Avis Budget Group, Inc. (CAR) Earnings Call Transcript & Summary

Good morning, and welcome to the 2020 Annual Meeting of Avis Budget Group, Inc. During the meeting, we will have a question-and-answer session. Shareholders who have entered a valid control number issued by Computershare, the company's transfer agent, may submit questions at any time during the meeting by clicking on the message icon at the top of your screen. Now it is my pleasure to introduce Joseph A. Ferraro, Interim President and Chief Executive Officer of Avis Budget Group. Mr. Ferraro, I'll turn the meeting over to you.

Great. Thank you, and good morning. I am Joe Ferraro, Interim President and Chief Executive Officer of Avis Budget Group. I'm delighted to welcome you to the 2020 Annual Meeting of Stockholders, the first virtual meeting in our company's history. I'd also like to thank our Board of Directors, many of whom are joining our webcast today. I'd also like to thank the members of our senior leadership team and all the Avis Budget shareholders who are in attendance. A representative from Deloitte & Touche, the company's independent auditors, is also present today, and I hope that each and every one of you and your families are safe and healthy. Today's meeting is being held in extraordinary times and just one example of how we've all had to adapt to current challenges. Historically, in past years, our company held its annual meetings in person so that we could share a meaningful dialogue with our shareholders and interact and meet face-to-face. Today, however, the world is grappling with a health issue of enormous scale and great human impact as a result of COVID-19. This year, for the first time, we determined it was neither appropriate nor even possible to gather together in the same location. Our deepest sympathies go out to all those families and individuals who have been so greatly impacted by this crisis. I'd like to take the time now to thank everyone who's been fighting on the front lines, including health care workers and all other essential service providers worldwide. I'd also like to give very special thanks and recognition to the employees of Avis Budget Group for everything they've been doing to keep our company and our business up and running. We are all truly grateful for all of your efforts. Prioritizing the health, security and well-being of our employees, partners and customers we serve has always been part of our mission, and we've taken meaningful actions to reduce the risk to our employees and customers and ensure their safety. Many of our employees are now working remotely. And for those employees at our rental locations, we've implemented enhanced sanitation practices, and we've also updated our already robust guidance for both cleaning and disinfecting all of our vehicles. Our company has pulled through many challenges since Avis was founded in 1946. Our company has a history of leadership and vision, both when times are good and also in the most challenging of times. Our business, like so many others here in the U.S. and around the world, is being impacted by this global pandemic. But we know this situation is temporary, and we are resilient. We went into this crisis from a position of strength, with strong results in 2019 that led to positive momentum resulting in significant achievements in early 2020 before the pandemic impacted our operations. As we have discussed in our press releases and disclosures and on our earnings call earlier this week, we've taken significant mitigating actions to proactively manage the impact of the pandemic on our business, and I'm excited and optimistic for our company's future. Before we begin the formal portion of this meeting, let me call your attention to the agenda and rules of conduct that have been posted. After we complete the formal business portion of the meeting, there will be a general question-and-answer period for questions relating to the company's business. If you are a shareholder who is attending this meeting and logged in with a valid control number issued by Compushare (sic) [ Computershare ], you may ask a question by clicking the message icon on your screen. I would now like to call this meeting to order and introduce Jean Sera, the company's Senior Vice President, General Counsel and Corporate Secretary, and call upon her to give her report.

Thank you, and welcome, shareholders. In order to conduct the formal business of the meeting, it is necessary to establish that notice of the meeting was duly and properly mailed and that a quorum is present. We have received an affidavit of mailing signed by Computershare that the notice of this meeting, along with the related proxy materials, was mailed on March 27, 2020, to our company's shareholders of record as of the close of business on March 25, 2020, our record date. A list of shareholders as of the record date is available for inspection by shareholders on the meeting website. Based on the affidavit from Computershare, this meeting is duly called with timely and proper notice. Based on the information provided by Computershare, a quorum of shareholders is present to conduct our meeting today. The company has appointed Christopher Coleman of Computershare as the inspector of election for this meeting to tabulate the votes. Mr. Ferraro will now conduct the formal business of the meeting.

Thank you. There are 3 proposals on the agenda to be voted on today. The first order of business is the election of directors as nominated by the Board and set forth in the proxy statement. The Board recommends a vote for each nominee. The second item of business is for the ratification of appointment of Deloitte & Touche LLP as the company's registered public accounting firm for fiscal year 2020. The Board recommends a vote for this proposal. The third item of business is for the advisory approval of the compensation of our named executive officers. The Board recommends a vote for this proposal. We will now pause so that the votes can be recorded and any shareholders who have logged in with a valid control number issued by Computershare. If you've previously voted by proxy and do not want to change your vote, your vote has been recorded, and you do not need to vote today. With that, I'll pause. [Voting]

Okay. The polls for voting at our 2020 Annual Meeting are now closed. I will ask the Secretary to please provide the results of the voting.

Thank you. I can now report that all the director nominees have been elected. The appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for fiscal 2020 has been approved, and the compensation of our named executive officers has been approved by an advisory vote. The final voting results will be reported on a Form 8-K to be filed with the Securities and Exchange Commission within 4 business days of the meeting. With the conclusion of the official business, the meeting is now adjourned. Mr. Ferraro will now conduct a question-and-answer session. The company may make statements about its future results and expectations, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

We have one question that's come in. How long can the companies at current revenue levels continue without running out of liquidity? I'll take that. This is John North, the CFO. We've taken unprecedented steps to shore up the balance sheet and to reduce costs. And we talked about this at length, both on our earnings call earlier this week and in our investor presentation, which everyone is welcome to access at our Avis Budget Investor Relations website. We've also subsequently priced $500 million of senior notes earlier this week as well to add to the over $1.6 billion of liquidity that we had at the end of March into the first quarter. We've seen an 80% decline in revenue in April. We expect similar trends in May. And then we anticipate things improving gradually from that point forward as shelter in place is lifted and people start to move around. In those scenarios, we anticipate earning approximately $800 million of liquidity in the second quarter, which is well under the amount of liquidity that we would have, especially after contemplating the additional $500 million of liquidity that we're adding through the senior notes, which would take us over $2 billion. And based on our outlook and expectations and taking fleet out, we believe that we can be cash flow positive in July and beyond. So at this time, we believe that we have sufficient liquidity to weather 2020 and take us into 2021. There are no further questions.

Okay. All right. Thank you. So if there are no other questions, on behalf of our Board of Directors and our leadership team, I would like to thank all of you for taking time to participate in our 2020 Annual Meeting of Shareholders. This concludes our meeting.

The 2020 Annual Meeting of Avis Budget Group, Inc. has been concluded. You may now disconnect.