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

Nothing flashing red and mgmt comments in presser are positive including "sequential" improvement through Q2 in pricing and utilisation and more importantly "actions to get our fleet size in-line with demand enabled us to start the third quarter with strong pricing around the Fourth of July holiday, setting us up well to take advantage of the summer peak". Expect more on that in earnings call. No supply expected (front maturity ~2027) but caution for longs on co's recent capital allocation policy that has well favoured equity holders - even if it's meant bearing higher cost on (then) upcoming debt refinancing. New 29s (at OAS+530/7.8%) look better value than 30s, both trade wide of $ curve on XCCY. No firm view from us.

• In 2Q revenues were $3b (-2%, c$3.1b) and adj. EBTIDA at $214m (-71%, c$255m) at a 7% margin (-23ppts yoy).
• Weakness was in Americas (-3%) vs. firmer international (-1%) - continuing this years theme. Bottom line/margin falls was shared and heavy across both.
• Headline revenue miss looks to have come out of rental days - not pricing (proxied through revenue per day) - that is vs. consensus. In year on year trends rental days are up +2% while pricing is down -4%.
• Fleet size was up 2% while utilisation was at 70.2% (-30bps) - a slight miss on the latter. Depreciation per unit (DPU) was actually lower than expectations at $347 (+91%yoy) - that is in line with mgmt saying a peak around $350 this qtr.
• Vehicle financing interest costs were $244m (+42%yoy). SG&A looks in line at $348m (-8%). It leaves most of the EBITDA miss vs. consensus coming from headline miss not the cost side.
• Debt levels look little changed on 1Q; $500m in cash against $5.2b in corporate debt.