Avis Posts Slight Miss on Lower Util rates; Neutral on Curve

Avis {CAR US Equity} (B1, BB-; S); slight miss on 4Q (Adj. EBITDA at $311 vs. c$331), EPS/Net income beat on favourable tax provisions

Strong performance in Americas (~78% of rev's) - miss was driven by international. Rental days did beat but vehicles came in higher driving utilisation below expectations (65.1% vs. c67.2%). Despite management touting positive pricing in 4Q, revenue per day (rev's/rental days) came in below consensus as well - a metric rating agencies have flagged expected to ease through the cycle peak. Fleet costs/unit (depreciation, lease charges & vehicle sales) were mixed (lower than expected for Americas, higher for international) - fleet depreciation/month was lower.

BS was little changed noting management's special dividend in 4Q - dividends & stock repurchases through the year totalled $1.3b vs. net borrowings of $118m - i.e. the "record revenue year & 2nd best adj. EBITDA" was skewed to equity holder returns not deleveraging. Management reiterated no meaningful maturities till 2026 (the €350m Jan 26's).

€ 26/30's are unch to tighter this mng - the 26's at Z+180/€99.8/4.9% trades relatively wide pricing more in-line with single B's - still vehicle utilisation at 65.1% is the lowest since 2020 - not a positive for Moody's that was looking at downgrades on "consistently below 70% util.". We don't have a firm view on the curve here.