CAR — Q2 2026 Financial Report Analysis

Avis Budget rented cars on 2% fewer days in the second quarter of 2026 than a year earlier, and revenue slipped 1% to $2,998 million. Profit still rose, mainly because the company ran a smaller, busier fleet that cost less to own: cars sat idle less often, and it sold used cars for more than their book value. Net income attributable to shareholders came to $35 million ($0.98 a diluted share) against $4 million ($0.10) a year ago. That jump overstates the improvement. Most of it came from a one-off restructuring charge in last year's quarter not repeating, and from a much lower tax rate. Adjusted EBITDA, the company's preferred profit measure, rose only 3% to $286 million.

At a glance

• Utilization hit 72.6%, up 1.9 points. On an average day, about 73 of every 100 cars in the fleet were out on rent. It is a second-quarter record. Avis cut its average fleet 5% while rental days fell only 2%, so each car worked harder.
• Fleet cost per car fell 4% to $290 a month (excluding currency moves). Vehicle depreciation, the cost of a car losing value while the company owns it, dropped $53 million. The 10-Q says the driver was "an increase in the gain on sale of vehicles", meaning used cars sold above their book value.
• $28 million of the $63 million total net income went to outside investors, not Avis shareholders. They are tax-credit investors in an electric-vehicle fleet joint venture set up in late 2025. That is why shareholders' profit was $35 million.

The numbers

Avis does not report an operating income line. The operating margin above is our own calculation: income before taxes, with interest on corporate debt and the $3 million debt-redemption cost added back, divided by revenue. That gives $184 million on $2,998 million, versus $128 million on $3,039 million a year ago. Interest on the debt that funds the fleet stays in as a cost, because renting out cars is the business. Rental-industry figures from this filing: revenue per day is revenue divided by rental days; utilization is rental days divided by the days cars were available.

What drove the quarter

Fewer rentals, about the same price. Total revenue per day rose 1% to $68.29. Excluding currency, it rose only 0.3%, to $67.84. In the Americas, revenue per day was flat at $70.20 and rental days fell 2%. The quarterly release quotes CEO Brian Choi: "as booking trends shifted, we moved quickly to resize fleet." In other words, demand came in softer than planned, and Avis shrank the fleet to protect pricing rather than chase volume.

A smaller fleet carried the result. The Americas average fleet fell 5% to 489,192 cars, and utilization rose 2.5 points to 73.2%. Vehicle depreciation and lease charges fell from 20.9% to 19.4% of revenue. Americas selling, general and administrative costs dropped from 11.3% to 10.5% of revenue on lower commissions and marketing. Together, these lifted Americas Adjusted EBITDA 8% to $237 million on 2% lower revenue.

International went the other way. International revenue was flat at $710 million, but only because the dollar was weaker. Currency added $21 million; excluding it, revenue fell about 2.5% to $689 million, and rental days were down 3%. Higher facilities costs pushed operating expenses from 46.7% to 48.1% of revenue. Higher commissions and marketing pushed SG&A from 15.5% to 17.0%. International Adjusted EBITDA fell 11% to $73 million.

What the headline numbers hide

• Most of the earnings jump came from items that don't repeat. Pretax income rose $58 million. Of that, $41 million came from lower restructuring charges: $18 million this quarter versus $59 million a year ago, from a global "rightsizing" plan started in 2024 that management says needs only about $9 million more this year. Underlying profit on the company's own measure (Adjusted EBITDA) grew $9 million, or 3%.
• The tax rate did a lot of the work for EPS. The effective tax rate was 13.7%, against 66.7% a year earlier. Tax expense was $10 million in both quarters, but last year it swallowed most of a much smaller pretax profit. Share count did not help: diluted shares rose slightly to 35.7 million from 35.4 million, and Avis bought back no stock in the first half.
• Not all of the profit belongs to shareholders. In December 2025 Avis set up Interpace Ventures, a joint venture that owns US electric rental cars, to sell part of its available tax credits to outside investors. Under the accounting method it uses (hypothetical liquidation at book value), $27 million of second-quarter income was allocated to those investors. The balance of their stake grew from $74 million to $147 million in six months. That is a real claim on earnings. Net income looks much better than the $35 million that actually reached Avis shareholders.
• Lower fleet costs depend partly on the used-car market. The 10-Q credits the Americas depreciation decline to a bigger gain on vehicle sales. Gains like that come and go with used-car prices, so they are less dependable than paying less for new cars.
• Adjusted EBITDA also adds back recurring costs. The $286 million excludes $11 million of "cloud computing costs", $9 million of transaction costs, $3 million of legal costs and the restructuring charges, as well as all corporate interest. Cloud costs show up every quarter ($23 million in the first half), so treating them as non-operating flatters the measure.
• Cash flow weakened. First-half operating cash flow was $1,066 million versus $1,456 million, down $390 million, which the 10-Q puts down to working capital. Adjusted free cash flow, the company's measure of cash left after fleet funding, interest and capital spending, was $161 million for the half.
• The balance sheet is thin, and refinancing is getting more expensive. Stockholders' equity was negative $3,388 million at June 30. Corporate debt was $6,022 million and vehicle-backed debt $19,850 million. In May the company issued $300 million of 8.000% notes due 2031 to repay 5.750% notes due 2027. That pushes the maturity out but costs about 2.25 points more a year in interest on that slice. In March, Avis also set up an "at-the-market" program to sell up to 5 million new shares, about 14% of the current count. None had been sold by June 30, but it is an option it has kept open.

Takeaway: Avis kept profits rising in a weaker quarter by shrinking its fleet to match demand. Fewer cars, each rented more often, and better prices on the cars it sold cut fleet costs 4% and lifted Americas Adjusted EBITDA 8% while revenue fell. Strip out last year's restructuring charge, the lower tax rate and the share going to tax-credit investors, and underlying profit grew about 3%, not tenfold.

First half in context

For the six months, revenue rose 1% to $5,528 million, and the net loss attributable to shareholders narrowed to $248 million from $501 million. Most of that improvement is the absence of a $390 million charge in the first half of 2025 for disposing of part of the Americas fleet; this year's first quarter carried no such charge. First-half Adjusted EBITDA fell 6% to $173 million. That implies a first-quarter loss on that measure of about $113 million, versus about $93 million a year earlier, so the second quarter clawed back some, but not all, of a weak start.

What to watch next

• The summer quarter. The third quarter is the peak of the rental year. The release offered no new numeric outlook. Its one forward statement was that Adjusted EBITDA came in "in line with our initial expectations" despite shifting bookings. The key question is whether Avis can keep utilization near records with a smaller fleet without giving up price. In the second quarter, Americas revenue per day was flat.
• Fleet buying has slowed sharply. The 10-Q shows commitments to buy about $2.6 billion of vehicles over the next 12 months, $4.2 billion less than at December 31. That fits the "resize fleet" message. It also means the fleet will age, and that could raise maintenance costs and lower resale values later.
• Used-car prices. Fleet cost per car is the main lever behind this quarter's profit, and part of that saving came from gains on vehicle sales. A softer used-car market would erode it quickly.
• International margins. International volume fell and costs rose faster than revenue there, while currency made revenue look stable. A second quarter like this in a row would make International a drag on the group.

This is our first published analysis of Avis Budget Group, so there is no earlier outlook to check against. The third-quarter 10-Q is expected around late October 2026, based on the company's usual filing pattern.