Avis Budget Group, Inc.

Greetings. Welcome to the Avis Budget Group second quarter 2026 earnings call. Please note that this conference is being recorded. I will now turn the conference over to David Calabria, Treasurer and Senior Vice President, Corporate Finance. Thank you, David. You may begin.

Good morning, everyone, and thank you for joining us. On the call with me are Brian Choi, our Chief Executive Officer, and Daniel Cunha, our Chief Financial Officer. Before we begin, I would like to remind everyone that we will be discussing forward-looking information including potential future financial performance, which is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and assumptions, uncertainties and other factors are identified in our earnings release and other periodic filings with the SEC, as well as the investor relations section of our website. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results and any or all of our forward-looking statements may prove to be inaccurate and we can make no guarantees about our future performance. We undertake no obligation to update or revise our forward-looking statements. On this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website, for how we define these measures and reconciliations to the closest comparable GAAP measures. With that, I'd like to turn the call over to Brian.

Thanks, David, and thank you all for joining us. I want to start this discussion not with the results themselves, but with the decisions that led to those results. Last quarter, we spoke about fleet reduction and supply discipline. This quarter, we put that operating philosophy into practice. The month of April started with summer bookings in the outer months holding at mid-single-digit growth. By early May, that momentum began to change. The strength we had been seeing in forward bookings started to erode, and that deceleration appeared in the booking data before it fully worked its way into reported volumes. Once we saw it, we did not wait for the trend to become more pronounced. We moved quickly. We accelerated vehicle dispositions well beyond our original plan, taking advantage of a window in April and early May when the used vehicle market was still seasonally strong. That allowed us to monetize favorable residual values while realigning supply to a different demand environment. The result was a fleet position that looks different from what we would typically expect in a second quarter. In a normal year, this is the period when we would be building fleet ahead of the summer peak. Instead, our Americas fleet finished the quarter down 5% year over year, the lowest second quarter fleet size since the COVID environment of 2Q21. That was a meaningful departure from our original plan. which contemplated growth tied to World Cup activity, America 250, and a more constructive summer travel environment. But the data changed. Against a backdrop of broader consumer uncertainty, higher travel costs, and geopolitical volatility, year-over-year TSA check-ins decelerated from flat in April to negative 70 basis points in May to negative 1.3% in June. Overseas visitors to the U.S., based on the CBP I-94 data, were down 8% in the second quarter. When it became clear that demand was not developing in line with our original plan, we treated that as new information and resized the fleet accordingly. Quarter after quarter, we have said that we would rather run this fleet slightly under demand than slightly over it. This quarter, we did just that. Importantly, a 5% smaller fleet did not translate into a 5% decline in rental days. Renzel Days in the Americas were down only 2% due to improved utilization. Vehicle utilization finished the quarter at 73.2% in the Americas, our highest second quarter utilization level in company history. This improvement was made possible by the technology deployments, operating discipline, and asset management mindset we have been building into the network over the past several quarters. It also reflects a different operating model for the business. We are treating fleet, Not simply as capacity to meet demand, but as capital at risk. When the data changes, the fleet plan has to change with it. In the second quarter, given the demand environment and the strength of the used vehicle market, we leaned deliberately into the asset manager side of the business and prioritized profitability and returns over rental days or market share. We believed this was the right decision and we made it knowing it would affect the shape of our second quarter. Most notably, With Fleet as a scarce resource this quarter, we made the deliberate choice to optimize for revenue per transaction versus revenue per day. Put simply, we accepted fewer one-day rentals, which carry an RPD premium, in order to fulfill more weekly business. When supply is tight, longer-duration rentals create better overall transaction economics because they reduce turns, handling costs, and operational complexity. If we had maintained the same length of rental mix as 2Q25, RPD would have been up nearly 3% year-over-year. Instead, RPD was essentially flat. That was a deliberate trade-off, and the economics showed up in revenue per transaction, which was up 6% year-over-year. Last quarter, we said that our expectation was for the World Cup to be a clear travel tailwind, particularly in host cities. That expectation was broadly shared across the travel industry, but it did not play out the way we expected. That is not in our control. What we can control is how quickly we adapt and our teams did that well this quarter. Our adjusted EBITDA outcome was in line with our initial expectations but the path to get there was very different than we anticipated. That has implications for how we will manage the third quarter and the same principles will apply. We will stay disciplined on fleet, protect utilization, and prioritize returns over volume. I'll elaborate on that later in the call. Before I turn it over to Daniel, I want to briefly touch on three additional items that are important to shareholder value in the strategic direction of the company. First, on Pentwater. You'll recall that last quarter, I spent time addressing the volatility in our stock price and the trading dynamics involving our second largest shareholder. We are pleased to report that Avis and Pentwater have reached a settlement agreement related to short swing profits under which Pentwater agreed to pay Avis $650 million in cash. We believe the settlement represents a fair resolution of the dispute and a meaningful recovery for our shareholders. The settlement remains subject to final court approval, but we expect this matter to be resolved by year end. Second, our partnership with Waymo reached an important milestone with the launch of autonomous ride hail operations in Dallas. Our teams assumed operational responsibility on July 1st, and since then, we have delivered thousands of trips while steadily scaling both operation and the fleet. I want to recognize our AV team for the work they have done to build this capability the right way, with the right people, processes, and resources. We are now taking the early lessons from Dallas and applying them to a repeatable operating model, one built around uncompromising safety, world-class customer experience, and operational excellence. Third, AVUS First, our premium first-class rental offering, continues to gain traction. Since our last update, We expanded the program to additional major airport locations including Orlando, Washington Dulles, London Heathrow, and Paris Charles de Gaulle. We also broadened the vehicle portfolio with high-demand models, including select Mercedes and BMW vehicles. Customer satisfaction remained strong, with an average rating of 4.9 out of 5 stars, underscoring the value proposition and the momentum we continue to see in this segment. Each of these items is important in its own way, but they all support the same broader goal, creating better value for shareholders through disciplined execution, stronger customer experiences, and new capabilities that can scale over time. With that, let me turn it over to Daniel, who will provide additional detail on the quarter.