AVIS BUDGET GROUP, INC.

Avis Budget Group, Inc. is a leading global provider of mobility solutions operating through three of the most recognized brands, Avis, Budget and Zipcar, as well as several other brands well recognized in their respective markets. The company and its licensees operate in approximately 180 countries throughout the world, maintaining a leading share of airport car rental revenues in North America, Europe and Australasia, and operating a leading car sharing network and one of the leading commercial truck rental businesses in the United States. The industry is characterized by intense price and service competition among global, local and regional competitors, with technology increasing pricing transparency and further intensifying price competition.

The company's primary competitors named in the filing include Enterprise Holdings, Inc., Hertz Global Holdings, Inc., Europcar Mobility Group and Sixt SE for vehicle rental operations, and for Budget Truck, competitors include U-Haul International, Inc., Penske Truck Leasing Corporation, Ryder System, Inc., Enterprise Truck Rental, and Hertz Global Holdings, Inc. The company believes the prominence and service reputation of its brands, extensive worldwide ownership of mobility solutions and commitment to innovation provide a competitive advantage. The company generally maintains a leading share of airport car rental revenues in North America, Europe and Australasia.

The company generates revenue primarily by providing vehicle rentals and other related products and mobility services to commercial and leisure customers, as well as through licensing of its rental brands. Revenues are derived from time and mileage fees, licensee royalties, and the sale or rental of optional ancillary products such as collision and loss damage waivers, additional liability insurance, and driving convenience products. The company also collects membership fees in connection with its car sharing business. The business model benefits from complementary demand patterns with mid-week commercial demand balanced by weekend leisure demand.

The Avis brand, positioned as a premium vehicle rental and mobility solution for the modern expert traveler, generated total revenues of approximately $6.6 billion in 2025, with royalty fees from licensees totaling approximately 1% of Avis revenues. The Budget brand, a leading provider of value-for-money rental car experiences, generated total revenues of approximately $4.3 billion in 2025, with royalty fees also totaling approximately 1% of Budget revenues. The Budget Truck rental business is one of the largest local and one-way truck and cargo van rental businesses in the United States, with an average fleet of approximately 24,000 vehicles in 2025 rented through approximately 800 Company and dealer-operated locations. Zipcar is a leading car sharing network offering self-service vehicles by the hour or day in urban areas and college campuses. Payless serves the deep-value segment with approximately 310 locations worldwide, allowing the company to cascade vehicles that exceed certain Avis and Budget age or mileage thresholds.

In 2025, the company announced a multi-year partnership with Waymo to support autonomous ride-hailing operations in Dallas, with initial public launch planned for 2026. In December 2025, in conjunction with the Interpace Ventures transaction, Interpace Funding LLC issued $965 million of alternative funding asset-backed securities with a targeted two-year term and a maturity date of June 2028. During 2025, the Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued approximately $1,708 million of asset-backed notes with expected final payment dates ranging from August 2027 to February 2031 and a weighted average interest rate of 5.33%. In May 2025, the company issued $600 million of 8.375% Senior Notes due June 2032. In July 2025, the company amended its floating rate term loan, extending its maturity date from August 2027 to July 2032 and increasing the interest rate to SOFR plus 2.50%. As of December 31, 2025, approximately $757 million of authorization remained available under the Share Repurchase Program, and no shares were repurchased during the year.

For the year ended December 31, 2025, total revenues were approximately $11.7 billion, a decrease of $137 million or 1% compared to 2024. Net loss attributable to Avis Budget Group, Inc. was $889 million, compared to a net loss of $1,821 million in 2024, a decrease of $932 million or 51%. Diluted loss per share was $25.25 compared to $51.23 in the prior year. Adjusted EBITDA was $748 million compared to $628 million in 2024. The net loss reflects $518 million in long-lived asset impairment and other related charges recorded to reduce the carrying value of certain United States EV rental car vehicles.

The company's strategy for 2026 remains centered on driving sustainable growth by strengthening operational efficiency, expanding the use of analytics, elevating the customer experience, and accelerating innovation through disciplined investment in technology. To enhance the customer experience, the company intends to reaffirm its goals of reliability and value while continuing to streamline the end-to-end rental journey, including scaling digital capabilities and broadening access to Avis First, a premium service that launched in select markets in 2025.

On the innovation front, in 2025 the company announced a multi-year partnership with Waymo to support autonomous ride-hailing operations in Dallas, with initial public launch planned for 2026. This arrangement leverages the company's fleet management capabilities and includes providing infrastructure, vehicle readiness, maintenance, and depot operations for Waymo's fully autonomous ride-hailing service.

The filing does not contain specific margin or cost outlook figures for the upcoming period.

The company anticipates that non-vehicle property and equipment additions will be approximately $250 million in 2026. The company expects further restructuring expense of approximately $35 million related to the Global Rightsizing initiative to be incurred in 2026.

As of December 31, 2025, approximately $757 million of authorization remained available under the Share Repurchase Program. The company did not declare or pay any cash dividends in 2025 or 2024. The company evaluates its dividend policy on a regular basis and may pay dividends in the future, subject to compliance with covenants.

The company continues to be susceptible to a number of industry-specific and global macroeconomic factors that may cause actual results to differ from expectations, including interest rates, inflationary impact on commodity prices and wages, cost of new vehicles, used car values, increases in personal injury claims and cost per incident, government shutdowns, manufacturer recalls, and an economic downturn that may impact travel demand, all of which may be exacerbated by ongoing military conflicts including in the Middle East and Eastern Europe. Uncertainty remains with respect to tariffs and tax regulations.

The company faces risks related to the high level of competition in the mobility industry, with price being one of the primary factors. If competitive pressures lead to loss of rental volume or require matching downward pricing without the ability to reduce operating costs, financial condition or results of operations could be materially adversely impacted. Additionally, any significant airline capacity reductions, reduced flight schedules, or events that disrupt business or leisure air travel could have an adverse impact on results of operations.

The company faces material risks related to fleet costs and availability, as fleet costs typically represent the single largest expense and can vary based on used vehicle market conditions. In 2025, on average approximately 84% of the rental fleet was comprised of risk vehicles, exposing the company to fluctuations in residual values. A reduction in residual values could cause substantial losses on vehicle sales or require accelerated depreciation. The company also faces risks related to its substantial debt obligations, with total outstanding debt of approximately $25.4 billion as of December 31, 2025, including unhedged interest rate sensitive debt of approximately $5.9 billion. During the seasonal borrowing peak in 2025, outstanding unhedged interest rate sensitive debt totaled approximately $6.2 billion. Increases in interest rates would increase debt service obligations for variable rate indebtedness. Additionally, the company faces risks related to liability and insurance, as it retains economic exposure for liability to third parties arising from vehicle rental services in the United States, Canada and Puerto Rico, and has recorded $508 million in self-insurance reserves as of December 31, 2025. The company also faces risks related to vehicle electrification, including the need for substantial capital investment in charging infrastructure and potential changes in government incentives, as the OBBBA eliminated, limited or phased out certain tax credits that had previously provided benefits to lessees and purchasers of EVs.

Management's message emphasizes that the strategy for 2026 remains centered on driving sustainable growth by strengthening operational efficiency, expanding the use of analytics, elevating the customer experience, and accelerating innovation through disciplined investment in technology. Key themes include reaffirming goals of reliability and value while streamlining the end-to-end rental journey, scaling digital capabilities, and broadening access to Avis First, a premium service launched in select markets in 2025. On innovation, management highlights the multi-year partnership with Waymo to support autonomous ride-hailing operations in Dallas, with initial public launch planned for 2026. Management believes this strategy will reinforce the company's competitive position, support long-term profitability, and deliver value to stakeholders.