Avis Budget Group's first quarter results reflected a mix of industry headwinds and company-specific operational shifts. While revenue fell short of Wall Street’s expectations due to lower pricing and rental volumes, management pointed to solid leisure travel demand and aggressive fleet rotation as key themes. CEO Joe Ferraro highlighted the company’s record pace of disposing older vehicles and accepting new model year deliveries, actions designed to lower fleet costs and improve vehicle utilization. Management described the quarter as shaped by calendar shifts, leisure strength, and a deliberate pullback in commercial demand.
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Avis Budget Group (CAR) Q1 CY2025 Highlights:
- Revenue: $2.43 billion vs analyst estimates of $2.50 billion (4.7% year-on-year decline, 2.9% miss)
- Adjusted EPS: -$5.23 vs analyst estimates of -$5.95 (12.1% beat)
- Adjusted EBITDA: -$93 million vs analyst estimates of -$112.9 million (-3.8% margin, 17.6% beat)
- Operating Margin: -22.7%, down from -2.1% in the same quarter last year
- Available rental days - Car rental: 56.82 million, down 3.91 million year on year
- Market Capitalization: $6.25 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Avis Budget Group’s Q1 Earnings Call
- John Babcock (Bank of America) asked about sustaining higher vehicle utilization rates and operational steps needed to maintain flexibility. CEO Joe Ferraro detailed ongoing fleet modeling and digital initiatives to optimize car availability.
- Stephanie Moore (Jefferies) questioned competitive dynamics in the Americas. Ferraro stated there were no major changes in industry intensity, emphasizing focus on internal execution and fleet management.
- Christopher Stathoulopoulos (Susquehanna) inquired about management’s confidence in annual EBITDA targets amid sector caution. Ferraro pointed to robust forward leisure bookings and high used car residual values as supporting factors.
- Joseph Padua (JPMorgan, for Ryan Brinkman) sought clarity on tariff impacts beyond fleet costs. Ferraro said younger fleet age would help control parts and maintenance expenses, while Martins reiterated a balanced approach to capital allocation.
- Dan Levy (Barclays) asked about assumptions behind per-unit fleet cost improvements and the company's summer fleet strategy. Martins explained that aggressive fleet rotation and stable used car values were primary drivers, with flexibility to adjust fleet size as demand evolves.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will monitor (1) the pace of fleet cost declines as new vehicles replace older inventory, (2) whether leisure demand continues to offset commercial softness and calendar volatility, and (3) the impact of automotive tariffs and used car market dynamics on vehicle acquisition and disposition. Progress in technology adoption and operational efficiency will also be critical to track.
Avis Budget Group currently trades at $178.30, up from $100.35 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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