Avis Budget Group Reports Third Quarter 2019 Results


PARSIPPANY, N.J., Oct. 31, 2019 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (NASDAQ: CAR) today reported results for its third quarter ended September 30, 2019.

Third Quarter 2019 over Third Quarter 2018 Highlights:

  • Revenues of $2.8 billion were comparable to prior year, up 1% excluding currency exchange rate movements
  • Net income was $189 million or $2.50 per diluted share and Adjusted net income was $223 million or $2.96 per diluted share
  • Adjusted EBITDA increased 1%, excluding a negative impact of 2% from currency exchange rate movements
  • Per-Unit Fleet Costs improved 6% excluding exchange rate effects
  • Repurchased approximately 2.1 million shares for a total of $59 million during the quarter

Total Company

Third quarter revenues increased 1% compared to prior year excluding a $44 million impact from currency exchange rate movements, primarily due to a 2% increase in Rental Days, partially offset by a 1% decrease in Revenue per Day. Per-Unit Fleet Costs, excluding exchange rate effects, improved by 6% year-over-year and utilization improved 20 basis points. For the quarter, net income was $189 million, or $2.50 per diluted share. Adjusted EBITDA was $471 million including a $9 million impact from currency exchange rate movements and Adjusted net income was $223 million, or $2.96 per diluted share.

“Our Adjusted EBITDA margin was more than 17% for the quarter. Our Americas segment had record Adjusted EBITDA performance. Our operations achieved record Net Promoter Scores for the second quarter in a row, showing the impact of our efforts to improve our customer experience,” said Larry De Shon, Avis Budget Group President and Chief Executive Officer. “In addition, we made further progress on our strategic partnerships with Uber, Lyft and Via where we increased our ride-hail fleet by nearly 60% from prior quarter. We remain focused on improving our core rental car business, while driving innovation to continue our transformation into a mobility service provider.”

Americas Segment

Third quarter revenues increased 1% to a record $1,868 million compared to prior year primarily due to a 3% increase in Rental Days, partially offset by a 2% decrease in Revenue per Day. Per-Unit Fleet Costs improved by 9%, with utilization improving 30 basis points. As a result, Adjusted EBITDA increased to a record $321 million.

Joe Ferraro, President, Americas commented, “Positive revenue growth in the quarter, along with strong ancillary performance and corporate account volume growth contributed to our success. Also, stable residual values and a record 70% of our vehicle dispositions through alternative channels drove fleet cost improvements. Altogether, this generated all time record revenue and Adjusted EBITDA.”

International Segment

Third quarter revenues decreased 1% compared to prior year, excluding a 4% negative impact from currency exchange rate movements, primarily due to a 1% decrease in Rental Days. Revenue per Day, excluding exchange rate effects improved compared to prior year. Per-Unit Fleet Costs were up 1%, excluding exchange rate effects, and utilization was flat. As a result, Adjusted EBITDA was flat to prior year, excluding a $9 million negative impact from currency exchange rate movements, primarily due to mitigating cost reduction actions.

“We focused on higher rate rentals in a challenging environment to improve our pricing, and we were able to increase our customer approval ratings to record highs,” said Keith Rankin, President, International.

Capital Allocation and Liquidity

In September 2019, we called $75 million of our 5.5% Senior Notes due 2023 for early redemption, which we paid in October 2019 with cash on hand. We also repurchased approximately 2.1 million shares during third quarter 2019, for approximately $59 million under our share repurchase program.

As of September 30, 2019, our corporate debt was approximately $3,483 million and cash and cash equivalents totaled $615 million, bringing net corporate debt to $2,868 million, and our net corporate leverage ratio to 3.6x.

Weighted average diluted shares outstanding were 75.7 million in the quarter compared to 79.5 million in the prior year, a 5% year-over-year reduction.

Investor Conference Call

We will host a conference call to discuss third quarter results and its outlook on November 1, 2019, at 8:30 a.m. (ET). Investors may access the call at ir.avisbudgetgroup.com or by dialing (877) 407-2991 and a replay will available on our website and at (877) 660-6853 using conference code 13695307.

Outlook

Our full-year 2019 outlook includes non-GAAP financial measures and excludes the effect of future changes in currency exchange rates. We believe that it is impracticable to provide a reconciliation to the most comparable GAAP measures due to the forward-looking nature of these forecasted Adjusted earnings measures and the degree of uncertainty associated with forecasting the reconciling items and amounts. We further believe that providing estimates of the amounts that would be required to reconcile the forecasted adjusted measures to forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors. The after-tax effect of such reconciling items could be significant to our future quarterly or annual results.

2019 guidance:

$ millions *2019 Estimates
Revenues$9,000 - $9,200
Adjusted EBITDA$750 - $800
Non-vehicle related depreciation and amortization$200 - $215
Interest expense related to corporate debt, net$180 - $190
Adjusted pretax income$350 - $450
Adjusted net income$260 - $320
Adjusted diluted earnings per share$3.35 - $4.20
Capital expenditures$230 - $250
Cash taxes, vehicle programs and other$70 - $120
Adjusted free cash flow$250 - $300
  

* Excluding Adjusted diluted earnings per share.
Non-vehicle related depreciation and amortization excludes acquisition-related amortization expense.
Interest expense related to corporate debt, net excludes early extinguishment of debt.

$ change millions (better)/worsevs prior year
Vehicle interest expense (rate impact)$25 - $35
Adjusted EBITDA net currency translation$15 - $25
  

Americas

% changevs prior year 
Rental Days1.0% - 2.0%
Revenue per Day0.0% - 1.0%
Per-Unit Fleet Costs per Month(6.0%) - (8.0%)
   

Revenue per Day and Per-Unit Fleet Costs per Month exclude exchange rate effects.

International

% changevs prior year 
Rental Days2.0% - 3.0%
Revenue per Day(1.0%) - (2.0%)
Per-Unit Fleet Costs per Month1.0% - 2.0%
   

Revenue per Day and Per-Unit Fleet Costs per Month exclude exchange rate effects.

About Avis Budget Group

Avis Budget Group, Inc. is a leading global provider of mobility solutions, both through its Avis and Budget brands, which have more than 11,000 rental locations in approximately 180 countries around the world, and through its Zipcar brand, which is the world's leading car sharing network with more than one million members. Avis Budget Group operates most of its car rental offices in North America, Europe and Australasia directly, and operates primarily through licensees in other parts of the world. Avis Budget Group has approximately 30,000 employees and is headquartered in Parsippany, N.J. More information is available at avisbudgetgroup.com.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements.” Any statements that refer to outlook, expectations or other characterizations of future events, circumstances or results, including all statements related to our future results, future fleet costs, acquisition synergies, cost-saving initiatives, cash flows and future share repurchases are forward-looking statements. Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, the high level of competition in the mobility industry, changes in our fleet costs as a result of a change in the cost of new vehicles, manufacturer recalls and/or the value of used vehicles, disruption in the supply of new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers that supply our rental vehicles which could affect their ability to perform their obligations under our repurchase and/or guaranteed depreciation arrangements, any change in economic conditions generally, particularly during our peak season and/or in key market segments, any change in travel demand, including changes in airline passenger traffic, any occurrence or threat of terrorism, any changes to the cost or supply of fuel, risks related to acquisitions or integration of acquired businesses, risks associated with litigation, governmental or regulatory inquiries or investigations, risks related to the security of our information technology systems, disruptions in our communication networks, changes in tax or other regulations, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our global operations, including the funding of our vehicle fleet via asset-backed securities markets, any fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, our ability to meet the covenants contained in the agreements governing our indebtedness, and our ability to accurately estimate our future results and implement our strategy for growth and cost savings. Other unknown or unpredictable factors could also have material adverse effects on the Company’s performance or achievements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Avis Budget Group’s Annual Report on Form 10-K for the year ended December 31, 2018 and in other filings and furnishings made by the Company with the Securities and Exchange Commission (the "SEC") from time to time. The Company undertakes no obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

Non-GAAP Financial Measures and Key Metrics

This release includes financial measures such as Adjusted EBITDA and Adjusted free cash flow, as well as other financial measures that exclude certain items that are not considered generally accepted accounting principles (“GAAP”) measures as defined under SEC rules. Important information regarding such measures is contained on Table 1, Table 4, Table 5 and Appendix I of this release. The Company and its management believe that these non-GAAP measures are useful to investors in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Adjusted EBITDA, Adjusted free cash flow, Adjusted pretax income (loss), Adjusted net income (loss) and Adjusted diluted earnings (loss) per share are net income (loss), net cash provided by operating activities, income (loss) before income taxes, net income (loss) and diluted earnings (loss) per share, respectively. Foreign currency translation effects on the Company’s results are quantified by translating the current period’s non-U.S. dollar-denominated results using the currency exchange rates of the prior period of comparison including any related gains and losses on currency hedges. Per-unit fleet costs, which represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet, are calculated on a per-month basis.

Share Repurchase Program

The Company’s share repurchases may occur through open market purchases or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. The repurchase program may be suspended, modified or discontinued at any time without prior notice. The repurchase program has no set expiration or termination date.

Tables Follow

Table 1

Avis Budget Group, Inc.
SUMMARY DATA SHEET
(In millions, except per share data)

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 % Change 2019 2018 % Change
Income Statement and Other Items           
Revenues$2,753  $2,778  (1%) $7,010  $7,074  (1%)
Income before income taxes328  355  (8%) 273  264  3%
Net income189  213  (11%) 160  152  5%
Earnings per share - diluted2.50  2.68  (7%) 2.10  1.88  12%
            
Adjusted Earnings Measures (non-GAAP) (A)           
Adjusted EBITDA471  476  (1%) 645  639  1%
Adjusted pretax income373  384  (3%) 355  356  0%
Adjusted net income223  265  (16%) 225  251  (10%)
Adjusted earnings per share - diluted2.96  3.33  (11%) 2.95  3.10  (5%)
            
 As of        
 September 30, 2019 December 31, 2018        
Balance Sheet Items           
Cash and cash equivalents$615  $615         
Vehicles, net12,752  11,474         
Debt under vehicle programs11,592  10,232         
Corporate debt3,483  3,551         
Stockholders' equity495  414         
              


Segment Results           
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 % Change 2019 2018 % Change
Revenues           
Americas$1,868  $1,844  1% $4,822  $4,782  1%
International885  934  (5%) 2,188  2,292  (5%)
Corporate and Other     n/m       n/m 
Total Company$2,753  $2,778  (1%) $7,010  $7,074  (1%)
            
Adjusted EBITDA           
Americas$321  $313  3% $508  $435  17%
International169  178  (5%) 187  252  (26%)
Corporate and Other(19) (15) n/m  (50) (48) n/m 
Total Company$471  $476  (1%) $645  $639  1%
            

__________
n/m Not meaningful.
(A) See Table 5 for reconciliations of non-GAAP measures and Appendix I for definitions.

Table 2

Avis Budget Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Revenues$2,753  $2,778  $7,010  $7,074 
        
Expenses       
Operating1,291  1,294  3,534  3,561 
Vehicle depreciation and lease charges, net551  587  1,579  1,693 
Selling, general and administrative350  336  947  953 
Vehicle interest, net90  85  261  237 
Non-vehicle related depreciation and amortization62  62  195  190 
Interest expense related to corporate debt, net:       
Interest expense49  44  139  139 
Early extinguishment of debt10    10  5 
Restructuring and other related charges22  4  66  14 
Transaction-related costs, net  11  6  18 
Total expenses2,425  2,423  6,737  6,810 
        
Income before income taxes328  355  273  264 
Provision for income taxes139  142  113  112 
Net income$189  $213  $160  $152 
        
Earnings per share - diluted       
Basic$2.52  $2.71  $2.12  $1.90 
Diluted$2.50  $2.68  $2.10  $1.88 
        
Weighted average shares outstanding       
Basic75.2  78.8  75.6  80.1 
Diluted75.7  79.5  76.2  81.0 
            

Table 3

Avis Budget Group, Inc.
KEY METRICS SUMMARY

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 % Change 2019 2018 % Change
            
Americas           
Rental Days (000’s)31,374  30,413  3% 85,249  84,085  1%
Revenue per Day, excluding exchange rate effects (A)$59.61  $60.64  (2%) $56.70  $56.87  0%
Average Rental Fleet469,863  457,066  3% 440,493  436,074  1%
Vehicle Utilization72.6% 72.3% 30 bps  70.9% 70.6% 30 bps 
Per-Unit Fleet Costs per Month, excluding exchange rate effects (A)$267  $294  (9%) $284  $313  (9%)
            
International           
Rental Days (000’s)18,056  18,216  (1%) 45,389  44,105  3%
Revenue per Day, excluding exchange rate effects (A)$51.33  $51.28  0% $51.17  $51.96  (2%)
Average Rental Fleet263,420  265,939  (1%) 229,892  224,524  2%
Vehicle Utilization74.5% 74.5% 0 bps  72.3% 72.0% 30 bps 
Per-Unit Fleet Costs per Month, excluding exchange rate effects (A)$233  $231  1% $234  $231  1%
            
Total           
Rental Days (000’s)49,430  48,629  2% 130,638  128,190  2%
Revenue per Day, excluding exchange rate effects (A)$56.59  $57.13  (1%) $54.78  $55.18  (1%)
Average Rental Fleet733,283  723,005  1% 670,385  660,598  1%
Vehicle Utilization73.3% 73.1% 20 bps  71.4% 71.1% 30 bps 
Per-Unit Fleet Costs per Month, excluding exchange rate effects (A)$255  $271  (6%) $267  $285  (6%)
_______      
Refer to Table 6 for key metrics calculations and Appendix I for key metrics definitions.
(A) The following metrics include changes in currency exchange rates:
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 % Change 2019 2018 % Change
            
Americas           
Revenue per Day$59.56  $60.64  (2%) $56.57  $56.87  (1%)
Per-Unit Fleet Costs per Month$267  $294  (9%) $283  $313  (10%)
            
International           
Revenue per Day$49.04  $51.28  (4%) $48.20  $51.96  (7%)
Per-Unit Fleet Costs per Month$222  $231  (4%) $221  $231  (4%)
            
Total           
Revenue per Day$55.71  $57.13  (2%) $53.66  $55.18  (3%)
Per-Unit Fleet Costs per Month$251  $271  (7%) $262  $285  (8%)
                      


Table 4 (page 1 of 2)

Avis Budget Group, Inc.
CONSOLIDATED CONDENSED SCHEDULES OF CASH FLOWS AND ADJUSTED FREE CASH FLOWS
(In millions)

CONSOLIDATED CONDENSED SCHEDULE OF CASH FLOWS

 Nine Months Ended September 30, 2019
Operating Activities 
Net cash provided by operating activities$1,931 
  
Investing Activities 
Net cash used in investing activities exclusive of vehicle programs(159)
Net cash used in investing activities of vehicle programs(2,879)
Net cash used in investing activities(3,038)
  
Financing Activities 
Net cash provided by (used in) financing activities exclusive of vehicle programs(96)
Net cash provided by (used in) financing activities of vehicle programs1,186 
Net cash provided by (used in) financing activities1,090 
  
Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash(10)
Net change in cash and cash equivalents, program and restricted cash(27)
Cash and cash equivalents, program and restricted cash, beginning of period (A)735 
Cash and cash equivalents, program and restricted cash, end of period (B)$708 
    

_____
(A) Consists of cash and cash equivalents of $615 million, program cash of $115 million and restricted cash of $5 million.
(B) Consists of cash and cash equivalents of $615 million, program cash of $89 million and restricted cash of $4 million.

CONSOLIDATED SCHEDULE OF ADJUSTED FREE CASH FLOWS (C)

 Nine Months Ended September 30, 2019
Income before income taxes$273 
Add-back of non-vehicle related depreciation and amortization195 
Add-back of debt extinguishment costs10 
Add-back of restructuring and other related costs66 
Add-back of transaction-related costs6 
Working capital and other(48)
Capital expenditures(178)
Tax payments, net of refunds(69)
Vehicle programs and related (D)(139)
Adjusted free cash flow116 
  
Acquisition and related payments, net of acquired cash (E)(45)
Dispositions, net of tax payments (F)64 
Borrowings, net of debt repayments(25)
Restructuring and other related payments(25)
Transaction-related payments(10)
Repurchases of common stock(65)
Change in program cash(23)
Change in restricted cash(2)
Foreign exchange effects, financing costs and other(12)
Net change in cash and cash equivalents, program and restricted cash (per above)$(27)
    

_____
(C) The Company has revised its definition of Adjusted free cash flow to exclude payments for restructuring and other related charges. Our calculation of Adjusted free cash flow may not be comparable to the calculation of similarly-titled measures used by other companies. See Appendix I for the definition of Adjusted free cash flow.
(D) Includes vehicle-backed borrowings (repayments) that are incremental to amounts required to fund incremental (reduced) vehicle and vehicle-related assets.
(E) Excludes $26 million of vehicles purchased as a part of North America licensee acquisitions, which were financed through incremental vehicle-backed borrowings, and includes equity method investment of $3 million in our licensee in Greece.
(F) Proceeds received on the sale of our equity method investment in Anji Car Rental & Leasing Company Limited ("Anji"), net of cross-border withholding taxes of $4 million.

Table 4 (page 2 of 2)

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW

 Nine Months Ended September 30, 2019
Net cash provided by operating activities (per above)$1,931 
Investing activities of vehicle programs(2,879)
Financing activities of vehicle programs1,186 
Capital expenditures(178)
Proceeds received on sale of assets and nonmarketable equity securities19 
Change in program cash23 
Change in restricted cash2 
Acquisition and disposition-related payments(23)
Restructuring and other related payments25 
Transaction-related payments10 
Adjusted free cash flow (per above)$116 
    

Table 5 (page 1 of 2)

Avis Budget Group, Inc.
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP MEASURES
(In millions, except per share data)

The accompanying press release includes certain non-GAAP (generally accepted accounting principles) financial measures as defined under SEC rules. To the extent not provided in the press release or accompanying tables, we have provided the reasons we present these non-GAAP financial measures and a description of what they represent in Appendix I. For each non-GAAP financial measure a reconciliation to the most comparable GAAP financial measure is calculated and presented below with reconciliations of net income, income before income taxes and diluted earnings per share to Adjusted EBITDA and our Adjusted earnings measures.

 Three Months Ended September 30,
Reconciliation of net income to Adjusted EBITDA:2019 2018
    
Net income$189  $213 
Provision for income taxes139  142 
Income before income taxes328  355 
    
Add certain items:   
Restructuring and other related charges22  4 
Acquisition-related amortization expense13  14 
Early extinguishment of debt10   
Transaction-related costs, net  11 
Adjusted pretax income373  384 
    
Add:     
Non-vehicle related depreciation and amortization (excluding acquisition-related amortization expense)49  48 
Interest expense related to corporate debt, net (excluding early extinguishment of debt)49  44 
Adjusted EBITDA$471  $476 
    
Reconciliation of net income to adjusted net income: 
    
Net income$189  $213 
Add certain items, net of tax:   
Restructuring and other related charges17  3 
Acquisition-related amortization expense10  11 
Early extinguishment of debt7   
Transaction-related costs, net  8 
Income tax provision from the Tax Act (A)  30 
Adjusted net income$223  $265 
Earnings per share - Diluted$2.50  $2.68 
Adjusted diluted earnings per share$2.96  $3.33 
Shares used to calculate Adjusted diluted earnings per share75.7  79.5 
      

_____
(A) As a result of the Tax Act, the adjustment of incremental tax expense related to cumulative foreign earnings initially recorded in the fourth quarter of 2017.

Table 5 (page 2 of 2)

 Nine Months Ended September 30,
Reconciliation of net income to Adjusted EBITDA:2019 2018
    
Net income$160  $152 
Provision for income taxes113  112 
Income before income taxes273  264 
    
Add certain items:   
Restructuring and other related charges66  14 
Acquisition-related amortization expense44  46 
Early extinguishment of debt10  5 
Transaction-related costs, net6  18 
Non-operational charges related to shareholder activist activity (A)  9 
Gain on sale of equity method investment in Anji (B)(44)  
Adjusted pretax income355  356 
    
Add:     
Non-vehicle related depreciation and amortization (excluding acquisition-related amortization expense)151  144 
Interest expense related to corporate debt, net (excluding early extinguishment of debt)139  139 
Adjusted EBITDA$645  $639 
    
Reconciliation of net income to adjusted net income: 
    
Net income$160  $152 
Add certain items, net of tax:   
Restructuring and other related charges51  11 
Acquisition-related amortization expense32  33 
Early extinguishment of debt7  4 
Transaction-related costs, net5  14 
Non-operational charges related to shareholder activist activity  7 
Income tax provision from the Tax Act (C)  30 
Gain on sale of equity method investment in Anji(30)  
Adjusted net income$225  $251 
Earnings per share - Diluted$2.10  $1.88 
Adjusted diluted earnings per share$2.95  $3.10 
Shares used to calculate Adjusted diluted earnings per share76.2  81.0 
      

_____
(A) Reported within selling, general and administrative expenses in our Consolidated Statements of Operations.
(B) Reported within operating expenses in our Consolidated Statements of Operations.
(C) As a result of the Tax Act, the adjustment of incremental tax expense related to cumulative foreign earnings initially recorded in the fourth quarter of 2017.

Table 6

Avis Budget Group, Inc.
KEY METRICS CALCULATIONS
($ in millions, except as noted)

 Three Months Ended September 30, 2019 Three Months Ended September 30, 2018
 Americas International Total Americas International Total
Revenue per Day (RPD)           
Revenue$1,868  $885  $2,753  $1,844  $934  $2,778 
Currency exchange rate effects2  42  44       
Revenue excluding exchange rate effects$1,870  $927  $2,797  $1,844  $934  $2,778 
Rental days (000's)31,374  18,056  49,430  30,413  18,216  48,629 
RPD excluding exchange rate effects (in $'s)$59.61  $51.33  $56.59  $60.64  $51.28  $57.13 
            
Vehicle Utilization           
Rental days (000's)31,374  18,056  49,430  30,413  18,216  48,629 
Average rental fleet469,863  263,420  733,283  457,066  265,939  723,005 
Number of days in period92  92  92  92  92  92 
Available rental days (000's)43,227  24,235  67,462  42,050  24,466  66,516 
Vehicle utilization72.6% 74.5% 73.3% 72.3% 74.5% 73.1%
            
Per-Unit Fleet Costs           
Vehicle depreciation and lease charges, net$376  $175  $551  $403  $184  $587 
Currency exchange rate effects1  9  10       
 $377  $184  $561  $403  $184  $587 
Average rental fleet469,863  263,420  733,283  457,066  265,939  723,005 
Per-unit fleet costs (in $'s)$801  $698  $764  $883  $693  $813 
Number of months in period3  3  3  3  3  3 
Per-unit fleet costs per month excluding exchange rate effects (in $'s)$267  $233  $255  $294  $231  $271 


 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018
 Americas International Total Americas International Total
Revenue per Day (RPD)           
Revenue$4,822  $2,188  $7,010  $4,782  $2,292  $7,074 
Currency exchange rate effects11  135  146       
Revenue excluding exchange rate effects$4,833  $2,323  $7,156  $4,782  $2,292  $7,074 
Rental days (000's)85,249  45,389  130,638  84,085  44,105  128,190 
RPD excluding exchange rate effects (in $'s)$56.70  $51.17  $54.78  $56.87  $51.96  $55.18 
            
Vehicle Utilization           
Rental days (000's)85,249  45,389  130,638  84,085  44,105  128,190 
Average rental fleet440,493  229,892  670,385  436,074  224,524  660,598 
Number of days in period273  273  273  273  273  273 
Available rental days (000's)120,255  62,760  183,015  119,048  61,295  180,343 
Vehicle utilization70.9% 72.3% 71.4% 70.6% 72.0% 71.1%
            
Per-Unit Fleet Costs           
Vehicle depreciation and lease charges, net$1,123  $456  $1,579  $1,226  $467  $1,693 
Currency exchange rate effects2  29  31       
 $1,125  $485  $1,610  $1,226  $467  $1,693 
Average rental fleet440,493  229,892  670,385  436,074  224,524  660,598 
Per-unit fleet costs (in $'s)$2,554  $2,108  $2,401  $2,813  $2,081  $2,564 
Number of months in period9  9  9  9  9  9 
Per-unit fleet costs per month excluding exchange rate effects (in $'s)$284  $234  $267  $313  $231  $285 
                        

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Our calculation of rental days and revenue per day may not be comparable to the calculation of similarly-titled metrics by other companies. Currency exchange rate effects are calculated by translating the current-year results at the prior-period average exchange rates plus any related gains and losses on currency hedges.


Appendix I

Avis Budget Group, Inc.
DEFINITIONS OF NON-GAAP MEASURES AND KEY METRICS

Adjusted EBITDA
The accompanying press release presents Adjusted EBITDA, which represents income (loss) from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring and other related charges, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, net charges for unprecedented personal-injury legal matters, non-operational charges related to shareholder activist activity, gain on sale of equity method investment in Anji and income taxes. Net charges for unprecedented personal-injury legal matters and gain on sale of equity method investment in Anji are recorded within operating expenses in our consolidated condensed statement of operations. Non-operational charges related to shareholder activist activity include third party advisory, legal and other professional service fees and are recorded within selling, general and administrative expenses in our consolidated results of operations. We have revised our definition of Adjusted EBITDA to exclude the gain on sale of equity method investment in Anji. We did not revise prior years’ Adjusted EBITDA amounts because there were no gains similar in nature to this gain. Adjusted EBITDA includes stock-based compensation expense and deferred financing fee amortization totaling $11 million and $12 million in third quarter 2019 and 2018, respectively, and totaling $34 million and $32 million in the nine months ended September 30, 2019 and 2018, respectively.

We believe that Adjusted EBITDA is useful to investors as a supplemental measure in evaluating the aggregate performance of our operating businesses and in comparing our results from period to period. Adjusted EBITDA is the measure that is used by our management, including our chief operating decision maker, to perform such evaluation. Adjusted EBITDA is also a component in the determination of management's compensation. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with GAAP and our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. A reconciliation of Adjusted EBITDA from net income (loss) recognized under GAAP is provided on Table 5.

Adjusted Earnings Non-GAAP Measures
The accompanying press release and tables present Adjusted pretax income (loss), Adjusted net income (loss) and Adjusted diluted earnings (loss) per share, which exclude certain items. We believe that these measures referred to above are useful to investors as supplemental measures in evaluating the aggregate performance of the Company. We exclude restructuring and other related charges, transaction-related costs, costs related to early extinguishment of debt and other certain items as such items are not representative of the results of operations of our business less a provision for income taxes derived utilizing applicable statutory tax rates for each item. A reconciliation of our Adjusted earnings Non-GAAP measures from the appropriate measures recognized under GAAP is provided on Table 5.

Adjusted Free Cash Flow
Represents Net Cash Provided by Operating Activities adjusted to reflect the cash inflows and outflows relating to capital expenditures, the investing and financing activities of our vehicle programs, asset sales, if any, and to exclude debt extinguishment costs, transaction-related costs, restructuring and other related charges and non-operational charges related to shareholder activist activity. We have revised our definition of Adjusted Free Cash Flow to exclude restructuring and other related charges and have revised prior years' Adjusted Free Cash Flow amounts accordingly. We believe this change is meaningful to investors as it brings the measurement in line with our other non-GAAP measures. We believe that Adjusted Free Cash Flow is useful to management and investors in measuring the cash generated that is available to be used to repay debt obligations, repurchase stock, pay dividends and invest in future growth through new business development activities or acquisitions. Adjusted Free Cash Flow should not be construed as a substitute in measuring operating results or liquidity, and our presentation of Adjusted Free Cash Flow may not be comparable to similarly-titled measures used by other companies. A reconciliation of Adjusted Free Cash Flow to the appropriate measure recognized under GAAP is provided on Table 4.

Available Rental Days
Defined as Average Rental Fleet times the numbers of days in a given period.

Average Rental Fleet
Represents the average number of vehicles in our fleet during a given period of time.

Currency Exchange Rate Effects
Represents the difference between current-period results as reported and current-period results translated at the prior-period average exchange rates plus any related currency hedges.

Net Corporate Debt
Represents corporate debt minus cash and cash equivalents.

Net Corporate Leverage
Represents Net Corporate Debt divided by Adjusted EBITDA for the twelve months prior to the date of calculation.

Per-Unit Fleet Costs
Represents vehicle depreciation, lease charges and gain or loss on vehicles sales, divided by Average Rental Fleet.

Rental Days
Represents the total number of days (or portion thereof) a vehicle was rented during a 24-hour period.

Revenue per Day
Represents revenues divided by Rental Days.

Vehicle Utilization
Represents Rental Days divided by Available Rental Days.


            

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