Avis Budget Group reports positive earnings in Q3
The rent a car company today announced third quarter 2020 financial results, with Net income of $45 million and Adjusted net income of $79 million
Avis Budget Group has sent a statement to to their investors that we share below:
Despite revenue being down 44% compared to the same period in the prior year, we achieved positive Adjusted EBITDA of $220 million in the third quarter through cost removal actions and sizing fleet to demand by selling over 100,000 vehicles globally. During the quarter we removed approximately $1 billion of costs, bringing the total to $2 billion year to date, and we are now on track to deliver more than $2.5 billion of cost removal for the full year.
We generated positive cash flow from operations and from Adjusted Free Cash flow in the quarter by implementing aggressive cost saving actions, taking advantage of sequential improvement in rental demand, and right-sizing our vehicle fleet. This resulted in our liquidity position at the end of the quarter to be $2.4 billion. Given the current operating environment, we believe our liquidity position is now robust enough to return the excess equity that we accessed earlier in the year back into our ABS facilities. This will position us to fund the purchase of our 2021 fleet appropriately.
We took advantage of a strong used vehicle market globally exceeding the prior year's vehicle dispositions by 50%. Fleet for the quarter was down 29% year-over-year with global utilization peaking in the 70% range, further demonstrating our ability to flex our fleet size up or down even during disruptive market conditions.
“We remain focused on what we can control. We have removed more than $2 billion of cost globally throughout the year, with more expected to come in the fourth quarter,” said Joe Ferraro, Avis Budget Group Chief Executive Officer. “Those cost removals along with our demonstrated history of aligning our fleet with demand allowed us to achieve both strong positive Adjusted EBITDA and Adjusted Free Cash Flow, despite these difficult times.”
We continued to reduce our cost base to match current revenue trends, removing another $1 billion of costs. We have removed more than $2 billion of costs since implementing our cost saving actions earlier this year.
We profitably disposed of 75,000 vehicles in the U.S., including a record 49,000 vehicles sold through alternative channels.
We completed a senior notes offering of $350 million, and used the proceeds to pay off $100 million of existing notes and provide additional liquidity. We also completed an offering of $650 million of asset-backed securities for a weighted average interest rate of 2.28%, our lowest rate since 2013 for our fleet financing.
We continued our Avis Safety Pledge and Budget Worry-Free Promise to keep our customers and employees safe. We have expanded our partnerships to enhance the cleanliness and disinfection of our rental facilities and vehicles.
We continue to expand contactless rentals for our Avis Preferred customers through the use of our app, which also enhances the rental experience.