These sales generated a small loss of approximately $40 million in the quarter, as compared to $250 million gained last year.

Speaker Change: One of our priorities was to rightsize our fleet as soon as possible by driving record vehicle sales. These sales generated a small loss of approximately $40 million into the quarter as compared to 250 million gain last year, so nearly $300 million of our year over year quarterly decline from this line item alone.

Izilda P. Martins: So nearly $300 million of our year-over-year quarterly decline was from this line item alone. In addition, our straight line depreciation moved from $276 to $298, resulting in a year-over-year negative impact of $80 million. The primary driver of this increase is the additional absorption of model year 2024 vehicles into our fleet mix and declining residual values. We expect the straight line depreciation to increase throughout the second and third quarters to roughly $350 per month before stabilizing and potentially decreasing in the fourth quarter as we start to inflate model year 2025 vehicles at more attractive cap costs.

Speaker Change: In addition, our straight line depreciation moved from $276 to 298, resulting in a year over year negative impact of $80 million. The primary driver of this increase is the additional absorption of model year 2024 vehicles into our fleet mix and declining.

Speaker Change: Values, we expect the straight line depreciation to increase throughout the second and third quarters to roughly $350 per month before stabilizing and potentially decreasing in the fourth quarter as we start to in fleet model year 'twenty five vehicles at more attractive cap off wildly.

Izilda P. Martins: While it is early, and we have seen in Europe with the model year 2024s, which have been less expensive, conversations with our OEM partners in the U.S. appear to suggest that vehicles may be more affordable on a go-forward basis.

Speaker Change: It is early and we have seen in Europe on the model year, 2024 hours, which have been less expensive conversations with our OEM partners in the U S appear to suggest the vehicles may be more affordable on a go forward basis now.

Izilda P. Martins: Now shifting gears to vehicle interest. The full year impact of all of last year's vehicle financing is reflected in this first quarter, as our vehicle debt was refinanced at higher interest rates throughout 2023. In addition, we completed three ASAP term issuances, renewed our ASAP variable funding notes, and renewed our EMEA securitization for financings totaling more than $9 billion during the first quarter. As expected, all these financings came at higher rates. These financings and higher base rates drove the $106 million interest increase in the quarter.

Speaker Change: Now shifting gears to vehicle interests, the full year impact on all of last year as vehicle financings is reflected in this first quarter as our vehicle debt was refinanced at higher interest rates throughout 2023.

Speaker Change: In addition, we completed three Aesop term issuances renewed our aesop variable funding note and renewed our EMEA securitization for financings totaling more than 9 billion during the first quarter as.

Speaker Change: As expected all of these financings came at higher rates.

Speaker Change: These financings and higher base rates drove the $106 million interest increased in the quarter. Our treasury team has been busy and put us in this strong position, where our funding needs for the year are materially complete we expect our quarterly interest cost to be similar to what we experienced in the first quarter and.

Izilda P. Martins: Our Treasury team has been busy and put us in this strong position where our funding needs for the year are materially complete. We expect our quarterly interest costs to be similar to what we experienced in the first quarter, and any other fleet financing we evaluate during the year would be opportunistic, which gives us ultimate flexibility. Our direct operating and SG&A expenses as a percentage of revenue grew by less than two percentage points in the quarter compared to the prior year, largely due to our record dispositions, and yet well below our 5% volume growth.

Speaker Change: Any other fleet financings, we evaluate during the year would be opportunistic which gives us ultimate flexibility.

Speaker Change: Our direct operating and SG&A expenses as a percentage of revenue grew by less than two percentage points in the quarter compared to prior year, largely due to our record disposition and yet well below our 5% volume growth as our mitigate mitigating actions surrounding predict productivity and.

Speaker Change: Other cost removal activities enabled by technology, Joe mentioned earlier improved this outcome and eliminated our cost increase year over year to $38 million as a result of these factors. Our adjusted EBITDA was 12 million for the quarter. However, we believe the actions we took during the quarter.

Izilda P. Martins: As our mitigating actions surrounding productivity and other cost removal activities enabled by technology, as Joe mentioned earlier, improved this outcome and limited our cost increase year over year to $38 million. As a result of these factors, our adjusted EBITDA was $12 million for the quarter.

Izilda P. Martins: However, we believe the actions we took during the quarter, including our fleet reductions and cost mitigation strategies, have positioned us for a more successful remainder of the year. As for capital allocation, our strategy is not changing. We continually invest in our operational facilities and technological improvements to continuously enhance our customer experience while implementing cost efficiencies to drive margin contribution. This quarter, we reinvested more than $55 million into our core business, the same amount we invested in the first quarter of 2023. We issued a 600 million euro senior note in the quarter and used the proceeds to redeem our 2026 350 million euro senior note maturing in April, with the remainder utilized to pay down vehicle debt.

Speaker Change: Including our fleet reductions and cost mitigation strategy has positioned us for a more successful remainder of the year.

Speaker Change: When it comes to capital allocation, our strategy is not changing we continually invest in our operational facility and technological improvements to continuously enhance our customer experience, while implementing cost efficiencies to drive margin contribution this quarter, we reinvested more.

Speaker Change: $55 million into our core business the same amount we invested in the first quarter of 2023.

Speaker Change: We issued a 600 million euros senior note in the quarter and used the proceeds to redeem our 2026 350 million Euro senior note maturing in April within remainder utilized to pay down vehicle debt.

Izilda P. Martins: As of March 31st, we had available liquidity of over $700 million, with additional borrowing capacity of approximately $3.8 billion in our EBS facilities. Our net corporate leverage ratio was 2.3 times, including the Eurobond redemption, and continues to be well-laddered, with our corporate debt having no maturities until 2027. Additionally, we are in compliance with all of our secured financing facilities. Now, let's move on to Outlook. I wanted to give you insights into what we are seeing for the second quarter.

Speaker Change: As of March 31st we had available liquidity of over 700 million with additional borrowing capacity of approximately $3 8 billion in Arab EPS facilities, our net corporate leverage ratio was two three times, including the eurobond redemption and continues to be well lathered with our corporate.

Speaker Change: That having no maturities until 2027.

Speaker Change: Additionally, we are in compliance with all of our secured financing facility.

Speaker Change: Let's move on to outlook I wanted to give you insights into what we are seeing for the second quarter as Joe mentioned earlier, we expect rental demand to be strong with the Americas up low single digits and international being up in the high single digits, we do expect pricing to be sequentially better each month and <unk>.

Izilda P. Martins: As Joe mentioned earlier, we expect rental demand to be strong, with the Americas up low single digits and international being up in the high single digits. We do expect pricing to be sequentially better each month and to exit the second quarter about flat to the prior year, which is a good place to start the summer season and our busiest quarter of this year. As we have said in the past, when we keep the fleet inside of demand, pricing should improve. In closing, we navigated through a quarter that had challenges with inflationary pressures, higher fleet costs, and more interest expense.

Speaker Change: Exit the second quarter about flat to prior year, which is a good place to start the summer season, and our busiest quarter of the of the year as we have said in the past when we keep fleet inside of demand pricing should improve.

Speaker Change: In closing, we navigated through a quarter that had challenges with inflationary pressures higher fleet costs and more interest expense, we took the appropriate actions necessary to reduce our fleet size by exiting the largest amount of cars in the first quarter in company history, putting us in a more optimal position as we head into the.

Operator: We took the appropriate actions necessary to reduce our fleet size by exiting the largest number of cars in the first quarter in company history, putting us in a more optimal position as we head into the spring and summer peak seasons. We achieved our highest first quarter volume, which gives us confidence for the remainder of the year while maintaining strong cost-effectiveness. Travel demand continues to be strong, and our prices continue to stabilize while being well above 2019 levels.

Speaker Change: Spring and summer peak season, we achieved our highest first quarter volume, which gives us confidence for the remainder of the year.

Speaker Change: Maintaining strong cost discipline.

Speaker Change: Travel demand continues to be strong our price continues to stabilize while being well above 2019 levels and we continue to expect the quarters to perform with the seasonality we have seen in the past with the second quarter being larger than the first and the third quarter, representing another great Summer peak.

Operator: And we continue to expect the quarters to perform with the seasonality we have seen in the past, with the second quarter being larger than the first, and the third quarter representing another great summer period. With that, let's open it up for any questions. Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press Start 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

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

Speaker Change: Thank you at.

Speaker Change: At this time, we'll be conducting a question and answer session.

Speaker Change: If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press Star two who like to withdraw your question from the queue.

Speaker Change: For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Operator: So we may address questions from as many participants as possible, we ask you please limit yourself to one question and one follow-up. One moment, please, while we assemble the queue for questions.

Speaker Change: So you may address questions from as many participants as possible. We ask you. Please limit yourself to one question and one follow up.

Speaker Change: One moment, please while we.

Speaker Change: Assemble the queue for questions. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

Operator: Thank you. And our first question is from the line of Ryan Brinkman with J.P. Morgan. Please proceed with your question.

Speaker Change: Our first question is from the line of Ryan Brinkman with J P. Morgan. Please proceed with your question.

Ryan Joseph Brinkman: Thanks for taking my question. With regard to capital allocation over the balance of the year, how would you rate the relative attractiveness of using cash from operations to either pay down corporate debt or fleet debt or to buy back shares? And, you know, what about the operating environment, your own performance, or the price at which the market is valuing different parts of your capital structure makes one option or the other more attractive to you at this time? And how do you see that maybe evolving as the year progresses or into next year and beyond? Hi there, good morning.

Ryan Joseph Brinkman: Hi, Thanks for taking my question with regard to capital allocation over the balance of the year, how would you rate the relative attractiveness of using cash from operations to either pay down corporate debt or fleet debt or to buy back shares.

Ryan Joseph Brinkman: What about the operating environment your own performance or the price at which the market is valuing different parts of your capital structure makes one option or the other more attractive to you at this time and how do you see that may be evolving as the year progresses or into next year and beyond.

Ryan Joseph Brinkman: Yeah.

Izilda P. Martins: Thank you for the question. You know, we still believe that our shares are undervalued relative to the fundamentals around our current and future earnings trajectory. However, we needed to take care of our fleet disposition strategy, invest in our technology and technological improvements, and offset rising interest rates. So I would think about it in the first half of the year; that's what we would be taking care of. As for the second half of the year, of course, we will continue to monitor all opportunities that are available to us and our shareholders.

Speaker Change: Hi, Good morning, Thank you for the question.

Speaker Change: Still believe that our shares are undervalued relative to the fundamentals.

Speaker Change: Around current and future earnings trajectory. However, we needed to take care of our fleet disposition strategy invest in our technology and technological improvements and to offset rising interest rates. So I would think about it in the first half of the year, that's what we would be taken care of.

Speaker Change: As for the <unk>.

Speaker Change: Half of the year of course, we will continue to monitor all opportunities that are available to us and our shareholders. We will always always evaluate the full spectrum of options, including M&A capex be a debt repayment dividend onetime irregular and of course share repurchases as I mentioned earlier.

Izilda P. Martins: We will always, always evaluate the full spectrum of options, including M&A, CapEx, be it debt repayment, dividend, one-time or regular, and, of course, share repurchases, as I mentioned earlier. So we will always opportunistically allocate capital to those areas that best benefit all of the stakeholders of our company. Okay, great. Thanks. And then, just maybe, I also wanted to check in.

Speaker Change: So we will always opportunistically allocate capital to those areas that best benefit all of the stakeholders of our company.

Speaker Change: Okay, great. Thanks, and then just.

Speaker Change: Maybe also wanted to check in it's been sometime since the commentary back in 2021 I believe that.

Izilda P. Martins: It's been some time since the commentary back in 2021. I believe that, you know, with regard to normalized EBITDA, that no plan submitted by the management to the board would be deemed acceptable for EBITDA in the upcoming year. It's a call for, you know, earning less than a billion dollars. And of course, since then, you went under for four billion dollars, and you haven't really, you know, commented on or updated on what you think normalized earnings are.

Speaker Change: With regards to normalized EBITDA that no plan submitted by the management to the board would be deemed acceptable for EBITDA in the upcoming year, if a call for earning less than $1 billion of course. Since then you went under $4 billion and haven't really.

Izilda P. Martins: There are obviously a lot closer to the billion now than before. But just having done that round trip and trying to think about what maybe has structurally changed relative to the 800 million or so you're doing pre-pandemic. Curious if you have any updated thoughts here in 2024 about what normalized earnings for the company might be and in what year you'd be expected to earn a normalized amount. Thanks for the follow-up question. I think I'll make it quite simple. I mean, nothing really has changed.

Speaker Change: Ah Pined are updated on what you think normalized earnings are there are obviously a lot closer to it.

Speaker Change: The 1 billion now.

Speaker Change: Sure, but just having done that round trip.

Speaker Change: And trying to think about what maybe has structurally changed relative to the $800 million or so youre doing pre pandemic curious if you have any updated thoughts here in 2024 about what normalized earnings for the company might be in.

Izilda P. Martins: In what year, maybe you'd be expected to earn normalized amount.

Izilda P. Martins: I would just simply say that, you know, nothing below a billion dollars is going to be acceptable to us. So that's really where I would leave it. So although I wasn't in this role back then, the strategy hasn't changed. Very helpful. Thank you. Our next question comes from the line of John Babcock, Bank of America. Please proceed with your question. Good morning, and thanks for giving me the opportunity to ask a couple questions here.

Speaker Change: Thanks for the follow up question I think it will make it quite simple I mean, nothing really has changed I would say.

John Plimpton Babcock: Just simply say that.

John Plimpton Babcock: There is nothing below $1 billion is going to be acceptable to us. So that's really where I would leave it so be it although I wasn't in this role back then the strategy Hasnt changed.

Joseph Ferraro: Very helpful. Thank you.

Izilda P. Martins: Our next question comes from the line of John Babcock Bank of America. Please proceed with your question.

John Plimpton Babcock: Um, I guess just starting out, could you talk about what you're seeing in terms of residual values? If you could just, you know, kind of go through a little bit on both newer cars and also some of the older cars in your fleet, I was just kind of curious what you're seeing in terms of trends there. You know, I think, though, the best way to think of it is that although residual values were relatively stable during the quarter, you know, and also Mannheim continues to be much higher than pre-pandemic levels.

Speaker Change: Hey.

John Plimpton Babcock: Good morning, and thanks for giving the opportunity to ask a couple of questions here.

John Plimpton Babcock: Just starting now could you talk about what youre seeing on residual values.

John Plimpton Babcock: If you could just.

John Plimpton Babcock: Kind of go through a little bit, but both on newer cars and also some of the older cars in our fleet I was just kind of curious what youre seeing in terms of trends there.

John Plimpton Babcock: I think the best way to think of it is although residual values were relatively stable during the quarter.

John Plimpton Babcock: And also the Mannheim continues to be much higher than pre pandemic levels.

John Plimpton Babcock: You know, we do think, though, I don't know, you know, if you think about what I said about our depreciation, I think the cost, the holding cost of the cars really relates to the fact that, you know, the cap costs are a little bit higher. So, as residual values pertain, you know, Avis Budget Group Inc. in the first quarter, and that will probably continue through through mid through mid May. The other thing is, I know there's a lot of noise in the marketplace surrounding EVs; we do continue to, we don't have many EVs, as you know. However, EVs are challenged from a residual value perspective.

John Plimpton Babcock: We do think though I don't know if you think about what I said about our depreciation I think they do.

John Plimpton Babcock: The cost the holding cost of the cars really relates to the fact that the cap costs are a little bit higher so as residual values pertain.

John Plimpton Babcock: Persist throughout the year, we're behind call at the highest point of the of the curve. So we do expect that residual values will continue to potentially decline as the year progresses, and obviously there are certain cohorts that may still be challenged within our fleet.

John Plimpton Babcock: We as we actually as you may not have seen yet because we are filing with or with the SEC probably after this call, but we'll certainly be filing today, we did experience about $40 million of losses in the quarter, It's really nominal amount as you heard Joe say, we dispose.

John Plimpton Babcock: We still have a record amount of vehicles in.

John Plimpton Babcock: In the first quarter and that will continue probably through through may through mid may.

Izilda P. Martins: So irrespective of that, you know, you still do need to take that into consideration. But I hope that was helpful. Unknown Speaker Yeah, it was.

John Plimpton Babcock: The other thing is I know theres a lot of.

Speaker Change: Noise in the marketplace surrounding Evs, we do continue we don't have many fees as you know however, it's evs are challenged from a residual value perspective, so irrespective of that you know you still need to take that into consideration.

Speaker Change: Hope that was helpful.

John Plimpton Babcock: Um, and then also just last quarter, I think you provided guidance for depreciation per unit of rent of 325 for 2024. Are you sticking to that guidance? Are there any reasons to think that that may have been adjusted upwards or downwards?

Speaker Change: Yes, it was.

Speaker Change: And then also just last quarter I think you provided guidance for depreciation per unit of around $3 25 for 2024 are you sticking to that guidance are there any reasons to think that that may have been adjusted upwards or downwards.

Izilda P. Martins: You can see from my prepared remarks that in the first quarter, we came within that guidance, and I think we came in at about $318,000. And in my prepared remarks, I told you about the $298,000 and the $40 million loss. I would say what we're seeing now is that that $318,000 is going to ramp up. I said in my prepared remarks that it's going to go up to $350,000, most likely by the tail end of the second quarter.

Speaker Change: Hello from my comments, you can tell from my prepared comments.

Izilda P. Martins: In the first quarter, we came within that guidance, if we do it and I think we came in at about $3 18, and in my prepared remarks, I told you about the 298 and the $40 million loss I would say what we're seeing now is that that $3 18 is going to ramp up I said in the prepared remarks that it's going up to 300.

Izilda P. Martins: $50, most likely by the tail end of the second quarter, but I think what's more important on how the how the quarter's progress is that we do expect it but as I said to tail up in the second and the third but given that it's still early in our negotiation process. We do believe that the model year 'twenty five.

Izilda P. Martins: But I think what's more important about how the quarters progress is that we do expect it, as I said, to tail up in the second and the third. But given that it's still early in our negotiation process, we do believe that the model year 25s will be more affordable. As we inflate those in the fourth quarter and into calendar year 25, we should see that that straight line depreciation should normalize. Okay, thanks.

Izilda P. Martins: We'll be more affordable and as we in fleet those in the fourth quarter and into calendar year 'twenty five we should see that that's that straight line depreciation should normalize.

Izilda P. Martins: And then, you know, sorry, just one more follow-up here before I pass it on. But just curious, you know, with the OEMs indicating that, or at least providing some indication that the prices on the 25s will become more affordable. Are they offering those discounts to you this year?

Speaker Change: Okay got it thanks, and then sorry, just one more follow up here before I pass it all but just curious.

Izilda P. Martins: With the Oems, indicating that.

Izilda P. Martins: We've provided some indication.

Izilda P. Martins: Prices on the 20 fives will become more affordable are they offering those discounts to this year or is that something that probably will come more into play next year as you enter those negotiations.

Izilda P. Martins: Or is that something that will come more into play next year as you enter those negotiations? Yeah, I'll take that. It's, It when we when we buy the 2025 model year by year, we'll buy it this year, we'll commit this year, and those prices will be afforded on cars as they arrive throughout the back half of this year and into next year. And you know, the question about affordability, let me just add a little color to that. I mean, it's been reported in various public sources that new cars are being priced at the lowest level in the past two years.

Speaker Change: Yes, I'll take that.

Izilda P. Martins: When we buy the 2025 model year buy is moved by it. This year, we will commit this year and those prices will be afforded on cars as they arrived throughout the back half of this year and into next year.

Izilda P. Martins: The question about affordability, let me just add a little color to that I mean, it's been reported in various public sources that new cars are being priced.

Speaker Change: Lowest level in the past two years, and we certainly expect to get our fair share of that.

Izilda P. Martins: And we certainly expect to get our fair share of that. So, like I said in my remarks, it's early, but what we saw in Europe, for example, because they buy the 2024s, they have to come in a little bit later, those prices have come down, have come down quite a bit. Okay, thank you.

Izilda P. Martins: So.

Izilda P. Martins: Like I said on my remarks.

Izilda P. Martins: It's early but what we saw in in Europe for example, because they buy the 2020 fours little they have to commit a little bit later those prices have come down.

Izilda P. Martins: Have come down quite a bit.

Izilda P. Martins: Okay. Thank you.

Speaker Change: Thank you.

Christopher Nicholas Stathoulopoulos: Thank you. Our next question is from the line of Chris Stathoulopoulos with Susquehanna. Please proceed with your question. Good morning. I just want to go back to this.

Izilda P. Martins: Our next question is from the line of Chris Stephanopoulos with Susquehanna. Please proceed with your question.

Christopher Nicholas Stathoulopoulos: Good morning.

Christopher Nicholas Stathoulopoulos: I just wanted to go back to this.

Izilda P. Martins: The per unit per fleet cost. So I think in February you had such a full year, around 325-1Q Transcripts provided by Transcription Outsourcing, LLC. Depending on how these negotiations shake out, that could taper off in 4Q and perhaps move lower. So I just, for next year, understand kind of the moving parts here and what's changed. And since you last updated on that item, thank you.

Christopher Nicholas Stathoulopoulos: The per unit per fleet costs. So I think in February you had said full year.

Izilda P. Martins: Around $325 <unk> is going to be a little higher than that but you did better at $3 17, and we're looking at I think now you are saying.

Izilda P. Martins: Towards trail towards $3 50 for two and three Q in the.

Izilda P. Martins: Pending on how these negotiations shake out that could taper off in <unk> and perhaps moved lower so just for next year, what understand kind of the moving parts and what's changed.

Izilda P. Martins: And since you last updated around that that item. Thank you.

Christopher Nicholas Stathoulopoulos: Well, you certainly summarized exactly what I said, so I agree with that. I think the only thing that's changed is, as we continue, we have accelerated the dispositions a little bit sooner than we anticipated. The next thing that maybe may have changed is the fact that, as we do this on a monthly basis, we're always evaluating what our residual values would be. And also, last but not least, there was always that hope that the interest rates would come down a bit. And as you know, yes, our cars are attractive in the used car market. We still believe that, and we still see that.

Speaker Change: Well, you certainly summarize exactly what I said, so I agree with that I think the only thing that's changed is as we continue one is we accelerated the dispositions a little bit sooner than we anticipated.

Christopher Nicholas Stathoulopoulos: And the next thing that maybe May have changed is the fact that as we do this on a monthly basis.

Christopher Nicholas Stathoulopoulos: He is evaluating what our residual values would be and also last but not least there was always that hope that the interest rates would come down a bit and as you know yes. Our cars are attractive in the used car market, we still believe that and we still see that I think what's a little bit different.

Joseph A. Ferraro: I think what's a little bit different as for the consumer to purchase a used car is where interest rates are. So given that consumer interest rates are still very high, moving those sales proceeds on the cars is just becoming a little bit more challenging. So there's a combination of things that have changed since I gave you the guidance of 325. I would say in the first quarter, it was well below that, and I think it's prudent to anticipate that it would be going up in the second and the third. Okay, thank you. And Joe, the follow up.

Joseph A. Ferraro: For the consumer to purchase a used car is where interest rates are so given that interest consumer interest rates are still very high.

Joseph A. Ferraro: Moving those sales proceeds on on the cars, it's just becoming a little bit more challenging. So I think there's a combination of things that changed since I gave you the guidance of 325 I would say in the first quarter. It was well below it and I think it is prudent to anticipate that it would be going up in the second and the third.

Joseph A. Ferraro: Kurt.

Joseph A. Ferraro: So your prepared remarks, about a third of that was around technology. There's the system rollout in Europe, you spoke to enhancing contribution margins, and it sounds like there are some enterprise-level initiatives here, frictionless technology with these kiosks. Could you put a finer point or detail on how you ultimately see this benefiting revenue costs and margins and kind of whether we are in the early stages with respect to anticipated benefits? Thank you. Yeah, yeah, thank you.

Speaker Change: Okay. Thank you and Joe and a follow up so your prepared remarks about a third of that was around technology Theres. The system rollout in Europe, you spoke to the pension contribution margins are sound like Theres. Some enterprise level initiatives here frictionless technology with these kiosks could you put a finer.

Joseph A. Ferraro: Point of detail on how you ultimately see this benefiting revenue cost and margins and kind of where are we in the early stages with respect to anticipated benefits. Thank you.

Speaker Change: Yes, yes. Thank you.

Joseph A. Ferraro: I talked a lot about on the last call about how we created this cost transformation group headed up by a previous CFO. And we've, I would say, yeah, we're probably in the early stages of it, but we have some things that have brought some meaningful benefits for us in the first quarter.

Joseph A. Ferraro: We I talked a lot about loan in the last call. How we created this cost transformation group headed up by our previous CFO and we've I would say, we're probably in the early stages of it but we have some things that have.

Joseph A. Ferraro: A meaningful benefit for us in the first quarter.

Joseph A. Ferraro: I talked a little bit about them, but for review, you know, we have technology improvements that enhance our scheduling for, like, our frontline staff. And we're seeing particularly good productivity improvements. So when I say productivity, you get more clean cars, you get more customers to process through with less staff. And we have technology that enables us to have, you know, a different level of full-time and part-time.

Joseph A. Ferraro: You talked a little bit about number for review.

Joseph A. Ferraro: We have technology improvements and enhance our scheduling for like a frontline staff and we are seeing particularly good productivity improvement. So when I say productivity you get more clean cars, you get more customers, who can process through with less staff and we have technology that enables us to have.

Joseph A. Ferraro: A different level of full time part time, there's more people coming into the workforce so different than the last couple of years, So that certainly helped.

Joseph A. Ferraro: There are more people coming into the workforce, so this is different than the last couple of years. So that's certainly helped, you know, deter wage inflation, which we had wage inflation in the first quarter of 3%, but we have productivity of 10. So, you know, that that's a definite add-on to margin, for sure. In life vehicle maintenance around technology and procurement to deal with rising costs of inventory. We have we have systems in place.

Joseph A. Ferraro: Detour wage inflation, which we had wage inflation in the first quarter of 3% we have productivity uptime. So.

Joseph A. Ferraro: That is a definite add onto margin for sure in light vehicle maintenance around technology and procurement to deal with the rising cost of inventory. We have we have systems in place. So I'll give you. An example of tire went up from $50 to call. It something closer to 100, we know procurement involved to get.

Joseph A. Ferraro: So I'll give you an example, a tire, you know, went up from, you know, $50 to call it something closer to 100. We now have procurement involved to get us the best cost. But we also have systems to tell us which tire is the most optimal to put on, whether it be, you know, by manufacturer or by product, whether it's using an existing tire or a pair of tires.

Joseph A. Ferraro: What's the best cost, but we also have system to tell us, which tire is the most optimal to put on whether it would be.

Joseph A. Ferraro: Bye bye manufacturer or by product, whether it's using existing tire repair is higher so there's a whole lot of effort I think when you think about our process is to take a look at what we want to solve create the energy around it through actions provide technology to give us insights and then differentiate the outcome.

Joseph A. Ferraro: So there's a whole lot of effort. I think when you think about our process, to take a look at what we want to solve, create the energy around it through actions, provide technology to give us insights, and then differentiate the outcome is kind of the way I see it. We have damage detection that we're deploying. If you think about what damage is, you know, cost us, one point improvement in damage collections is like a $4 million benefit.

Joseph A. Ferraro: It's kind of the way I see it we have damage protection that we're deploying if you think about like what does damage cost us a one point improvement in damage collections is like a $4 million benefit you can do the math that sounds small, but as you start multiplying it by course utilization to have an idea not just on utilization of the overall.

Joseph A. Ferraro: You can do the math that sounds small, but as you start multiplying it by cars, you get an idea not just of utilization of the overall fleet compared to rental volume but utilization of a car at various stages of its life, its downtime, and why it's down to the bin level.

Joseph A. Ferraro: <unk> fleet compared to rental volume, but utilization of a car at various stages of its life. It's downtime why its down down to the <unk> level. If you reprove utilization by a point and just a point of utilization thats between 30% and $40 million. So those are things that I think are very attractive we have others that are modeling most prevent.

Joseph A. Ferraro: If you improve utilization by a point, right, just a point of utilization, it's between $30 and $40 million. So those are things that I think are very attractive. We have others that deal with loss prevention. And then you get to the revenue side, which you started off with. You know, I believe our demand fleet pricing system, something we built in the United States many, many years ago, gives us a decided advantage in how we price vehicles based on our demand and inventory levels and allows us to put the best optimal price out there. And we saw them; we rolled it out in the U.S.

Joseph A. Ferraro: And then you get to the revenue side, which you started off with.

Joseph A. Ferraro: We've our demand fleet pricing system, but something we built in the United States. Many many years ago gives us a decided advantage on how we price vehicles.

Joseph A. Ferraro: Based on.

Joseph A. Ferraro: Demand and inventory levels and allows us to put the best optimal price out there and we saw that we rolled it out in the United States. The early indications were used went up in price went up as well and we think we're going to get that benefit in Europe, but as far as the U S. We continue to iterate that price that.

Joseph A. Ferraro: The early indications were that use went up, and price went up as well. And we think we're going to get that benefit in Europe. But as far as the U.S., we continue to iterate that price, that model of ours. Last year, we put segments of business on it that we hadn't had in the past. We put import versus off import, and it's all designed to drive a differentiated outcome. Okay,

Joseph A. Ferraro: That.

Joseph A. Ferraro: Our model of ours last year, we put segments of business on it that we hadn't had in the past, we put airport versus off airport and it all designed to drive a differentiated outcome.

Joseph A. Ferraro: Yeah.

Speaker Change: Okay. Thank you.

Joseph A. Ferraro: Yeah.

Speaker Change: Thank you.

Chris Jon Woronka: Thank you. Our next question is from the line of Chris Woronka with Deutsche Bank. Hey, good morning, everyone. Thanks for taking the questions. The first one is for Izzy.

Speaker Change: Our next question is from the line of Chris Christopher Walker with Deutsche Bank. Please proceed with your question.

Chris Jon Woronka: Hey, good morning, everyone. Thanks for taking the questions.

Chris Jon Woronka: The first one is this might be for Eze theres been.

Izilda P. Martins: There's been, you know, some noise in the market recently, and I think investors are just trying to gain a better understanding of kind of where you are in terms of your ABS coverage and things like that. I don't can maybe give us a quick overview and talk about whether you see any funding requirements coming and things like that just to provide a little, you know, color to the market. Thanks. And then I have a follow-up question. You know, I'm just going to Chris. Thanks for the question.

Chris Jon Woronka: Some noise in the market recently I think investors are just trying to gain a better understanding of kind of where you are in terms of your.

Izilda P. Martins: Your EPS coverage and things like that.

Chris: Maybe give us a quick overview and talk about whether you see any funding requirements coming in and things like that just to provide a little.

Chris: Color to the market and then I have a follow up.

Izilda P. Martins: I think I'm just going to answer right off the bat that we don't have any issues on that front. I mean, if you look at the first table of the earnings release, you know, we have a cushion of about $2.8 billion. And actually, that cushion, that's how we have to report it for gap purposes; the true cushion is $3.6 billion, just because of the way ASAP is treated as a non-consolidated entity.

Speaker Change: I'm, just going Hey, Chris. Thanks for the question I think I'm, just going to answer right off the bat that we don't have any issues on that front I mean, if you look at what we report on the first table of the earnings release.

Izilda P. Martins: At the cushion of about $2 $8 billion and actually that cushion. That's how we have to reported for GAAP purposes. The true question is $3 $6 billion, just because of the way Aesop is treated as a non consolidated entity. So you really need to add back about $840 million. So if you think about that.

Izilda P. Martins: So you really need to add back, you know, about $840 million. So if you think about that, you know, that makes our net advance rate, you know, in call it the low 80s, and we can go into the high 80s. I mean, I hope that answers your question.

Izilda P. Martins: That makes our net advance rate.

Izilda P. Martins: In call it the low Eighty's and we can go into the high Eighty's I mean, I hope that answers your question, but I mean, the simple answer is we have plenty of headroom there.

Izilda P. Martins: But I mean, the simple answer is, we have plenty of headroom there. Yeah, no, that's, that's great. Thanks. Thanks, Izzy.

Speaker Change: Yes, no that's great. Thanks.

Chris Jon Woronka: And then, you know, the second question is, I, if I've done the math correctly, I think you reduced your DOE on a reported basis globally by about 1.8% for transactions. Avis Budget Group Inc. You're spot on. It's exactly what Joe just went through.

Speaker Change: And then second question is.

Chris Jon Woronka: If I've done the math correctly I think you reduced your.

Chris Jon Woronka: On a reported basis globally by about one 8% for transaction.

Chris Jon Woronka: In the quarter.

Chris Jon Woronka: It can be a pretty impressive number.

Chris Jon Woronka: What's your outlook for that and if it's not a number its just directionally can cannot continue to decline as you build volume and work on some of these.

Chris Jon Woronka: <unk> that Joe was talking about.

Chris Jon Woronka: And as you know, we just made that transition as I'm new to this, and Brian's leading that team. And, you know, in the initial stages, we're already seeing benefits. I don't have an exact number for you.

Chris Jon Woronka: Youre spot on exactly what Joe just went through and as you know, we just made that transition as I'm, new to this and Brian's leading that team and.

Chris Jon Woronka: In the initial stages, we're already seeing benefits I don't have an exact number for you, but as you as you stated as you multiply it as you take it to more locations whatever it may be it should continue to give us that advantage and as you saw.

Chris Jon Woronka: This particular quarter right, even though we had a tremendous amount of vehicles going out in the quarter.

Chris Jon Woronka: But as you stated, as you multiply it, as you take it to more locations, whatever it may be, it should continue to give us that advantage. And as you saw in this particular quarter, right? Even though we had a tremendous number of vehicles going out in the quarter, an all-time record.

Chris Jon Woronka: All time record you would expect the deal to go to go up because thats, where we incur the cost to prepare the carts for disposition, but instead you saw volume going up by five record dispositions and our deal. We only went up by two and we're just getting started in scaling up all these.

Chris Jon Woronka: You would expect the DOE to go up because that's where we incur the costs to prepare the cards for disposition. But instead, you saw volume going up by five record dispositions, and our DOE only went up by two, and we're just getting started with scaling up all these improvements enabled by the technology that Joe took you through. Okay, very good. Thanks.

Chris Jon Woronka: All these improvements enabled by technology that Joe took you through.

Chris Jon Woronka: Yeah.

Speaker Change: Okay very good thanks.

Chris Jon Woronka: Yeah.

Speaker Change: Thank you.

Harold Antar: Thank you. Our next question comes from the line of Harold Antar with Jeffries. Please receive your question. Hello, this is Harold Antoine with Stephanie Moore.

Chris Jon Woronka: Our next question comes from the line of Harold <unk> with Jefferies. Please proceed with your questions.

Harold Antar: Just so I guess, on the fleet, you know, with high demand levels right now, is there any expectation, any expectation for fleet additions this year? And, you know, just how does the company plan to manage that? Hi, thank you for the question. I think you should think of it this way, although we accelerated plenty of the dispositions into the first half or, say, the first four months, every single month will be continually adding new fleet and disposing of fleet. So it's just always a continuous cycle.

Harold Antar: Hello, This is harold onto onto stuff anymore.

Harold Antar: So I guess on the <unk>.

Harold Antar: <unk>.

Harold Antar:

Speaker Change: High demand levels right now.

Speaker Change: And do you expect any.

Speaker Change: Our expectation for fleet additions this year.

Speaker Change: Just how does the company plan to my understanding.

Izilda P. Martins: So I wouldn't say that anything has significantly changed. I would just simply say that maybe what it may create is actually even more efficiencies in the peak season, given that we accelerated the deletions a little bit earlier this year. Yeah, I think I'll jump in here. Look, utilization was important for us, and we got our utilization back to historic norms, and I think that's a tremendous opportunity. Some of the things that I mentioned early on about some of the cost initiatives and things and productivity improvements and how we manage, I think are going to benefit us this year.

Speaker Change: Hi, Thank you for the question I think you think of it this way, although we accelerated that.

Speaker Change: Plenty of the dispositions into the first half or say the first four months every single month will be continually to add new fleet and dispose. The fleet. So it's just always a continuous cycle. So I wouldn't say that anything has significantly changed I would just simply say that may be what it may create a Z actually even.

Speaker Change: More efficiencies in the peak season, given that we accelerated the delete a little bit earlier this year.

Speaker Change: I'll jump in here look at utilization was important for us. So we got our utilization back to historic norms and I think that's a tremendous opportunity some of the things that I mentioned early on about some of the cost initiatives and things and productivity improvements in how we manage I think is going to benefit us this year price of vehicles are high.

Izilda P. Martins: The price of vehicles is high, and you're going to see us manage our fleet to a more efficient level. I believe that we can get utilizations up over prior levels in the third quarter and not deter volume. Got it. Got it.

Izilda P. Martins: And youre going to see us manage our fleet to a more efficient level I believe that we can get utilizations up over prior year levels in the third quarter and not to tour volume.

Izilda P. Martins: And I guess, you know, and I'm sorry if I missed this, but just on managing capital costs, given, I guess, what appears to be a higher interest rate environment than we expected a few months ago, I guess, interest rate expectations throughout the year, you know, if you could, you know, comment on that, that'd be great. Yeah, that's exactly why we had to adjust our depreciation to be a little bit higher than what we estimated last time.

Speaker Change: Got it got it and I guess.

Izilda P. Martins: And I'm, sorry, if I missed this but do some monitoring capital cost.

Izilda P. Martins: Given I guess would appears to be a higher interest rate.

Izilda P. Martins: Apartment then.

Izilda P. Martins: <unk>.

Izilda P. Martins: We expected a few months ago.

Izilda P. Martins: Interest rate expectations.

Izilda P. Martins: Throughout the year.

Izilda P. Martins: If you could.

Izilda P. Martins: Comment on that.

Izilda P. Martins: <unk>.

Izilda P. Martins: Yes, that's exactly why we had to adjust our depreciation to be a little bit higher than what we guided last time. So I think if you. If you use this revised call. It number that we gave today I think that addresses that issue.

Izilda P. Martins: So I think if you use this revised call it number that we gave today, I think that addresses that issue. Thank you. Our next question is from the line of John Healy with NorthCoast Research. I'm pleased to see you with your question. Thank you for taking my question.

John Michael Healy: Thank you.

Izilda P. Martins: Our next question is from the line of John Healy with Northcoast Research. Please proceed with your questions.

John Michael Healy: First, I wanted to just talk a little bit about the summer expectations. Joe, I don't know if you'd be willing to do this, but could you talk to maybe what you think your fleet might grow in Q2 and Q3? And I think in the last statement, you just said potentially, we could get utilization in Q3 above previous levels. Is there a reason to think and have some hope that if that's the case, we could potentially have positive pricing for you guys on an RPD basis in Q3? Yeah, look at it.

John Michael Healy: For taking my question first I wanted to just talk a little bit about the summer expectations.

John Michael Healy: Joe I don't know if you'd be willing to do this but could you talk to maybe what you think you actually might grow in Q2, and Q3 and I think in the last statement you just said potentially we could get utilization in Q3.

John Michael Healy: Above previous levels.

John Michael Healy: Is there a reason to think it have some hope that if thats. The case, we could have potentially positive pricing for you guys on an RBC basis in Q3.

Joseph A. Ferraro: I mean, it gives us our best chance there, John. That's the way I would say it. We took a concerted effort to get our fleet sizes in line, right? We did it quickly. We wanted to get it behind us.

John Michael Healy: Yes.

Joe: It gives us the best chance there Jon that's that's the way I would say.

Joseph A. Ferraro: We took a concerted effort to get our fleet sizes in line range. We did it quickly I wanted to we wanted to get it behind us that's taking into consideration new cars that may be coming in or is that we exited and the fact that we removed 50% of our.

Joseph A. Ferraro: Annual sales in the first four months I think is pretty remarkable to get us to that level.

Joseph A. Ferraro:

Joseph A. Ferraro: Mike.

Speaker Change: I am little more optimistic on the pricing trends quite frankly, and I know everybody does scrapes and that's the initial price that you see in the marketplace.

Joseph A. Ferraro: I think when you think about price you have to think about it in a couple of ways.

Joseph A. Ferraro: That's taking into consideration new cars that may be coming in and cars that we have already exited. And the fact that we removed, you know, 50% of our annual sales in the first four months, I think it's pretty remarkable to get us to that level. I'm a little more optimistic about the pricing trends, quite frankly, and I know everybody does scrapes, and that's the initial price that you see in the marketplace. But I think when you think about price, you have to think about it in a couple of ways. For us... You know, what is it?

Speaker Change: For us.

Joseph A. Ferraro: What is the, you know, segmentation of price and what's the strategy behind what price you actually achieve? There are many different factors, whether it's commercial or leisure, whether it's exclusive partners or not, or whether it's car size based on mix. I think all those affect how we see it.

Joseph A. Ferraro: What is it what is the segmentation.

Joseph A. Ferraro: Price and what's the strategy behind what price you actually achieve.

Joseph A. Ferraro: There is many different factors, whether it's commercial or leisure, whether its exclusive partners or not or whether its core size based on mix I think all those affect how we see it and if you think about this.

Joseph A. Ferraro: Trends.

Joseph A. Ferraro: Just in general we started.

Joseph A. Ferraro: Last year, we were down in the Americas at least down seven exiting the fourth quarter, we came in down six with much better than that the year before that didn't happen.

Joseph A. Ferraro: <unk>.

Joseph A. Ferraro: The fourth quarter for the first quarter was it was the other way.

Joseph A. Ferraro: And if you think about the trend, [inaudible] the fourth quarter to the first quarter was the other way. And I like the way that we exit. And you say, well, maybe it was because Easter, you know, was in March and there was probably a little bit more demand, possibly.

Joseph A. Ferraro: And I liked the way that we exit and you say well maybe it was because Easter was in March and that was probably a little bit more demand bank, possibly but I think in order to understand pricing trends. It would be helpful to go back to the Covid years like in 2022, which is when you compare everything that happened in 2000.

Joseph A. Ferraro: But I think, you know, in order to understand pricing trends, it would be helpful to go back, you know, to the COVID years. Like, in 2022, which is when you compare everything that happened in 2023, there was just an acceleration of demand, and there was a short supply of vehicles. So you got two, the demand increase and then the short supply. That really didn't end until February of this year; we didn't actually go over it until this past February because you had Omicron kind of like in 2022.

Joseph A. Ferraro: 23 that was just an acceleration of demand and there was a short supply of vehicles. So you got to the demand increase and then a short supply.

Joseph A. Ferraro: That really didn't end until February.

Joseph A. Ferraro: We didn't actually go over it until this past February because you had omicron kind of like in 2022. So I think all of that accelerated since behind us and I think we took a lot of that price decline last year and in the early months of the fourth quarter.

Joseph A. Ferraro: So I think all of that, you know, accelerated behind us, and I think we took a lot of that price decline last year and in the early months of the fourth quarter. If you think about in 2023 and 2024, the biggest decline comparisons that we had compared to the prior year were in the second and third quarter. That's why I'm kind of saying that, you know what? We have a shot to get to flatten, potentially up. And I don't believe the fleet, you know, was going to be an inhibiting factor for us.

Joseph A. Ferraro: Think about in 2023 and 2024, the biggest decline comparisons that we had compared to prior year were in the second and third quarter. That's why I'm kind of saying that we have a shot to get to flat and potentially up and I don't believe the fleet was going to be inhibiting factor for us we have systems in place that enable us to put cars in the places that matter to them.

Joseph A. Ferraro: We have systems in place that enable us to put cars in the places that matter the most. And our DFP system, you know, allows us to price cars the way we think they need to be priced before we get to that event. So, yeah, I'm pretty encouraged with the pricing. Great to hear, and then maybe for Izzy, I want to talk a little bit about the car side of things, but maybe on the back end of things on the remarketing side.

Joseph A. Ferraro: Most and our DSP system.

Joseph A. Ferraro: House price cars the way we think.

Izzy: It needs to be priced before we get to that event, so I'm pretty encouraged with the pricing trends.

Speaker Change: Great good to hear and then just.

Izzy: Maybe you heard is he wanted to talk a little bit on the car side of things.

Izzy: But maybe on the back end side of things on the remarketing side.

John Michael Healy: Any sort of kind of progress that maybe you can point to on those initiatives that maybe, you know, change the way you're selling cars after they run through the fleet and potentially get you a higher quote unquote residual value or disposition price, and maybe we're where we're at in terms of those, you know, being outlaid and kind of rolling out through the I think I'll take that, John. So, Yeah, we've been looking at our disposition strategy for a number of years now.

Izzy: Any sort of kind of progress maybe you can point to on those initiatives that maybe.

John: Change the way you are selling cars after they run through the fleet and potentially get you a higher quote unquote residual value or disposition price.

John: And maybe where we're where we're at in terms of kind of those.

John: Being outlaid and kind of rolling out through the system.

Speaker Change: Yes, I think I'll take that John so.

John Michael Healy: And you know, whether we sell it, you know, Direct to Dealers or Market Connect. And we have a, you know, a certain number of retail lots. And since you asked, I'll say we're really in the early phases of a direct-to-consumer platform that will allow us to sell cars digitally on some e-commerce platform. And like I said very early on, I think you might even write about it in one of your releases. It's called the Ruby Car by Avis.

John: Yes, we've been looking at our disposition strategy for a number of years here now and whether we sell it.

John Michael Healy: So direct to dealers or market connect and we have.

John Michael Healy: A certain number of retail lots.

John Michael Healy: And since you asked I'll say, we were really in the early phases of a direct to consumer.

John Michael Healy: Platform that will allow us to sell cars.

John Michael Healy: On some e-commerce and.

John Michael Healy: E Commerce way.

John Michael Healy: And like I said very early on I think you might be even wrote about it in one of our one of your releases.

John Michael Healy: It's called Ruby car by Avis.

Joseph A. Ferraro: It's our... It's our way that we believe that we can get, you know, higher residual values and, you know, better aftermarket by selling direct to consumers. You know that. We sell a card direct to consumers. You always have that available.

John Michael Healy: It's our.

John Michael Healy: It's our it's our data that we believe that we can get higher.

Joseph A. Ferraro: Higher residual values and better aftermarket by showing direct to consumer you know that.

Joseph A. Ferraro: We saw a car direct to consumer you always have that available to you.

Joseph A. Ferraro: And the reason why I say, like, we're looking at that is because we think we have the right to participate in that. First of all, we manufacture a lot of used cars. All right, we buy all these cars new, we differentiate ourselves, we have a lot of used cars, so we have inventory. Second, we have locations to deploy. We have a lot of locations around our airport and supply chain locations, fixed vehicles that we can deploy and deliver, things of that nature.

Joseph A. Ferraro: And the reason why I say like we're looking at that is because we have.

Joseph A. Ferraro: We think we have the right to participate in that first of all we manufacture a lot of used cars.

Joseph A. Ferraro: Alright, we buy all these cars new we differentiate ourselves we have a lot of used cars. So we have inventory.

Joseph A. Ferraro: Second we have.

Joseph A. Ferraro: Locations to deploy we have a lot of locations around our airport and supply chain locations fixed vehicles that we can deploy and deliver things of that nature third is like I said, we have supply chain. We have mechanics had been fixing cars for a long period of time.

Joseph A. Ferraro: Thirdly, like I said, we have a supply chain; we have mechanics who've been fixing cars for a long period of time, both for rental operations and for car sales, both retail and wholesale.

Joseph A. Ferraro: Both for rental operations and for <unk>.

Joseph A. Ferraro: And for.

Joseph A. Ferraro: Core sales, both retail and wholesale.

Joseph A. Ferraro: And we have customers, right? We have... corporate accounts that can use it towards [inaudible] We've sold hundreds of cars, and hopefully, we can capture the higher disposition costs as we start giving this more meaningful volume. Thank you. Our last question is from the line of Izzy Dobre with Goldman Sachs.

Joseph A. Ferraro: And.

Joseph A. Ferraro: And we have customers alright, we have.

Joseph A. Ferraro: Corporate accounts that could use it towards.

Izilda P. Martins: HR benefit and we have partners.

Izilda P. Martins: You can use it as a membership Kirk.

Joseph A. Ferraro: And we've established over the past year, some technology that allows us to sell cars direct to consumers.

Izilda P. Martins: I said very early innings, but.

Joseph A. Ferraro: We've sold.

Izilda P. Martins: Hundreds of course, and hopefully we can capture the you know the higher disposition costs as we start.

Izilda P. Martins: Given this more meaningful.

Joseph A. Ferraro: Volume.

Izilda P. Martins: Great. Thank you guys.

Izilda P. Martins: Thank you. Our last question is from the line of his he Dover with Goldman Sachs. Please proceed with your questions.

Izilda P. Martins: Please proceed with your question. Hi, thanks so much for taking the question. I thought the color on DPU was incredibly helpful, and it's great to hear what you think the kind of normal DPU will be in 2025 in terms of the improvements that you think you might be able to see there. And I'll ask my follow-up now for just any kind of help you can give in terms of international versus US.

Izilda P. Martins: Hi, Thanks, so much for taking the question.

Izilda P. Martins: The color on GPU is incredibly helpful. That's great to hear what you think kind of normal GPU is in 2025 in terms of the improvement that you think you might be able to see that and I'll ask my follow up now. So just any kind of help you can give in terms of international versus U S. Thank you.

Izilda P. Martins: Thank you. Leslie, thank you for the question. Unfortunately, it's just way too early to really give you any insights as to what we expect to see in the model year, I mean, for calendar year 2025.

Speaker Change: I see thank you for the question I think unfortunately, it's just way too early to really give you any insight as to what where we expect to see and model year <unk> for calendar year 2025, as I said in my discussions.

Leslie: We expect it to improve from where we're at but as I said you know we're still in the very very early stages of the negotiations for the model year 'twenty five and I hope that what I tried to do in my remarks was to give you kind of a walk down of what's changing year over year and really what it comes down.

Izilda P. Martins: As I said in my discussions, you know, we expect it to improve from where we are, but as I said, you know, we're still in the very, very early stages of the negotiations for model year 25. And I hope what I tried to do in my remarks was to give you kind of a walk-down of what's changing year over year. And really, what it comes down to is the fleet cost.

Izilda P. Martins: In two weeks the fleet costs.

Speaker Change: You are spot on I am trying to figure out Okay, which is the same thing. We're trying to do is is what is that that cost, but as I said, it's a little bit too early to really try to anticipate what that could be in next year other than it should be better than where we're at today.

Izilda P. Martins: So it's, you're spot on. I'm trying to figure out, okay, which is the same thing we're trying to do is, what is that cost. But as I said, it's a little bit too early to really try to anticipate what that could be in the next year, other than it should be better than where we're at today.

Joseph A. Ferraro: Got it. Thank you. And I'll take the international part of your question. Look, we've been talking about, you know, volume not being back to 2019 levels on a number of calls now. But I was pleased, however, with the transition from the fourth quarter to the third. We've seen volume improve a bit.

Speaker Change: Got it thank you.

Speaker Change: And I'll take the international part of your question.

Joseph A. Ferraro: <unk>.

Joseph A. Ferraro: And I think it's largely due to our, you know, how the segments are reacting. We've commissioned our sales team to drive business out of the United States. We think that's an opportunity for us. We have a tremendous amount of partners and corporate business that flows through our system here that we can utilize in a greater way. And this cross-border business comes at particularly better prices and also buys a lot of ancillary equipment and actually keeps the cars longer, price improvement, and volume.

Joseph A. Ferraro: But we've been talking about volume not being back to 2019 levels for a number of calls now.

Joseph A. Ferraro: I was pleased however, with the transition from the fourth quarter to the third were seeing volume improve a bit and I think it's largely due to our.

Joseph A. Ferraro: How how the segments are reacting.

Joseph A. Ferraro: We commissioned our sales team to.

Joseph A. Ferraro: To drive business out of the United States, We think that that's an opportunity for us we have tremendous amount of partners and.

Joseph A. Ferraro: Corporate business that we have flowing through our system here that we can utilize in a greater and a greater way.

Joseph A. Ferraro: And this cross border business comes at particularly better pricing and also buys a lot of ancillary actually keeps the cars longer. So it has a material effect on utilization.

Joseph A. Ferraro: Price improvement in.

Joseph A. Ferraro: And as the quarters progress, it becomes a much bigger part of the international book of business. And that business books early, right? If you're going to Europe and you're leaving from the United States, you've either made a reservation, or you're looking to make one right now if you're looking to book into the summer.

Joseph A. Ferraro: In volume and as the quarters progressed, it becomes a much bigger part of the international book of business.

Joseph A. Ferraro: And that that business books early alright, if youre going to go to Europe, and you're leaving from the United States either made a reservation or you're looking to make one right now if youre looking to book into the summer and we've seen some pretty impressive reservation.

Joseph A. Ferraro: And we've seen some pretty impressive reservations improvements compared to the prior year. And I think the bigger thing for us and internationally is, you know, it's, you know, countries definitely segmented, segmented by countries, and we're developing this, you know, this system called our Demand Fleet Pricing System, which centrally manages all our pricing. I think that's going to be a big benefit for us. We'll be able to, you know, initiate prices in various different countries based on price segments and strategies, looking at demand and inventory.

Joseph A. Ferraro: Improvements compared to prior year.

Joseph A. Ferraro: And I think the bigger thing for us and internationally.

Joseph A. Ferraro: Yes.

Joseph A. Ferraro: Countries definitely segmented segmented by countries and we are developing this.

Joseph A. Ferraro: This.

Joseph A. Ferraro: This system called our demand fleet pricing system with centrally manages all of our pricing I think that's going to be a big benefit for us will be able to initiate price and various different countries based on price segments and strategies looking at.

Joseph A. Ferraro: Demand in inventory and it's something that we we havent used over there.

Joseph A. Ferraro: And it's something that we haven't used over there, and we've deployed it this year, and I think it's going to have a meaningful benefit for the overall margin of the business. Great, that's so helpful. Thank you. At this time, we've reached the end of our question and answer session. I'll turn the call back to Joe Ferraro for closing remarks.

Joseph A. Ferraro: And we've deployed at.

Joseph A. Ferraro: This year and I think it's going to have meaningful benefit to the overall margin of the business.

Joseph A. Ferraro: Great. That's very helpful. Thank you.

Joseph A. Ferraro: Thank you at this time, we've reached the end of our question and answer session I'll turn the call back to Joe Ferraro for closing remarks.

Joseph A. Ferraro: Thank you. So to recap, we reported strong first-quarter demand with record volume in the Americas. We took the necessary actions to reduce our fleet setting, setting us up for better utilization and improved flexibility as we move through the summer peak. We saw pricing stabilize throughout the quarter.

Joseph A. Ferraro: Thank you so to recap we reported a strong first quarter demand with record volume in the Americas, we took the necessary actions to reduce our fleet setting setting us up for better utilization and improved flexibility as we move through the summer peak, we saw pricing stabilized throughout the quarter. We believe travel demand will continue to be strong and will continue to mitigate.

Joseph A. Ferraro: We believe travel demand will continue to be strong, and we'll continue to mitigate costs with technology and actions in our field locations. All this sets us up for what we believe will be another successful spring and summer season. And I want to thank all our employees around the world for their tireless efforts. And, always, I want to thank you for your time and interest in our cause. Thank you. This will conclude today's conference. You may disconnect your lines at this time.

Joseph A. Ferraro: Cost.

Joseph A. Ferraro: Technology and actions at our field locations all of this sets us up for what we believe are another successful spring and summer season, and I want to thank all our employees around the world for their tireless efforts and always I want to thank you for your time and interest in our company.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Joseph A. Ferraro: [music].

Operator: Thank you for your participation. Avis Budget Group Inc, Unknown Attendee, Ryan Brinkman, Elizabeth Dove, Unknown Attendee, [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??. .. .. .. .. .. .. .. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Avis Budget Group, Unknown Attendee, Ryan Brinkman, Elizabeth Dove, Unknown Attendee, [inaudible]

Operator: [music].

Operator: [music].