Avis Budget Group, Inc.: Less depreciation, more conviction

Research evidence excerpt

Avis Budget Group, Inc.: Less depreciation, more conviction

Deutsche Bank

Research

Europe Company Date

Global 15 May 2026

North America Avis Budget Group,

High Yield Corporates Inc.

Automobiles & Components

Less depreciation, more conviction

Sean-M Wondrack

LTM 3/31/2026 (Q1-2026) Research Analyst

Avis Budget Group (CAR) reported improved results as Q1-2026 earnings beat a low +1-212-250-8980

bar but the forward guide pointed to a much more favorable outlook than just a few

months ago when management's tone was more cautious following a soft quarter

and the EV write-down. Revenue of $2.5 billion (+4% YoY) was 3% above consensus

estimates for $2.4 billion while adj EBITDA of ($113) million (-22% YoY) also beat

consensus estimates for ($157) million by 28%. Net debt was $5.5 billion resulting

in 7.6x net leverage off $728 million of LTM adj EBITDA. Liquidity was $915 million.

CAR guided to adj EBITDA of $850 million to $1 billion in 2026 with depreciation

improving sequentially throughout the year and fleet DPU ending the year ~$315-

325. Based on our estimates, we see leverage normalizing into 2027 from elevated

levels today barring big share repurchases or other exogenous allocation of cash

Source: Deutsche Bank, Company Reports

flow. We estimate CAR will deliver revenue of $11.995 billion in 2026 and adj

EBITDA of $886 million resulting in 5.7x net leverage (versus 7.6x today). For 2027,

we currently estimate revenue of $12.229 billion, adj EBITDA of $1.077 billion and

net leverage of ~4.2x.

Recommendation

We believe Q1 sets Avis up for a meaningful recovery in net leverage during 2026

as adj EBITDA recovers some in Q2 and more meaningfully in Q3. The normalization

of DPU alone in 2H-2026 is set to put the company back on track. Metrics moving