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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Form 10-Q
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

Commission File No. 001-10308
 
Avis Budget Group, Inc.
(Exact name of registrant as specified in its charter) 
Delaware06-0918165
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
379 Interpace Parkway
Parsippany,NJ07054
(Address of principal executive offices)(Zip Code)
(973)496-4700
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01CARThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated FilerNon-accelerated Filer
Smaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

The number of shares outstanding of the issuer’s common stock was 35,647,164 shares as of April 26, 2024.


Table of Contents
 Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.



FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q may be considered “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by any such forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These statements may be identified by the fact that they do not relate to historical or current facts and may use words such as “believes,” “expects,” “anticipates,” “will,” “should,” “could,” “may,” “would,” “intends,” “projects,” “estimates,” “plans,” “forecasts,” “guidance,” and similar words, expressions or phrases. The following important factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements. These factors include, but are not limited to:

the high level of competition in the mobility industry, including from new companies or technology, and the impact such competition may have on pricing and rental volume;

a change in our fleet costs, including as a result of a change in the cost of new vehicles, resulting from inflation or otherwise, manufacturer recalls, disruption in the supply of new vehicles, including due to labor actions or otherwise, shortages in semiconductors used in new vehicle production, and/or a change in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;

the results of operations or financial condition of the manufacturers of our vehicles, which could impact their ability to perform their payment obligations under our agreements with them, including repurchase and/or guaranteed depreciation arrangements, and/or their willingness or ability to make vehicles available to us or the mobility industry as a whole on commercially reasonable terms or at all;

levels of and volatility in travel demand, including future volatility in airline passenger traffic;

a deterioration in economic conditions, resulting in a recession or otherwise, particularly during our peak season or in key market segments;

an occurrence or threat of terrorism, pandemic diseases such as COVID-19, natural disasters, military conflicts, including the ongoing military conflicts in the Middle East and Eastern Europe, or civil unrest in the locations in which we operate, and the potential effects of sanctions on the world economy and markets and/or international trade;

any substantial changes in the cost or supply of fuel, vehicle parts, energy, labor or other resources on which we depend to operate our business, including as a result of a global pandemic such as COVID-19, inflation, the ongoing military conflicts in the Middle East and Eastern Europe, and any embargoes on oil sales imposed on or by the Russian government;

our ability to successfully implement or achieve our business plans and strategies, achieve and maintain cost savings and adapt our business to changes in mobility;

political, economic or commercial instability in the countries in which we operate, and our ability to conform to multiple and conflicting laws or regulations in those countries;

the performance of the used vehicle market from time to time, including our ability to dispose of vehicles in the used vehicle market on attractive terms;

our dependence on third-party distribution channels, third-party suppliers of other services and co-marketing arrangements with third parties;

risks related to completed or future acquisitions or investments that we may pursue, including the incurrence of incremental indebtedness to help fund such transactions and our ability to promptly and
1

effectively integrate any acquired businesses or capitalize on joint ventures, partnerships and other investments;

our ability to utilize derivative instruments, and the impact of derivative instruments we utilize, which can be affected by fluctuations in interest rates, fuel prices and exchange rates, changes in government regulations and other factors;

our exposure to uninsured or unpaid claims in excess of historical levels and our ability to obtain insurance at desired levels and the cost of that insurance;

risks associated with litigation or governmental or regulatory inquiries, or any failure or inability to comply with laws, regulations or contractual obligations or any changes in laws, regulations or contractual obligations, including with respect to personally identifiable information and consumer privacy, labor and employment, and tax;

risks related to protecting the integrity of, and preventing unauthorized access to, our information technology systems or those of our third-party vendors, licensees, dealers, independent operators and independent contractors, and protecting the confidential information of our employees and customers against security breaches, including physical or cybersecurity breaches, attacks, or other disruptions, compliance with privacy and data protection regulation, and the effects of any potential increase in cyberattacks on the world economy and markets and/or international trade;

any impact on us from the actions of our third-party vendors, licensees, dealers, independent operators and independent contractors and/or disputes that may arise out of our agreements with such parties;

any major disruptions in our communication networks or information systems;

risks related to tax obligations and the effect of future changes in tax laws and accounting standards;

risks related to our indebtedness, including our substantial outstanding debt obligations, recent and future interest rate increases, which increase our financing costs, downgrades by rating agencies and our ability to incur substantially more debt;

our ability to obtain financing for our global operations, including the funding of our vehicle fleet through the issuance of asset-backed securities and use of the global lending markets;

our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, or to obtain a waiver or amendment of such covenants should we be unable to meet such covenants;

significant changes in the assumptions and estimates that are used in our impairment testing for goodwill or intangible assets, which could result in a significant impairment of our goodwill or intangible assets; and

other business, economic, competitive, governmental, regulatory, political or technological factors affecting our operations, pricing or services.

We operate in a continuously changing business environment and new risk factors emerge from time to time. New risk factors, factors beyond our control, or changes in the impact of identified risk factors may cause actual results to differ materially from those set forth in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Moreover, we do not assume responsibility if future results are materially different from those forecasted or anticipated. Other factors and assumptions not identified above, including those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 2 and “Risk Factors” in Item 1A in this quarterly report and in similarly titled sections set forth in Item 7 and in Item 1A and in other portions of our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2024 (the “2023 Form 10-K”), may cause actual results to differ materially from those projected in any forward-looking statements.

2

Although we believe that our assumptions are reasonable, any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual results could differ materially from past results and/or those anticipated, estimated or projected. We undertake no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

3

PART I — FINANCIAL INFORMATION
Item 1.    Financial Statements
Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In millions, except per share data)
(Unaudited)

Three Months Ended 
March 31,
20242023
Revenues$2,551 $2,557 
Expenses
Operating1,344 1,307 
Vehicle depreciation and lease charges, net636 265 
Selling, general and administrative325 324 
Vehicle interest, net239 133 
Non-vehicle related depreciation and amortization61 56 
Interest expense related to corporate debt, net83 73 
Restructuring and other related charges3 4 
Transaction-related costs, net1  
Other (income) expense, net1 (2)
Total expenses2,693 2,160 
Income (loss) before income taxes(142)397 
Provision for (benefit from) income taxes(29)85 
Net income (loss)(113)312 
Less: net income attributable to non-controlling interests1  
Net income (loss) attributable to Avis Budget Group, Inc.
$(114)$312 
Comprehensive income (loss) attributable to Avis Budget Group, Inc.
$(158)$302 
Earnings (loss) per share
Basic$(3.21)$7.88 
Diluted$(3.21)$7.72 









See Notes to Consolidated Condensed Financial Statements (Unaudited).
4

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions, except par value)
(Unaudited)

March 31, 
2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents$522 $555 
Receivables, net1,032 900 
Other current assets779 684 
Total current assets2,333 2,139 
Property and equipment, net709 719 
Operating lease right-of-use assets2,750 2,654 
Deferred income taxes1,811 1,868 
Goodwill1,088 1,099 
Other intangibles, net658 670 
Other non-current assets450 441 
Total assets exclusive of assets under vehicle programs9,799 9,590 
Assets under vehicle programs:
Program cash73 85 
Vehicles, net22,020 21,240 
Receivables from vehicle manufacturers and other431 443 
Investment in Avis Budget Rental Car Funding (AESOP) LLC—related party1,205 1,211 
23,729 22,979 
Total Assets$33,528 $32,569 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other current liabilities$2,669 $2,627 
Short-term debt and current portion of long-term debt405 32 
Total current liabilities3,074 2,659 
Long-term debt5,032 4,791 
Long-term operating lease liabilities2,234 2,117 
Other non-current liabilities509 528 
Total liabilities exclusive of liabilities under vehicle programs10,849 10,095 
Liabilities under vehicle programs:
Debt3,241 3,496 
Debt due to Avis Budget Rental Car Funding (AESOP) LLC—related party15,949 15,441 
Deferred income taxes3,325 3,418 
Other672 462 
23,187 22,817 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value—authorized 10 shares; none issued and outstanding, in each period
  
Common stock, $0.01 par value—authorized 250 shares; issued 137 shares, in each period
1 1 
Additional paid-in capital6,610 6,634 
Retained earnings3,738 3,854 
Accumulated other comprehensive loss(140)(96)
Treasury stock, at cost—101 and 102 shares, respectively
(10,724)(10,742)
Stockholders’ equity attributable to Avis Budget Group, Inc.
(515)(349)
Non-controlling interests7 6 
Total stockholders’ equity(508)(343)
Total Liabilities and Stockholders’ Equity$33,528 $32,569 

See Notes to Consolidated Condensed Financial Statements (Unaudited).
5

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

 Three Months Ended 
March 31,
 20242023
Operating activities
Net income (loss)$(113)$312 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Vehicle depreciation562 477 
Amortization of right-of-use assets302 251 
(Gain) loss on sale of vehicles, net39 (250)
Non-vehicle related depreciation and amortization61 56 
Stock-based compensation7 8 
Amortization of debt financing fees12 9 
Net change in assets and liabilities:
Receivables(8)34 
Income taxes and deferred income taxes(34)66 
Accounts payable and other current liabilities46 82 
Operating lease liabilities(299)(250)
Other, net14 24 
Net cash provided by operating activities589 819 
Investing activities
Property and equipment additions(53)(44)
Proceeds received on asset sales1  
Net assets acquired (net of cash acquired)(1)(3)
Net cash used in investing activities exclusive of vehicle programs(53)(47)
Vehicle programs:
Investment in vehicles(4,081)(3,880)
Proceeds received on disposition of vehicles2,610 2,283 
Investment in debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party(254)(105)
Proceeds from debt securities of Avis Budget Rental Car Funding (AESOP) LLC—related party260 71 
(1,465)(1,631)
Net cash used in investing activities(1,518)(1,678)

6

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)

 Three Months Ended 
March 31,
 20242023
Financing activities
Proceeds from long-term borrowings$651 $ 
Payments on long-term borrowings(10)(7)
Net change in short-term borrowings 2 
Repurchases of common stock(15)(51)
Debt financing fees(11)(2)
Net cash provided by (used in) financing activities exclusive of vehicle programs615 (58)
Vehicle programs:
Proceeds from borrowings6,614 5,270 
Payments on borrowings(6,296)(4,359)
Debt financing fees(36)(12)
282 899 
Net cash provided by financing activities897 841 
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash(13)5 
Net decrease in cash and cash equivalents, program and restricted cash(45)(13)
Cash and cash equivalents, program and restricted cash, beginning of period644 642 
Cash and cash equivalents, program and restricted cash, end of period$599 $629 
See Notes to Consolidated Condensed Financial Statements (Unaudited).
7

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)
(Unaudited)

Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss)Treasury Stock
Stockholders’ Equity Attributable to Avis Budget Group, Inc.
Non-controlling InterestsTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 2023137.1 $1 $6,634 $3,854 $(96)(101.6)$(10,742)$(349)$6 $(343)
Comprehensive income (loss):
Net income (loss)— — — (114)— — — (114)1 (113)
Other comprehensive loss— — — — (44)— — (44)— (44)
Total comprehensive income (loss)(114)(44)(158)1 (157)
Net activity related to restricted stock units— — (24)(2)— 0.2 18 (8)— (8)
Balance at March 31, 2024137.1 $1 $6,610 $3,738 $(140)(101.4)$(10,724)$(515)$7 $(508)
Balance at December 31, 2022137.1 $1 $6,666 $2,579 $(101)(97.6)$(9,848)$(703)$3 $(700)
Comprehensive income (loss):
Net income— — — 312 — — — 312 — 312 
Other comprehensive loss— — — — (10)— — (10)— (10)
Total comprehensive income (loss)312 (10)302 — 302 
Net activity related to restricted stock units— — (46)— — 0.3 3 (43)— (43)
Balance at March 31, 2023137.1 $1 $6,620 $2,891 $(111)(97.3)$(9,845)$(444)$3 $(441)














See Notes to Consolidated Condensed Financial Statements (Unaudited).
8


Avis Budget Group, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Unless otherwise noted, all dollar amounts are in millions, except per share amounts)

 1.    Basis of Presentation

Avis Budget Group, Inc. provides mobility solutions to businesses and consumers worldwide. The accompanying unaudited Consolidated Condensed Financial Statements include the accounts and transactions of Avis Budget Group, Inc. and its subsidiaries, as well as entities in which Avis Budget Group, Inc. directly or indirectly has a controlling financial interest (collectively, “we”, “our”, “us”, or the “Company”), and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting.

We operate the following reportable business segments:

Americas - consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.
International - consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.

The operating results of acquired businesses are included in the accompanying Consolidated Condensed Financial Statements from the dates of acquisition. Differences between the preliminary allocation of purchase price and the final allocation for our 2023 acquisitions of various licensees were not material. We consolidate joint venture activities when we have a controlling interest and record non-controlling interests within stockholders’ equity and the statement of comprehensive income equal to the percentage of ownership interest retained in such entities by the respective non-controlling party.

In presenting the Consolidated Condensed Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Consolidated Condensed Financial Statements contain all adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These financial statements should be read in conjunction with our 2023 Annual Report on Form 10-K (the “2023 Form 10-K”).

Summary of Significant Accounting Policies

Our significant accounting policies are fully described in Note 2 – Summary of Significant Accounting Policies in our 2023 Form 10-K.

Cash and cash equivalents, Program cash and Restricted cash. The following table provides a detail of cash and cash equivalents, program and restricted cash reported within the Consolidated Condensed Balance Sheets to the amounts shown in the Consolidated Condensed Statements of Cash Flows.

As of March 31,
20242023
Cash and cash equivalents$522 $548 
Program cash73 80 
Restricted cash (a)
4 1 
Total cash and cash equivalents, program and restricted cash$599 $629 
________
(a)Included within other current assets.
9



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

Transaction-related costs, net. Transaction-related costs, net are classified separately in the Consolidated Condensed Statements of Comprehensive Income. These costs are comprised of expenses primarily related to acquisition-related activities such as due diligence and other advisory costs, expenses related to the integration of the acquiree’s operations with those of our operations, including the implementation of best practices and process improvements, non-cash gains and losses related to re-acquired rights, expenses related to pre-acquisition contingencies and contingent consideration related to acquisitions.

Currency Transactions. We record the gain or loss on foreign currency transactions on certain intercompany loans and the gain or loss on intercompany loan hedges within interest expense related to corporate debt, net.

Variable Interest Entity (“VIE”). We review our investments to determine if they are VIEs. A VIE is an entity in which either (i) the equity investors as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. Entities that are determined to be VIEs are consolidated if we are the primary beneficiary of the entity. The primary beneficiary possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. We will reconsider our original assessment of a VIE upon the occurrence of certain events such as contributions and redemptions, either by us, or third parties, or amendments to an entity’s governing documents. On an ongoing basis, we reconsider whether we are deemed to be a VIE’s primary beneficiary. See Note 14 – Related Party Transactions for our VIE investment in our former subsidiary.

Investments. As of March 31, 2024 and December 31, 2023, we had equity method investments with a carrying value of $95 million and $93 million, respectively, which are included in other non-current assets. Earnings from our equity method investments are included within operating expenses. For the three months ended March 31, 2024 and 2023 we recorded $3 million and an immaterial amount related to our equity method investments, respectively. See Note 14 – Related Party Transactions for our equity method investment in our former subsidiary.

Revenues. Revenues are recognized under “Leases (Topic 842),” with the exception of royalty fee revenue derived from our licensees and revenue related to our customer loyalty program, which were approximately $42 million and $44 million during the three months ended March 31, 2024 and 2023, respectively.


10


The following table presents our revenues disaggregated by geography:
 Three Months Ended 
March 31,
20242023
Americas$1,993 $2,016 
Europe, Middle East and Africa382 367 
Asia and Australasia176 174 
Total revenues$2,551 $2,557 

The following table presents our revenues disaggregated by brand:
Three Months Ended 
March 31,
20242023
Avis$1,460 $1,415 
Budget921 977 
Other170 165 
Total revenues$2,551 $2,557 
________
Other includes Zipcar and other operating brands.

Recently Issued Accounting Pronouncements

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which amends Topic 740 primarily through enhanced disclosures about an entity’s tax risks and tax planning. The amendments are effective for public business entities in annual periods beginning after December 15, 2024, with early adoption permitted on a prospective or retrospective basis. ASU 2023-09 will become effective for us on January 1, 2025. We are currently evaluating the impact of the adoption of this accounting pronouncement on our Consolidated Financial Statements.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures,” which amends Topic 280 primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 became effective for us on January 1, 2024. We are currently evaluating the impact of the adoption of this accounting pronouncement on our Consolidated Condensed Financial Statements.

Reference Rate Reform

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which amends ASU 2020-04 and clarifies the scope and guidance of Topic 848 to allow derivatives impacted by the reference rate reform to qualify for certain optional expedients and exceptions for contract modifications and hedge accounting. The guidance is optional and is effective for a limited period of time. In December 2022, the FASB also issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” to defer the sunset date of ASC 848 from December 31, 2022 to December 31, 2024. As of March 31, 2024, this guidance had no impact on our Consolidated Condensed Financial Statements, and we will continue to evaluate this guidance.

11


 2.    Leases

Lessor

The following table presents our lease revenues disaggregated by geography:
Three Months Ended 
March 31,
20242023
Americas$1,974 $1,995 
Europe, Middle East and Africa364 349 
Asia and Australasia171 169 
Total lease revenues$2,509 $2,513 

The following table presents our lease revenues disaggregated by brand:
Three Months Ended 
March 31,
20242023
Avis$1,434 $1,388 
Budget909 964 
Other166 161 
Total lease revenues$2,509 $2,513 
________
Other includes Zipcar and other operating brands.

Lessee

We have operating and finance leases for rental locations, corporate offices, vehicle rental fleet and equipment. Many of our operating leases for rental locations contain concession agreements with various airport authorities that allow us to conduct our vehicle rental operations on site. In general, concession fees for airport locations are based on a percentage of total commissionable revenue as defined by each airport authority, some of which are subject to minimum annual guaranteed amounts. Concession fees other than minimum annual guaranteed amounts are not included in the measurement of operating lease right of use (“ROU”) assets and operating lease liabilities, and are recorded as variable lease expense as incurred. Our operating leases for rental locations often also require us to pay or reimburse operating expenses.

The components of lease expense are as follows:
Three Months Ended 
March 31,
20242023
Property leases (a)
Operating lease expense$229 $205 
Variable lease expense69 83 
Total property lease expense$298 $288 
________
(a)    Primarily within operating expenses.

12


Supplemental balance sheet information related to leases is as follows:
As of 
March 31, 2024
As of 
December 31, 2023
Property leases
Operating lease ROU assets$2,750$2,654
Short-term operating lease liabilities (a)
$558$576
Long-term operating lease liabilities2,2342,117
Operating lease liabilities$2,792$2,693
Weighted average remaining lease term8.0 years8.1 years
Weighted average discount rate4.88 %4.83 %
________
(a)    Included in accounts payable and other current liabilities.

Supplemental cash flow information related to leases is as follows:
Three Months Ended 
March 31,
20242023
Cash payments for lease liabilities within operating activities:
Property operating leases$266 $210 
Non-cash activities - increase (decrease) in ROU assets in exchange for lease liabilities:
Property operating leases$380 $154 

 3.    Restructuring and Other Related Charges

During the first quarter of 2024, we initiated a global restructuring plan to further right size our operations (“Global Rightsizing”). The costs associated with this initiative are primarily related to the operational scaling of processes, locations, and lines of business. We expect further restructuring expense of approximately $35 million related to this initiative to be incurred this year.

During the second quarter of 2022, we initiated a restructuring plan to focus on consolidating our global operations by designing new processes and implementing new systems (“Cost Optimization”). We expect this initiative to be completed this year.

The following tables summarize the change to our restructuring-related liabilities and identifies the amounts recorded within our reporting segments for restructuring charges and corresponding payments and utilizations:

AmericasInternationalTotal
Balance as of January 1, 2024$2 $2 $4 
Restructuring expense:
Global Rightsizing2 1 3 
Restructuring payments and utilization:
Global Rightsizing(2)(1)(3)
Cost Optimization (1)(1)
Balance as of March 31, 2024$2 $1 $3 


13


 4.    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share (“EPS”) (shares in millions): 
Three Months Ended March 31,
20242023
Net income (loss) attributable to Avis Budget Group, Inc. for basic and diluted EPS
$(114)$312 
Basic weighted average shares outstanding35.6 39.6 
Non-vested stock (a)
 0.8 
Diluted weighted average shares outstanding35.6 40.4 
Earnings (loss) per share:
Basic$(3.21)$7.88 
Diluted$(3.21)$7.72 
________
(a)    For the three months ended March 31, 2024 and 2023, 0.3 million and 0.1 million non-vested stock awards, respectively, have an anti-dilutive effect and therefore are excluded from the computation of diluted weighted average shares outstanding.

 5.    Other Current Assets

Other current assets consisted of:
As ofAs of
March 31,December 31,
20242023
Prepaid expenses$312 $239 
Sales and use taxes221 192 
Other246 253 
Other current assets$779 $684 

 6.    Intangible Assets

Intangible assets consisted of:
 As of March 31, 2024As of December 31, 2023
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortized Intangible Assets
License agreements$312 $236 $76 $316 $234 $82 
Customer relationships250 220 30 253 221 32 
Other54 46 8 56 46 10 
Total$616 $502 $114 $625 $501 $124 
Unamortized Intangible Assets
Goodwill$1,088 $1,099 
Trademarks$544 $546 

For the three months ended March 31, 2024 and 2023, amortization expense related to amortizable intangible assets was approximately $8 million in each period.

Based on our amortizable intangible assets at March 31, 2024, we expect amortization expense of approximately $21 million for the remainder of 2024, $22 million for 2025, $21 million for 2026, $16 million for 2027, $9 million for 2028 and $7 million for 2029, excluding effects of currency exchange rates.
14



 7.    Vehicle Rental Activities

The components of vehicles, net within assets under vehicle programs are as follows: 
As ofAs of
March 31,December 31,
20242023
Rental vehicles$24,110 $23,114 
Less: Accumulated depreciation(2,647)(2,639)
21,463 20,475 
Vehicles held for sale521 734 
Vehicles, net investment in lease (a)
36 31 
Vehicles, net$22,020 $21,240 
________
(a)    See Note 14 – Related Party Transactions.

The components of vehicle depreciation and lease charges, net are summarized below: 
 Three Months Ended 
March 31,
20242023
Depreciation expense$562 $477 
Lease charges35 38 
(Gain) loss on sale of vehicles, net 39 (250)
Vehicle depreciation and lease charges, net$636 $265 

At March 31, 2024 and 2023, we had payables related to vehicle purchases included in liabilities under vehicle programs - other of $483 million and $314 million, respectively, and receivables related to vehicle sales included in assets under vehicle programs - receivables from vehicle manufacturers and other of $239 million and $137 million, respectively.

 8.    Income Taxes

Our effective tax rate for the three months ended March 31, 2024 was a benefit of 20.4%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to the effect of certain tax credits, partially offset by foreign taxes on our International operations and state taxes.

Our effective tax rate for the three months ended March 31, 2023 was a provision of 21.4%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to foreign taxes on our International operations and state taxes, partially offset by the effect of certain tax credits and the favorable adjustments related to stock-based compensation.

The Organisation for Economic Cooperation and Development (“OECD”) published a proposal for the establishment of a global minimum tax rate of 15% (the “Pillar Two rule”), effective for fiscal 2024. We are closely monitoring developments of the Pillar Two rule as the OECD continues to refine its technical guidance and member states implement tax laws and regulations based on Pillar Two proposals. Based on our preliminary analysis, we do not expect Pillar Two to have a material impact on our financial statements for 2024.
15


 9.    Accounts Payable and Other Current Liabilities

Accounts payable and other current liabilities consisted of:
As ofAs of
March 31,December 31,
20242023
Short-term operating lease liabilities$558 $576 
Accounts payable504 487 
Accrued advertising and marketing267 276 
Accrued sales and use taxes268 251 
Accrued payroll and related164 188 
Deferred lease revenues - current257 168 
Public liability and property damage insurance liabilities – current172 181 
Other479 500 
Accounts payable and other current liabilities$2,669 $2,627 

 10.    Long-term Corporate Debt and Borrowing Arrangements

Long-term corporate debt and borrowing arrangements consisted of:
As ofAs of
MaturityMarch 31,December 31,
Date20242023
4.750% euro-denominated Senior Notes (a)
January 2026$378 $386 
5.750% Senior Notes
July 2027736 736 
4.750% Senior Notes
April 2028500 500 
7.000% euro-denominated Senior Notes
February 2029647  
5.375% Senior Notes
March 2029600 600 
7.250% euro-denominated Senior Notes
July 2030432 441 
8.000% Senior Notes
February 2031497 497 
Floating Rate Term Loan (b)
August 20271,162 1,164 
Floating Rate Term Loan (c)
March 2029523 524 
Other (d)
24 30 
Deferred financing fees(62)(55)
Total5,437 4,823 
Less: Short-term debt and current portion of long-term debt405 32 
Long-term debt$5,032 $4,791 
________
(a)In April 2024, these notes were fully redeemed. See Note 18 – Subsequent Events.
(b)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of March 31, 2024, the floating rate term loan due 2027 bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 1.75%, for an aggregate rate of 7.19%. We have entered into a swap to hedge $750 million of interest rate exposure related to the floating rate term loan at an aggregate rate of 3.26%.
(c)The floating rate term loan is part of our senior revolving credit facility, which is secured by pledges of capital stock of certain of our subsidiaries, and liens on substantially all of our intellectual property and certain other real and personal property. As of March 31, 2024, the floating rate term loan due 2029 bears interest at one-month SOFR plus 3.00% for an aggregate rate of 8.43%.
(d)Primarily includes finance leases, which are secured by liens on the related assets.

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

Committed Credit Facilities and Available Funding Arrangements

As of March 31, 2024, the committed corporate credit facilities available to us and/or our subsidiaries were as follows: 
Total
Capacity
Outstanding
Borrowings
Letters of Credit IssuedAvailable
Capacity
Senior revolving credit facility maturing 2028 (a)
$2,000 $ $1,800 $200 
________
(a)The senior revolving credit facility bears interest at one-month SOFR plus 1.75% and is part of our senior credit facilities, which include the floating rate term loan and the senior revolving credit facility, and which are secured by pledges of capital stock of certain of our subsidiaries, liens on substantially all of our intellectual property and certain other real and personal property.

Debt Covenants

The agreements governing our indebtedness contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries, the incurrence of additional indebtedness and/or liens by us and certain of our subsidiaries, acquisitions, mergers, liquidations, and sale and leaseback transactions. Our senior credit facility also contains a maximum leverage ratio requirement. As of March 31, 2024, we were in compliance with the financial covenants governing our indebtedness.

 11.    Debt Under Vehicle Programs and Borrowing Arrangements

Debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding (AESOP) LLC (“Avis Budget Rental Car Funding”), consisted of:
As ofAs of
March 31,December 31,
20242023
Americas - Debt due to Avis Budget Rental Car Funding (a)
$16,030 $15,502 
Americas - Debt borrowings 1,082 1,075 
International - Debt borrowings (b)
1,973 2,203 
International - Finance leases 164 172 
Other40 55 
Deferred financing fees (c)
(99)(70)
Total$19,190 $18,937 
________
(a)Includes approximately $843 million and $841 million of Class R notes as of March 31, 2024 and December 31, 2023, respectively, which are held by us.
(b)In February 2024, we amended our European rental fleet securitization program to increase its capacity to approximately €1.9 billion and extend the maturity of the program to September 2026. We also added £200 million to our capacity within the program.
(c)Deferred financing fees related to Debt due to Avis Budget Rental Car Funding as of March 31, 2024 and December 31, 2023 were $81 million and $61 million, respectively.


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The following table provides a summary of debt issued by AESOP during the three months ended March 31, 2024:
Issuance DateMaturity DateWeighted Average
Interest Rate
Amount
Issued
January 2024June 20295.51 %$1,200 
February 2024April 20266.24 %53 
February 2024October 20266.18 %37 
February 2024April 20286.23 %52 
March 2024October 20275.26 %400 
March 2024December 20295.35 %700 

Debt Maturities

The following table provides the contractual maturities of our debt under vehicle programs, including related party debt due to Avis Budget Rental Car Funding, at March 31, 2024:
 
Debt under Vehicle Programs (a)
Within 1 year (b)
$2,090 
Between 1 and 2 years (c)
3,803 
Between 2 and 3 years (d)
6,780 
Between 3 and 4 years (e)
2,770 
Between 4 and 5 years
2,365 
Thereafter1,481 
Total$19,289 
________
(a)    Vehicle-backed debt primarily represents asset-backed securities.
(b)    Includes $0.2 billion of bank and bank-sponsored facilities.
(c)    Includes $1.3 billion of bank and bank-sponsored facilities.
(d)    Includes $3.5 billion of bank and bank-sponsored facilities.
(e)    Includes $0.1 billion of bank and bank-sponsored facilities.

Committed Credit Facilities and Available Funding Arrangements

As of March 31, 2024, available funding under our debt arrangements related to our vehicle programs, including related party debt due to Avis Budget Rental Car Funding, consisted of:
Total
Capacity (a)
Outstanding
Borrowings (b)
Available
Capacity
Americas - Debt due to Avis Budget Rental Car Funding$18,455 $16,030 $2,425 
Americas - Debt borrowings1,194 1,082 112 
International - Debt borrowings3,119 1,973 1,146 
International - Finance leases242 164 78 
Other40 40  
Total$23,050 $19,289 $3,761 
________
(a)    Capacity is subject to maintaining sufficient assets to collateralize debt. The total capacity for Americas - Debt due to Avis Budget Rental Car Funding includes increases from an amendment and renewal of our asset-backed variable-funding financing facilities during March 2024.
(b)    The outstanding debt is collateralized by vehicles and related assets of $18.3 billion for Americas - Debt due to Avis Budget Rental Car Funding; $1.5 billion for Americas - Debt borrowings; $2.6 billion for International - Debt borrowings; and $0.2 billion for International - Finance leases.

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Debt Covenants

The agreements under our vehicle-backed funding programs contain restrictive covenants, including restrictions on dividends paid to us by certain of our subsidiaries and restrictions on indebtedness, mergers, liens, liquidations, and sale and leaseback transactions and in some cases also require compliance with certain financial requirements. As of March 31, 2024, we are not aware of any instances of non-compliance with any of the financial or restrictive covenants contained in the debt agreements under our vehicle-backed funding programs.

 12.    Commitments and Contingencies

Contingencies

In 2006, we completed the spin-offs of our Realogy and Wyndham subsidiaries (now known as Anywhere Real Estate, Inc., and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co., respectively). We do not believe that the impact of any resolution of pre-existing contingent liabilities in connection with the spin-offs should result in a material liability to us in relation to our consolidated financial position or liquidity, as Anywhere Real Estate, Inc., Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have agreed to assume responsibility for these liabilities.

In March 2023, the California Office of Tax Appeals (“OTA”) issued an opinion in a case involving notices of proposed assessment of California corporation franchise tax for tax year 1999 issued to us. The case involves whether (i) the notices of proposed assessment were barred by the statute of limitations; and (ii) a transaction undertaken by us in tax year 1999 constituted a tax-free reorganization under the Internal Revenue Code (“IRC”). The OTA concluded that the notices of proposed assessment were not barred by the statute of limitations and that the 1999 transaction was not a tax-free reorganization under the IRC. Anywhere Real Estate, Inc. has assumed 62.5%, and Wyndham Hotels and Resorts, Inc. and Travel + Leisure Co. have assumed 37.5% of the potential tax liability in this matter, respectively. We filed a petition for rehearing, which was denied in April 2024, and the tax assessment is expected to become payable, even if judicial relief is sought.

We are also named in litigation that is primarily related to the businesses of our former subsidiaries, including Realogy and Wyndham. We are entitled to indemnification from such entities for any liability resulting from such litigation.

In September 2014, Dawn Valli et al. v. Avis Budget Group Inc., et al. was filed in U.S. District Court for the District of New Jersey. The plaintiffs seek to represent a purported nationwide class of certain renters of vehicles from our Avis and Budget subsidiaries from September 30, 2008 through the present. The plaintiffs seek damages in connection with claims relating to alleged misrepresentations and omissions concerning charging customers for traffic infractions and related administrative fees. On October 10, 2023, plaintiffs’ motion for class certification was denied as to their proposed nationwide class and granted as to a subclass, created at the Court’s discretion, of Avis Preferred and Budget Fastbreak members. We have been named as a defendant in other purported consumer class action lawsuits, including two class actions filed against us in New Jersey, one seeking damages in connection with a breach of contract claim and another related to ancillary charges at our Payless subsidiary. However, the Company intends to vigorously defend them.

We are currently involved, and in the future may be involved, in claims and/or legal proceedings, including class actions, and governmental inquiries that are incidental to our vehicle rental and car sharing operations, including, among others, contract and licensee disputes, competition matters, employment and wage-and-hour claims, insurance and liability claims, intellectual property claims, business practice disputes and other regulatory, environmental, commercial and tax matters.

We are a defendant in a number of legal proceedings for personal injury arising from the operation of our vehicles. In June 2023, two of our subsidiaries were named as defendants in a lawsuit filed in Dallas, Texas alleging that one of our employees caused the death of an individual with one of our vehicles: Peggy Dawson Edwards, Individually and as Anticipated Representative of the Estate of Michael Edwards, Sr., et. al. v. Avis Budget Car Rental, LLC; PV Holding Corp.; and Kevin Barnes, Cause No. CC-23-03188-E, pending in County Court at Law No. 5 for Dallas County, Texas. The complaint alleges that our subsidiaries are responsible for Mr. Edwards’ death and seeks compensatory and punitive damages in an unspecified
19


amount exceeding $1 million. The court has set a trial date in November 2024 for this lawsuit. Given the early stages of the legal proceedings, it is not possible to predict the outcome of the claim. However, the Company intends to vigorously defend it.

Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable resolutions could occur. We estimate that the potential exposure resulting from adverse outcomes of current legal proceedings in which it is reasonably possible that a loss may be incurred could, in the aggregate, be up to approximately $40 million in excess of amounts accrued as of March 31, 2024. We do not believe that the impact should result in a material liability to us in relation to our consolidated financial condition or results of operations.

Commitments to Purchase Vehicles

We maintain agreements with vehicle manufacturers under which we have agreed to purchase approximately $4.1 billion of vehicles from manufacturers over the next 12 months, a $2.7 billion decrease compared to December 31, 2023, financed primarily through the issuance of vehicle-backed debt and cash received upon the disposition of vehicles. Certain of these commitments are subject to the vehicle manufacturers satisfying their obligations under their respective repurchase and guaranteed depreciation agreements.

Concentrations

Concentrations of credit risk as of March 31, 2024 include (i) risks related to our repurchase and guaranteed depreciation agreements with domestic and foreign car manufacturers and primarily with respect to receivables for program cars that have been disposed but for which we have not yet received payment from the manufacturers and (ii) risks related to Realogy and Wyndham, including receivables of $38 million and $23 million, respectively, related to certain contingent, income tax and other corporate liabilities assumed by Realogy and Wyndham in connection with their disposition.

 13.    Stockholders' Equity

Share Repurchases

Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023 (the “Stock Repurchase Program”). During the three months ended March 31, 2024 and 2023, we did not repurchase any shares of common stock under the program. As of March 31, 2024, approximately $802 million of authorization remained available to repurchase common stock under the program.

Common stock repurchases under the Stock Repurchase Program do not include shares withheld to satisfy employees’ income tax liabilities attributable to the vesting of restricted stock unit awards.

Total Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income (loss).

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The components of other comprehensive income (loss) were as follows: 
 
Three Months Ended
March 31,
 20242023
Net income (loss)$(113)$312 
Less: net income attributable to non-controlling interests1  
Net income (loss) attributable to Avis Budget Group, Inc.
(114)312 
Other comprehensive income (loss):
Currency translation adjustments (net of tax of $(5) and $3, respectively)
(52)(4)
Net unrealized gain (loss) on cash flow hedges (net of tax of $(2) and $2, respectively)
7 (7)
Minimum pension liability adjustment (net of tax of $0 in each period)
1 1 
(44)(10)
Comprehensive income (loss) attributable to Avis Budget Group, Inc.
$(158)$302 
________
Currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries.

Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) were as follows: 
Currency
Translation
Adjustments
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges(a)
Minimum
Pension
Liability
Adjustment(b)
Accumulated
Other
Comprehensive
Income (Loss)
Balance, January 1, 2024
$(3)$37 $(130)$(96)
Other comprehensive income (loss) before reclassifications(52)12  (40)
Amounts reclassified from accumulated other comprehensive income (loss) (5)1 (4)
Net current-period other comprehensive income (loss)(52)7 1 (44)
Balance, March 31, 2024
$(55)$44 $(129)$(140)
Balance, January 1, 2023
$(30)$45 $(116)$(101)
Other comprehensive income (loss) before reclassifications(4)(5) (9)
Amounts reclassified from accumulated other comprehensive income (loss) (2)1 (1)
Net current-period other comprehensive income (loss)(4)(7)1 (10)
Balance, March 31, 2023
$(34)$38 $(115)$(111)
________
All components of accumulated other comprehensive income (loss) are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries and include $108 million gain, net of tax, as of March 31, 2024 related to our hedge of our investment in euro-denominated foreign operations (see Note 16 – Financial Instruments).
(a)For the three months ended March 31, 2024 and 2023, the amounts reclassified from accumulated other comprehensive income (loss) into corporate interest expense were gains of $7 million ($5 million, net of tax) and gains of $3 million ($2 million, net of tax), respectively.
(b)For the three months ended March 31, 2024 and 2023, amounts reclassified from accumulated other comprehensive income (loss) into selling, general and administrative expenses were losses of $1 million ($1 million, net of tax), in each period.
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 14.    Related Party Transactions

SRS Mobility Ventures, LLC

In 2021, SRS Mobility Ventures, LLC acquired a 33 1/3% Class A Membership Interest in one of our subsidiaries at fair value of $37.5 million. SRS Mobility Ventures, LLC is an affiliate of our largest shareholder, SRS Investment Management, LLC.

On September 1, 2022, through the issuance of Class B Preferred Voting Membership Interests, SRS Mobility Ventures, LLC increased their ownership in this subsidiary to 51% at a fair value of $62 million. As a result, we deconsolidated our former subsidiary, Avis Mobility Ventures LLC (“AMV”), from our financial statements and began to report our proportional share of the former subsidiary’s income or loss within other (income) expense, net in our Consolidated Condensed Statements of Comprehensive Income as we do not have the ability to direct the significant activities of the former subsidiary and are therefore no longer primary beneficiary of the VIE. In August and October 2023, SRS made capital contributions to AMV, increasing their ownership to approximately 65%.

In accordance with ASC Topic 810-10-40, we must deconsolidate a subsidiary as of the date we cease to have a controlling interest in that subsidiary and recognize the gain or loss in net income at that time. The fair value of our retained investment was determined utilizing a discounted cash flow methodology based on various assumptions, including projections of future cash flows, which include forecast of future revenue and EBITDA. Upon deconsolidation, our former subsidiary had a net asset carrying amount of $49 million resulting in a gain of $10 million.

We continue to provide vehicles, related fleet services, and certain administrative services to AMV to support their operations. For the three months ended March 31, 2024 and 2023, we recorded $2 million and $8 million of related income within other (income) expense, net, respectively. For the three months ended March 31, 2024 and 2023, we recorded losses of $3 million and $6 million within other (income) expense, net, related to our equity investment, respectively.

As of March 31, 2024 and December 31, 2023, receivables from AMV related to these services were $10 million and $2 million, respectively, and our net investment in vehicle finance lease with AMV, which is included in vehicles, net, was $36 million and $31 million, respectively. The carrying value of our equity investment in AMV as of March 31, 2024 and December 31, 2023 was approximately $21 million and $24 million, respectively, which is included in other non-current assets.

 15.    Stock-Based Compensation

We recorded stock-based compensation expense of $7 million and $8 million ($5 million and $6 million, net of tax) during the three months ended March 31, 2024 and 2023, respectively.

As part of our declaration and payment of a special cash dividend in December 2023, we granted additional restricted stock units (“RSUs”) to our award holders with unvested shares as a dividend equivalent, which has been deferred until, and will not be paid unless, the shares of stock underlying the award vest.

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The activity related to RSUs consisted of (in thousands of shares):
Number of SharesWeighted
Average
Grant Date
Fair Value
Weighted Average Remaining Contractual Term (years)Aggregate Intrinsic Value
(in millions)
Time-based RSUs
Outstanding at January 1, 2024
290 $161.87 
Granted (a)
120 113.10 
Vested (b)
(90)125.57 
Forfeited(1)180.27 
Outstanding and expected to vest at March 31, 2024 (c)
319 $153.71 1.6$39 
Performance-based RSUs
Outstanding at January 1, 2024411 $128.77 
Granted (a)
144 113.10 
Vested (b)
(222)68.54 
Forfeited(1)154.07 
Outstanding at March 31, 2024
332 $162.12 2.1$41 
Outstanding and expected to vest at March 31, 2024 (c)
199 $156.64 2.1$24 
________
(a)Reflects the maximum number of stock units assuming achievement of all performance- and time-vesting criteria and does not include those for non-employee directors. The weighted-average fair value of time-based RSUs and performance-based RSUs granted during the three months ended March 31, 2023 was $208.84.
(b)The total fair value of RSUs vested during the three months ended March 31, 2024 and 2023 was $27 million and $17 million, respectively.
(c)Aggregate unrecognized compensation expense related to time-based RSUs and performance-based RSUs amounted to $57 million and will be recognized over a weighted average vesting period of 1.8 years.

 16.    Financial Instruments

Derivative Instruments and Hedging Activities

Currency Risk. We use currency exchange contracts to manage our exposure to changes in currency exchange rates associated with certain of our non-U.S.-dollar denominated receivables and forecasted royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S.-dollar denominated acquisitions. We primarily hedge a portion of our current-year currency exposure to the Australian, Canadian and New Zealand dollars, the euro and the British pound sterling. The majority of forward contracts do not qualify for hedge accounting treatment. The fluctuations in the value of these forward contracts do, however, largely offset the impact of changes in the value of the underlying risk they economically hedge. Forward contracts used to hedge forecasted third-party receipts and disbursements up to 12 months are designated and do qualify as cash flow hedges. We have designated our euro-denominated notes as a hedge of our investment in euro-denominated foreign operations.

The estimated net amount of existing gains or losses we expect to reclassify from accumulated other comprehensive income (loss) to earnings for cash flow and net investment hedges over the next 12 months is not material.

Interest Rate Risk. We use various hedging strategies including interest rate swaps and interest rate caps to create what we deem an appropriate mix of fixed and floating rate assets and liabilities. We use interest rate swaps and interest rate caps to manage the risk related to our floating rate corporate debt and our floating rate vehicle-backed debt. We record the changes in the fair value of our cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassify these amounts into earnings in the period during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. We record the gains or losses related to freestanding derivatives, which are not designated as a hedge for accounting purposes, currently in earnings and are presented in the same line of the income statement expected for the hedged item. We estimate that approximately $26 million of gain currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months.
23


Commodity Risk. We periodically enter into derivative commodity contracts to manage our exposure to changes in the price of fuel. These instruments were designated as freestanding derivatives and the changes in fair value are recorded in earnings and are presented in the same line of the income statement expected for the hedged item.

We held derivative instruments with absolute notional values as follows:
As of 
March 31, 2024
Foreign exchange contracts$2,062 
Interest rate caps (a)
15,835 
Interest rate swaps750 
________
(a)Represents $10.6 billion of interest rate caps sold, partially offset by approximately $5.3 billion of interest rate caps purchased. These amounts exclude $5.9 billion of interest rate caps purchased by our Avis Budget Rental Car Funding subsidiary as it is not consolidated by us.

Estimated fair values (Level 2) of derivative instruments are as follows: 
 As of March 31, 2024As of December 31, 2023
 Fair Value,
Asset Derivatives
Fair Value,
Derivative
Liabilities
Fair Value,
Derivative
Assets
Fair Value,
Derivative
Liabilities
Derivatives designated as hedging instruments
Interest rate swaps (a)
$59 $ $50 $ 
Derivatives not designated as hedging instruments
Foreign exchange contracts (b)
4 6 5 4 
Interest rate caps (c)
7 48 19 74 
Total$70 $54 $74 $78 
________
Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding, as it is not consolidated by us; however, certain amounts related to the derivatives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss), as discussed in Note 13 – Stockholders' Equity.
(a)Included in other non-current assets or other non-current liabilities.
(b)Included in other current assets or other current liabilities.
(c)Included in assets under vehicle programs or liabilities under vehicle programs.

The effects of derivatives recognized in our Consolidated Condensed Financial Statements are as follows:

 Three Months Ended 
March 31,
 20242023
Derivatives designated as hedging instruments (a)
Interest rate swaps (b)
$7 $(7)
Euro-denominated notes (c)
15 (9)
Derivatives not designated as hedging instruments (d)
Foreign exchange contracts (e)
(13)(7)
Total$9 $(23)
________
(a)Recognized, net of tax, as a component of accumulated other comprehensive income (loss) within stockholders’ equity.
(b)Classified as a net unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss). Refer to Note 13 – Stockholders' Equity for amounts reclassified from accumulated other comprehensive income (loss) into earnings.
(c)Classified as a net investment hedge within currency translation adjustment in accumulated other comprehensive income (loss).
(d)Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged.
(e)Included in interest expense.
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Debt Instruments

The carrying amounts and estimated fair values (Level 2) of debt instruments are as follows: 

 As of March 31, 2024As of December 31, 2023
 Carrying
Amount
Estimated
Fair
Value
Carrying
Amount
Estimated
Fair
Value
Corporate debt
Short-term debt and current portion of long-term debt
$405 $406 $32 $32 
Long-term debt5,032 5,021 4,791 4,812 
Debt under vehicle programs
Vehicle-backed debt due to Avis Budget Rental Car Funding
$15,949 $15,817 $15,441 $15,238 
Vehicle-backed debt3,193 3,215 3,422 3,435 
Interest rate swaps and interest rate caps (a)
48 48 74 74 
________
(a)    Derivatives in a liability position.

 17.    Segment Information

Our chief operating decision-maker assesses performance and allocates resources based upon the separate financial information of our operating segments. In identifying our reportable segments, we also consider the nature of services provided by our operating segments, the geographical areas in which the segments operate and other relevant factors. We aggregate certain of our operating segments into our reportable segments.

Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; any impairment charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; and income taxes.

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally. Our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.


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 Three Months Ended March 31,
 20242023
RevenuesAdjusted EBITDARevenuesAdjusted EBITDA
Americas$1,993 $44 $2,016 $516 
International558 (15)541 50 
Corporate and Other (a)
 (17) (31)
Total Company$2,551 $12 $2,557 $535 
Reconciliation of Adjusted EBITDA to income (loss) before income taxes:
20242023
Adjusted EBITDA$12 $535 
Less:Non-vehicle related depreciation and amortization61 56 
Interest expense related to corporate debt, net83 73 
Restructuring and other related charges3 4 
Transaction-related costs, net1  
Other (income) expense, net (b)
1 (2)
Reported within operating expenses:
Cloud computing costs10 7 
Legal matters, net(5) 
Income (loss) before income taxes$(142)$397 
________
(a)Includes unallocated corporate overhead which is not attributable to a particular segment.
(b)Primarily consists of gains or losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

Since December 31, 2023, there have been no significant changes in segment assets exclusive of assets under vehicle programs. As of March 31, 2024 and December 31, 2023, Americas’ segment assets under vehicle programs were approximately $20.2 billion and $19.3 billion, respectively. This increase in assets under vehicle programs is directly correlated to the increase in the size and cost of our vehicle fleet.

 18.    Subsequent Events

In April 2024, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary amended and restated its asset-backed variable-funding financing facilities to extend its maturity through April 2025.

In April 2024, we redeemed all of our 4.750% euro-denominated Senior Notes due January 2026 with an aggregate outstanding balance of €350 million plus accrued interest.



* * * *
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

OVERVIEW
Our Company

We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 667,000 vehicles in first quarter 2024. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

Our Segments

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

Business and Trends

Our strategy continues to primarily focus on customer experience and costs to strengthen our Company, maximize profitability, and deliver stakeholder value. During the three months ended March 31, 2024, we generated revenues of $2.6 billion, net loss of $113 million and Adjusted EBITDA of $12 million. These results were driven primarily by increased volume, offset by decreased revenue per day, increased fleet costs, and sustained inflationary pressures on costs.

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

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RESULTS OF OPERATIONS

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

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

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

During the three months ended March 31, 2024:

Our revenues totaled $2.6 billion, consistent with the similar period in 2023.
Our net loss was $114 million, representing a decrease of $426 million year-over-year, primarily due to increased fleet costs and sustained inflationary pressures on costs.
Our Adjusted EBITDA was $12 million, representing a decrease of $523 million year-over-year.



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Three Months Ended March 31, 2024 vs. Three Months Ended March 31, 2023
Our consolidated condensed results of operations comprised the following:
Three Months Ended March 31,
20242023$ Change % Change
Revenues$2,551 $2,557 $(6)%
Expenses
Operating1,344 1,307 37 %
Vehicle depreciation and lease charges, net636 265 371 140 %
Selling, general and administrative325 324 %
Vehicle interest, net239 133 106 80 %
Non-vehicle related depreciation and amortization61 56 %
Interest expense related to corporate debt, net83 73 10 14 %
Restructuring and other related charges(1)(25 %)
Transaction-related costs, net— n/m
Other (income) expense, net(2)n/m
Total expenses2,693 2,160 533 25 %
Income (loss) before income taxes(142)397 (539)(136 %)
Provision for (benefit from) income taxes(29)85 (114)(134 %)
Net income (loss)(113)312 (425)(136 %)
Less: net income attributable to non-controlling interests— n/m
Net income (loss) attributable to Avis Budget Group, Inc.
$(114)$312 $(426)(137 %)
________
n/m - Not Meaningful

Revenues during the three months ended March 31, 2024 were consistent with the similar period in 2023, primarily due to a 5% increase in volume, offset by a 5% decrease in revenue per day, excluding exchange rate effects. Total expenses increased 25% during the three months ended March 31, 2024, compared to the similar period in 2023, primarily due to increased fleet costs and the impact of inflation. Our effective tax rates were a benefit of 20.4% and a provision of 21.4% for the three months ended March 31, 2024 and 2023, respectively. As a result of these items, our net income decreased by $426 million compared to the similar period in 2023. For the three months ended March 31, 2024 and 2023, we reported earnings (loss) per diluted share of $(3.21) and $7.72, respectively.

Operating expenses increased to 52.7% of revenue during the three months ended March 31, 2024 compared to 51.1% during the similar period in 2023, primarily due to an increase in volume; a decrease in revenue per day, excluding exchange rate effects; and cost inflation. Vehicle depreciation and lease charges increased to 24.9% of revenue during the three months ended March 31, 2024 compared to 10.3% during the similar period in 2023, primarily due to increased per unit fleet costs, excluding exchange rate effects, which was driven by increased fleet levels and a decrease in the gain on sale of vehicles. Selling, general and administrative costs were approximately 12.7% of revenue during the three months ended March 31, 2024, consistent with the similar period in 2023, primarily due to increased marketing costs and commissions, offset by a decrease in other selling, general and administrative costs. Vehicle interest costs increased to 9.4% of revenue during the three months ended March 31, 2024 compared to 5.2% during the similar period in 2023, primarily due to rising interest rates and additional funding for vehicles.

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

Three Months Ended March 31,
 20242023
 RevenuesAdjusted EBITDARevenuesAdjusted EBITDA
Americas$1,993 $44 $2,016 $516 
International558 (15)541 50 
Corporate and Other (a)
— (17)— (31)
Total Company$2,551 $12 $2,557 $535 
Reconciliation to Adjusted EBITDA
20242023
Net income (loss)$(113)$312 
Provision for (benefit from) income taxes(29)85 
Income (loss) before income taxes(142)397 
Add:Non-vehicle related depreciation and amortization61 56 
Interest expense related to corporate debt, net83 73 
Restructuring and other related charges
Transaction-related costs, net— 
Other (income) expense, net (b)
(2)
Reported within operating expenses:
Cloud computing costs10 
Legal matters, net(5)— 
Adjusted EBITDA$12 $535 
________
(a)Includes unallocated c