AVIS BUDGET GROUP, INC. (CAR)

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q and with our 2025 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 approximately 665,000 vehicles in second quarter 2026. 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 (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly; and International, consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.

Business and Trends

Our strategy remains centered on driving sustainable growth through operational efficiency, analytics, customer experience and innovation. Additionally, during the fourth quarter of the fiscal year ended December 31, 2025, in conjunction with the Interpace Ventures transaction, we reviewed our fleet strategy, specific to certain United States EV rental car vehicles, and as a result shortened the useful life associated with such vehicles. We believe our strategies will continue to reinforce our competitive position, support long-term profitability, and deliver value to our stakeholders. During the three months ended June 30, 2026, we generated revenues of $3.0 billion, net income of $63 million and Adjusted EBITDA of $286 million. These results were primarily driven by lower per-unit fleet costs and increased revenue per day, partially offset by decreased volume.

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. 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, cost of new vehicles, used car values, increases in the number of 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. Additionally, uncertainty remains with respect to tariffs and tax regulations, and this uncertainty has had and may continue to have impacts on our operations. 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 and cash flows.

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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 being 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 period 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. We aggregate certain of our operating segments into our reportable segments. In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the 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 (loss) from continuing operations before non-vehicle related depreciation and amortization; long-lived asset impairment and other related charges; other fleet charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, net, which primarily includes amounts recorded in excess of $5 million, related to unprecedented self-insurance reserves for allocated loss adjustment expense, 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; severe weather-related damages in excess of $5 million, net of insurance proceeds; and income taxes.

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, 2026:

•Our revenues totaled $5.5 billion, an increase of $59 million year-over-year, primarily due to increased revenue per day, partially offset by decreased volume.

•Our net loss attributable to Avis Budget Group, Inc. was $248 million, representing a decreased loss of $253 million year-over-year, primarily due to increased revenue per day and decreased fleet charges.

•Our Adjusted EBITDA was $173 million, representing a decrease of $11 million year-over-year.

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Three Months Ended June 30, 2026 vs. Three Months Ended June 30, 2025

Our condensed consolidated results of operations comprised of the following:

___________

n/m - Not Meaningful

Revenues decreased $41 million during the three months ended June 30, 2026 compared to the similar period in 2025, primarily due to a 2% decrease in volume, partially offset by a $20 million positive impact from currency exchange rate movements. Total expenses decreased 3% during the three months ended June 30, 2026 compared to the similar period in 2025, primarily due to lower fleet costs. Our effective tax rates were a provision of 13.7% and 66.7% for the three months ended June 30, 2026 and 2025, respectively. As a result of these items, our net income attributable to Avis Budget Group, Inc. increased by $31 million compared to the similar period in 2025. For the three months ended June 30, 2026 and 2025, we reported diluted earnings per share of $0.98 and $0.10, respectively.

Operating expenses increased to 50.9% of revenue during the three months ended June 30, 2026 compared to 50.2% during the similar period in 2025, primarily due to increased facilities costs and decreased revenue, partially offset by decreased fleet operating costs. Vehicle depreciation and lease charges decreased to 19.4% of revenue during the three months ended June 30, 2026 compared to 20.9% during the similar period in 2025, primarily due to decreased per-unit fleet costs, excluding exchange rate effects, driven by an increase in the gain on sale of vehicles. Selling, general and administrative costs were 12.9% of revenue during the three months ended June 30, 2026 compared to 13.0% during the similar period in 2025. Vehicle interest costs were 7.7% of revenue during the three months ended June 30, 2026 compared to 7.6% during the similar period in 2025.

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Following is a more detailed discussion of the results of each of our reportable segments and corporate and other, together with a reconciliation of net income to Adjusted EBITDA:

[Excerpt truncated for page length; source filing is linked above.]

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 684,000 vehicles in 2025. 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, 2025 compared to 2024 is presented below. A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to 2023 can be found under Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 14, 2025, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at ir.avisbudgetgroup.com.

In 2025, we saw sustained volume, decreased revenue per day and lower per-unit fleet costs, excluding other fleet charges related to the disposal of certain fleet in our Americas reportable segment. This resulted in revenues of approximately $11.7 billion, net loss of $995 million and Adjusted EBITDA of $748 million for the year ended December 31, 2025. During the fourth quarter of 2025, in conjunction with the Interpace Ventures transaction, we reviewed our fleet strategy, specific to certain United States EV rental car vehicles, and as a result shortened the useful life associated with such vehicles. Our net loss reflects $518 million in long-lived asset impairment and other related charges, which was recorded to reduce the carrying value of certain United States EV rental car vehicles to its fair value in connection with this change. See Note 2 – Summary of Significant Accounting Policies – Impairment of Long-Lived Assets to our Consolidated Financial Statements.

Our strategy remains centered on driving sustainable growth through operational efficiency, analytics, customer experience and innovation. In addition to the change in fleet strategy mentioned above, during the fourth quarter of the fiscal year ended December 31, 2024, we changed our fleet strategy with respect to United States and Canadian rental car vehicles, to accelerate certain fleet rotations in order to decrease the age of our fleet for competitive reasons. We believe our strategies will continue to reinforce our competitive position, support long-term profitability, and deliver value to our stakeholders.

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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. 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, cost of new vehicles, used car values, increases in the number of 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. Additionally, uncertainty remains with respect to tariffs and tax regulations, and this uncertainty has had and may continue to have impacts on our operations. 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.

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 being 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 period 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. We aggregate certain of our operating segments into our reportable segments. In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the 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 (loss) from continuing operations before non-vehicle related depreciation and amortization; long-lived asset impairment and other related charges; other fleet charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, net, which primarily includes amounts recorded in excess of $5 million, related to unprecedented self-insurance reserves for allocated loss adjustment expense, 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; severe weather-related damages in excess of $5 million, net of insurance proceeds; and income taxes. In the first quarter of 2025, we revised our definition of Adjusted EBITDA to exclude other fleet charges. We did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these.

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.

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Year Ended December 31, 2025 vs. Year Ended December 31, 2024

Our consolidated results of operations comprised the following:

__________

n/m    Not meaningful.

Revenues decreased $137 million or 1% for the year ended December 31, 2025, compared to the similar period in 2024, primarily due to a 1% decrease in revenue per day, excluding exchange rate effects and sustained volume, partially offset by a $71 million positive impact from currency exchange rate movements. Total expenses decreased 13% for the year ended December 31, 2025, compared to the similar period in 2024, primarily due to the long-lived asset impairment and other related charges recorded in 2024. See Note 2 – Summary of Significant Accounting Policies – Impairment of Long-Lived Assets to our Consolidated Financial Statements. Our effective tax rates for the years ended December 31, 2025 and 2024 were a provision of 7.1% and a benefit of 30.8%, respectively. As a result of these items, our net loss attributable to Avis Budget Group, Inc. decreased by $932 million compared to the similar period in 2024. For the years ended December 31, 2025 and 2024, we reported diluted loss per share of $25.25 and $51.23, respectively.

Operating expenses decreased to 50.3% of revenues for the year ended December 31, 2025, compared to 51.0% during the similar period in 2024, primarily due to a settlement distribution relating to our participation in the In re Automotive Parts Antitrust Litigation and decreased fleet operating costs, partially offset by increased facilities costs. See Note 15 – Commitments and Contingencies to our Consolidated Financial Statements. Vehicle depreciation and lease charges increased to 25.9% of revenues for the year ended December 31, 2025, compared to 25.2% during the similar period in 2024, primarily due to other fleet charges related to the disposal of certain fleet in our Americas reportable segment, partially offset by an increase in the gain on sale of vehicles. Selling, general and administrative costs increased to 12.4% of revenues for the year ended December 31, 2025, compared to 11.5% during the similar period in 2024, primarily due to increased commissions, marketing and

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other general and administrative costs. Vehicle interest costs were 7.9% of revenues for the year ended December 31, 2025, compared to 8.0% during the similar period in 2024.

Following is a more detailed discussion of the results of each of our reportable segments and corporate and other, together with a reconciliation of net loss to Adjusted EBITDA:

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]