Avis Budget 4Q16 Earnings Call Notes

Larry D. De Shon

Residual values are down in the 2-3 point range

“In terms of the market right now, I think it’s consistent with what we’re expecting for the year. Residual values are down in that 2 to 3 point range. We saw the Manheim off-rental index being down a little bit over 3 points year-over-year in January. So I think what we’re seeing is generally consistent with the market as a whole.”

We’re watching the border adjustment tax closely

“It’s a really interesting question, and we’re watching some of the proposals that are out there very carefully. I think there are just too many possibilities and too much uncertainty about what they might look like and how they would be implemented for us to speculate at this point in time. Clearly, one of the things we’re going to watch most closely is whether anything develops with respect to border adjustment taxes that could impact fleet that has the potential to have – to impact us. It’s just really hard to estimate what that could look like, when it might take effect, and what structures or alternatives would be available to help us in that situation. So that one is high up on our radar screen, but it’s really hard for us to speculate at this point in time.

Not seeing a huge impact of ride sharing on our business

“On the second part of your question, as we continue to update our analysis of car-hailing or ride-hailing impacts on our business, and I think what we found is that they’re fairly consistent with the analyses that we’ve been doing before. You can find certain markets that you could see maybe a larger impact than other markets, particularly on the one day or the multiday, but under 75-mile type of rentals. Overall, though, as you look at those rentals as a percent of your total rentals, they don’t really change that much across the country basis. It’s just not that big of a part of our business to begin with. As we’ve said, our average rental is four days and 450 miles, so those kind of short mileage and short length of rental type transactions are not a big part of our volume. So we continue to look at it and we continue to update our analysis, make sure we’re staying on top of it. But we’re not seeing much from the last time we looked at it and we spoke about it.”

David B. Wyshner

Elections had disruptive effect in 4Q

“Sure. Let me tackle the first part related to the fourth quarter. Clearly, we knew the way the calendar was shaping up and that the elections were taking place. I think both of them had a more significant impact than we had expected. For a lot of reasons, I think the elections had just a little bit more of a disruptive effect, and that would be true not only in the week or two leading up to the election. I think that continued for us in the week or two following that.”