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What changed in AVIS BUDGET GROUP, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AVIS BUDGET GROUP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+236 added−234 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-16)

Top changes in AVIS BUDGET GROUP, INC.'s 2023 10-K

236 paragraphs added · 234 removed · 212 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+4 added−2 removed66 unchanged
Biggest changeAvis QuickPass, a feature on the Avis mobile application, allows Avis Preferred customers to choose, exchange or upgrade their car in the mobile application upon arrival, proceed straight to the vehicle, and utilize a unique code to exit via our automated Express Exit for a completely contactless rental experience; • the Avis Signature Series , a selection of luxury vehicles; • invited or earned customer status levels allowing for upgrades and counter bypass; • availability of premium, sport and performance vehicles as well as eco-friendly vehicles, including hybrids and full electric; • access to portable navigation units, tablets and satellite radio service; • Avis rental services such as roadside assistance, fuel service options, e-receipts, electronic toll collection services that allow customers to pay highway tolls without waiting in toll booth lines, and amenities such as Avis Access , a full range of special products and services for drivers and passengers with disabilities; • Curbside Delivery , a service that provides customers at select airport locations in the United States with the added convenience of being dropped off at the airport terminal in the same car that they rented; and • for our corporate customers, Avis Budget Group Business Intelligence , a proprietary customer reporting solution that provides a centralized reporting tool and customer reporting portal for corporate clients in North America and Europe, enabling them to easily view and analyze their rental activity, permitting them to better manage their travel budgets and monitor employee compliance with applicable travel policies.
Biggest changeIn many United States locations, QuickPass also allows customers to choose, exchange or upgrade their car upon arrival and utilize a unique code to exit via our automated Express Exit for a completely contactless rental experience; • availability of a selection of luxury vehicles through our Avis Signature Series, as well as premium, sport, performance and electrified vehicles; • access to satellite radio service, mobile WiFi devices, and GPS navigation; • Avis rental services such as roadside assistance, fuel service options, e-receipts, electronic toll collection services that allow customers to pay highway tolls without waiting in toll booth lines, and amenities such as Avis Cares , a full range of special products and services for drivers and passengers with disabilities; • for our corporate customers, Avis Budget Group Business Intelligence , a proprietary reporting solution that provides a centralized reporting tool and customer reporting portal for corporate clients in North America and Europe, enabling them to easily view and analyze their rental activity, allowing them to better manage their travel budgets and monitor employee compliance with applicable travel policies.
In addition, we are able 4 Table of Contents to recognize benefits as a result of complementary demand patterns with commercial rentals occurring primarily on business days and leisure rentals occurring primarily on holidays and weekends. We also operate the Payless and Apex brands in the value segment of the car rental industry, augmenting our Avis, Budget and Zipcar brands.
In addition, we are able to recognize benefits as a result of complementary demand patterns with commercial rentals occurring primarily 4 Table of Contents on business days and leisure rentals occurring primarily on holidays and weekends. We also operate the Payless and Apex brands in the value segment of the car rental industry, augmenting our Avis, Budget and Zipcar brands.
In Australasia, motor vehicle bodily injury insurance coverage is compulsory and provided upon vehicle registration. In addition, we provide our customers with third-party property damage insurance through an unaffiliated third-party insurer. We retain a share of property damage risk through local deductibles. AEGIS Motor Insurance Limited reinsures certain risks through unaffiliated companies, which limits its liabilities.
AEGIS Motor Insurance Limited reinsures certain risks through unaffiliated companies, which limits its liabilities. In Australasia, motor vehicle bodily injury insurance coverage is compulsory and provided upon vehicle registration. In addition, we provide our customers with third-party property damage insurance through an unaffiliated third-party insurer. We retain a share of property damage risk through local deductibles.
REGULATION We are subject to a wide variety of laws and regulations in the countries in which we operate, including those relating to, among others, consumer protection, insurance products and rates, franchising, customer privacy and data protection, securities and public disclosure, competition and antitrust, environmental matters, taxes, automobile-related liability, corruption and anti-bribery, labor and employment matters, health and safety, claims management, automotive retail sales, currency-exchange and other various banking and financial industry regulations, cost and fee recovery, the protection of our trademarks and other intellectual property, and local ownership or investment requirements.
REGULATION We are subject to a wide variety of laws and regulations in the countries in which we operate, including those relating to, among others, consumer protection, insurance products and rates, franchising, customer privacy and data protection, securities and public disclosure, competition and antitrust, environmental matters, taxes, automobile-related liability, corruption and anti-bribery, labor and employment matters, health and safety, claims management, automotive retail sales, currency-exchange and other various banking and financial industry regulations, cost and fee recovery, the protection of our trademarks and other intellectual property, ESG matters and local ownership or investment requirements.
These are mainly driven by improvements in vehicle preventive maintenance, the incorporation of green building practices and by complying with environmental regulations. • Carbon Offset Program: We work closely with our corporate customers to help them achieve their environmental impact reduction targets through our carbon offset program. • Sustainable Fleet: We are actively anticipating and driving changes in mobility.
These are mainly driven by improvements in vehicle preventive maintenance, the incorporation of green building practices and by complying with environmental regulations. • Carbon Offset Program: We work closely with our corporate customers to help them achieve their environmental impact reduction targets through our carbon offset program. • More Sustainable Fleet: We are actively anticipating and driving changes in mobility.
In the United States, these license relationships constitute “franchises” under most federal and state laws regulating the offer and sale of franchises and the relationship of the parties to a franchise agreement. We continue to optimize the Avis and Budget brands by issuing new license agreements and periodically acquiring licensees to grow our revenues and expand our global presence.
In the United States, these license relationships constitute “franchises” under most federal and state laws regulating the offer and sale of franchises and the relationship of the parties to a franchise agreement. We continue to optimize the Avis, Budget and Payless brands by issuing new license agreements and periodically acquiring licensees to grow our revenues and expand our global presence.
In addition, Budget’s mobile application allows customers to reserve, 6 Table of Contents modify and cancel reservations on their mobile device, and its Fastbreak or QuickPass service expedites rental service for frequent travelers. Budget Truck Our Budget Truck rental business is one of the largest local and one-way truck and cargo van rental businesses in the United States.
In addition, Budget’s mobile application allows customers to reserve, modify and cancel reservations on their mobile device, and its Fastbreak and QuickPass service expedites rental service for frequent travelers. 6 Table of Contents Budget Truck Our Budget Truck rental business is one of the largest local and one-way truck and cargo van rental businesses in the United States.
As a result, we are focused on supporting the transition to a low-carbon economy and employ practices designed to promote a more fair, just and equal workplace and community. 13 Table of Contents The Environment: We are committed to offering safe and low-carbon transportation solutions: • Greenhouse Gas Emissions: As our corporate and leisure customers become increasingly aware and concerned about pollution and congestion caused by vehicles, we aim to provide sustainable transportation solutions by leveraging connected vehicle technology and introducing more fuel efficient and low emission vehicles. • Sustainable Operations: We are driving the efficiencies needed to reduce our environmental impact and enhance the sustainability of our operations.
As a result, we are focused on supporting the transition to a low-carbon economy and employ practices designed to promote a more fair, just and equal workplace and community. 13 Table of Contents The Environment: We are committed to offering safe and low-carbon transportation solutions: • Greenhouse Gas Emissions: As our corporate and leisure customers become increasingly aware and concerned about pollution and congestion caused by vehicles, we aim to provide more sustainable transportation solutions by leveraging connected vehicle technology and introducing more fuel efficient, low emission, and electric vehicles. • Sustainable Operations Improvements: We are driving the efficiencies needed to reduce our environmental impact and enhance the sustainability of our operations.
We strive to maintain satisfactory relationships with all of our employees, including the unions and work councils representing these employees. As of December 31, 2022, approximately 28% of our employees were covered by collective bargaining or similar agreements with various labor unions. We believe our employee relations are satisfactory. We have never experienced a large-scale work stoppage.
We strive to maintain satisfactory relationships with all of our employees, including the unions and work councils representing these employees. As of December 31, 2023, approximately 28% of our employees were covered by collective bargaining or similar agreements with various labor unions. We believe our employee relations are satisfactory. We have never experienced a large-scale work stoppage.
In 2022, these royalty fees totaled approximately 1% of our Avis revenues. 5 Table of Contents We offer Avis customers a variety of premium services, including: • the Avis mobile application, which allows customers a unique and innovative way to control many elements of their rental experience via their mobile devices without the need to visit the rental counter.
In 2023, these royalty fees totaled approximately 1% of our Avis revenues. 5 Table of Contents We offer Avis customers a variety of premium services, including: • the Avis mobile application, which allows customers a unique and innovative way to control many elements of their rental experience via their mobile devices without the need to visit the rental counter.
In addition, our social media platform allows us to engage with our customers in their preferred channel, which enables us to meet the needs of our customers while promoting our brands to gain more market share and drive customer loyalty. The employees at our Company-operated locations are trained and empowered to resolve most customer issues at the location level.
In addition, our social media platform allows us to engage with our customers in their preferred channel, which enables us to meet the needs of our customers while promoting our brands to gain more market share and drive customer loyalty. The employees at our Company-operated locations are trained and empowered to resolve many customer issues at the location level.
We have created employee resource groups (“ERGs”) to advocate for equality, provide opportunities for advancement, and facilitate discussion around best practices and resources to advance more targeted cultural and racial understanding and diversity. These ERGs provide a space where employees can foster connections and develop in a supportive environment.
We have created employee resource groups (“ERGs”) to advocate for equality, provide opportunities for advancement, and facilitate discussion around better practices and resources to advance more targeted cultural and racial understanding and diversity. These ERGs provide a space where employees can foster connections and develop in a supportive environment.
The following graphs present the approximate composition of our Avis revenues in 2022. We also license the Avis brand to independent commercial owners who operate approximately half of our locations worldwide and generally pay royalty fees to us based on a percentage of applicable revenues.
The following graphs present the approximate composition of our Avis revenues in 2023. We also license the Avis brand to independent commercial owners who operate approximately half of our locations worldwide and generally pay royalty fees to us based on a percentage of applicable revenues.
Our Customer Led, Service Driven ™ program focuses on continually improving the overall customer experience based on our research of customer service practices, improved customer insights, executing our customer relationship management strategy, delivering customer-centric employee training and leverage our mobile applications technology and the enriched experience it provides our customers.
Our Customer Led, Service Driven program focuses on continually improving the overall customer experience based on our research of customer service practices, improved customer insights, executing our customer relationship management strategy, delivering customer-centric employee training and leveraging our mobile applications technology and the enriched experience it provides our customers.
Our Budget Truck operations in the United States competes with several other local, regional 12 Table of Contents and nationwide truck rental companies including U-Haul International, Inc., Penske Truck Leasing Corporation, Ryder System, Inc., Enterprise Truck Rental, and Hertz.
Our Budget Truck operations in the United States competes with several other local, regional 12 Table of Contents and nationwide truck rental companies including U-Haul International, Inc., Penske Truck Leasing Corporation, Ryder System, Inc., Enterprise Truck Rental, and Hertz Global Holdings, Inc.
Through our Zipcar for Business program, we also offer direct-bill accounts and employee benefit programs to companies and governments that support the use of Zipcars. LICENSING We have licensees in approximately 175 countries throughout the world.
Through our Zipcar for Business program, we also offer direct-bill accounts and employee benefit programs to companies and governments that support the use of Zipcar vehicles. LICENSING We have licensees in approximately 175 countries throughout the world.
We continue to offer our Zipcar Flex product in London providing for one-way rentals, including to and from Heathrow airport, which can be parked in public on-street spots in designated areas of the city.
We continue to offer our Zipcar Flex product in London providing one-way rentals, including to and from Heathrow airport, which can be parked in public on-street parking spots in designated areas of the city.
In addition, our Maggiore and Morini Rent brands in Italy, FranceCars brand in France and Turiscar brand in Portugal further extend our offerings. The following graphs present the approximate composition of our revenues in 2022. * Includes Budget Truck. ** Includes Zipcar and other operating brands. *** Includes Budget Truck and Zipcar.
In addition, our Maggiore and Morini Rent brands in Italy, FranceCars brand in France and Turiscar brand in Portugal further extend our offerings. The following graphs present the approximate composition of our revenues in 2023. * Includes Budget Truck. ** Includes Zipcar and other operating brands.
We offer Business Intelligence, an online portal complete with rental summary dashboards, visualizations and detailed reports that provides our corporate customers with insight into their program’s performance, giving them direct access to more data in a customer-facing portal offering useful data insights, including options to customize and schedule reports.
We offer Avis Budget Group Business Intelligence , an online portal complete with rental summary dashboards, visualizations and detailed reports that provides our corporate customers with insight into their program’s performance, giving them direct access to more data in a customer-facing portal offering useful data insights, including options to customize and schedule reports.
As of the end of 2022, we had the following ERGs: Power of Women, Power of Veterans, Power of Pride, and Power of Color. Health and Safety The health and safety of our employees is our highest priority because our people are our most valuable asset.
As of the end of 2023, we had the following ERGs: Power of Women, Power of Veterans, Power of Pride, and Power of Color. Health and Safety The health and safety of our employees is our highest priority because our people are our most valuable asset.
We operate in approximately 45 rental locations throughout the country. • FranceCars, which operates one of the largest light commercial vehicle rental fleets in France in approximately 75 rental locations and leverages our existing operational processes and local customer base. • Apex, which operates in approximately 30 rental locations at, or near, major airports and in several metropolitan cities in New Zealand and Australia. • Turiscar, a leading vehicle rental brand in Portugal, which operates primarily in the corporate market, including light commercial vehicles, at approximately 25 rental locations throughout the country. • ACL Hire, a provider of quality vehicle rental and maintenance services in the UK, with a strong focus on light commercial vehicles.
We operate in approximately 45 rental locations throughout the country. • FranceCars, which operates one of the largest light commercial vehicle rental fleets in France, in approximately 70 rental locations, and leverages our existing operational processes and local customer base. • Apex, which operates in approximately 25 rental locations at, or near, major airports and in several metropolitan cities in New Zealand and Australia. • Turiscar, a leading vehicle rental brand in Portugal, which operates primarily in the corporate market, including light commercial vehicles, at approximately 30 rental locations throughout the country. • ACL Hire and McNicoll Hire, providers of quality vehicle rental and maintenance services in the UK, with a strong focus on light commercial vehicles.
Our compensation program is designed to attract, retain and motivate highly qualified employees and executives. Employees As of December 31, 2022, we employed approximately 24,500 people worldwide, of whom approximately 6,000 were employed on a part-time basis. Of our approximately 24,500 employees, approximately 8,000 were employed in our International segment.
Our compensation program is designed to attract, retain and motivate highly qualified employees and executives. Employees As of December 31, 2023, we employed approximately 24,500 people worldwide, of whom approximately 6,500 were employed on a part-time basis. Of our approximately 24,500 employees, approximately 8,500 were employed in our International segment.
If the Company should decide to amend any of its board committee charters, Codes of Conduct and Ethics or other corporate governance documents, copies of 16 Table of Contents such amendments will be made available to the public through the Company’s website.
If the Company should decide to amend any of its board committee charters, Codes of Conduct and Ethics or other corporate governance documents, copies of such amendments will be made available to the public through the Company’s website.
The information contained on the Company’s website is not included in, or incorporated by reference into, this Annual Report on Form 10-K. 17
The information contained on the Company’s website is not included in, or incorporated by reference into, this Annual Report on Form 10-K. 16
In 2022, these royalty fees totaled approximately 1% of our Budget revenues. Budget offers its customers several products and services similar to Avis, such as refueling options, roadside assistance, electronic toll collection, curbside delivery and other supplemental rental products, emailed receipts and special rental rates for frequent renters.
In 2023, these royalty fees totaled approximately 1% of our Budget revenues. Budget offers its customers several products and services similar to Avis, such as refueling options, roadside assistance, electronic toll collection, and other supplemental rental products, emailed receipts and special rental rates for frequent renters.
We operate or license in approximately 135 rental locations throughout the country. ◦ Morini Rent offers rental of cars, vans, and refrigerated vehicles.
We operate or license in approximately 140 rental locations throughout the country. ◦ Morini Rent offers rental of cars, vans, and refrigerated vehicles.
A substantial majority of Zipcar’s fleet is dedicated to use by Zipcar. Fleet Purchases We maintain a diverse rental fleet, in which no vehicle manufacturer represented more than 21% of our 2022 fleet purchases, and we regularly adjust our fleet levels to be consistent with demand. We participate in a variety of vehicle purchase programs with major vehicle manufacturers.
A substantial majority of Zipcar’s fleet is dedicated to use by Zipcar. Fleet Purchases We maintain a diverse rental fleet, in which no vehicle manufacturer represented more than 23% of our 2023 fleet purchases, and we regularly adjust our fleet levels to be consistent with demand. We participate in a variety of vehicle purchase programs with major vehicle manufacturers.
Diversity, Inclusion and Belonging We embrace diversity and inclusion. We value each employee around the world, whose talent, skill and personality have helped establish us as a leading global mobility provider. We believe that embracing and promoting diversity is a critical component of our success and we have committed to creating a safe, supportive and inclusive environment.
We value each employee around the world, whose talent, skill and personality has helped establish us as a leading global mobility provider. We believe that embracing and promoting diversity is a critical component of our success and we have committed to creating a safe, supportive and inclusive environment.
In 2022, our Company-operated Budget vehicle rental operations generated total revenues of approximately $4.7 billion. The following graphs present the approximate composition of our Budget revenues in 2022. Zipcar is a leading car sharing network, driven by a mission to enable simple and responsible urban living.
In 2023, our Company-operated Budget vehicle rental operations generated total revenues of approximately $4.5 billion. The following graphs present the approximate composition of our Budget revenues in 2023. Zipcar is a leading car sharing network, driven by a mission to enable simple and responsible urban living.
We offer products to customers that will enhance their rental experience, including: • collision and loss damage waivers, under which we agree to relieve a customer from financial responsibility arising from vehicle damage incurred during the rental; 9 Table of Contents • additional/supplemental liability insurance or personal accident/effects insurance products which provide customers with additional protections for personal or third-party losses incurred; • products for driving convenience such as fuel service options, roadside assistance services, electronic toll collection services, curbside delivery, tablet rentals, access to satellite radio, portable navigation units and child safety seat rentals; and • products that supplement truck rental including automobile towing equipment and other moving accessories such as hand trucks, furniture pads and moving supplies.
We offer products to customers that will enhance their rental experience, including: • collision and loss damage waivers, under which we agree to relieve a customer from financial responsibility arising from vehicle damage incurred during the rental; 9 Table of Contents • additional/supplemental liability insurance or personal accident/effects insurance products which provide customers with additional protections for personal or third-party losses incurred; • products for driving convenience such as fuel service options, roadside assistance services, electronic toll collection services, access to satellite radio, mobile WiFi devices, GPS navigation and child safety seat rentals; and • products that supplement truck rental including automobile towing equipment and other moving accessories, such as hand trucks, furniture pads and moving supplies.
In 2022, approximately 12% of our average rental fleet was comprised of vehicles subject to agreements requiring automobile manufacturers to repurchase vehicles at a specified price during a specified time period or guarantee our rate of depreciation on the vehicles during a specified period of time; or vehicles subject to operating leases with a fixed lease period and interest rate.
In 2023, approximately 10% of our average rental fleet was comprised of vehicles subject to agreements requiring automobile manufacturers to repurchase vehicles at a specified price during a specified time period or guarantee our rate of depreciation on the vehicles during a specified period of time; or vehicles subject to operating leases with a fixed lease period and interest rate.
When a customer elects to purchase supplemental liability insurance or other optional insurance related products, we typically retain economic exposure to loss, since the insurance is provided by an unaffiliated insurer that is reinsuring its exposure through our captive insurance subsidiary, Constellation Reinsurance Co., Ltd.
When a customer elects to purchase supplemental liability insurance or other optional insurance related products, we typically retain economic exposure to loss, since the insurance is provided by an unaffiliated insurer that is reinsuring its exposure through our captive insurance subsidiary, Constellation Reinsurance Company Limited.
Our Zipcar members can reserve vehicles through Zipcar’s reservation system, which is accessible online or on a mobile device, by the minute, hour, or day, at rates that include gasoline, secondary insurance and other costs associated with vehicle ownership.
Our Zipcar members can reserve vehicles through Zipcar’s reservation system, which is accessible online or on a mobile device, by the hour or day, at rates that include fuel, secondary insurance and other costs typically associated with vehicle ownership.
When we return program vehicles to the manufacturer, we receive the price guaranteed at the time of purchase and are therefore protected from fluctuations in the price of previously-owned vehicles in the wholesale market. In 2022, approximately 24% of the vehicles we disposed of were sold pursuant to repurchase or guaranteed depreciation programs.
When we return program vehicles to the manufacturer, we receive the price guaranteed at the time of purchase and are therefore protected from fluctuations in the price of previously-owned vehicles in the wholesale market. In 2023, approximately 20% of the vehicles we disposed of were program vehicles sold pursuant to repurchase or guaranteed depreciation programs.
Our subsidiaries have also filed patent applications pertaining to fleet and connected car technology in the U.S. and other countries. ENVIRONMENTAL, SOCIAL & GOVERNANCE (“ESG”) We recognize our role as one of the world’s leading mobility solutions providers.
Our subsidiaries have also filed patent applications pertaining to fleet and connected car technology in the United States and other countries. ENVIRONMENTAL, SOCIAL & GOVERNANCE (“ESG”) We recognize our role as one of the world’s leading mobility solutions providers.
Our brands and mobility solutions have an extended global reach with nearly 10,250 rental locations throughout the world, including approximately 3,900 locations operated by our licensees.
Our brands and mobility solutions have an extended global reach with approximately 10,250 rental locations throughout the world, including approximately 3,700 locations operated by our licensees.
In 2022, we primarily purchased vehicles from Stellantis N.V., Toyota Motor Corporation, Hyundai Motor Group, General Motors Company, Ford Motor Company, Volkswagen Group and Renault-Nissan-Mitsubishi Alliance. Fleet costs represented approximately 10% of our aggregate expenses in 2022.
In 2023, we primarily purchased vehicles from Stellantis N.V., General Motors Company, Renault-Nissan-Mitsubishi Alliance, Toyota Motor Corporation, Hyundai Motor Group, Ford Motor Company and Volkswagen Group. Fleet costs represented approximately 17% of our aggregate expenses in 2023.
Average fleet utilization for 2022, which is based on the number of rental days (or portion thereof) that vehicles are rented compared to the total amount of time that vehicles are available for rent, ranged from approximately 67% to approximately 71%. Our average car rental fleet size and utilization are typically highest in the summer months.
Average quarterly fleet utilization for 2023, which is based on the number of rental days (or portion thereof) that vehicles are rented compared to the total amount of time that vehicles are available for rent, ranged from approximately 65% to approximately 71%. Our average car rental fleet size and utilization are typically highest in the summer months.
We offer our U.S. customers a range of optional insurance products and coverages such as supplemental liability insurance, personal accident insurance, personal effects protection, emergency sickness protection, automobile towing protection and cargo insurance, which create additional risk exposure for us.
We offer our United States customers a range of optional insurance products and coverages such as supplemental liability insurance, personal accident insurance, personal effects protection, emergency sickness protection, automobile towing protection and cargo insurance, which create additional risk exposure for us.
The service marks “Avis,” “Budget” and “Zipcar” and related marks or designs incorporating such terms and related logos and marks such as “We Try Harder,” “We Know The Road” and “Own The Trip, Not The Car” are material to our vehicle rental and car sharing businesses. Our subsidiaries and licensees actively use these marks.
The service marks “Avis,” “Budget” and “Zipcar” and related marks or designs incorporating such terms and related logos and marks such as “Plan On Us,” “We Try Harder,” “We Know The Road” and “Own The Trip, Not The Car”, “Preferred” and “Fastbreak” are material to our vehicle rental and car sharing businesses. Our subsidiaries and licensees actively use these marks.
Other Brands Our other brands include the following: • Payless, a leading rental car supplier serving the deep-value segment of the industry, which we license or operate in approximately 265 locations worldwide, including more than 175 locations operated by licensees and approximately 90 Company-operated locations. ◦ Company-operated Payless locations are primarily located in North America, the majority of which are at or near major airports.
Other Brands Our other brands include the following: • Payless, a leading rental car supplier serving the deep-value segment of the industry, which we license or operate in approximately 270 locations worldwide, including more than 160 locations operated by licensees and approximately 110 Company-operated locations. ◦ Company-operated Payless locations are primarily located in North America, the majority of which are at or near major airports.
Additional information about the regulations that we are subject to can be found in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. COMPANY INFORMATION Our principal executive office is located at 6 Sylvan Way, Parsippany, New Jersey 07054 (our telephone number is 973-496-4700).
Additional information about the regulations that we are subject to can be found in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. COMPANY INFORMATION Our principal executive office is located at 379 Interpace Parkway, Parsippany, New Jersey 07054 (our telephone number is 973-496-4700).
As well as encouraging our employees to volunteer in their local communities, we are committed to supporting a variety of causes and charities that aid people in crisis situations. • Supporting Community Resilience: Over the past 70 years, we have developed strong competencies in responding to business disruptions.
As well as encouraging our employees to volunteer in their local communities, we are committed to supporting a variety of causes and charities that aid people in crisis situations. • Supporting Community Resilience: We have developed strong competencies in responding to business disruptions.
Royalty fee revenues derived from our vehicle rental licensees in 2022 totaled $134 million, with approximately $92 million in our International segment and $42 million in our Americas segment. Licensed locations are independently operated by our licensees and range from large operations at major airport locations and territories encompassing entire countries to relatively small operations in suburban or rural locations.
Royalty fee revenues derived from our vehicle rental licensees in 2023 totaled $133 million, with approximately $92 million in our International segment and $41 million in our Americas segment. Licensed locations are independently operated by our licensees and range from large operations at major airport locations and territories encompassing entire countries to relatively small operations in suburban or rural locations.
To accomplish this task, we have developed and continue to evolve specialized training programs for our technicians. Our Supply Chain Department reviews, distributes, and makes accessible OEM technical service bulletins that can be retrieved electronically at our repair locations.
To accomplish this task, we have developed and continue to evolve specialized training programs for our technicians. Our Supply Chain Department reviews, distributes, and makes accessible original equipment manufacturer (“OEM”) technical service bulletins that can be retrieved electronically at our repair locations.
As of December 31, 2022, our Budget Truck fleet is comprised of approximately 19,000 vehicles that are rented through a network of approximately 415 dealer-operated and 390 Company-operated locations throughout the continental United States. These dealers are independently-owned businesses that generally operate other retail service businesses.
As of December 31, 2023, our Budget Truck fleet is comprised of approximately 21,000 vehicles that are rented through a network of approximately 440 dealer-operated and 415 Company-operated locations throughout the continental United States. These dealers are independently-owned businesses that generally operate other retail service businesses.
Car Rental The Budget brand is a leading supplier of vehicle rental and other mobility solutions focused primarily on more value-conscious customers. We operate or license Budget car rental locations at most of the largest airports and cities in the world. The table below presents the approximate number of Budget locations as of December 31, 2022.
Car Rental The Budget brand is a leading supplier of vehicle rental and other mobility solutions focused primarily on more value-conscious customers. We operate or license Budget car rental locations at airports and in cities worldwide. The table below presents the approximate number of Budget locations as of December 31, 2023.
Over the past several years, program vehicles have comprised of a decreasing proportion of our fleet. The approximate percentage of program vehicles in our average rental fleet within each of our reporting segments in 2022 was 44% for International and less than 1% for the Americas, respectively.
Over the past several years, program vehicles have comprised of a decreasing proportion of our fleet. The approximate percentage of program vehicles in our average rental fleet within each of our reporting segments in 2023 was 40% for International and less than 1% for the Americas.
OUR FLEET We offer a wide variety of vehicles in our rental fleet, including luxury cars, electric, hybrid and fuel efficient vehicles, specialty-use vehicles and light commercial vehicles. Our fleet consists primarily of vehicles from the current and immediately preceding model year. We maintain a single fleet of vehicles for Avis and Budget in countries where we operate both brands.
OUR FLEET We offer a wide variety of vehicles in our rental fleet, including luxury vehicles, electrified vehicles, specialty-use vehicles and light commercial vehicles. Our fleet consists primarily of vehicles from the current and immediately preceding model year. We maintain a single fleet of vehicles for Avis and Budget in countries where we operate both brands.
Well-being We take a holistic approach to well-being. We understand that to deliver our best performance, our employees need to be healthy and happy in all areas of their lives. Our Connecting You to Well-Being program focuses on helping our people achieve all aspects of wellness through encouraging habits that promote physical, emotional, and financial well-being.
We understand that to deliver our best performance, our employees need to be healthy and happy in all areas of their lives. Our well-being program focuses on helping our people achieve all aspects of wellness through encouraging habits that promote physical, emotional and financial well-being.
We dispose of our program vehicles in accordance with repurchase or guaranteed depreciation programs with major vehicle manufacturers. Fleet Utilization In 2022, our average quarterly vehicle rental fleet size ranged from a low of approximately 594,000 vehicles in the first quarter to a high of approximately 707,000 vehicles in the third quarter.
We dispose of our program vehicles in accordance with repurchase or guaranteed depreciation programs with major vehicle manufacturers. Fleet Utilization In 2023, our average quarterly vehicle rental fleet size ranged from a low of approximately 621,000 vehicles in the first quarter to a high of approximately 754,000 vehicles in the third quarter.
Our most recent Corporate Governance documents are available on the Company’s website. The information contained on the Company’s website is not included in, or incorporated by reference into, this Annual Report on Form 10-K. OUR HUMAN CAPITAL RESOURCES AND MANAGEMENT Our human capital objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future or prospective employees.
The information contained on the Company’s website is not included in, or incorporated by reference into, this Annual Report on Form 10-K. OUR HUMAN CAPITAL RESOURCES AND MANAGEMENT Our human capital objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future or prospective employees.
In 2022, approximately 60% of vehicle rental transactions originating from our Company-operated Avis locations were generated by travelers who rented from Avis under contracts between Avis and their employers or through membership in an organization with which Avis has a contractual affiliation.
In 2023, approximately 50% of vehicle rental transactions originating from Avis locations were generated by travelers who rented from Avis under contracts between Avis and their employers or through membership in an organization with which Avis has a contractual affiliation.
With respect to costs, we aim to achieve operational excellence and invest strategically to lower costs over the long term. For customer experience, we seek to enhance the customer journey by leveraging technology to, among other things, streamline reservations, modernize pick-up and exit, and digitize the on-rent experience to continue to offer value and convenience.
With respect to costs, we aim to achieve operational excellence and invest strategically to lower costs over the long term. For customer experience, we seek to enhance the end to end customer journey by leveraging technology to, among other things, streamline reservations, and modernize the pick-up, exit, on rent and return experiences.
Avis also 8 Table of Contents maintains marketing relationships with other organizations through which we are able to provide their customers with incentives to rent from Avis. Additionally, we offer “Unlimited Rewards,” an award-winning loyalty incentive program for travel agents, and Avis and Budget programs for small businesses that offer discounted rates, central billing options and rental credits to members.
Avis also 8 Table of Contents maintains marketing relationships with other travel partners through which we are able to offer their customers incentives to rent from Avis. Additionally, we offer Unlimited Rewards , our loyalty incentive program for travel agents, and Avis and Budget programs for small businesses that offer discounted rates, central billing options and rental credits to members.
We believe the range of options from our diversified brands enjoy complementary demand patterns with mid-week commercial demand balanced by weekend leisure demand. On average, our global rental fleet totaled approximately 655,000 vehicles in 2022. We completed more than 36 million vehicle rental transactions worldwide and generated total revenues of approximately $12 billion during 2022.
We believe the range of options from our diversified brands enjoy complementary demand patterns with mid-week commercial demand balanced by weekend leisure demand. On average, our global rental fleet totaled approximately 691,500 vehicles in 2023. We completed nearly 39 million vehicle rental transactions worldwide and generated total revenues of approximately $12 billion during 2023.
We utilize a customer relationship management system that enables us to deliver more targeted and relevant offers to customers across online and offline channels, including an expedited and contactless rental process, and loyalty programs that reward frequent renters with free rental days and car class upgrades.
We also market through sponsorships of major sports entities and charitable organizations. We utilize a customer relationship management system that enables us to deliver more targeted and relevant offers to customers across online and offline channels, including an expedited and contactless rental process and loyalty programs that reward frequent renters with free rental days and car class upgrades.
Alternative disposition channels provide the opportunity to increase vehicle sales prices and reduce relevant fleet costs compared to selling vehicles at auctions. Ultimate Test Drive program, retail locations, and RubyCar, our online retail sales platform, offer customers the ability to purchase well-maintained, late-model rental vehicles from our fleet.
Alternative disposition channels provide the opportunity to increase vehicle sales prices and reduce relevant fleet costs compared to selling vehicles at auctions. We sell vehicles direct to consumers through our retail locations, and through RubyCar, our online retail sales platform, which offers customers the ability to purchase well-maintained, late-model rental vehicles from our fleet.
Recruitment and Development Our talent strategy is solidly rooted in attracting and retaining a diverse workforce. We run numerous recruitment programs that aim to give back to our local communities. Our Talent Acquisition teams have strong relationships with organizations that help us reach a diverse pool of candidates including LGBTQ+ and those with disabilities.
Recruitment and Development Our talent strategy is solidly rooted in attracting and retaining a diverse workforce. Our Talent Acquisition teams have strong relationships with organizations that help us reach a diverse pool of candidates including those who identify as LGBTQ+ and those with disabilities.
We believe that our employees possess a wealth of knowledge that could and should be shared with others. We 15 Table of Contents have a wealth of established learning and talent programs that we make available to our employees, including a digital learning platform that has transformed the way we produce, manage and share learning resources.
We have a wealth of established learning and talent programs that we make available to our employees, including a digital learning platform that has transformed the way we produce, manage and share learning resources. 15 Table of Contents Diversity, Inclusion and Belonging We embrace diversity and inclusion.
The Avis mobile application also allows customers to track Avis shuttle buses to rental locations, find their vehicle, and locate nearby gas stations and parking facilities; • Avis Preferred , an award-winning frequent renter rewards program that offers counter-bypass at major airport locations.
The Avis mobile application also allows customers to track Avis shuttle buses to rental locations, find their vehicle, and locate nearby gas stations and parking facilities; • Avis Preferred , our frequent renter rewards program that offers counter bypass at major airport locations; • invited or earned customer status levels allowing for upgrades and counter bypass; • Avis QuickPass , a feature on the Avis mobile application that allows customers to bypass the counter.
Budget Locations * Americas International Total Company-operated locations 1,390 800 2,190 Licensee locations 480 1,060 1,540 Total Budget Locations 1,870 1,860 3,730 * Certain locations support multiple brands. We also license the Budget brand to independent commercial owners who generally pay royalty fees to us based on a percentage of applicable revenues.
Budget Locations * Americas International Total Company-operated locations 1,430 790 2,220 Licensee locations 485 1,030 1,515 Total Budget Locations 1,915 1,820 3,735 * Certain locations support multiple brands. We also license the Budget brand to independent commercial owners who generally pay royalty fees to us based on a percentage of applicable revenues.
Our concession agreements with the various airport authorities generally impose certain minimum operating requirements, provide for relocation in the event of future construction and provide for abatement of the minimum annual guarantee in the event of extended low passenger volume. OTHER BUSINESS CONSIDERATIONS SEASONALITY Our operating results are subject to variability due to seasonality, macroeconomic conditions and other factors.
Our concession agreements with the various airport authorities generally impose certain minimum operating requirements, provide for relocation in the event of future construction and in some cases provide for abatement of the minimum annual guarantee in the event of extended low passenger volume.
OUR STRATEGY For 2023, we expect our strategy to continue to primarily focus on costs and customer experience to strengthen our Company, enable resilience and deliver stakeholder value. To execute our strategy, we expect to leverage marketing and technology, increase the electric vehicles in our fleet, and invest in related infrastructure.
OUR STRATEGY For 2024, we expect our strategy to continue to primarily focus on customer experience and costs to strengthen our Company, maximize profitability, and deliver stakeholder value. To execute our strategy, we expect to continue to leverage marketing and invest in technology and infrastructure to support our vehicle related rentals.
In addition, competition is also influenced strongly by advertising, marketing, loyalty programs and brand reputation. We believe the prominence and service reputation of our brands, extensive worldwide ownership of mobility solutions and commitment to innovation provides us with a competitive advantage.
We believe the prominence and service reputation of our brands, extensive worldwide ownership of mobility solutions and commitment to innovation provides us with a competitive advantage.
We maintain strong links to the travel industry including marketing alliances with numerous marketing partners, such as airlines and major hotel companies. In addition, we have developed relationships that provide brand exposure and access to new customers, including deals to provide vehicles to ride-hail drivers in cities across North America.
In addition, we have developed relationships that provide brand exposure and access to new customers, including deals to provide vehicles to ride-hail drivers in cities across North America.
The table below presents the approximate number of Avis locations as of December 31, 2022. Avis Locations * Americas International Total Company-operated locations 1,890 1,080 2,970 Licensee locations 430 1,720 2,150 Total Avis Locations 2,320 2,800 5,120 * Certain locations support multiple brands. In 2022, our Company-operated Avis locations generated total revenues of approximately $6.5 billion.
The table below presents the approximate number of Avis locations as of December 31, 2023. Avis Locations * Americas International Total Company-operated locations 2,015 1,025 3,040 Licensee locations 445 1,625 2,070 Total Avis Locations 2,460 2,650 5,110 * Certain locations support multiple brands. In 2023, our Company-operated Avis locations generated total revenues of approximately $6.8 billion.
Consistent with our operating philosophy, we are committed to safety and our core belief is that health and safety is every employee’s responsibility, not only for our employees but for our customers, vendors, and all stakeholders. We currently collect incident rates to track safety performance for our United States operations, which represents our largest employee population.
Consistent with our operating philosophy, we are committed to safety and our core belief is that health and safety is every employee’s responsibility, not only for our employees but for our customers, vendors, and all stakeholders. Well-being We take a holistic approach to well-being.
With more than one million members worldwide, Zipcar is helping reduce traffic and congestion. ◦ Connected Vehicles: Connected vehicles support our ability to reduce emissions through a steadfast focus on fleet maintenance and optimization . ◦ Fleet Efficiency: We offer our customers the opportunity to choose from a wide variety of vehicles, including hybrids, electric or fuel-efficient vehicles at almost all of our locations.
Zipcar’s technology platform is key to providing a successful self-service experience for its members and effectively managing a distributed fleet of vehicles and associated parking locations. ◦ Connected Vehicles: Connected vehicles support our ability to reduce emissions through a steadfast focus on fleet maintenance and optimization . ◦ Fleet Efficiency: We offer our customers the opportunity to choose from a wide variety of vehicles, including fuel-efficient, hybrid, or electric vehicles at almost all of our locations.
COMPETITION The competitive environment for our industry is generally characterized by intense price and service competition among global, local and regional competitors. Competition in our vehicle rental operations is based primarily upon price, customer service quality, including usability of booking systems and ease of rental and return, vehicle availability, reliability, rental locations, product innovation and national or international distribution.
Competition in our vehicle rental operations is based primarily upon price, customer service quality, including usability of booking systems and ease of rental and return, vehicle availability, reliability, rental locations, product innovation and national or international distribution. In addition, competition is also influenced strongly by advertising, marketing, loyalty programs and brand reputation.
Our efforts include: ◦ Car Sharing: Zipcar continually improves its car sharing technology, which includes its mobile member app, in-vehicle telematics hardware, and reservation, fleet management and community management systems. Zipcar’s technology platform is key to providing a successful self-service experience for its members and effectively managing a distributed fleet of vehicles and associated parking locations.
Our efforts include: ◦ Car Sharing: Zipcar continually improves its car sharing technology, which includes its mobile member app, in-vehicle telematics hardware and reservation, fleet management and community management systems.
We utilize an “all hands on deck” approach within our incident management and command structure to ensure that we respond as rapidly and effectively as possible.
We utilize an “all hands on deck” approach within our incident management and command structure to ensure that we respond as rapidly and effectively as possible. We have also developed longstanding partnerships with leading national disaster response agencies, which strengthen our ability to provide support to affected customers, employees and communities.
Marketing and Sales We support our brands through a range of marketing channels and campaigns, including traditional media as well as digital media, including Internet and email marketing, social media, streaming services, and mobile device applications. We market through sponsorships of major sports entities. We also market through sponsorships of charitable organizations.
Marketing and Sales We support our brands through a range of marketing channels and campaigns, including traditional media as well as digital media, including internet and email marketing, social media, streaming services, and mobile device applications. In 2023, we launched the Plan On Us campaign as the Avis brand platform to highlight the trust our customers have in us.
Car rental volumes tend to be associated with the travel industry, particularly airline passenger volumes, or enplanements, which in turn tend to reflect general economic conditions. Our operations are also seasonal, with the third quarter of the year historically having been our strongest due to the increased level of leisure travel during the quarter.
OTHER BUSINESS CONSIDERATIONS SEASONALITY Our operating results are subject to variability due to seasonality, macroeconomic conditions and other factors. Car rental volumes tend to be associated with the travel industry, particularly airline passenger volumes, or enplanements, which in turn tend to reflect general economic conditions.
In addition, we currently purchase insurance coverage to limit our exposure to legal fees and expenses resulting from cybersecurity breaches. We generally retain economic exposure for liability to third parties arising from vehicle rental and car sharing services in the United States, Canada, Puerto Rico and the U.S.
We generally retain economic exposure for liability to third parties arising from vehicle rental and car sharing services in the United States, Canada and Puerto Rico in accordance with the minimum financial responsibility requirements (“MFRs”) and primacy of coverage laws of the relevant jurisdiction.
We have also developed longstanding partnerships with leading national disaster response agencies, which strengthen our ability to provide support to affected customers, employees and communities. 14 Table of Contents Governance: Our Board of Directors monitors the effectiveness of our policy and decision making, including with respect to ESG, on the current and long-term value of our company.
Governance: Our Board of Directors monitors the effectiveness of our policy and decision making, including with respect to ESG, on the current and long-term value of our company. 14 Table of Contents Our most recent Corporate Governance documents are available on the Company’s website.
We have a partially variable cost structure and routinely adjust the size, and therefore the cost, of our rental fleet in response to fluctuations in demand. The following chart presents our quarterly revenues for the years ended December 31, 2020, 2021 and 2022.
Our operations are also seasonal, with the third quarter of the year historically having been our strongest due to the increased level of leisure travel during the quarter. We have a partially variable cost structure and routinely adjust the size, and therefore the cost, of our rental fleet in response to fluctuations in demand.
Removed
We offer customized bundling of certain of these ancillary products and services, allowing our customers to benefit from discounted pricing and providing customers the flexibility to add multiple products or services that suit their needs.
Added
We are able to reach and merchandise cars and rentals to a diverse demographic of consumers through our strategic partnerships with airlines, associations and hotel companies, and we maintain strong links to the travel industry.
Removed
Virgin Islands, in accordance with the minimum financial responsibility requirements (“MFRs”) and primacy of coverage laws of the relevant jurisdiction.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeShould we be found to not be in compliance with the GDPR, CCPA, VCDPA or similar privacy and data protection laws, we could be subject to substantial monetary forfeitures, government consent decrees, regulatory enforcement actions, and other penalties that could negatively impact our operating results or harm our reputation.
Biggest changeShould we be found to not be in compliance with the GDPR, UK DPA, CCPA, VCDPA or similar privacy and data protection laws, we could be subject to substantial monetary penalties, government consent decrees, regulatory enforcement actions, and other sanctions that could negatively impact our operating results or harm our reputation. 28 Table of Contents The centralized nature of our information systems combined with the expansive nature of our global business requires the routine flow of information regarding employees, customers and potential customers, and suppliers across national borders, particularly in the United States, the United Kingdom, and Europe.
We are also exposed to risk to the extent that any auto manufacturer increases the cost of vehicles, including as a result of inflation, labor shortages or supply chain disruptions, or declines to sell vehicles to us on terms or at prices consistent with past practice.
We are also exposed to risk to the extent that any auto manufacturer increases the cost of vehicles, including as a result of inflation, labor shortages or disruptions, or supply chain disruptions, or declines to sell vehicles to us on terms or at prices consistent with past practice.
We may be subject to complaints and/or litigation involving our customers, licensees, employees, independent operators and others with whom we conduct business, including claims for bodily injury, death and property damage related to use of our vehicles or our locations, or claims based on allegations of discrimination, misclassification as exempt, wage and hour pay disputes, and various other claims.
We may be subject to complaints and/or litigation involving our customers, licensees, employees, independent operators and others with whom we conduct business, including claims for bodily injury, death and property damage related to use of our vehicles or our locations, or claims based on allegations of discrimination, misclassification as exempt, wage and hour pay disputes or allegations related to our business practices, and various other claims.
Certain of our debt obligations contain restrictive covenants and provisions that limit our ability to, among other things, incur additional debt; provide guarantees; pay dividends or distributions, redeem or repurchase capital stock; prepay, redeem or repurchase debt; create or incur liens; make distributions from our subsidiaries; sell assets and capital stock of our subsidiaries; and consolidate merge with or into, or sell substantially all of our assets to, another person.
Certain of our debt obligations contain restrictive covenants and provisions that may limit our ability to, among other things, incur additional debt; provide guarantees; pay dividends or distributions, redeem or repurchase capital stock; prepay, redeem or repurchase debt; create or incur liens; make distributions from our subsidiaries; sell assets and capital stock of our subsidiaries; and consolidate or merge with or into, or sell substantially all of our assets to, another person.
Failure to meet these data security standards could result in substantial increased fees to credit card companies, other liabilities and/or loss of the right to collect credit card payments, which could adversely impact our financial condition or results of operations. GENERAL RISK FACTORS We face risks related to the market price of our common stock.
Failure to meet these data privacy and security standards could result in substantial increased fees to credit card companies, other liabilities and/or loss of the right to collect credit card payments, which could adversely impact our financial condition or results of operations. GENERAL RISK FACTORS We face risks related to the market price of our common stock.
If that were to occur, the holders of our asset-backed debt may have the ability to exercise their right to instruct the trustee to direct the return of program vehicles and/or the sale of risk vehicles to generate proceeds sufficient to repay such debt. Program and leased vehicles enable us to determine our depreciation expense in advance of purchase.
If that were to occur, the holders of our asset-backed debt may have the ability to exercise their right to instruct the trustee to direct the return of program vehicles and/or the sale of risk vehicles to generate proceeds sufficient to repay such debt. Program vehicles enable us to determine our depreciation expense in advance of purchase.
At some of our locations, we outsource to third party independent contractors who operate the business as a separate entity and pay a commission for operating their business under our brands. There is a growing trend in the United States aimed at the gig economy to define independent contractors as employees.
At some of our locations, we outsource to third-party independent contractors who operate the business as a separate entity and we pay these independent contractors a commission for operating their business under our brands. There is a growing trend in the United States aimed at the gig economy to define independent contractors as employees.
We face risks related to our property leases and vehicle rental concessions. We lease or have vehicle rental concessions at locations throughout the world, including at most airports where we operate and at train stations throughout Europe, where vehicle rental companies are frequently required to bid periodically for space at these locations.
We face risks related to our property leases and vehicle rental concessions. We have property leases or vehicle rental concessions at locations throughout the world, including at most airports where we operate and at train stations throughout Europe, where vehicle rental companies are frequently required to bid periodically for space at these locations.
These covenants and provisions also limit our ability to respond to adverse changes in general economic, industry and competitive conditions, as well as changes in government regulation and changes to our business.
These covenants and provisions also may limit our ability to respond to adverse changes in general economic, industry and competitive conditions, as well as changes in government regulation and changes to our business.
Privacy laws in the countries where we operate are developing at a rapid pace and may be interpreted and applied inconsistently from jurisdiction to jurisdiction and impose inconsistent or conflicting requirements. Complying with varying jurisdictional privacy requirements could increase our operating costs, divert management attention or require additional changes to our business practices.
Data protection laws in the countries where we operate are developing at a rapid pace and may be interpreted and applied inconsistently from jurisdiction to jurisdiction and impose inconsistent or conflicting requirements. Complying with varying jurisdictional privacy and data protection requirements could increase our operating costs, divert management attention or require additional changes to our business practices.
When travel demand or economic conditions in the United States, Europe and/or worldwide weakens, our financial condition and results of operations are often adversely impacted. 19 Table of Contents Any significant airline capacity reductions, airfare or related fee increases, reduced flight schedules, or any events that disrupt or reduce business or leisure air travel or weaken travel demand and tourism, such as work stoppages, military conflicts, terrorist incidents, natural disasters, disease epidemics, or the response of governments to any such events, could have an adverse impact on our results of operations.
When travel demand or economic conditions in the United States, Europe and/or worldwide weaken, our financial condition and results of operations are often adversely impacted. 18 Table of Contents Any significant airline capacity reductions, airfare or related fee increases, reduced flight schedules, or any events that disrupt or reduce business or leisure air travel or weaken travel demand and tourism, such as work stoppages, military conflicts, terrorist incidents, natural disasters, disease epidemics, or the response of governments to any such events, could have an adverse impact on our results of operations.
We are subject to multiple, and sometimes conflicting, laws and regulations in the countries in which we operate that relate to, among others, consumer protection, competition and antitrust, customer privacy and data protection, securities and public disclosure, automotive retail sales, franchising, corruption and anti-bribery, environmental matters, taxes, automobile-related liability, labor and employment matters, cost and fee recovery, currency-exchange and other various banking and financial industry regulations, health and safety, insurance rates and products, claims management, protection of our trademarks and other intellectual property and other 24 Table of Contents trade-related laws and regulations.
We are subject to multiple, and sometimes conflicting, laws and regulations in the countries in which we operate that relate to, among others, consumer protection, competition and antitrust, customer privacy and data protection, securities and public disclosure, automotive retail sales, franchising, corruption and anti-bribery, environmental matters, taxes, automobile-related liability, labor and employment matters, cost and fee recovery, currency-exchange and other various banking and financial industry regulations, health and safety, insurance rates and products, claims management, protection of our trademarks and other intellectual property and other trade-related laws and regulations.
Current privacy and data protection laws, particularly the European Union’s General Data Protection Regulation and the equivalent in the United Kingdom (collectively, the “GDPR”), California Consumer Privacy Act including modifications by the California Privacy Rights Act (collectively, the “CCPA”), the Virginia Consumer Data Protection Act (“VCDPA”), and other regulations in the jurisdictions in which we operate impose obligations and restrictions regarding the types of information that we may collect, process, sell and retain about our customers, employees and other individuals with whom we deal or propose to deal, some of which may be non-public personal data.
Current privacy and data protection laws, particularly the European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom Data Protection Act (“UK DPA”), the California Consumer Privacy Act including modifications by the California Privacy Rights Act (collectively, the “CCPA”), the Virginia Consumer Data Protection Act (“VCDPA”), and other regulations in the jurisdictions in which we operate impose obligations and restrictions regarding the types of information that we may collect, process, sell and retain about our customers, employees and other individuals with whom we deal or propose to deal, some of which may be non-public personal data.
A reduction in residual values for risk vehicles in our rental 18 Table of Contents fleet could cause us to sustain a substantial loss on the sale of such vehicles or require us to depreciate those vehicles at a more accelerated rate than previously anticipated while we own them.
A reduction in residual values for risk vehicles in our rental fleet could cause us to 17 Table of Contents sustain a substantial loss on the sale of such vehicles or require us to depreciate those vehicles at a more accelerated rate than previously anticipated while we own them.
Fleet costs typically represent our single largest expense and can vary from year to year based on the prices that we are able to purchase and dispose of our vehicles. We purchase program vehicles, which are guaranteed a rate of depreciation through agreements with auto manufacturers, and non-program, or “risk” vehicles.
Fleet costs typically represent our single largest expense and can vary from year to year based on the prices that we are able to purchase and dispose of our vehicles. We purchase program vehicles, which are guaranteed a rate of depreciation through agreements with auto manufacturers, and non-program, or risk vehicles.
We may experience system interruptions or disruptions for a variety of reasons, 28 Table of Contents including from network failures, power outages, cyber-attacks, employee errors, software errors, an unusually high volume of visitors attempting to access our systems, or other events such as fire, explosions, earthquakes, storms, floods, epidemics, strikes, acts of war, civil unrest or terrorist acts.
We may experience system interruptions or disruptions for a variety of reasons, including from network failures, power outages, cyber-attacks, employee errors, software errors, an unusually high volume of visitors attempting to access our systems, or other events such as fire, explosions, earthquakes, storms, floods, epidemics, strikes, acts of war, civil unrest or terrorist acts.
We carry a significant amount of goodwill and identifiable intangible assets on our consolidated balance sheets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill and indefinite-lived intangible assets for impairment each year, or more frequently if circumstances suggest an impairment may have occurred.
We carry a significant amount of goodwill and identifiable intangible assets on our Consolidated Balance Sheets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess 22 Table of Contents goodwill and indefinite-lived intangible assets for impairment each year, or more frequently if circumstances suggest an impairment may have occurred.
From 2004 until its elimination, we utilized like-kind exchange to replace vehicles in a manner that allowed for a material deferral of U.S. federal and state income taxes.
From 2004 until its elimination, we utilized like-kind exchange to replace vehicles in a manner that allowed for a material deferral of United States (U.S.) federal and state income taxes.
Unfavorable ESG ratings and investment community divestment initiatives may lead to negative publicity or investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital. We face risks related to franchising or licensing laws and regulations.
Unfavorable ESG ratings and investment 24 Table of Contents community divestment initiatives may lead to negative publicity or investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital. We face risks related to franchising or licensing laws and regulations.
We typically utilize derivative instruments to manage fluctuations in foreign exchange rates, interest rates and gasoline prices. The derivative instruments we use to manage our risk are usually in the form of interest rate swaps and caps and foreign exchange and commodity contracts.
We typically utilize derivative instruments to manage fluctuations in foreign exchange rates, interest rates and fuel prices. The derivative instruments we use to manage our risk are usually in the form of interest rate swaps and caps and foreign exchange and commodity contracts.
While we take steps to manage our currency exposure, such as currency hedging, we may not be able to effectively limit our exposure to intermediate- or long-term movements in currency exchange rates, which could adversely impact our financial condition or results of operations. 23 Table of Contents We face risks related to our derivative instruments.
While we take steps to manage our currency exposure, such as currency hedging, we may not be able to effectively limit our exposure to intermediate- or long-term movements in currency exchange rates, which could adversely impact our financial condition or results of operations. We face risks related to our derivative instruments.
The risks involved in engaging in these types of transactions include the possible failure to successfully integrate the operations of acquired businesses, or to realize expected benefits within the anticipated time frame, or at all, such as cost savings, synergies, sales and growth opportunities.
The risks involved in engaging in these types of transactions include the possible failure to successfully integrate the operations of acquired businesses, or to realize expected benefits within the anticipated time frame, or at all, such as cost savings, synergies, sales and growth 20 Table of Contents opportunities.
However, these provisions could apply even if such a potential acquisition of control of the Company may be considered beneficial by some stockholders and could delay or prevent an acquisition of control that our Board of Directors determines is not in the best interests of our Company and our stockholders. 30 Table of Contents
However, these provisions could apply even if such a potential acquisition of control of the Company may be considered beneficial by some stockholders and could delay or prevent an acquisition of control that our Board of Directors determines is not in the best interests of our Company and our stockholders.
If we are unable to refinance maturing indebtedness at interest rates that are equivalent to or lower than the interest rates on our maturing debt, our results of operations or our financial condition may be adversely affected. We face certain risks related to our share repurchase program.
If we are unable to refinance maturing indebtedness at interest rates that are equivalent to or lower 26 Table of Contents than the interest rates on our maturing debt, our results of operations or our financial condition may be adversely affected. We face certain risks related to our share repurchase program.
Should new laws or regulations arise that place new limits on our ability to offer loss damage waivers to our customers, our financial condition or results of operations could be adversely impacted. Additionally, current U.S. federal law pre-empts state laws that impute tort liability based solely on ownership of a vehicle involved in an accident.
Should new laws or regulations arise that place new limits on our ability to offer loss damage waivers to our customers, our financial condition or results of operations could be adversely impacted. Additionally, current United States. federal law pre-empts state laws that impute tort liability based solely on ownership of a vehicle involved in an accident.
We have developed certain initiatives, goals and practices relating to environmental, social and governance (ESG) matters. We may not be successful in implementing these initiatives, goals and practices, including due to factors beyond our control, and even if successful, they may not achieve our desired or expected outcomes.
We have developed certain initiatives, goals and practices relating to ESG matters. We may not be successful in implementing these initiatives, goals and practices, including due to factors beyond our control, and even if successful, they may not achieve our desired or expected outcomes.
In addition, our failure to maintain the security of the data we hold, whether as a result of our own error or the actions of others, could harm our reputation or give rise to legal liabilities that adversely impact our financial condition or results of operations.
Moreover, our failure to maintain the security of the data we hold, whether as a result of our own error or the actions of others, could harm our reputation or give rise to legal liabilities that adversely impact our financial condition or results of operations.
In 2022, on average approximately 88% of our rental fleet was comprised of risk vehicles. The costs of our risk vehicles may be adversely impacted by the relative strength of the used car market, particularly the market for one- to two-year old used vehicles, or potentially by the insolvency or bankruptcy of an auto manufacturer from whom we purchase vehicles.
In 2023, on average approximately 90% of our rental fleet was comprised of risk vehicles. The costs of our risk vehicles may be adversely impacted by the relative strength of the used car market, particularly the market for one- to two-year old used vehicles, or potentially by the insolvency or bankruptcy of an auto manufacturer from whom we purchase vehicles.
We rely upon third-party distribution channels to generate a significant portion of our vehicle rental reservations, including: • traditional and online travel agencies, airlines and hotel companies, marketing partners such as credit card companies and membership organizations and other entities that help us attract customers; and • global distribution systems (“GDS”), such as Amadeus, Galileo/Apollo, Sabre and Worldspan, that connect travel agents, travel service providers and corporations to our reservation systems.
We rely upon third-party distribution channels to generate a significant portion of our vehicle rental reservations, including: • traditional and online travel agencies, airlines and hotel companies, marketing partners such as credit card companies and membership organizations and other entities that help us attract customers; and • global distribution systems (“GDS”) that connect travel agents, travel service providers and corporations to our reservation systems.
Our failure to comply with these restrictive covenants and provisions, if not waived, would cause a default under the applicable debt agreement and could result in a cross-default under several of our other debt obligations, including our U.S. and European asset-backed debt facilities.
Our failure to comply with these restrictive covenants and provisions, if not waived, would cause a default under the applicable debt agreement and could result in a cross-default under several of our other debt obligations, including our United States and European asset-backed debt facilities.
Our global operations expose us to several forms of liability, including claims for bodily injury, death and property damage related to the use of our vehicles, or for having our customers on our premises, as well as workers’ compensation and other claims.
We face risks related to liability and insurance. Our global operations expose us to several forms of liability, including claims for bodily injury, death and property damage related to the use of our vehicles, or for having our customers on our premises, as well as workers’ compensation and other claims.
The financial position and results of operations of many of our foreign subsidiaries are reported in the relevant local currency and then translated to U.S. dollars at the applicable currency exchange rate for inclusion in our Consolidated Financial Statements.
The financial position and results of operations of many of our foreign subsidiaries are reported in the relevant local currency and then translated to United States dollars at the applicable currency exchange rate for inclusion in our Consolidated Financial Statements.
If our ESG initiatives, goals, and practices do not meet our expectations or those of our investors or other stakeholders, which continue to evolve, we may incur additional costs, and our brand, reputation and our results of operations and financial condition may be adversely impacted.
If our ESG initiatives, goals, and practices do not meet our expectations, those of our investors or other stakeholders, or requirements of local rules and regulations, each of which continue to evolve, we may incur additional costs, and our brand, reputation and our results of operations and financial condition may be adversely impacted.
RISKS RELATED TO LEGAL, REGULATORY AND ESG-RELATED MATTERS Costs associated with lawsuits, investigations or increases in legal reserves that we establish based on our assessment of contingent liabilities may have an adverse effect on our results of operations.
RISKS RELATED TO LEGAL, REGULATORY AND ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (“ESG”) RELATED MATTERS Costs associated with lawsuits, investigations or increases in legal reserves that we establish based on our assessment of contingent liabilities may have an adverse effect on our results of operations.
Our Board of Directors previously authorized the repurchase of up to $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in February 2023 (the “Share Repurchase Program”). As of February 13, 2023, approximately $1.7 billion remains available under the Share Repurchase Program.
Our Board of Directors previously authorized the repurchase of up to $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in February 2023 (the “Share Repurchase Program”). As of December 31, 2023, approximately $802 million remains available under the Share Repurchase Program.
These laws also impose significant forfeitures and penalties for noncompliance and afford private rights of action to individuals under certain circumstances. The Company has adopted policies and procedures in compliance with these laws, which may need to be updated as additional information concerning best practices are made available through guidance from regulatory authorities or published enforcement decisions.
These laws also impose significant forfeitures and penalties for noncompliance and afford private rights of action to individuals under certain circumstances. The Company has adopted policies and procedures in compliance with these laws, which may need to be updated as new laws are passed or as additional guidance is made available from regulatory authorities or published enforcement decisions.
While we have been successful at partially mitigating some of these requirements in the past, including when enplanements have decreased significantly, there is no guarantee that we will be able to do so in the future, and if we are not successful our costs as a percentage of revenue could increase. 21 Table of Contents We face risks related to the seasonality of our business.
While we have been successful at partially mitigating some of these requirements in the past, including when enplanements have decreased significantly, there is no guarantee that we will be able to do so in the future, and if we are not successful our costs as a percentage of revenue could increase.
We currently sell risk vehicles through various sales channels in the used vehicle marketplace, including traditional auctions, on-line auctions, direct-to-dealer sales and directly to consumers through either retail lots or on-line.
We currently sell risk vehicles through various sales channels in the used vehicle marketplace, including traditional auctions, and alternative disposition channels, including online auctions, direct-to-dealer sales and directly to consumers through either retail lots or online.
Should rules establishing limitations on greenhouse gas or other emissions or rules imposing fees on entities deemed to be responsible for greenhouse gas emissions, or rules establishing bans on diesel or fuel vehicles from entering certain locations become effective in the countries in which we operate, demand for our services could be affected, our fleet and/or other costs could increase, and our business could be adversely impacted. 25 Table of Contents We face risks related to ESG matters.
Should rules establishing limitations on greenhouse gas or other emissions or rules imposing fees on entities deemed to be responsible for greenhouse gas emissions, or rules establishing bans on diesel or fuel vehicles from entering certain locations become effective in the countries in which we operate, demand for our services could be affected, our fleet and/or other costs could increase, and our business could be adversely impacted.
These channels may not produce stable vehicle prices in the future, as the market for used vehicles is subject to changes in demand for such vehicles, consumer interests, inventory levels, new car pricing, interest rates, fuel costs, tariffs and general economic conditions, and recent reports have suggested that prices in the used vehicle market may decrease in 2023 amid rising interest rates and improved availability of new cars and trucks.
These channels may not produce stable vehicle prices in the future, as the market for used vehicles is subject to changes in demand for such vehicles, consumer interests, inventory levels, new car pricing, interest rates, fuel costs, tariffs and general economic conditions, and recent reports have suggested that prices in the used vehicle market may decrease in 2024.
As of December 31, 2022, our total outstanding debt of approximately $18.6 billion included unhedged interest rate sensitive debt of approximately $5.8 billion. During our seasonal borrowing peak in 2022, outstanding unhedged interest rate sensitive debt totaled approximately $7.2 billion. Virtually all of our debt under vehicle programs and certain of our corporate indebtedness matures within the next five years.
As of December 31, 2023, our total outstanding debt of approximately $23.9 billion included unhedged interest rate sensitive debt of approximately $7.6 billion. During our seasonal borrowing peak in 2023, outstanding unhedged interest rate sensitive debt totaled approximately $7.6 billion. Virtually all of our debt under vehicle programs and certain of our corporate indebtedness matures within the next five years.
Our program and leased vehicles also generally provide us with flexibility to reduce the size of our fleet rapidly. This flexibility is affected as the percentage of program vehicles in our fleet is reduced, or if the features of the programs provided by auto manufacturers are less favorable.
Our program vehicles also generally provide us with flexibility to reduce the size of our fleet rapidly. This flexibility is negatively affected as the percentage of program vehicles in our fleet is reduced as has been the trend over the last several years, or if the features of the programs provided by auto manufacturers are less favorable.
RISKS RELATED TO THE NATURE OF OUR BUSINESS Damage to our reputation or brands may negatively impact our business. Our reputation and global brands are integral to the success of our business. Maintenance of our Company’s reputation and brands depends on many factors, including the quality of our products and services and the trust we maintain with our customers.
Our reputation and global brands are integral to the success of our business. Maintenance of our Company’s reputation and brands depends on many factors, including the quality of our products and services and the trust we maintain with our customers.
A portion of our borrowings, primarily our vehicle-backed borrowings, bears interest at variable rates that expose us to interest rate risk.
We face risks related to increases in interest rates. A portion of our borrowings, primarily our vehicle-backed borrowings, bears interest at variable rates that expose us to interest rate risk.
In our business, the third quarter of the year has historically been our most profitable quarter, as measured by net income and Adjusted EBITDA, due to the increased level of summer leisure travel and household moving activity.
We face risks related to the seasonality of our business. In our business, the third quarter of the year has historically been our most profitable quarter, as measured by net income and Adjusted EBITDA, due primarily to the increased level of summer leisure travel.
The ongoing military conflict between Russia and Ukraine and the related sanctions are causing uncertainty that may have an adverse impact on our business, financial condition and results of operations. The world economy and markets are experiencing volatility and disruption from the ongoing military conflict between Russia and Ukraine, the length and impact of which are highly unpredictable.
The ongoing military conflicts in the Middle East and Eastern Europe are causing uncertainty that may have an adverse impact on our business, financial condition and results of operations. The world economy and markets are experiencing volatility and disruption from the ongoing military conflicts in the Middle East and Eastern Europe, the length and impact of which are highly unpredictable.
This conflict has led to, and could in the future lead to, significant volatility in our costs, including gas and fleet costs, including as a result of sanctions or any embargos on oil sales imposed on or by the Russian government; further impacts to fleet availability; and impacts on demand for travel as a result of weakness in economic conditions, increased inflation 20 Table of Contents or increases in the cost of gas.
These conflicts have led to, and could in the future lead to, significant volatility in our costs, including fuel and fleet costs, including as a result of sanctions or any embargoes on oil sales imposed on or by the Russian government; impacts to fleet availability; and impacts on demand for travel as a result of weakness in economic conditions, increased inflation 19 Table of Contents or increases in the cost of fuel as well as other factors.
Increasing attention to climate change, increasing societal expectations on companies to address climate change, and potential consumer and customer use of substitutes to our products may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation, reputational harm and negative impacts on our stock price and access to capital markets.
Increasing attention to climate change, increasing societal expectations on companies to address climate change, the increase in proposed and adopted ESG regulations and laws, both domestically (including in California) and globally (especially in the European continent) and potential consumer and customer use of substitutes to our products may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation, reputational harm and negative impacts on our stock price and access to capital markets.
If we are not adequately prepared to meet consumer demand for electric, hybrid and autonomous vehicles as such demand develops, including if we are unable to attain an optimal and consistently reliable charging infrastructure and systems, which will require substantial capital investment, our financial condition or results of operations could be adversely impacted. 22 Table of Contents We face risks related to liability and insurance.
If we are not adequately prepared to meet consumer demand for electric, hybrid and autonomous vehicles as such demand develops, including if we are unable to attain an optimal and consistently reliable charging infrastructure and systems, which will require substantial capital investment, or if consumer demand for electric, hybrid and autonomous vehicles fails to meet our expectations, including due to slower or inadequate investments in charging infrastructure by third parties, our financial condition or results of operations could be adversely impacted.
Third parties may have the technology or expertise to breach the security of our customer transaction data and our security measures may not prevent or timely detect physical security or cybersecurity breaches, which could result in substantial harm to our business, our reputation or our results of operations.
As cybersecurity threats become more frequent, intense and sophisticated, costs of proactive defense measures may increase. 27 Table of Contents Third parties may have the technology or expertise to breach the security of our customer transaction data and our security measures may not prevent or timely detect physical security or cybersecurity breaches, which could result in substantial harm to our business, our reputation or our results of operations.
As an example, the OECD has put forth two proposals—Pillar One and Pillar Two—that revise the existing profit allocation and nexus rules (profit allocation based on location of sales versus physical presence) and ensure a minimal level of taxation, respectively.
As an example, the OECD has put forth two proposals—Pillar One and Pillar Two—that revise the existing profit allocation and nexus rules (profit allocation based on location of sales versus physical presence) and ensure a minimal level of taxation, respectively. During 2023, the OECD issued administrative guidance which provides for transition and safe harbor rules for the global minimum tax.
The effect of the repeal of the like-kind exchange treatment for vehicle sales has been largely 26 Table of Contents offset through 2022 by the availability of full expensing for certain business assets (including our vehicles) in the year placed in service.
The effect of the repeal of the like-kind exchange treatment for vehicle sales has been largely offset through 2022 by the availability of full expensing for certain business assets (including our vehicles) in the year placed in service. During 2023, the full expensing provision has started to phase-out ratably over five years.
In addition, as a result of the conflict, governmental and non-governmental entities have issued alerts noting the potential for increased cyber-attacks. Such risks and disruptions could adversely impact our business, results of operations and financial condition. Impacts from COVID-19 continue to impact our company.
In addition, as a result of the conflict in Eastern Europe, governmental and non-governmental entities have issued alerts noting the potential for increased cyber-attacks. Such risks and disruptions could adversely impact our business, results of operations and financial condition. RISKS RELATED TO THE NATURE OF OUR BUSINESS Damage to our reputation or brands may negatively impact our business.
Likewise, any disruption of the asset-backed financing or credit markets could also increase our borrowing costs, as we seek to refinance existing debt or increase our indebtedness.
Likewise, any disruption of the asset-backed financing or credit markets could also increase our borrowing costs, as we seek to refinance existing debt or increase our indebtedness. In addition, we could be subject to increased collateral requirements to the extent that we request any amendment or renewal of any of our existing asset-backed or debt financings.
We may in the future be subject to potential laws or regulations that could negatively impact our ability to separately state, charge and recover such costs, which could adversely impact our financial condition or results of operations.
We may in the future be subject to potential laws or regulations that could negatively impact our ability to separately state, charge and recover such costs, which could adversely impact our financial condition or results of operations. 23 Table of Contents We are seeking Advanced Pricing Agreements with certain tax authorities to obtain certainty regarding our transfer pricing policy.
The impact on the Company of these provisions, which became effective on January 1, 2023, will depend on several factors, including recently released and forthcoming interpretive regulatory guidance. The Company continues to review and assess the provisions of the IRA, and its potential impact on our financial condition, results of operations, liquidity, and cash flows.
The impact on the Company of these provisions, which became effective on January 1, 2023, will depend on several factors, including recently released and forthcoming interpretive regulatory guidance.
Such production may be curtailed as a result of a wide range of factors, including impacts of a pandemic and supply chain impacts, including shortages of parts, such as semiconductors, which have caused and may continue to cause certain auto manufacturers to suspend or slow production of new vehicles.
Such production may be curtailed as a result of a wide range of factors, including impacts of a pandemic and supply chain impacts, including shortages of parts, which have impacted certain manufacturers in the past.
There is also a high level of uncertainty in today’s tax environment stemming from both global initiatives put forth by the Organisation for Economic Co-operation and Development (the “OECD”), and unilateral measures being implemented by various countries.
The Company continues to review and assess the provisions of the IRA, and its potential impact on our financial condition, results of operations, liquidity, and cash flows. 25 Table of Contents There is also a high level of uncertainty in today’s tax environment stemming from both global initiatives put forth by the Organisation for Economic Co-operation and Development (the “OECD”), and unilateral measures being implemented by various countries.
We reinsure certain insurance exposures as well as offer optional insurance coverages through unaffiliated third-party insurers that then reinsure all or a portion of their risks through our insurance company subsidiaries, which subjects us to regulation under various insurance laws and statutes.
Should we be subject to an adverse ruling, or experience other significant liability for which we did not plan and were not adequately insured, our results of operations, financial position or cash flows could be negatively impacted. 21 Table of Contents We reinsure certain insurance exposures as well as offer optional insurance coverages through unaffiliated third-party insurers that then reinsure all or a portion of their risks through our insurance company subsidiaries, which subjects us to regulation under various insurance laws and statutes.
We are seeking Advanced Pricing Agreements with certain tax authorities to obtain certainty regarding our transfer pricing policy While this effort is ongoing, the process of negotiating and ultimately entering into these agreements may take several years.
While this effort is ongoing, the process of negotiating and ultimately entering into these agreements has been lengthy and may take several more years.
This decision imposes additional obligations and restrictions related to data transfers between the EU and other countries, including the U.S., and may affect our ability to serve our customers and efficiently manage our employees and operations.
This continued uncertainty may affect our ability to process and transfer personal data, which could impact our ability to serve our customers and efficiently manage our employees and operations.
Several other US state privacy laws will go into effect in 2023, including the Colorado Privacy Act, the Connecticut Data Privacy Act, and the Utah Consumer Privacy Act. These laws and regulations, each wide-ranging in scope, provide individuals located in those jurisdictions greater control over their personal data.
A patchwork of new and proposed privacy and data protection legislation and regulation continues to evolve across the jurisdictions in which we operate. These laws and regulations, each wide-ranging in scope, provide individuals located in those jurisdictions with greater control over their personal data and impose various requirements on our business relating to the collection and processing of personal data.
Removed
The COVID-19 pandemic has affected, and may continue to affect, our business, financial condition, results of operations and/or cash flows. Governmental authorities took, and continue to take, measures to address the pandemic, including, but not limited to, restrictions on travel.
Added
For example, events of a global nature such as the COVID-19 pandemic have had, and may in the future have, material impacts on the Company.
Removed
As a result, we faced, among other impacts to our business, reductions in travel volumes, impacts to staffing levels, and delays in receiving delivery of new vehicles from vehicle manufacturers, including, but not limited to, due to a global semiconductor supply shortage.
Added
While proposed legislation is presently under consideration in Congress to postpone this phase-out, no assurance can be given that the phase-out will be delayed.
Removed
As a result of the delays in receiving new vehicle deliveries, the average mileage of a portion of the vehicles in our fleet has increased, and we could face challenges meeting consumer demand and customer expectations should such delays continue.
Added
Further, many countries have proposed or have begun to implement changes to existing tax laws in response to the OECD’s proposals. The Company continues to closely monitor any such developments and guidance issued to determine any impact on our effective tax rate, cash tax obligations and operations.
Removed
We cannot anticipate with any certainty the length, scope or severity of the pandemic’s impact in each of the jurisdictions that we operate, including due to new variants.
Added
Although new and updated personal data transfer mechanisms, such as the European Commission’s Standard Contractual Clauses, have been adopted by regulators following the invalidation of previously available transfer mechanisms in 2020 by the Court of Justice of the European Union, these mechanisms remain subject to legal uncertainty and face ongoing scrutiny from EU supervisory authorities.
Removed
If the pandemic continues, there could be adverse impacts to our revenues, customer demand and expenses, the used car market, our workforce, our indebtedness and adequacy of cash flow, earnings and liquidity, consumer sentiment and discretionary spending patterns, and our overall financial condition, any of which could be material.
Removed
Should we be subject to an adverse ruling, or experience other significant liability for which we did not plan and were not adequately insured, our results of operations, financial position or cash flows could be negatively impacted.
Removed
The full expensing provision is scheduled to start to phase-out ratably over five years starting in 2023 and there can be no assurance that the phase-out will be delayed or that full expensing will be made permanent.
Removed
The Council of the EU recently adopted a Directive to ensure a global minimum level of taxation for certain multinational groups active in the EU consistent with Pillar Two, to be effective beginning after 2023.
Removed
In addition, we could be subject to increased collateral requirements to the extent that we request any amendment or renewal of any of our existing asset-backed or debt financings. 27 Table of Contents We face risks related to increases in interest rates.
Removed
As cybersecurity threats become more frequent, intense and sophisticated, costs of proactive defense measures may increase.
Removed
These laws impose several requirements relating to rights of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification, the use of third-party processors in connection with the processing of personal 29 Table of Contents data, and the transfer or sale of personal data, and measures we must take to demonstrate compliance.
Removed
The centralized nature of our information systems combined with the global nature of our business requires the routine flow of information about employees, customers and potential customers across national borders, particularly in the United States, the United Kingdom and Europe. In 2020, the Court of Justice of the European Union invalidated mechanisms for transferring personal information out of the EU.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed4 unchanged
Biggest changeWe own a facility in Virginia Beach, Virginia, which serves as a satellite administrative facility for our car and truck rental operations. We also lease office space in Tulsa, Oklahoma, and Boston, Massachusetts, pursuant to leases expiring in 2025 and 2031, respectively. These locations primarily provide operational and administrative services or contact center operations for our Americas segment.
Biggest changeWe also lease office space in Tulsa, Oklahoma and Boston, Massachusetts, pursuant to leases expiring in 2028 and 2031, respectively. These locations primarily provide operational and administrative services or contact center operations for our Americas segment.
See Note 3 – Leases to our Consolidated Financial Statements for information regarding lease commitments. We believe that our properties are sufficient to meet our present needs and we do not anticipate any difficulty in securing additional space, as needed, on acceptable terms.
See Note 3 – Leases to our Consolidated Financial Statements for information regarding lease commitments. We believe that our properties are sufficient to meet our present needs and we do not anticipate any difficulty in securing additional space, as needed, on acceptable terms. 30 Table of Contents
Removed
ITEM 2. PROPERTIES Our principal executive offices are located at 6 Sylvan Way, Parsippany, New Jersey 07054 pursuant to a lease agreement that expires in October 2023. Upon expiration of our lease agreement, we plan to relocate to another property in the same city.
Added
ITEM 2. PROPERTIES Our principal executive offices are owned and located at 379 Interpace Parkway, Parsippany, New Jersey 07054. We own a facility in Virginia Beach, Virginia, which serves as a satellite administrative facility for our car and truck rental operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+0 added−0 removed0 unchanged
Biggest changeDIVIDEND POLICY We neither declared nor paid any cash dividends on our common stock in 2022 or 2021, and we do not currently anticipate paying cash dividends on our common stock.
Biggest changeIn December 2023, we declared and paid a $10.00 per share special cash dividend to all holders of our common stock as of December 15, 2023. We did not declare or pay any cash dividends in 2022 or 2021.
The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will also depend upon many factors, including our financial condition, earnings, capital requirements of our businesses, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that the Board of Directors deems relevant.
The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will also depend upon many factors, including our financial condition, earnings, capital requirements of our businesses, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board of Directors deems relevant.
However, we evaluate our dividend policy on a regular basis and may pay dividends in the future, subject to compliance with the covenants in our senior credit facility, the indentures governing our senior notes and our vehicle financing programs.
DIVIDEND POLICY We evaluate our dividend policy on a regular basis and may pay dividends in the future, subject to compliance with the covenants in our senior credit facility, the indentures governing our senior notes and our vehicle financing programs.
Under the Company’s stock repurchase program, the Company repurchases shares from time to time in open market transactions, and may also repurchase shares in accelerated share repurchases, tender offers, privately negotiated transactions or by other means. Repurchases may also be made under a plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Under our stock repurchase program, we repurchase shares from time to time in open market transactions and may also repurchase shares in accelerated share repurchases, tender offers, privately negotiated transactions or by other means. Repurchases may also be made under a plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, the Company’s share price, legal requirements, restricted payment capacity under its debt instruments and other factors. The stock repurchase program may be suspended, modified or discontinued without prior notice.
The timing and amount of repurchase transactions is determined by management based on our evaluation of market conditions, our share price, legal requirements, restricted payment capacity under our debt instruments and other factors. Our stock repurchase program may be suspended, modified or discontinued without prior notice.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON EQUITY Our common stock is currently traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CAR.” At January 31, 2023, the number of stockholders of record was 2,083.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON EQUITY Our common stock is currently traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CAR.” At January 31, 2024, the number of stockholders of record was 1,980.
PERFORMANCE GRAPH Set forth below are a line graph and table comparing the cumulative total stockholder return of our common stock against the cumulative total returns of peer group indices, the S&P Midcap 400 Index, and the Dow Jones US Transportation Average Index for the period of five fiscal years commencing December 31, 2017 and ending December 31, 2022.
PERFORMANCE GRAPH Set forth below are a line graph and table comparing the cumulative total stockholder return of our common stock against the cumulative total returns of the S&P MidCap 400 Index and the Dow Jones US Transportation Average Index for the period of five fiscal years commencing December 31, 2018 and ending December 31, 2023.
The broad equity market indices used by the Company are the S&P Midcap 400 Index, which measures the performance of mid-sized companies, and the Dow Jones US Transportation Average Index, which measures the performance of transportation companies.
The broad equity market index used by the Company is the S&P MidCap 400 Index, which measures the performance of mid-sized companies, and the published industry index used by the Company is the Dow Jones US Transportation Average Index, which measures the performance of transportation companies.
ISSUER PURCHASES OF EQUITY SECURITIES Total Number of Shares Purchased (in millions) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions) October 2022 1.5 $ 173.33 1.5 $ 1,123 November 2022 1.5 225.02 1.5 785 December 2022 0.5 188.54 0.5 691 3.5 $ 197.68 3.5 $ 691 The Company’s Board of Directors has authorized the repurchase of up to approximately $8.1 billion of its common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023.
ISSUER PURCHASES OF EQUITY SECURITIES Total Number of Shares Purchased (in millions) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in millions) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ in millions) October 2023 0.66 $ 171.80 0.66 $ 945 November 2023 0.55 189.29 0.55 841 December 2023 0.20 192.48 0.20 802 1.41 $ 181.52 1.41 $ 802 Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023.
The graph and table depict the result of an investment on December 31, 2017 of $100 in the Company’s common stock, the S&P Midcap 400 Index and the Dow Jones US Transportation Average Index, including investment of dividends. 32 Table of Contents As of December 31, 2017 2018 2019 2020 2021 2022 Avis Budget Group, Inc. $ 100.00 $ 51.23 $ 73.47 $ 85.00 $ 472.58 $ 373.59 S&P Midcap 400 Index $ 100.00 $ 88.92 $ 112.21 $ 127.54 $ 159.12 $ 138.34 Dow Jones US Transportation Average Index $ 100.00 $ 87.67 $ 105.94 $ 123.44 $ 164.44 $ 135.56
The graph and table depict the result of an investment on December 31, 2018 of $100 in the Company’s common stock, the S&P MidCap 400 Index and the Dow Jones US Transportation Average Index, including investment of dividends. 32 Table of Contents As of December 31, 2018 2019 2020 2021 2022 2023 Avis Budget Group, Inc. $ 100.00 $ 143.42 $ 165.93 $ 922.46 $ 729.23 $ 829.47 S&P MidCap 400 Index $ 100.00 $ 126.20 $ 143.44 $ 178.95 $ 155.58 $ 181.15 Dow Jones US Transportation Average Index $ 100.00 $ 120.83 $ 140.80 $ 187.56 $ 154.62 $ 186.46

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

53 edited+15 added−7 removed26 unchanged
Biggest changeYear Ended December 31, 2021 Our consolidated results of operations comprised the following: Year Ended December 31, 2022 2021 $ Change % Change Revenues $ 11,994 $ 9,313 $ 2,681 29% Expenses Operating 5,285 4,255 1,030 24% Vehicle depreciation and lease charges, net 828 1,197 (369) (31%) Selling, general and administrative 1,348 1,145 203 18% Vehicle interest, net 402 313 89 28% Non-vehicle related depreciation and amortization 225 272 (47) (17%) Interest expense related to corporate debt, net: Interest expense 250 218 32 15% Early extinguishment of debt — 136 (136) n/m Restructuring and other related charges 19 64 (45) (70%) Transaction-related costs, net 8 5 3 60% Other (income) expense, net (7) — (7) n/m Total expenses $ 8,358 $ 7,605 $ 753 10% Income before income taxes 3,636 1,708 1,928 n/m Provision for income taxes 880 425 455 n/m Net income $ 2,756 $ 1,283 $ 1,473 n/m Less: net loss attributable to non-controlling interests (8) (2) (6) n/m Net income attributable to Avis Budget Group, Inc. $ 2,764 $ 1,285 $ 1,479 n/m __________ n/m Not meaningful. 35 Table of Contents Revenues increased $2.7 billion, or 29%, for the year ended December 31, 2022 compared to 2021, primarily due to a 23% increase in volume and a 8% incr ease in revenue per day, excluding exchange rate effects, partially offset by a $327 million negative impact fro m currency exchange rate movements.
Biggest changeYear Ended December 31, 2022 Our consolidated results of operations comprised the following: Year Ended December 31, 2023 2022 $ Change % Change Revenues $ 12,008 $ 11,994 $ 14 — % Expenses Operating 5,675 5,285 390 7 % Vehicle depreciation and lease charges, net 1,739 828 911 110 % Selling, general and administrative 1,408 1,348 60 4 % Vehicle interest, net 736 402 334 83 % Non-vehicle related depreciation and amortization 216 225 (9) (4 %) Interest expense related to corporate debt, net: Interest expense 296 250 46 18 % Early extinguishment of debt 5 — 5 n/m Restructuring and other related charges 11 19 (8) (42 %) Transaction-related costs, net 5 8 (3) (38 %) Other (income) expense, net 3 (7) 10 n/m Total expenses $ 10,094 $ 8,358 $ 1,736 21 % Income before income taxes 1,914 3,636 (1,722) (47 %) Provision for income taxes 279 880 (601) (68 %) Net income $ 1,635 $ 2,756 $ (1,121) (41 %) Less: Net income (loss) attributable to non-controlling interests 3 (8) 11 n/m Net income attributable to Avis Budget Group, Inc. $ 1,632 $ 2,764 $ (1,132) (41 %) __________ n/m Not meaningful. 35 Table of Contents Revenues for the year ended December 31, 2023 were consistent with the similar period in 2022, primarily due to a 5% increase in volume, partially offset by a 5% decrease in revenue per day, excluding exchange rate effects.
Our Board of Directors has authorized the repurchase of up to $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023. Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Exchange Act.
Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded, most recently in February 2023. Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Exchange Act.
Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. Year Ended December 31, 2022 vs.
Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. Year Ended December 31, 2023 vs.
We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world. RESULTS OF OPERATIONS A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to 2021 is presented below.
We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world. RESULTS OF OPERATIONS A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to 2022 is presented below.
Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings. As of December 31, 2022, we were in compliance with the financial covenants governing our indebtedness.
Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings. As of December 31, 2023, we were in compliance with the financial covenants governing our indebtedness.
CRITICAL ACCOUNTING ESTIMATES Accounting Policies The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principals (GAAP), we are required to make estimates and assumptions that affect the amounts reported therein.
CRITICAL ACCOUNTING ESTIMATES Accounting Policies The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principles (GAAP), we are required to make estimates and assumptions that affect the amounts reported therein.
Currently we do not record valuation allowances on the majority of our tax loss carryforwards as there are adequate deferred tax liabilities that could be realized within the carryforward period. See Note 2 – Summary of Significant Accounting Policies and Note 9 – Income Taxes to our Consolidated Financial Statements for more information regarding income taxes.
Currently we do not record valuation allowances on the majority of 41 Table of Contents our tax loss carryforwards as there are adequate deferred tax liabilities that could be realized within the carryforward period. See Note 2 – Summary of Significant Accounting Policies and Note 9 – Income Taxes to our Consolidated Financial Statements for more information regarding income taxes.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2021 compared to 2020 can be found under Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at ir.avisbudgetgroup.com.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to 2021 can be found under Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at ir.avisbudgetgroup.com.
Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions or the absence of a recovery or worsening of the U.S. and worldwide economies, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally.
Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions or the absence of a recovery or worsening of the United States and worldwide economies, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally.
We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations. Our strategy continues to primarily focus on costs and customer experience to strengthen our company, enable resilience, and deliver stakeholder value.
We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations. Our strategy continues to primarily focus on customer experience and costs to strengthen our Company, maximize profitability, and deliver stakeholder value.
Management evaluates the operating results of each of our reportable segments based upon revenues and “Adjusted EBITDA,” which we define as income 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 and other legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits; non-operational charges related to shareholder activist activity, which include third party advisory, legal and other professional fees; COVID-19 charges, net; other (income) expense, net, and income taxes.
Management evaluates the operating results of each of our reportable segments based upon revenues and Adjusted EBITDA, which we define as 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 legal matters, net, which includes amounts recorded in excess of $5 million related to class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net, and income taxes.
We are susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations.
We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations.
Recently Issued Accounting Pronouncements For a description of recently issued accounting pronouncements and the impact thereof on our business, see Note 2 – Summary of Significant Accounting Policies to our Consolidated Financial Statements. 41 Table of Contents
Recently Issued Accounting Pronouncements For a description of recently issued accounting pronouncements and the impact thereof on our business, see Note 2 – Summary of Significant Accounting Policies to our Consolidated Financial Statements.
OVERVIEW OUR COMPANY We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar together with several other brands, well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 655,000 vehicles in 2022.
OVERVIEW OUR COMPANY We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 691,500 vehicles in 2023.
Adju sted EBITDA decreased $16 million for the year ended December 31, 2022, compared to 2021, due to higher selling, general and administrative expenses related to current year performance accruals and computer technology transformation costs, which are not attributable to a particular segment. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES We present separately the financial data of our vehicle programs.
Adju sted EBITDA decreased 22% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to higher selling, general and administrative expenses related to computer technology transformation costs, which are not attributable to a particular segment. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES We present separately the financial data of our vehicle programs.
The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, used car values, and an economic downturn that may impact travel demand.
The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, disruption in the supply of new vehicles, used car values, and an economic downturn that may impact travel demand, all of which may be exacerbated by the ongoing military conflicts in the Middle East and Eastern Europe.
We acquire our rental vehicles either through repurchase and guaranteed depreciation programs with certain automobile manufacturers or outside of such programs. For rental vehicles purchased under such programs, we depreciate the vehicles such that the net book value on the date of sale or return to the manufacturers is intended to equal the contractual guaranteed residual values.
For rental vehicles purchased under such programs, we depreciate the vehicles such that the net book value on the date of sale or return to the manufacturers is intended to equal the contractual guaranteed residual values.
As of December 31, 2022, we had access to $0.6 billion of available cash and cash equivalents and available borrowings under our revolving credit facility of approximately $1.0 billion, providing us with access to an approximate $1.6 billion of total liquidity.
As of December 31, 2023, we had access to $555 million of available cash and cash equivalents and available borrowings under our revolving credit facility of approximately $261 million, providing us with access to an approximate $816 million of total liquidity.
As a result of these items, our net income increased by $1.5 billion compared to 2021. For the years ended December 31, 2022 and 2021, we reported earnings per diluted share of $57.16 and $19.44, respectively.
As a result of these items, our net income decreased by $1.1 billion compared to the similar period in 2022. For the years ended December 31, 2023 and 2022, we reported earnings per diluted share of $42.08 and $57.16, respectively.
We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally.
We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally.
International 2022 2021 % Change Revenues $ 2,520 $ 1,756 44 % Adjusted EBITDA $ 560 $ 118 375 % Revenues increased 44% for the year ended December 31, 2022, compared to 2021, primarily due to a 31% increase in revenue per day, excluding exchange r ate effects, a 23% increase in vo lume, partially offset by a $310 million negative impact from currency exchange rate movements.
International 2023 2022 % Change Revenues $ 2,661 $ 2,520 6 % Adjusted EBITDA $ 400 $ 560 (29 %) Revenues increased 6% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to a 6% increase in vo lume and a $25 million positive impact from currency exchange rate movements, partially offset by a 1% decrease in revenue per day, excluding exchange r ate effects .
Year Ended December 31, 2021 The following table summarizes our cash flows: Year Ended December 31, 2022 2021 Change Cash provided by (used in): Operating activities $ 4,707 $ 3,491 $ 1,216 Investing activities (4,299) (6,306) 2,007 Financing activities (360) 2,687 (3,047) Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash (32) (11) (21) Net change in cash and cash equivalents, program and restricted cash 16 (139) 155 Cash and cash equivalents, program and restricted cash, beginning of period 626 765 (139) Cash and cash equivalents, program and restricted cash, end of period $ 642 $ 626 $ 16 The increase in cash provided by operating activities during 2022 compared with 2021 is primarily due to the increase in our net income.
Year Ended December 31, 2022 The following table summarizes our cash flows: Year Ended December 31, 2023 2022 Change Cash provided by (used in): Operating activities $ 3,828 $ 4,707 $ (879) Investing activities (7,346) (4,299) (3,047) Financing activities 3,506 (360) 3,866 Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash 14 (32) 46 Net change in cash and cash equivalents, program and restricted cash 2 16 (14) Cash and cash equivalents, program and restricted cash, beginning of period 642 626 16 Cash and cash equivalents, program and restricted cash, end of period $ 644 $ 642 $ 2 The decrease in cash provided by operating activities during 2023 compared with 2022 is primarily due to the decrease in our net income.
The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations. Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.
Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.
During 2022, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued approximately $2.1 billion of asset-backed notes with expected final payment dates ranging from March 2023 to February 2028, and a weighted average interest rate of 4.94%.
During 2023, our Avis Budget Rental Car Funding (AESOP) subsidiary issued approximately $3.9 billion of asset-backed notes with expected final payment dates ranging from October 2026 to February 2029, and a weighted average interest rate of 5.81%.
Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA: 2022 2021 Revenues Adjusted EBITDA Revenues Adjusted EBITDA Americas $ 9,474 $ 3,660 $ 7,557 $ 2,364 International 2,520 560 1,756 118 Corporate and Other (a) — (87) — (71) Total Company $ 11,994 $ 4,133 $ 9,313 $ 2,411 Reconciliation of net income (loss) to Adjusted EBITDA 2022 2021 Net income $ 2,756 $ 1,283 Provision for income taxes 880 425 Income before income taxes $ 3,636 $ 1,708 Add: Non-vehicle related depreciation and amortization (b) 235 279 Interest expense related to corporate debt, net: Interest expense 250 218 Early extinguishment of debt — 136 Restructuring and other related charges (c) 19 64 Transaction-related costs, net (d) 8 5 Unprecedented personal-injury and other legal matters, net (e) 1 3 COVID-19 charges, net (f) (9) (2) Other (income) expense, net (7) — Adjusted EBITDA $ 4,133 $ 2,411 __________ (a) Includes unallocated corporate overhead which is not attributable to a particular segment.
Following is a more detailed discussion of the results of each of our reportable segments and reconciliation of net income to Adjusted EBITDA: 2023 2022 Revenues Adjusted EBITDA Revenues Adjusted EBITDA Americas $ 9,347 $ 2,196 $ 9,474 $ 3,660 International 2,661 400 2,520 560 Corporate and Other (a) — (106) — (87) Total Company $ 12,008 $ 2,490 $ 11,994 $ 4,133 Reconciliation of net income to Adjusted EBITDA 2023 2022 Net income $ 1,635 $ 2,756 Provision for income taxes 279 880 Income before income taxes $ 1,914 $ 3,636 Add: Non-vehicle related depreciation and amortization 216 225 Interest expense related to corporate debt, net Interest expense 296 250 Early extinguishment of debt 5 — Restructuring and other related charges 11 19 Transaction-related costs, net 5 8 Other (income) expense, net (b) 3 (7) Reported within operating expenses: Cloud computing costs 35 10 COVID-19 charges, net — (9) Legal matters, net 5 1 Adjusted EBITDA $ 2,490 $ 4,133 __________ (a) Includes unallocated corporate overhead which is not attributable to a particular segment.
Vehicle depreciation and lease charges decreased to 16.4% of revenue for the year ended December 31, 2022 compared to 19.7% in 2021, primarily due to increased revenues and improved utilization, partially offset by a 10% increase in p er-unit fleet costs, excluding exchange rate effects.
Vehicle depreciation and lease charges increased to 19.7% of revenue for the year ended December 31, 2023 compared to 16.4% during the similar period in 2022, primarily due to increased per-unit fleet costs, excluding exchange rate effects, driven by increased fleet levels and increased depreciation rates .
We review the carrying value of goodwill and other indefinite-lived intangible assets for impairment annually or more frequently if circumstances indicate that an impairment may have occurred. Our goodwill and other indefinite-lived intangible assets are allocated among our reporting units. During 2022, 2021 and 2020, there was no impairment of goodwill and other intangible assets.
In such event, we would then be required to record a charge, which would impact earnings. We review the carrying value of goodwill and other indefinite-lived intangible assets for impairment annually or more frequently if circumstances indicate that an impairment may have occurred. Our goodwill and other indefinite-lived intangible assets are allocated among our reporting units.
For the year ended December 31, 2022, we repurchased approximately 16.7 million shares of common stock at a cost of approximately $3.3 billion under the program. As of February 13, 2023, approximately $1.7 billion of authorization remained available to repurchase common stock under the program. Cash Flows Year Ended December 31, 2022 vs.
For the year ended December 31, 2023, we repurchased approximately 4.3 million shares of common stock at a cost of approximately $889 million (excluding excise taxes due under the Inflation Reduction Act of 2022) under the program. As of December 31, 2023, approximately $802 million of authorization remained available to repurchase common stock under the program.
We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. Goodwill and Other Indefinite-lived Intangible Assets.
Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. Goodwill and Other Indefinite-lived Intangible Assets. We have reviewed the carrying value of our goodwill and other indefinite-lived intangible assets for impairment.
When determining fair value, we utilize various assumptions, including the fair market trading price of our common stock and management’s projections of future cash flows, which include forecast of future revenue and Adjusted EBITDA. When appropriate, comparative market multiples and other factors are used to corroborate the discounted cash flow results.
In performing this review, we are required to make an assessment of fair value for our goodwill and other indefinite-lived intangible assets. When determining fair value, we utilize various assumptions, including the fair market trading price of our common stock and management’s projections of future cash flows, which include forecast of future revenue and Adjusted EBITDA.
LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below.
LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below. 38 Table of Contents In July 2023, we issued €400 million of 7.250% euro-denominated Senior Notes due July 2030, at par, with interest payable semi-annually.
Vehicle depreciation and lease charges decreased to 4.4% of revenue for the year ended December 31, 2022 compared to 11.3% in 2021, primarily due to increased revenues and a 61% decrease in per-unit fleet costs, excluding exchange rate effects, driven by a favorable trend in the used-vehicle market.
Vehicle depreciation and lease charges increased to 14.5% of revenue for the year ended December 31, 2023 compared to 6.9% during the similar period in 2022 , primarily due to increased per unit fleet costs, excluding exchange rate effects, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles .
The decrease in cash provided by financing activities during 2022 compared with 2021 is primarily due to the increase in repurchases of common stock and net payments on vehicle borrowings, offset by a decrease in net payments on corporate borrowings. We anticipate that our non-vehicle property and equipment additions will be approximately $325 million in 2023.
The increase in cash used in investing activities during 2023 compared with 2022 is primarily due to the increase in our net investment in vehicles. 39 Table of Contents The increase in cash provided by financing activities during 2023 compared with 2022 is primarily due to the increase in our net borrowings under vehicle programs and the decrease in our common stock repurchases, offset by the increase in our payments of corporate borrowings.
For information regarding our debt and borrowing arrangements, see Note 1 – Basis of Presentation, Note 13 – Long-term Corporate Debt and Borrowing Arrangements, and Note 14 – Debt Under Vehicle Programs and Borrowing Arrangements to our Consolidated Financial Statements. 39 Table of Contents LIQUIDITY RISK Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses.
For information regarding our debt and borrowing arrangements, see Note 1 – Basis of Presentation, Note 13 – Long-term Corporate Debt and Borrowing Arrangements, and Note 14 – Debt Under Vehicle Programs and Borrowing Arrangements to our Consolidated Financial Statements.
Selling, general and administrative cost s decreased to 15.0% of revenue for the year ended December 31, 2022 compared to 17.1% in 2021, primarily due to increased revenues and cost discipline as volume returned. Vehicle interest costs decreased to 2.2% of revenue for the year ended December 31, 2022 compared to 3.1% in 2021, primarily due to increased revenue.
Selling, general and administrative cost s increased to 15.4% of revenue for the year ended December 31, 2023 compared to 15.0% during the similar period in 2022, primarily due to increased marketing costs and inflation .
Operating expenses decreased to 44.1% of revenue for the year ended December 31, 2022 compared to 45.7% in 2021 , primarily due to increased revenues and cost discipline as volume returned.
Operating expenses increased to 47.3% of revenue for the year ended December 31, 2023 compared to 44.1% during the similar period in 2022 , primarily due to cost inflation.
Operating expenses decreased to 44.3% of revenue for the year ended December 31, 2022 compared to 53.5% in 2021, primarily due to increased revenues and cost discipline as volume returned.
Operating expenses increased to 45.6% of revenue for the year ended December 31, 2023 compared to 44.3% during the similar period in 2022, primarily due to cost inflation.
Debt and Financing Arrangements At December 31, 2022, we had approximatel y $18.5 billion of indebtedness (including corporate indebtedness of approximately $4.7 billion and debt under vehicle programs of approximately $13.8 billion).
We anticipate that our non-vehicle property and equipment additions will be approximately $285 million in 2024. Debt and Financing Arrangements At December 31, 2023, we had approximatel y $23.8 billion of indebtedness (including corporate indebtedness of approximately $4.8 billion and debt under vehicle programs of approximately $18.9 billion).
Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they relate to future events and/or events that are outside of our control. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity.
If there is a significant unfavorable change to current conditions, it could result in a material 40 Table of Contents adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time.
See Note 7 – Intangible Assets to our Consolidated Financial Statements. Vehicles. We present vehicles at cost, net of accumulated depreciation, on the Consolidated Balance Sheets. We record the initial cost of the vehicle, net of incentives and allowances from manufacturers.
Vehicles. We present vehicles at cost, net of accumulated depreciation, on the Consolidated Balance Sheets. We record the initial cost of the vehicle, net of incentives and allowances from manufacturers. We acquire our rental vehicles either through repurchase and guaranteed depreciation programs with certain automobile manufacturers or outside of such programs.
See “Liquidity and Capital Resources” and Note 13 – Long-term Corporate Debt and Borrowing Arrangements to our Consolidated Financial Statements. The increases in assets and liabilities under vehicle programs are principally related to the increase in the size of our vehicle rental fleet to meet increased demand.
The increase in liabilities exclusive of liabilities under vehicle programs compared to 2022 is principally related to the increase in operating lease liabilities and corporate indebtedness from the issuance of senior notes. See “Liquidity and Capital Resources,” Note 3 – Leases and Note 13 – Long-term Corporate Debt and Borrowing Arrangements to our Consolidated Financial Statements.
Selling, general and administrative costs decreased to 11.2% of revenue for the year ended December 31, 2022 compared to 12.3% in 2021, primarily due to increased revenues and cost discipline as volume returned. Vehicle interest costs represented 3.4% of revenue, unchanged for the year ended December 31, 2022 compared to 2021.
Selling, general and administrative costs increased to 11.7% of revenue for the year ended December 31, 2023 compared to 11.2% during the similar period in 2022, primarily due to increased marketing costs and inflation .
Total expenses increased 10% for the year ended December 31, 2022, compared to 2021, primarily due to increased demand, partially offset by cost discipline as volume returned. Our effective tax rates for the years ended December 31, 2022 and 2021 were provisions of approximately 24% and 25% , respectively .
Total expenses increased 21% for the year ended December 31, 2023, compared to the similar period in 2022, primarily due to increased fleet costs, interest costs, and the impact of inflation . Our effective tax rates for the years ended December 31, 2023 and 2022 were provisions of 14.6% and 24.2%, respectively .
A change in these underlying assumptions will cause a change in the results of the tests and, as such, could cause the fair value to be less than the respective carrying amount. In such event, we would then be 40 Table of Contents required to record a charge, which would impact earnings.
When appropriate, comparative market multiples and other factors are used to corroborate the discounted cash flow results. A change in these underlying assumptions will cause a change in the results of the tests and, as such, could cause the fair value to be less than the respective carrying amount.
Adjusted EBITDA was $442 million higher for the year ended December 31, 2022 compared to 2021, primarily due to increased revenues and cost discipline as volume returned, partially offset by an increase in per-unit fleet costs an d a $80 million negative impact from currency exchange rate movements. 37 Table of Contents Corporate and Other 2022 2021 % Change Revenues $ — $ — n/m Adjusted EBITDA $ (87) $ (71) 23 % __________ n/m Not meaningful.
Adjusted EBITDA decreased 29% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs and inflationary pressures. 37 Table of Contents Corporate and Other 2023 2022 % Change Revenues $ — $ — n/m Adjusted EBITDA $ (106) $ (87) (22 %) __________ n/m Not meaningful.
Adjusted EBITDA was $1.3 billion higher for the year ended December 31, 2022 compared to 2021, primarily due to increased revenues, lower per-unit fleet costs and cost discipline as volume returned.
Adjusted EBITDA decreased 40% for the year ended December 31, 2023 compared to the similar period in 2022, primarily due to higher per-unit fleet costs and inflationary pressures.
This coupled with disciplined cost management and continued fleet management resulted in revenues of approximately $12.0 billion, net income of $2.8 billion and Adjusted EBITDA of $4.1 billion for the year ended December 31, 2022.
In 2023, we saw strong volume as normal seasonality returned to our industry. This coupled with revenue per day and inflationary pressures resulted in revenues of approximately $12.0 billion, net income of $1.6 billion and Adjusted EBITDA of $2.5 billion for the year ended December 31, 2023.
Operating expenses are consistent with prior year at 43.8% of revenue for the year ended December 31, 2022 compared to 43.7% in 2021.
Operating expenses increased to 47.4% of revenue for the year ended December 31, 2023 compared to 43.8% during the similar period in 2022, primarily due to cost inflation.
Selling, general and administrative costs decreased to 9.5% of revenue for the year ended December 31, 2022 compared to 10.3% in 2021, primarily due to increased revenues and cost discipline as volume returned. Vehicle interest costs increased to 3.7% of revenue for the year ended December 31, 2022 compared to 3.4% in 2021, primarily due to higher interest rates.
Vehicle interest costs increased to 6.6% of revenue for the year ended December 31, 2023 compared to 3.7% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
The proceeds from these borrowings were used to fund the repayment 38 Table of Contents of maturing vehicle-backed debt and the acquisition of rental cars in the United States.
In January 2024, AESOP issued $1.2 billion of asset-backed notes to investors with an expected final payment date of June 2029 and a weighted average interest rate of 5.51%. The proceeds from these borrowings were used to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States.
Vehicle depreciation and lease charges decreased to 6.9% of revenue for the year ended December 31, 2022 compared to 12.9% in 2021 , primarily due to 41% lower per unit fleet cost, excluding exchange rate effects, driven by a favorable trend in the used-vehicle market.
Vehicle depreciation and lease charges increased to 13.0% of revenue for the year ended December 31, 2023 compared to 4.4% during the similar period in 2022, primarily due to increased per-unit fleet costs, driven by increased fleet levels, increased depreciation rates, and a decrease in the gain on sale of vehicles.
The decrease in stockholders’ equity compared to 2021 is principally related to our share repurchases, partially offset by comprehensive income.
The increases in assets and liabilities under vehicle programs are principally related to the increase in the size and cost of our vehicle rental fleet to meet demand. The increase in stockholders’ equity compared to 2022 is principally related to comprehensive income, partially offset by our share repurchase activity.
FINANCIAL CONDITION As of December 31, 2022 2021 Change Total assets exclusive of assets under vehicle programs $ 8,499 $ 8,581 $ (82) Total liabilities exclusive of liabilities under vehicle programs 9,656 8,933 723 Assets under vehicle programs 17,428 14,019 3,409 Liabilities under vehicle programs 16,971 13,876 3,095 Stockholders’ equity (700) (209) (491) The increase in liabilities exclusive of liabilities under vehicle programs compared to 2021 is principally related to the increase in corporate indebtedness from the issuance of Floating Rate Term Loan due March 2029.
FINANCIAL CONDITION As of December 31, 2023 2022 Change Total assets exclusive of assets under vehicle programs $ 9,590 $ 8,499 $ 1,091 Total liabilities exclusive of liabilities under vehicle programs 10,095 9,656 439 Assets under vehicle programs 22,979 17,428 5,551 Liabilities under vehicle programs 22,817 16,971 5,846 Stockholders’ equity (343) (700) 357 The increase in assets exclusive of assets under vehicle programs compared to 2022 is principally related to the increase in operating lease right-of-use assets, deferred income taxes, other current assets and property and equipment.
Removed
In 2022, we saw strong demand and pricing for vehicle rentals, driven by global travel demand, and favorable conditions in the used-vehicle market in the United States.
Added
Vehicle interest costs increased to 6.1% of revenue for the year ended December 31, 2023, compared to 3.4% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles.
Removed
We revised our definition of Adjusted EBITDA to exclude other (income) expense, net. We did not revise prior years' Adjusted EBITDA because there were no other charges similar in nature. We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period.
Added
(b) Primarily consists of gains or losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary. 36 Table of Contents Americas 2023 2022 % Change Revenues $ 9,347 $ 9,474 (1 %) Adjusted EBITDA $ 2,196 $ 3,660 (40 %) Revenues decreased 1% for the year ended December 31, 2023 compared to the similar period in 2022 , primarily due to a 6% decrease in revenue per day, partially offset by a 5% increase in volume.
Removed
(b) Includes cloud computing costs of $10 million and $7 million in 2022 and 2021, respectively, within operating expenses. (c) Other related charges include costs associated with the separation of certain of our officers. (d) Primarily comprised of acquisition and integration related expenses. (e) Reported within operating expenses in our consolidated results of operations.
Added
Selling, general and administrative costs were approximately 9.6% of revenue for the year ended December 31, 2023, consistent with the similar period in 2022, primarily due to increased marketing costs, offset by a decrease in other selling, general and administrative costs .
Removed
(f) The following table presents the unusual, direct and incremental costs due to the COVID-19 pandemic: 36 Table of Contents 2022 2021 Minimum annual guaranteed rent in excess of concession fees, net $ (9) $ (2) Vehicles damaged in overflow parking lots, net of insurance proceeds — (7) Other charges — 7 Operating expenses (9) (3) Selling, general and administrative expenses — 1 COVID-19 charges, net $ (9) $ (2) Americas 2022 2021 % Change Revenues $ 9,474 $ 7,557 25 % Adjusted EBITDA $ 3,660 $ 2,364 55 % Revenues increased 25% for the year ended December 31, 2022 compared to 2021 , primarily due to a 22% increase in volume and a 3% increase in revenue per day.
Added
Vehicle interest costs increased to 4.4% of revenue for the year ended December 31, 2023 compared to 2.2% during the similar period in 2022, primarily due to rising interest rates and additional funding for vehicles .
Removed
In March 2022, we entered into a $750 million Floating Rate Term Loan due March 2029, at a price of 97% of the aggregate principal amount, with interest paid monthly, which is part of our senior credit facilities. The Floating Rate Term Loan due March 2029 bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 350 basis points.
Added
See Note 3 – Leases, Note 9 – Income Taxes, Note 10 – Other Current Assets and Note 11 – Property and Equipment, net to our Consolidated Financial Statements.
Removed
The decrease in cash used in investing activities during 2022 compared with 2021 is primarily due to the increase in proceeds received on vehicle sales.
Added
In September 2023, we used net proceeds from the offering primarily to redeem all of the €300 million of our outstanding 4.125% euro-denominated Senior Notes due 2024 plus accrued interest. In November 2023, we issued $500 million of 8.000% Senior Notes due February 2031, at 99.3% of face value, with interest payable semi-annually.
Removed
We have reviewed the carrying value of our goodwill and other indefinite-lived intangible assets for impairment. In performing this review, we are required to make an assessment of fair value for our goodwill and other indefinite-lived intangible assets.
Added
Net proceeds were used to fully redeem our 4.500% euro-denominated Senior Notes due 2025 and a portion of our outstanding balance on our Term Loan due 2029, with the remainder being used for general corporate purposes.
Added
In December 2023, we paid a special cash dividend of $10.00 per share to all holders of our common stock as of December 15, 2023, totaling approximately $355 million.
Added
Cash Flows Year Ended December 31, 2023 vs.
Added
LIQUIDITY RISK Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses. The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations.
Added
Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they relate to future events and/or events that are outside of our control.
Added
During 2023, 2022 and 2021, there was no impairment of goodwill and other intangible assets. See Note 7 – Intangible Assets to our Consolidated Financial Statements.
Added
For our Europe, Middle East and Africa (“EMEA”) reporting unit, the percentage by which the estimated fair value exceeded the carrying value as of October 1, 2023 was approximately 14% and the amount of goodwill allocated to our reporting unit was approximately $460 million.
Added
We will continue to closely monitor actual results versus our expectations, as well as any significant changes in events or conditions, and the resulting impact to our assumptions about future estimated cash flows, the discount rate and market multiples.
Added
In the future, failure to achieve our business plans, a significant deterioration of the macroeconomic conditions of the countries in which we operate, or significant changes in the assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets (such as the discount rate) could result in significantly different estimates of fair value that could trigger an impairment of the goodwill of our reporting units or intangible assets.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBecause gains or losses related to interest rate derivatives are expected to be offset by corresponding gains or losses on the underlying exposures being hedged, when combined, these interest rate contracts and the offsetting underlying commitments do not create a material impact on our Consolidated Financial Statements. 42 Table of Contents Commodity Risk Management We have commodity price exposure related to fluctuations in the price of gasoline.
Biggest changeBecause gains or losses related to interest rate derivatives are expected to be offset by corresponding gains or losses on the underlying exposures being hedged, when combined, these interest rate contracts and the offsetting underlying commitments do not create a material impact on our Consolidated Financial Statements.
We manage our exposure to market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments, particularly currency forward contracts to manage and reduce currency exchange rate risk; swap contracts, futures and options contracts, to manage and reduce the interest rate risk related to our debt; and derivative commodity instruments to manage and reduce the risk of changing unleaded gasoline prices.
We manage our exposure to market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments, particularly currency forward contracts to manage and reduce currency exchange rate risk; swap contracts, futures and options contracts, to manage and reduce the interest rate risk related to our debt; and derivative commodity instruments to manage and reduce the risk of changing unleaded fuel prices.
Based on our interest rate exposures and derivatives as of December 31, 2022, we estimate that a 10% change in interest rates would not have a material impact on our 2022 earnings.
Based on our interest rate exposures and derivatives as of December 31, 2023, we estimate that a 10% change in interest rates would not have a material impact on our 2023 earnings.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and gasoline prices.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and fuel prices.
With all other variables held constant, a hypothetical 10% change (increase or decrease) in currency exchange rates would not have a material impact on our 2022 earnings.
With all other variables held constant, a hypothetical 10% change (increase or decrease) in currency exchange rates would not have a material impact on our 2023 earnings.
We assess our market risk based on changes in currency exchange rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on earnings, cash flows and fair values based on a hypothetical 10% appreciation or depreciation in the value of the underlying currencies being hedged, against the U.S. dollar at December 31, 2022.
We assess our market risk based on changes in currency exchange rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on earnings, cash flows and fair values based on a hypothetical 42 Table of Contents 10% appreciation or depreciation in the value of the underlying currencies being hedged, against the U.S. dollar at December 31, 2023.
Interest Rate Risk Management Our primary interest rate exposure at December 31, 2022 was interest rate fluctuation in the U.S. due to its impact on variable rate borrowings and other interest rate sensitive liabilities. We use interest rate swaps and caps to manage our exposure to interest rate movements.
Interest Rate Risk Management Our primary interest rate exposure at December 31, 2023 was interest rate fluctuation in the United States due to its impact on variable rate borrowings and other interest rate sensitive liabilities. We use interest rate swaps and caps to manage our exposure to interest rate movements.
We anticipate that such commodity risk will remain a market risk exposure for the foreseeable future. We determined that a hypothetical 10% change in the price of gasoline would not have a material impact on our earnings as of December 31, 2022.
Commodity Risk Management We have commodity price exposure related to fluctuations in the price of fuel. We anticipate that such commodity risk will remain a market risk exposure for the foreseeable future. We determined that a hypothetical 10% change in the price of fuel would not have a material impact on our earnings as of December 31, 2023.

Other CAR 10-K year-over-year comparisons