Avis (Snr unsecured; B1, BB-) 2Q (to June) Earnings Call

It is trying to drive home a narrative that pricing stayed relatively firm (-3%) as it de-fleeted and pulled back capacity (fleet size was +2% and rental days +1%). It's pointing to base effects, vs. 2019, intra-quarter trends etc. to justify numbers vs. narrative. We are less interested in its headline development (outside pointing out it is still down yoy) and more focused on its long-term capital allocation. Seems to be no firm view from co to change that/turn more cautious ahead of potential consumer slow-down;

"Now historically we timed our share buybacks with cash generation, and as you know, that comes more in the second half of the year. And given where our shares are currently, you can see what's happening recently and where they're currently trading, we firmly believe our stock is undervalued and that buybacks represent a compelling opportunity, as you can imagine to create permanent value for our shareholders."

It's hard to ignore its policy - we saw clear opportunities for it to pay down debt and receive rating upgrades last year - which it passed on. Unlike then, now it has no-significant maturities till '27 which we only see moving that motivation lower. Current carry (Bund +5.6%) may be enough compensation for some to take on that one-sided risk. No firm view from us.

Numbers given in earnings call;

• Adj. EBITDA guidance for Q3 of $500-$600m (vs. $907m last year).
• 70% of FY planned fleet disposals have been completed in 1H already.
• DPU to now remain elevated around $350/unit for the remainder of the year.
• Like airlines not seeing weakness in forward bookings; "I haven't seen anything really that would indicate a general downturn." but notes watching any impacts from upcoming election in the US.
• Says $1b of headroom in fleet financing structure acting as a cushion for used car price falls and as a source of liquidity.

Numbers from last night here