AVIS BUDGET GROUP, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q) – Marketscreener.com | Gmx Pharm

The following discussion should be read in conjunction with our Consolidated
Condensed Financial Statements and accompanying Notes included in this Quarterly
Report on Form 10-Q, and with our 2021 Form 10-K. Our actual results of
operations may differ materially from those discussed in forward-looking
statements as a result of various factors, including those discussed in
"Forward-Looking Statements". See "Forward-Looking Statements" and "Risk
Factors" for additional information. Unless otherwise noted, all dollar amounts
in tables are in millions.


 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 over 668,000 vehicles in second quarter 2022. 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.

Our Segments

We categorize our operations into two reportable business segments: Americas,
consisting primarily of our vehicle rental operations in North America, South
America, Central America and the Caribbean, car sharing operations in certain of
these markets, and licensees in certain areas in which we do not operate
directly; and International, consisting primarily of our vehicle rental
operations in Europe, the Middle East, Africa, Asia and Australasia, car sharing
operations in certain of these markets, and licensees in certain areas in which
we do not operate directly.

Business and Trends

Over the past year, we have seen a number of encouraging developments, such as a
significant increase in global travel demand, which generated an increase in
demand for rental vehicles and improved pricing across the industry, suggesting
a steady return to historic seasonal travel trends. Our strategy continues to
focus on cost optimization, core revenue growth and capital investments aimed to
allow us to maximize our infrastructure to capitalize on what we believe will be
continued travel demand. During the quarter ended June 30, 2022, we generated
revenues of $3.2 billion, net income of $774 million and Adjusted EBITDA of $1.2
billion. These results were driven by increased demand for rental vehicles,
improved pricing across the industry, disciplined cost management and continued
fleet management.

The full extent of the ongoing impact of the COVID-19 pandemic on our long-term
operational and financial performance will depend on future developments,
including those outside of our control, such as the spread of new variants of
the virus and the implementation of new or continued travel restrictions and the
overall economic environment. These variants could cause prolonged impacts on
the economy, our industry and on us, with reductions in available staffing and
increasing inflation, among other impacts. We will continue to monitor these and
other impacts and take action in connection with it, by leveraging our
technology and reviewing cost mitigating actions, among other actions.
Significant events affecting travel have historically had an impact on vehicle
rental volumes, with the full extent of the impact generally determined by the
length of time the event influences travel decisions. As a consequence, we
cannot estimate the impact on our business, financial condition or forecast
financial or operational results with reasonable certainty.

The global semiconductor shortage is impacting fleet supply, resulting in
tighter fleets throughout the industry and causing us to hold cars longer
compared to periods prior to the COVID-19 pandemic. We have historically
navigated through significant vehicle recalls and worked with our vehicle
manufacturers, and believe we have the logistics in place to effectively manage
our fleet during this disruption in supply. We continue to purchase vehicles and
believe we can increase our fleet utilization efficiency to capture increased
demand.

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                             RESULTS OF OPERATIONS

We measure performance principally using the following key metrics: (i) rental
days, which represent the total number of days (or portion thereof) a vehicle
was rented, (ii) revenue per day, which represents revenues divided by rental
days, (iii) vehicle utilization, which represents rental days divided by
available rental days, with available rental days defined as average rental
fleet times the number of days in the period, and (iv) per-unit fleet costs,
which represent vehicle depreciation, lease charges and gain or loss on vehicle
sales, divided by average rental fleet. Our rental days, revenue per day and
vehicle utilization metrics are all calculated based on the actual rental of the
vehicle during a 24-hour period. We believe that this methodology provides
management with the most relevant metrics in order to effectively manage the
performance of the business. Our calculation may not be comparable to the
calculation of similarly-titled metrics by other companies. We present currency
exchange rate effects to provide a method of assessing how our business
performed excluding the effects of foreign currency rate fluctuations. Currency
exchange rate effects are calculated by translating the current-year results at
the prior-period average exchange rate plus any related gains and losses on
currency hedges.

We assess performance and allocate resources based upon the separate financial
information of our operating segments. In identifying our reportable segments,
we also consider the nature of services provided by our operating segments, the
geographical areas in which our segments operate and other relevant factors.
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 and income taxes. Net charges for unprecedented
personal-injury and other legal matters are recorded within operating expenses
in our consolidated results of operations. Non-operational charges related to
shareholder activist activity include third party advisory, legal and other
professional service fees and are recorded within selling, general and
administrative expenses in our consolidated results of operations. COVID-19
charges include unusual, direct and incremental costs due to the COVID-19
pandemic, such as minimum annual guaranteed rent in excess of concession fees
for the period, overflow parking for idle vehicles and related shuttling costs,
incremental cleaning supplies to sanitize vehicles and facilities and other
charges, and losses associated with vehicles damaged in overflow parking lots,
net of insurance proceeds, and are primarily recorded within operating expenses
in our consolidated results of operations. 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. 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.

During the six months ended June 30, 2022:


•Our revenues totaled $5.7 billion, an increase of 52% compared to the similar
period in 2021, primarily due to increased demand for rental vehicles and a
significant increase in pricing. The significant increase in revenues was a
direct result of the global effort to combat the incidence and spread of the
COVID-19 virus, which led to a significant increase in global travel demand,
suggesting a steady return to historic travel levels.

•Our net income was $1.3 billionwhich is a significant increase of
$1.1 billion year-on-year, mainly due to significantly higher sales, as described above, and disciplined cost management.


•Our Adjusted EBITDA was $2.0 billion, representing a significant increase of
$1.3 billion year-over-year, primarily due to significantly higher revenues and
disciplined cost management.

•We have redeemed about $1.7 billion of our common stock, which reduces our outstanding shares by approximately 7.9 million shares.

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Three months ended June 30, 2022 vs. three months ended June 30, 2021

Our consolidated combined operating results were as follows:

                                                                                                           Three Months Ended June 30,
                                                                                         2022                 2021            $ Change             % Change
Revenues                                                                          $    3,244               $ 2,371          $     873                    37  %

Expenses
         Operating                                                                     1,349                 1,032                317                    31  %
         Vehicle depreciation and lease charges, net                                     234                   338               (104)                  (31  %)
         Selling, general and administrative                                             359                   294                 65                    22  %
         Vehicle interest, net                                                            97                    77                 20                    26  %
         Non-vehicle related depreciation and amortization                                51                    62                (11)                  (18  %)
         Interest expense related to corporate debt, net:
         Interest expense                                                                 64                    59                  5                     8  %

         Restructuring and other related charges                                           6                    22                (16)                  (73  %)
         Transaction-related costs, net                                                    1                     1                  -                     0  %
Total expenses                                                                         2,161                 1,885                276                    15  %

Income before income taxes                                                             1,083                   486                597                   

n/m

Provision for income taxes                                                               309                    88                221                       n/m
Net income                                                                               774                   398                376                    94  %
Less: net loss attributable to non-controlling interests                                  (4)                    -                 (4)                  

n/m

Net income attributable to Avis Budget Group, Inc.                                $      778               $   398          $     380                    95  %


___________
n/m - Not Meaningful

Revenues increased $873 million, or 37%, during the three months ended June 30,
2022 compared to the similar period in 2021, primarily due to a 29% increase in
volume as the mobility industry recovers from the pandemic and a 9% increase in
revenue per day, excluding exchange rate effects, partially offset by a $86
million negative impact from currency exchange rate movements. Total expenses
increased 15% during the three months ended June 30, 2022, compared to the
similar period in 2021, primarily due to increased demand, partially offset by
cost discipline as volume returned. Our effective tax rates were a provision of
28.5% and 18.1% for the three months ended June 30, 2022 and 2021, respectively.
As a result of these items, our net income increased by $376 million compared to
the similar period in 2021. For the three months ended June 30, 2022 and 2021,
we reported earnings per diluted share of $15.71 and $5.63, respectively.

Operating expenses decreased to 41.6% of revenue during the three months ended
June 30, 2022 compared to 43.5% during the similar period in 2021, primarily due
to the increased revenues and cost discipline as volume returned. Vehicle
depreciation and lease charges decreased to 7.2% of revenue during the three
months ended June 30, 2022 compared to 14.3% during the similar period in 2021,
primarily due to increased revenues and a 44% lower per unit fleet cost,
excluding exchange rate effects, driven by the continued favorable trend in the
used-vehicle market. Selling, general and administrative costs decreased to
11.1% of revenue during the three months ended June 30, 2022 compared to 12.4%
during the similar period in 2021, primarily due to increased revenues and cost
discipline as volume returned. Vehicle interest costs were 3.0% of revenue
during the three months ended June 30, 2022, which is consistent with 3.2%
during the similar period in 2021.

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The following is a more detailed discussion of the results of each of our reportable segments and the reconciliation of net income to Adjusted EBITDA:

                                                                                              Three Months Ended June 30,
                                                                                   2022                                          2021
                                                                    Revenues            Adjusted EBITDA           Revenues           Adjusted EBITDA
Americas                                                          $    2,567          $          1,041          $    1,974          $           634
International                                                            677                       183                 397                        8
Corporate and Other (a)                                                    -                       (19)                  -                      (18)
                 Total Company                                    $    3,244          $          1,205          $    2,371          $           624

                                                                                                                     Reconciliation to Adjusted EBITDA
                                                                                                                    2022                   2021
Net income                                                                                                      $      774          $           398
Provision for income taxes                                                                                             309                       88
Income before income taxes                                                                                           1,083                      486

Add:                         Non-vehicle related depreciation and amortization (b)                                      53                       67
                             Interest expense related to corporate debt, net:
                             Interest expense                                                                           64                       59

                             Restructuring and other related charges                                                     6                       22
                             Unprecedented personal-injury and other legal matters, net (c)                              -                      (11)
                             Transaction-related costs, net                                                              1                        1
                             COVID-19 charges (d)                                                                       (2)                       -
Adjusted EBITDA                                                                                                 $    1,205          $           624

(a) Includes unallocated corporate overheads not attributable to a specific segment.

(b) For the past three months June 30, 2022includes operational costs associated with cloud computing costs of 2 million dollars. For the past three months June 30, 2021includes operating expenses and selling, general and administrative expenses associated with cloud computing costs 3 million dollars and 2 million dollarsrespectively.

(c) Reported as operating expenses in our consolidated summarized operating results.


(d)The following table presents the unusual, direct and incremental costs due to
the COVID-19 pandemic:

                                                                        2022      2021
Minimum annual guaranteed rent in excess of concession fees, net       $ (2)     $ (3)
Vehicles damaged in overflow parking lots, net of insurance proceeds      -         2

Other charges                                                             -         1
Operating expenses                                                       (2)        -

COVID-19 charges, net                                                  $ (2)     $  -



Americas
                                  Three Months Ended June 30,
                                2022                  2021        % Change
Revenues             $       2,567                  $ 1,974           30  %
Adjusted EBITDA              1,041                      634           64  %



Revenues increased 30% during the three months ended June 30, 2022 compared to
the similar period in 2021, primarily due to a 28% increase in volume and a 2%
increase in revenue per day.

Operating expenses increased to 41.6% of revenue during the three months ended
June 30, 2022 compared to 40.9% during the similar period in 2021, primarily due
to higher fuel prices, partially offset by revenue. Vehicle depreciation and
lease charges decreased to 5.0% of revenue during the three months ended June
30, 2022 compared to 13.1% during the similar period in 2021, primarily due to
increased revenues and a 62% decrease in per-unit fleet costs, excluding
exchange rate effects, driven by the continued favorable trend in the
used-vehicle market. Selling, general and administrative costs decreased to 9.6%
of revenue during the three months ended June 30, 2022 compared to 10.0% during
the similar period in 2021, primarily due to increased revenues and cost
discipline as volume returned. Vehicle interest costs were 3.3% of revenue
during the three months ended June 30, 2022 consistent with 3.2% during the
similar period in 2021.
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Adjusted EBITDA was $407 million higher during the three months ended June 30,
2022 compared to the similar period in 2021, primarily due to increased
revenues, lower per-unit fleet costs and cost discipline as volume returned.

International
                                   Three Months Ended June 30,
                                  2022                   2021       % Change
Revenues             $         677                      $ 397           71  %
Adjusted EBITDA                183                          8             n/m


___________

n/m - Not Meaningful

Revenues increased 71% during the three months ended June 30, 2022, compared to
the similar period in 2021, primarily due to 44% increase in revenue per day,
excluding exchange rate effects and a 33% increase in volume, partially offset
by an $81 million negative impact from currency exchange rate movements.


Operating expenses decreased to 41.4% of revenue during the three months ended
June 30, 2022 compared to 56.4% during the similar period in 2021, primarily due
to increased revenues and cost discipline as volume returned. Vehicle
depreciation and lease charges decreased to 15.8% of revenue during the three
months ended June 30, 2022 compared to 19.9% during the similar period in 2021,
primarily due to increased revenues, partially offset by a 19% increase in
per-unit fleet costs, excluding exchange rate effects. Selling, general and
administrative costs decreased to 14.2% of revenue during the three months ended
June 30, 2022 compared to 19.2% during the similar period in 2021, primarily due
to increased revenues and cost discipline as volume returned. Vehicle interest
costs decreased to 1.7% of revenue during the three months ended June 30, 2022
compared to 3.3% during the similar period in 2021, primarily due to increased
revenues.

Adjusted EBITDA was $175 million higher in second quarter 2022 compared to the
similar period in 2021, primarily due to increased revenues and cost discipline
as volume returned, partially offset by an increase in per-unit fleet costs and
a $22 million negative impact from currency exchange rate movements.

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Six months ended June 30, 2022 vs. Six months ended June 30, 2021

Our consolidated combined operating results were as follows:


                                                                                                        Six Months Ended June 30,
                                                                                      2022              2021           $ Change             % Change
Revenues                                                                          $   5,676          $ 3,743          $  1,933                    52  %

Expenses
         Operating                                                                    2,496            1,864               632                    34  %
         Vehicle depreciation and lease charges, net                                    345              592              (247)                  (42  %)
         Selling, general and administrative                                            642              476               166                    35  %
         Vehicle interest, net                                                          174              152                22                    14  %
         Non-vehicle related depreciation and amortization                              109              130               (21)                  (16  %)
         Interest expense related to corporate debt, net:
         Interest expense                                                               117              120                (3)                   (3  %)
         Early extinguishment of debt                                                     -              129              (129)                      n/m
         Restructuring and other related charges                                         14               42               (28)                  (67  %)
         Transaction-related costs, net                                                   1                2                (1)                  (50  %)
Total expenses                                                                        3,898            3,507               391                    11  %

Income before income taxes                                                            1,778              236             1,542                       n/m
Provision for income taxes                                                              477                8               469                       n/m
Net income                                                                            1,301              228             1,073                       

n/m

Less: net loss attributable to non-controlling interests                                 (6)               -                (6)                      

n/m

Net income attributable to Avis Budget Group, Inc.                                $   1,307          $   228          $  1,079                       n/m


___________
n/m - Not Meaningful

Revenues increased $1.9 billion, or 52%, during the six months ended June 30,
2022 compared to the similar period in 2021, primarily due to a 36% increase in
volume as the mobility industry recovers from the pandemic and a 14% increase in
revenue per day, excluding exchange rate effects, partially offset by a $115
million negative impact from currency exchange rate movements. Total expenses
increased 11% during the six months ended June 30, 2022, compared to the similar
period in 2021, primarily due to increased demand, partially offset by cost
discipline as volume returned. Our effective tax rates were a provision of 26.8%
and 3.4% for the six months ended June 30, 2022 and 2021, respectively. As a
result of these items, our net income increased by $1.1 billion compared to the
similar period in 2021. For the six months ended June 30, 2022 and 2021, we
reported earnings per diluted share of $25.14 and $3.23, respectively.

Operating expenses decreased to 44.0% of revenue during the six months ended
June 30, 2022 compared to 49.8% during the similar period in 2021, primarily due
to the increased revenues and cost discipline as volume returned. Vehicle
depreciation and lease charges decreased to 6.1% of revenue during the six
months ended June 30, 2022 compared to 15.8% during the similar period in 2021,
primarily due to increased revenues and a 55% lower per unit fleet cost,
excluding exchange rate effects, driven by the continued favorable trend in the
used-vehicle market. Selling, general and administrative costs decreased to
11.3% of revenue during the six months ended June 30, 2022 compared to 12.7%
during the similar period in 2021, primarily due to increased revenues and cost
discipline as volume returned. Vehicle interest costs decreased to 3.1% of
revenue during the six months ended June 30, 2022 compared to 4.1% during the
similar period in 2021, primarily due to increased revenues.

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The following is a more detailed discussion of the results of each of our reportable segments and the reconciliation of net income to Adjusted EBITDA:

                                                                                               Six Months Ended June 30,
                                                                                   2022                                          2021
                                                                    Revenues            Adjusted EBITDA           Revenues           Adjusted EBITDA
Americas                                                          $    4,567          $          1,851          $    3,054          $           742
International                                                          1,109                       206                 689                      (42)
Corporate and Other (a)                                                    -                       (42)                  -                      (29)
                 Total Company                                    $    5,676          $          2,015          $    3,743          $           671

                                                                                                                     Reconciliation to Adjusted EBITDA
                                                                                                                    2022                   2021
Net income                                                                                                      $    1,301          $           228
Provision for income taxes                                                                                             477                        8
Income before income taxes                                                                                           1,778                      236

Add:                         Non-vehicle related depreciation and amortization (b)                                     113                      135
                             Interest expense related to corporate debt, net:
                             Interest expense                                                                          117                      120
                             Early extinguishment of debt                                                                -                      129
                             Restructuring and other related charges                                                    14                       42
                             Unprecedented personal-injury and other legal matters, net (c)                              1                      (11)
                             Transaction-related costs, net                                                              1                        2
                             COVID-19 charges (d)                                                                       (9)                      18
Adjusted EBITDA                                                                                                 $    2,015          $           671


(a)Includes unallocated corporate overhead which is not attributable to a
particular segment.
(b)For the six months ended June 30, 2022, includes operating expenses related
to cloud computing costs of $4 million. For the six months ended June 30, 2021,
includes operating expenses and selling, general and administrative expenses
related to cloud computing costs of $3 million and $2 million, respectively.

(c) Reported as operating expenses in our consolidated summarized operating results.


(d)The following table presents the unusual, direct and incremental costs due to
the COVID-19 pandemic:

                                                                        2022      2021
Minimum annual guaranteed rent in excess of concession fees, net       $ (9)     $ 16
Vehicles damaged in overflow parking lots, net of insurance proceeds      -        (4)

Other charges                                                             -         6
Operating expenses                                                       (9)       17

Selling, general and administrative expenses                              -         1
COVID-19 charges, net                                                  $ (9)     $ 18



Americas

                                  Six Months Ended June 30,
                               2022                2021        % Change
Revenues             $      4,567                $ 3,054           50  %
Adjusted EBITDA             1,851                    742          149  %


Revenue increased by 50% in the past six months June 30, 2022 compared to the comparable period in 2021, mainly due to a 38% increase in volume and an 8% increase in revenue per day.


Operating expenses decreased to 43.0% of revenue during the six months ended
June 30, 2022 compared to 46.9% during the similar period in 2021, primarily due
to increased revenues and cost discipline as volume returned. Vehicle
depreciation and lease charges decreased to 3.4% of revenue during the six
months ended June 30, 2022 compared to 14.5% during the similar period in 2021,
primarily due to increased revenues and a 75% decrease in per-unit fleet costs,
driven by the continued favorable trend in the used-vehicle market. Selling,
general and administrative costs decreased to 9.7% of revenue during the six
months ended June 30, 2022
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compared to 10.2% during the similar period in 2021, primarily due to increased
revenues and cost discipline as volume returned. Vehicle interest costs
decreased to 3.3% of revenue during the six months ended June 30, 2022 compared
to 4.1% during the similar period in 2021, primarily due to increased revenues.

Adjusted EBITDA was $1.1 billion higher during the six months ended June 30,
2022 compared to the similar period in 2021, primarily due to increased
revenues, lower per-unit fleet costs and cost discipline as volume returned.

International
                                   Six Months Ended June 30,
                                 2022                 2021       % Change
Revenues             $        1,109                  $ 689           61  %
Adjusted EBITDA                 206                    (42)         590  %


Revenues increased 61% during the six months ended June 30, 2022, compared to
the similar period in 2021, primarily due to a 37% increase in revenue per day,
excluding exchange rate effects and a 30% increase in volume, partially offset
by a $110 million negative impact from currency exchange rate movements.


Operating expenses decreased to 47.1% of revenue during the six months ended
June 30, 2022 compared to 62.7% during the similar period in 2021, primarily due
to increased revenues and cost discipline as volume returned. Vehicle
depreciation and lease charges decreased to 17.2% of revenue during the six
months ended June 30, 2022 compared to 21.6% during the similar period in 2021,
primarily due to increased revenues partially offset by a 10% increase in
per-unit fleet costs, excluding exchange rate effects. Selling, general and
administrative costs decreased to 15.2% of revenue during the six months ended
June 30, 2022 compared to 19.1% during the similar period in 2021, primarily due
to increased revenues and cost discipline as volume returned. Vehicle interest
costs decreased to 2.0% of revenue during the six months ended June 30, 2022
compared to 3.8% during the similar period in 2021, primarily due to increased
revenues.

Adjusted EBITDA was $248 million higher during the six months ended June 30,
2022 compared to the similar period in 2021, primarily due to increased revenues
and cost discipline as volume returned, offset by higher per-unit fleet costs
and a $23 million negative impact from currency exchange rate movements.

              FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We present separately the financial data of our vehicle programs. These programs
are distinct from our other activities as the assets under vehicle programs are
generally funded through the issuance of debt that is collateralized by such
assets. The income generated by these assets is used, in part, to repay the
principal and interest associated with the debt. Cash inflows and outflows
relating to the generation or acquisition of such assets and the principal debt
repayment or financing of such assets are classified as activities of our
vehicle programs. We believe it is appropriate to segregate the financial data
of our vehicle programs because, ultimately, the source of repayment of such
debt is the realization of such assets.

FINANCIAL SITUATION

                                                         June 30,
                                                           2022               December 31, 2021            Change
Total assets exclusive of assets under vehicle
programs                                              $      8,445          $            8,581          $     (136)
Total liabilities exclusive of liabilities
under vehicle programs                                       9,800                       8,933                 867
Assets under vehicle programs                               17,650                      14,019               3,631
Liabilities under vehicle programs                          16,944                      13,876               3,068
Stockholders' equity                                          (649)                       (209)               (440)



The increase in liabilities exclusive of liabilities under vehicle programs is
principally related to the increase in corporate indebtedness from the issuance
of Floating Rate Term Loan due March 2029. See "Liquidity and Capital Resources"
and Note 10 to our Consolidated Condensed Financial Statements.

The increase in vehicle program assets and vehicle program liabilities is primarily related to the expansion of our vehicle rental fleet to meet increased rental demand.

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The decrease in equity is primarily due to our share buybacks, partially offset by overall results.

LIQUIDITY AND CAPITAL RESOURCES


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.

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 SOFR plus 350 basis points for
an aggregate rate of 5.13%.

During second quarter 2022, our Avis Budget Rental Car Funding (AESOP) LLC
subsidiary issued an aggregate of approximately $870 million of asset-backed
notes. We used the proceeds from these borrowings to fund the repayment of
maturing vehicle-backed debt and the acquisition of rental cars in the United
States. Borrowings under the Avis Budget Rental Car Funding program primarily
represent fixed rate notes. Our Avis Budget Rental Car Funding (AESOP) LLC
subsidiary also entered into $800 million of variable funding asset-backed notes
and as of June 30, 2022, no funds were drawn on these notes.

Our Board of Directors has authorized the repurchase of up to $7.1 billion of
our common stock under a plan originally approved in 2013 and subsequently
expanded, most recently in May 2022. Our stock repurchases may occur through
open market purchases, privately negotiated transactions or trading plans
pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The
amount and timing of specific repurchases are subject to market conditions,
applicable legal requirements, restricted payment capacity under our debt
instruments and other factors. The repurchase program may be suspended, modified
or discontinued at any time without prior notice. The repurchase program has no
set expiration or termination date. During the six months ended June 30, 2022,
we repurchased approximately 7.9 million shares of common stock at a cost of
approximately $1.7 billion under the program. As of June 30, 2022, approximately
$2.25 billion of authorization remained available to repurchase common stock
under the program.

CASH FLOWS

The table below summarizes our cash flows:

Six months ended June 30th,

                                                                               2022                2021             Change

Cash provided by (used in):

              Operating activities                                       $    2,371             $  1,255          $  1,116
              Investing activities                                           (3,870)              (4,035)              165
              Financing activities                                            1,582                3,430            (1,848)

Effect of changes in exchange rates on cash and cash equivalents, program and restricted cash

                                                     (25)                  (4)              (21)

Net increase in cash and cash equivalents, program and restricted cash

      58                  646              (588)

Cash and cash equivalents, program and earmarked cash, start of period

                                                                          626                  765              (139)

Cash and Cash Equivalents, Program and Restricted Cash, Period End $

     684             $  1,411          $   (727)



The increase in cash provided by operations over the past six months June 30, 2022 compared to the same period in 2021 is mainly due to the increase in our net income.

The decrease in cash used in investing activities over the past six months
June 30, 2022 compared to the same period in 2021 is mainly due to the increase in revenue from vehicle sales.


The decrease in cash provided by financing activities during the six months
ended June 30, 2022 compared with the same period in 2021 is primarily due to
the increase in repurchases of common stock and payments on vehicle borrowings,
offset by a decrease in net payments on corporate borrowings.
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DEBT AND FUNDING RULES


At June 30, 2022, we had approximately $19 billion of indebtedness, including
corporate indebtedness of approximately $5 billion and debt under vehicle
programs of approximately $14 billion. For information regarding our debt and
borrowing arrangements, see Notes 1, 10 and 11 to our Consolidated Condensed
Financial Statements.

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. 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 liquidity position was impacted by COVID-19 as a result of significant
volume declines. However, since 2021, travel advisories and restrictions were
eased, which led to a significant increase in global travel demand, resulting in
increased demand for rental vehicles and improved pricing across the industry.
However, the full extent of the ongoing impact of this virus on our long-term
operational performance and liquidity will depend on future developments,
including those outside of our control, such as the spread of new variants of
the virus, which may be resistant to currently approved vaccines and the
implementation of new or continued travel restrictions.

Our liquidity could 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. We believe
these factors have affected and could further affect the debt ratings assigned
to us by credit rating agencies and the cost of our borrowings. Additionally, a
worsening or prolonged downturn in the worldwide economy or a disruption in the
credit markets could further impact our liquidity due to (i) decreased demand
and pricing for vehicles in the used-vehicle market, (ii) increased costs
associated with, and/or reduced capacity or increased collateral needs under,
our financings, (iii) the adverse impact of vehicle manufacturers being unable
or unwilling to honor their obligations to repurchase or guarantee the
depreciation on the related program vehicles and (iv) disruption in our ability
to obtain financing due to negative credit events specific to us or affecting
the overall debt market.

away June 30, 2022we had $579 million of available cash and cash equivalents and access to available credit under our revolving credit facility of approximately $271 millionwhich supplies us approximately $850 million the total liquidity.


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 June 30, 2022, we were in compliance with the financial
covenants governing our indebtedness. For additional information regarding our
liquidity risks, see Part I, Item 1A, "Risk Factors" of our 2021 Form 10-K, as
well as the "Risk Factors" section in this quarterly report.

CONTRACTUAL OBLIGATIONS


Our future contractual obligations have not changed significantly from the
amounts reported within our 2021 Form 10-K with the exception of our commitment
to purchase vehicles, which decreased by approximately $2.1
billion from December 31, 2021, to approximately $3.8 billion as of June 30,
2022 due to seasonality. Changes to our obligations related to corporate
indebtedness and debt under vehicle programs are presented above within the
section titled "Liquidity and Capital Resources-Debt and Financing Arrangements"
and also within Notes 10 and 11 to our Consolidated Condensed Financial
Statements.

ACCOUNTING POLICIES

The results of most of our recurring businesses are recorded in our financial statements using accounting principles that are not particularly subjective or complex. However, in presenting our financial statements in accordance with generally accepted accounting principles, we are required to make estimates and assumptions

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that affect the amounts reported therein. Several of the estimates and
assumptions that we are required to make pertain to matters that are inherently
uncertain as they relate to future events. Presented within the section titled
"Critical Accounting Policies" of our 2021 Form 10-K are the accounting policies
(related to goodwill and other indefinite-lived intangible assets, vehicles,
income taxes and public liability, property damage and other insurance
liabilities) that we believe require subjective and/or complex judgments that
could potentially affect 2022 reported results. There have been no significant
changes to those accounting policies or our assessment of which accounting
policies we would consider to be critical accounting policies.

Goodwill and Other Indefinite-lived Intangible Assets. We perform our annual
goodwill and other indefinite-lived intangible assets impairment assessment in
the fourth quarter of each year at the reporting unit level, or more frequently
if events or circumstances indicate that the carrying amount of goodwill and
other indefinite-lived intangible assets may be impaired. 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, 2021 was 10% and the
amount of goodwill allocated to our reporting unit was $488 million.

We evaluated qualitative factors and determined that an interim impairment test
was not required this quarter as we believe it is more likely than not that the
fair value of our goodwill and other indefinite-lived intangible assets exceeds
the carrying value. We will continue to closely monitor actual results versus
our expectations as well as any significant changes in events or conditions,
including the impact of COVID-19 on our business and the travel industry, and
the resulting impact to our assumptions about future estimated cash flows, the
discount rate and market multiples. In the future, failure to achieve our
business plans, a deterioration of the general economic 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.

New accounting standards

See Note 1 to our Condensed Consolidated Financial Statements for detailed information on new accounting standards and their impact on our business.

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