2. Forward-Looking Statements
Statements about future results made in this presentation constitute forward-
looking statements within the meaning of the Private Securities Litigation Reform
g g g
Act of 1995. Such forward-looking statements include projections.
These statements are based on current expectations and the current economic
environment. Forward-looking statements and projections are inherently subject to
significant economic, competitive and other uncertainties and contingencies, many
of which are beyond the control of management The Company cautions that these
management.
statements are not guarantees of future performance. Actual results may differ
materially from those expressed or implied in the forward-looking statements.
Important assumptions and other important factors that could cause actual results
to differ materially from those in the forward-looking statements and p j
y g projections
INVESTORS
are specified in the Company's Form 10-K for the year ended December 31, 2007.
This presentation also includes certain non-GAAP financial measures as defined
under SEC rules. Where required, a reconciliation of those measures to the most
directly comparable GAAP measure is provided in the glossary of this presentation.
Financial information for 2008 is estimated as of February 13, 2008.
TO
PRESENTATION
2
3. Business Overview
We are the leading general-use vehicle rental company in
each of North America, Australia, New Zealand and certain
other regions based on published airport statistics.
More Than …
6,900 Rental locations
425,000 Vehicles
INVESTORS
30,000 Employees
28 million Transactions
110 million Vehicle rental days
TO
$5.9 billion Annual revenues
PRESENTATION
3
4. Two-Brand Strategy
Two Brands, One Cost Structure
Customer Touchpoints Customer Touchpoints
• Airport counters and busing • Airport counters and busing
• Loyalty programs • Loyalty programs
• Reservations and marketing • Reservations and marketing
INVESTORS
Non-Customer Touchpoints
• Management / back-office
• Vehicles and fleet management
• Pricing and yield management
• Systems
TO
• Claims / insurance
PRESENTATION
Shared services save in excess of $100 million per year
4
5. Rental Car Industry Overview
Airport Segment Local Segment
Thrifty Oth
Other Avis Budget
2% 8%
Dollar 4% All Others Hertz
18% 9%
7%
Avis
21%
Alamo
Avis Budget
5%
32%
Enterprise
8%
Budget
11%
27%
INVESTORS
National
N ti l
14%
Hertz Enterprise
28% 65%
TO
Total Revenue: ~ $11 Billion Total Revenue: ~ $11 Billion
PRESENTATION
We generate about half our revenues from commercial rentals and half from leisure rentals
Note: Local segment share amounts are company estimates
5
6. Margin Opportunities
Pro Forma Car Rental EBITDA Margin
14%
Pro forma for $100 million of cost
12.3% savings from integration of Budget
12%
10.8% 10.6%
10%
9%
Average
8.4% 8.3%
8% 7.2%
6.8%
INVESTORS
6%
4%
2%
TO
PRESENTATION
0%
2002 2003 2004 2005 2006 2007
6
7. Strategic Overview
Create sustainable improvements in margins and earnings
Optimize Two- Expand Revenue Maximize
Brand Strategy Sources Profits
• Avis, as a premium • Off-airport growth • Yield management and
brand, with premium pricing optimization
• Optional insurance
pricing
products and counter • Rigorous cost controls
• Budget, as value up-sells
INVESTORS
brand, with • Fleet diversification
• Ancillary rental
corresponding cost
products such as • Deployment of free
structure
Where2 cash flow
• Strong online presence
• Brand extensions
• Customer loyalty
TO
PRESENTATION
Develop engines for accelerated earnings g
p g g growth
7
8. Expand Revenue Sources
Where2 is a significant income opportunity for 2008
12%
10%
$15 million
EBITDA
Where Take Rate
e
8%
$70 million
6%
EBITDA
e2
INVESTORS
4% $55 million
$35 million
EBITDA
EBITDA
2%
TO
0%
PRESENTATION
2007 2008
Note: For analytical purposes only based on 96 million rental days, average daily rate for Where2 of $10 and EBITDA margin of approximately 70%
8
9. Strategic Overview
Optimization / Multiple Avenues to Increase Margins
Price/Yield Process
Fleet
Management Improvement
Management
• Productivity / elimination of
• Commercial vs. leisure • Program vs. risk
waste
• Length of rental • Hold periods
• Replication of best practices
• Peak vs. off-peak • Manufacturers, brands and
models
• Ancillary revenues • Enhanced customer
INVESTORS
• On- vs. off-airport use experience
• Mileage
• Reservation channel • Timing of acceptance and • Use of LEAN, Six Sigma and
disposition other tools
• Affinity relationship
• Vehicle size and options
• Competitive dynamics • More than 400 opportunities
• Method of disposition identified to date
• Timing of reservation
TO
PRESENTATION
Target annual savings of
Target annual savings of $50-$100 million(a) $100-$150 million(a)
(a) After full implementation
9
10. Performance Excellence
E mple of P oje t Unde W
Examples Projects Under Way
Replication generates significant savings opportunities
Single-site Annual Savings
Project Savings after Replication
• Standardizing check-in process $300,000 $5,000,000
• Shuttling 200,000 5,500,000
• Optimizing bus schedules 500,000 1,700,000
INVESTORS
• Optimizing vehicle turn-back 750,000 5,000,000
• Process of assigning cars to be relocated 154,000 3,600,000
• Guard services 500,000
, 2,500,000
, ,
TO
• Degassing 3,500,000
PRESENTATION
$26,800,000
10
11. Fleet Management
Fleet Compo ition
Composition
Fleet is becoming more diversified
100%
7%
9% 11%
16%
3% 8% 22%
10%
21% 14%
75% 24%
16%
24%
26%
22%
50%
INVESTORS
67%
61%
55%
25%
44%
40%
TO
0%
2004 2005 2006 2007 2008E
PRESENTATION
GM Ford Chrysler Other
Risk Cars
Ri k C ~1%
1% ~1%
1% ~8%
8% ~25%
25% ~50%
50%
Note: Calendar year figures
11
12. 2008 Opportunities
Management controls key areas of opportunity
Management Control
Market / Environment
Performance Excellence Off-airport growth Time & mileage per day
Where2 Insurance replacement Interest rates
Other ancillary revenues New marketing partners Used car market
INVESTORS
Operating cost reductions Carey
Commercial account base
Fleet optimization
Risk vehicles
TO
Share repurchase
Free cash flow
PRESENTATION
Employees
Brands
12
13. 2007 Highlights
Revenue Drivers Strategic Progress
T&M
Launched Performance Excellence process
•
Rental Revenue
improvement initiative
Days per Day
Domestic Car Rental 4% 0% Grew ancillary revenue by 23%
•
International 3% 10%
Increased on-airport share lead over
p
•
second-largest competitor
Truck Rental (7%) (8%)
Expanded off-airport presence, including
•
revenue growth of 9%
Revenue Drivers
Income Statement
INVESTORS
Retained more than 98% of commercial
•
accounts
2007 Vs. 2006
($MM) Pro Forma
Increased Domestic EBITDA by 24% and
•
y
International EBITDA by 18%
Revenues $5,986 +6%
TO
Restructured Truck Rental operations
EBITDA 409 +1% •
PRESENTATION
Pretax Income 198 +15% Made strategic investment in Carey
•
International
Note: EBITDA presented for 2007 excludes separation credit of $5 million and pretax income excludes the separation credit and goodwill impairment
13
14. 2008 Outlook
We expect our revenues and pretax income to increase in 2008
• Domestic rental days projected to increase 3-5%, aided by off-airport
growth
• Domestic time and mileage revenue per rental day projected to increase
modestly
• Performance Excellence initiative expected to generate $40 million of
savings
• Domestic fleet costs expected to rise 4-6% on a pe
e pected ise 4 6% per-unit basis
nit
INVESTORS
• Cost structure is 70% variable, providing flexibility to adjust to
macroeconomic changes
• Seasonality will l k l increase industry-wide
l ll likely d d
TO
• Free cash flow target is 85% of pretax income
PRESENTATION
Not a federal cash taxpayer
14
15. Sensitivities
C Rent l Ope tion
Car Rental Operations
EBITDA Impact of a 1% Change in Driver ($ in millions)
$45 $42
$30
$19
INVESTORS
$14
$15
TO
PRESENTATION
$0
T&M Revenue per Rental Days Utilization
Rental Day
15
16. Capital Markets
Vehicle financing secured for 2008
• 2008 peak financing requirements in place
New $800 million bank conduit facility closed in February
Pricing 50 basis points higher than existing conduit facility
Opportunistically issue term debt when pricing becomes attractive
• Only $400 million of ABS term debt maturities in 2009
INVESTORS
• No current borrowings under $1.5 billion corporate revolver
• No corporate debt maturities until 2012
• After-tax free cash flow yield of 11%
After tax
TO
PRESENTATION
Note: Free cash flow yield based on 2007 free cash flow excluding separation-related payments
16
17. Key Investment Considerations
• Well-known and differentiated brands
• L di
Leading position i th on-airport segment
iti in the i t t
• Significant free cash flow
• Established and loyal customer base
• Strong and experienced management team
• Significant opportunities for margin expansion
• Multiple avenues for long-term revenue and earnings growth
long term
INVESTORS
TO
PRESENTATION
See glossary for definition of free cash flow
17
18.
19. Key Revenue Drivers
Car Rental Time and Mileage
Car Rental Days
per Rental Day
Combo: Line with column Combo: Line with column
$44
(in millions)
120
$42
107
$40.52
103
101 $39.96
$39.56
$40
100
$38.74
88
85 $37.96
$38
80
INVESTORS
$36
60
$34
40 $32
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
TO
PRESENTATION
We project 3-5% growth in rental days and modest pricing increases in 2008
A-1
20. Revenue and EBITDA Growth
(in million )
millions)
Revenue EBITDA
Combo: Line with column Combo: Line with column
$6,500 $550
$5,986
$5,628
$5 628
$467
$5,316
$5,500
$439
$4,709 $409
$4,599 $405
$4,500 $400
INVESTORS
$328
$3,500
$2,500 $250
2006(a) 2007 (b)
2003 2004 2005 2006 2007 2003 2004 2005
TO
PRESENTATION
(a) Pro forma EBITDA gives effect to the pro forma transactions described in the glossary and excludes separation and restructuring costs
( )P f i ff h f i d ib d i h l d ld i d i
(b) Excludes separation costs
Note: Avis Budget acquired a substantial portion of the assets of Budget Group in November 2002
A-2
21. Glossary
EBITDA excluding separation-related expenses
EBITDA is presented excluding separation expenses (credits), which excludes costs that were incurred in connection with the execution of the plan to separate Cendant (as we
were formerly known) into four independent companies, which amounted to $(5) million in 2007. We define EBITDA as income from continuing operations before non-vehicle
related depreciation and amortization, any goodwill impairment charge, non-vehicle related interest (other than intercompany interest related to tax benefits and working capital
advances) and income taxes. 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 EBITDA may not be comparable to similarly-titled measures used by other companies.
Reconciliation of Avis Budget Group, Inc. EBITDA excluding separation-related costs, net to Avis Budget Group, Inc. loss before income taxes:
(in millions)
Year Ended
December 31, 2007
Avis Budget Group, Inc. EBITDA excluding separation-related expenses $ 409
Less: Separation-related costs net
costs, (5)
Non-vehicle related depreciation and amortization 84
Interest expense related to corporate debt, net 127
Goodwill impairment 1,195
Avis Budget Group, Inc. loss before income taxes $ (992)
Income before income taxes, excluding separation-related costs, net and goodwill impairment
Income before income taxes is presented excluding separation expenses (credits) and the 2007 goodwill impairment. Separation expenses (credits) were costs incurred in
INVESTORS
connection with th separation of Cendant (as we were formerly known) into four independent companies, and amounted to ($5) million i th fourth quarter 2007 Th C
ti ith the ti fC d t( f lk )i t f id dt i d t dt illi in the f th t 2007. The Company
recorded a charge of $1,195 million for the impairment of goodwill during the fourth quarter 2007, primarily reflecting the decline in the market value of the Company's common
stock compared to its book value.
Reconciliation of Avis Budget Group, Inc. income before income taxes, excluding separation-related costs, net and goodwill impairment to loss before
income taxes:
(in millions)
Year Ended
December 31, 2007
TO
Avis Budget Group, Inc. income before income taxes, excluding separation-related expenses and goodwill impairment $ 198
Less: Separation-related costs, net (5)
PRESENTATION
Goodwill impairment 1,195
Avis Budget Group, Inc. loss before income taxes $ (992)
A-3
22. Glossary
Pro forma Adjustments
The following table presents our pro forma financial data for the period ended December 31, 2006. All of these financial data are for Avis Budget Car Rental, LLC and its
subsidiaries, the companies that comprise Avis Budget Group, Inc.'s vehicle rental business. The pro forma information was derived from Avis Budget Car Rental, LLC's selected
historical financial data and adjusted to give effect to the following transactions:
• Establishment of a $2.375 billion senior credit facility, of which $838 million was drawn at December 31, 2006
• Issuance of $1.0 billion of senior unsecured notes
f$ b ll f d
• Repayment of approximately $1.875 billion of debt under vehicle programs with proceeds from credit facility borrowings and the issuance of senior notes
• Elimination of interest income related to intercompany balances
• Reversal of allocated corporate general overhead costs and inclusion of estimated stand-alone corporate costs
The pro forma financial data assume that the pro forma transactions occurred on January 1, 2006. Management believes that the assumptions used to derive the pro forma
financial data are reasonable under the circumstances and given the information available. The pro forma financial data have been provided for informational purposes only and
are not necessarily indicative of the financial condition or results of future operations or the actual results that would have been achieved had the pro forma transactions occurred
on the date indicated. For risk factors that could adversely affect our business, please see quot;Forward-Looking Statementsquot; included in the beginning of this presentation.
Reconciliation of Pro Forma EBITDA to Pro Forma Income before Income Taxes for Avis Budget Car Rental
(in millions)
2006
Revenues $ 5,628
Avis Budget C ar Rental EBITDA $ 370
Adjustments:
INVESTORS
Remove general corporate overhead (C ) 51
Remove vehicle and intercompany interest, net (D) 8
Remove separation costs 33
Add public company costs (E) (57)
Total adjustments 35
Pro Forma EBITDA $ 405
Interest on corporate debt (A) 137
EBITDA less interest on corporate debt (
p (EBTDA)) 268
Non-vehicle depreciation and amortization (B) 96
TO
Pro Forma Pretax income $ 172
(A) Represents interest expense on the April 2006 financings.
PRESENTATION
(B) Includes additional depreciation and amortization associated with assets transferred from the corporate parent of Avis Budget C ar Rental in conjunction with the
separation transactions.
(C ) Represents allocated general corporate overhead costs, which will be replaced by stand-alone corporate costs.
(D) Represents the removal of intercompany interest income on the intercompany balance with the corporate parent of Avis Budget C ar Rental, removal of interest
expense related to debt under vehicle programs (as associated debt was repaid with proceeds from the credit facility and senior notes) and the impact of
increased Truck financing costs due to the separation transaction.
(E) Estimate of costs to operate as a stand-alone public company without Realogy, Wyndham and Travelport.
A-4
23. Glossary
EBITDA Reconciliation for Avis Budget Car Rental
EBITDA as presented in slide A-2 for 2002-2006 and as referred to on slide 8 is EBITDA for Avis Budget Car Rental, LLC, which represents income from continuing operations before non-
vehicle related depreciation and amortization, non-vehicle related interest (other than intercompany interest related to tax benefits and working capital advances) and income taxes.
(in millions) 2002 2003 2004 2005 2006
EBITDA 300 328 467 439 370
Less: Non-vehicle depreciation and amortization 43 73 73 80 86
Less: Non-vehicle interest, net* 42 40 10 6 94
Income before income taxes 215 215 384 353 190
Less: Provision for income taxes 82 79 147 129 105
Income before cumulative effect of accounting changes 133 136 237 224 85
Less: C umulative effect of accounting changes, net of tax - - - (8) -
Net Income 133 136 237 216 85
* Does not reflect intercompany interest income of $2 million, $2 million, and $26 million during 2003, 2004 and 2005, respectively, related to tax benefits and working capital advances,
py $ ,$ , $ g , , p y, gp ,
which are included in EBITDA. There is no intercompany interest income included in EBITDA on a pro forma basis.
EBITDA used in the calculation of the margins presented on slide 8 is adjusted for 2002-2007 primarily to exclude revenues and EBITDA for our Truck Rental segment and for 2002-2006 to
give effect to pro forma adjustments on the previous slide. Such pro forma adjustments for 2002-2006 total $67 million, $122 million, $84 million, $61 million and $26 million, respectively.
Free Cash Flow Definition
Represents Net Cash Provided by Operating Activities adjusted to include the cash inflows and outflows relating to (i) capital expenditures and GPS navigational units, (ii) the
investing and financing activities of our vehicle programs, (iii) asset sales and (iv) the change in restricted cash. We believe that Free Cash Flow is useful to management and
the Company’s investors in measuring the cash generated by the Company that is available to be used to repurchase stock, repay debt obligations, pay dividends and invest in
INVESTORS
future growth through new business development activities or acquisitions. Free Cash Flow should not be construed as a substitute i measuring operating results or
ft th th h bi d l t ti iti i iti F C h Fl h ld tb t d b tit t in i ti lt
liquidity, and our presentation of Free Cash Flow may not be comparable to similarly-titled measures used by other companies.
Reconciliation of Free Cash Flow excluding separation-related cash outflows to Net Cash Provided by Operating Activities
Year Ended
(in millions) December 31, 2007
Free C ash Flow excluding separation-related cash outflows $ 128
Less: Net separation-related cash outflows (39)
Free Cash Flow 89
TO
C ash (inflows) outflows included in Free C ash Flow but not reflected in Net C ash Provided by Operating Activities
Investing activities of vehicle programs 1,756
Financing activities of vehicle programs (235)
PRESENTATION
C apital expenditures 94
Proceeds received on asset sales (23)
C hange in restricted cash 18
Purchase of GPS navigational units 15
Net Cash Provided by Operating Activities $ 1,714
Free Cash Flow Yield Definition
Represents Free Cash Flow excluding separation-related cash outflows (per above) on December 31,2007 divided by market capitalization on January 31, 2008.
A-5