Good morning and welcome to the Avis Budget Group Second Quarter Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the meeting over to Mr. Neal Goldner, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Rhea. Good morning, everyone, and thank you for joining us. On the call with me are Ron Nelson, our Chairman and Chief Executive Officer and David Wyshner, our Senior Executive Vice President and Chief Financial Officer. Before we discuss our second quarter results, I want to remind everyone that the company will be discussing forward-looking information that involves risks, uncertainties, and assumptions that could cause actual results to differ materially from the forward-looking information. Important risks, assumptions, and other factors that could cause future results to differ materially from those expressed in the forward-looking statements are specified in the company's earnings release and other periodic filings with the SEC, which are available on the Investor Relations' section of our website at avisbudgetgroup.com. We have provided slides to accompany this morning's conference call, which can be accessed on our website as well. Our comments will focus on our results, excluding certain items and other non-GAAP financial measures that are reconciled to our GAAP numbers in our press release and in the earnings call presentation on our website. Now, I'd like to turn the call over to Avis Budget Group's Chairman and Chief Executive Officer, Ron Nelson.

Thank you, Neal, and good morning. It's no secret that pricing was challenging throughout the first half of this year. It also isn't news that one sizable insurance replacement contract switching hand last year had an impact on our competitor's fleeting decisions which in turn has had an interim disruptive effect on the marketplace. But all of that in our view is transitory in nature and should not overshadow the fact that in the face of a challenging environment we had a strong second quarter with adjusted EBITDA rising 15% in constant currency and earnings per share growing 24% year-over-year excluding certain items. How did we do that? Well, we did it the old-fashioned way through strong execution, expense discipline, and nimble fleet management. Let's look at the facts. First, as we had expected, year-over-year pricing in the Americas improved from April to May and again from May to June. This trend also continued into July. While pricing overall for the quarter was down, there remained modest over-fleeting in the market. Compounding that was the difficult comps we faced this quarter. In a quarter that's traditionally difficult to get pricing, last year's pricing was up 4% in constant currency, 6% in leisure alone, and benefited from a very favorable Easter calendar. Second, used vehicle residual values continued to be firm and we took advantage of that strength to have opportunistically completed 70% of our planned risk car sales for the year by the end of June and 77% as of the end of July. Third, Americas EBITDA margins improved 30 basis points and fleet utilization improved by over a point. In July, utilization tracked almost 3 points over the last year. Now to be sure, some of that reflects the absence of the significant recall activity we had last year,…

Our first question is from John Healey of Northcoast Research. You may ask your question.

Thank you. Ron, wanted to ask a little bit more about the pricing commentary that you provided for the month of July. Just wanted to clarify that that was for the Avis and the Budget brand in the U.S. And it really seems surprising; there's a lot of chatter in the marketplace that July has been a really tough month for pricing. Was hoping you could maybe try to talk to maybe why there is this disconnect with the market in terms of what people are expecting with pricing and what you guys are actually seeing, because I think it's quite impressive. Then maybe you could touch on a little bit about the brand repositioning that you referenced, maybe a little bit more color there.

Yeah, John, yeah. We focus on the Avis and the Budget brands in the U.S. because it's 85% to 90% of our revenue and really drives our results. Yes, it is positive. It's not going to knock anybody's socks off in terms of the ultimate result. And I think a lot of what happens in pricing surveys is that you miss the impact of the upgrades, ancillary sales, and things of that nature that allow us to get higher pricing. I think when you guys do your pricing surveys, you don't take into account – you don't get pricing for International inbound, and that drives a fair amount of incremental pricing. So, I mean, I don't know why the July pricing is showing up less, but I do think that there's always a fair amount of noise between the surveys that analysts do on their own and what our results are. And so, again, I don't know that, as I said, even though the pricing is positive, it's not going to be that significant. In terms of our competitors' flip, if you've followed the marketplace, Enterprise has basically swapped positioning with the Alamo brand, and the Enterprise brand is far bigger than the Alamo brand. So they've effectively gotten a price increase by repositioning Enterprise into the Alamo slot and using the Alamo to compete with Dollar Thrifty, and at times even competing with Payless. And so that effectively shows up on their revenue line as a price increase.

Got you. That makes sense. And I just wanted to ask a little bit more about the share repurchase plans. It seems like that there's a lot of potential beyond what you have current authorization for, so wanted to think just how you think about share repurchase on kind of a multi-year plan going forward.

Yeah. Look, I don't think that our priorities are going to change between tuck-in acquisitions and share repurchases. As you know, we always sort of keep one eye on our debt ratio. Right now, our gross debt ratio is at 4 times, our net is about 3.4 times. We're right there in the comfort zone. And the way we evaluate how much we spend is to stress those ratios for recessions so that we don't find ourselves repurchasing stock at a point in time that would have our debt ratio go north of 4 times and sort of challenge our positioning with the rating agencies. The rating agencies over the course of the last two years have been very comfortable with where we're at in terms of share repurchases. We've been fairly clear with them what our guidelines are and how we're doing it. And so I think we're comfortable with what we've announced. I think we'll do well more than $300 million this year. But I don't think you are going to see us do an amount that would tax our debt ratio and move it up into the 4 times range on a net basis.

Great. Thank you.

Our next question is from Chris Agnew of MKM Partners. You may ask your question.

Thanks very much. Good morning. First question I wanted to ask, how you approached pricing guidance for the rest of the year. I know in the past you've only included or you have not included any pricing past the point to visibility, which I think would be around August. Then also can you touch on August pricing trends and also International inbound trends? Thank you.

Okay. So, look, I think on pricing guidance, we changed our philosophy this year and decided to build into our forecast pricing guidance, and we haven't done that in a number of years, and lo and behold, we got burned. So, look, I don't want to suggest that pricing isn't going to continue to be challenged over the course of the rest of the year. I think it will be. But I think we're likely to revert back to being cautious in terms of what we do on pricing guidance for the balance of this year and certainly going into next. August pricing looks a lot like July. There's not going to be anything that differentiates it much from what's happening in July with the Avis and Budget brands up modestly. And I think your third question on International inbound? David B. Wyshner - Chief Financial Officer & Senior Executive VP: International inbound has been up. It was in the Americas, it was up in July and currently it's holding up for August as well.

Great. Thanks. And if I could one more. On commercial volumes, it was weaker in the first quarter as well as the second quarter and I know, David, you mentioned you had tough comps in the second quarter. But can you maybe just give us a little more color on is there additional industry pressure or external competitive pressures? And how do those comps for commercial fare through the rest of the year? Thanks.

I honestly don't think they're going to be a lot different. I think that we've been saying actually since the first of the year that commercial was softer than we had thought it would be and I think some of it was that we really didn't focus on the buy customer challenges that we had in the oil industry and I think they certainly materialized in the second quarter. Canada, which is included in the Americas number is predominantly oil-related and they had down volume and have had since the first of the year. And I think some of what impacted our commercial volumes was small business. We got a fair amount of small business leads and small business rentals from our airline contract with United, and when we walked away from that based on an inability to earn any money, it did affect the reservations and rentals that we got from small business. I expect those will pick up as the American volume comes online and as the JetBlue volume comes online. But I don't get a sense, Chris, that you're going to see significant changes in commercial volume over the course of this year. I think there seems to be a little more pessimism about the economy in terms of the forward-looking momentum but I hope I'm wrong. But we're going to continue to manage our business for profitability and we're going to continue to keep our fleet sized with demand, and those things are important.

Great. Thank you.

Our next question comes from Chris Woronka of Deutsche Bank. Sir, your line is open. You may ask your question.

Hey, good morning, guys. I just wanted to follow-up a little bit on the volume and maybe get the cadence throughout the quarter, and was it something where, was the problem more in June than May or April? And then maybe kind of how you're thinking about the August and September months on volume, whether you see any uptick or downtick? David B. Wyshner - Chief Financial Officer & Senior Executive VP: Sure, Chris. The volume issues have been a, I would say, a somewhat steady drip since February when we went out with our initial guidance. When we updated that guidance in April, we were still in the range, but we had moved down a little bit in terms of our own point estimate. And then volumes just continued to soften over the course of the second quarter. We've seen the Fed continue to push out lift-off amid economic numbers that are just a little bit weaker than everyone expected, and I think that's impacting us. We've looked to see whether there are impacts in any particular markets from external factors that could impact places like San Francisco and Boston and Chicago and New York more than other places, and that doesn't seem to be an issue because we're seeing good industry-wide revenue growth in each of those four markets. So we're looking at it as being an issue that's sort of developing slowly over time for all the reasons Ron mentioned, primarily a softer economy and some particular customers and accounts and affiliations having a little bit more of an impact than we had estimated. And our comps, particularly in the first half, being tougher than we perhaps gave them credit for being at the outset of the year.

Okay. That's helpful. And then just want to shift over to Europe for a second. You guys have I think made a lot of progress there already on the cost front. How much more is there to do? And where do you – are there any kind of rough targets or goal posts for where you get margins to over time with the acquisitions kind of – once they fully stabilize? David B. Wyshner - Chief Financial Officer & Senior Executive VP: Yeah, it's a good question. We do continue to believe that there's more opportunity there. You may remember we acquired Avis Europe in the middle of 2011, and the economy there, while it's been growing the last couple of years is off a base that shrunk fairly considerably in 2011 and 2012. And as a result, we still think volumes are below longer-term trends which provides an opportunity for us. We see significant opportunity still to grow the share of our Budget brand in Europe which is under-shared compared to the amount of volume it does in other parts of the world and that creates a growth and a margin opportunity for us as well. And some of our initiatives like the T15 initiative that I spoke about for global consolidation of certain functions is all about continuing to reduce our SG&A costs, and I think this has particular opportunity for us in Europe as well.

Okay. Very good. Thanks, David.

Thank you. Our next question comes from Brian Johnson of Barclays. You may ask your question.

Yes. Good morning. First question, you've signaled lower volume growth. How are you – just a couple of questions around that. What is your capacity plan given that expected lower volume growth, and related to that, one of your competitors is now communicating their capacity expansion plans perhaps, in a page, taken from the airline playbook. Is that something that you would consider doing?

I think in general, Brian, because of recalls last year, our utilization is up pretty significantly. We don't see an awful lot of fleet growth this year. And generally, our strategy is we're going to grow our fleet consistent with our demand. I don't think we're going to plan on announcing our fleet growth. If you have our volume growth, then you probably have a pretty good estimate of where our fleet growth is going to be because we generally assume that we're not going to get any utilization gains. And I think obviously the ones we're getting this year are pretty significantly impacted by the fact that we had so many recalls and out-of-service calls last – cars, last year that it skewed the numbers. But I don't think we have any plans to sort of overtly announce our fleet growth other than giving you a sense of what our volume growth is.

Okay. And I guess second question is what do you with your board, and when you were part of a private – or a division of company, what do you focus on as the best kind of annual indication of how the business is doing? Is it EPS? Is it cash flow? Or is it corporate EBITDA? More a philosophical question back to the discussions you and I have had on the various flavors of ownership models for car rentals over the decades.

I can tell you at Cendant, the two metrics that we focused on the most were: what was the growth in EBITDA and what was the free cash flow that was coming out of the business? As you probably recall, car rental was the lowest multiple business in the portfolio of businesses at Cendant and so we generally took the free cash flow from car rental and reinvested it into our other businesses. We continue to focus on those metrics, but we're also now using the free cash flow to obviously invest in our businesses through tuck-in acquisitions, and we've had a heightened capital expenditure program now for the last three or four years with our technology initiatives and all the things that we're doing to take costs out of the system, primarily in Europe. But those were the focus.

Okay. Thanks.

Our next question is from Kevin Milota of JPMorgan. You may ask your question.

Hey, good morning. Thanks, guys. As it relates to the rental demand cut or the volume cut that you have for the Americas, how do you guys feel about your fleet position as you work here through August and into September? And then the second question would be is it possible to give us the comparable Americas fleet cost per unit per month for the third quarter and fourth quarter of 2014? Thank you. David B. Wyshner - Chief Financial Officer & Senior Executive VP: We feel really good about our fleet positioning. The strength in the used car market has allowed us to get out of cars whenever we've needed to, and we're really coming at this from a position of having historically managed our fleet tightly and for utilization. So as we think about our position in the second quarter, we felt good about our fleet. We feel very good about the fleet now. It's a little tight, and as Ron mentioned, we're likely to see two to three points of utilization improvement in the third quarter, partly due to recalls last year and partly due to how we're managing the fleet. We've also seen increases in our fleet utilization internationally. And we approach this issue of being a regular weekly and sometimes more than weekly management activity for us around the world. So it's something that is ingrained in how we operate and it's an important part of our operating management's activity day-to-day, week-to-week. And as a result, we've been in a situation where we really have not had our fleet get out of line with our demand for more than a few weeks at a time without getting rectified and fixed through this process. And we expect to continue that going forward. I think the per unit fleet cost changes that we're expecting in the second half of the year in the Americas are roughly consistent with what we've seen in the first half.

Okay. And then just one more question on just organic volumes. If you could strip out the Southern California acquisition, what do organic volumes look like for your Americas segment? David B. Wyshner - Chief Financial Officer & Senior Executive VP: Sure. We expect Southern California and the Americas to contribute about a 1.5 point of volume this year. So if you take the mid-point of our guidance range on America's volume that leaves about 3 points of organic growth.

Okay. Very good. Thank you.

Our next question is from Anj Singh of Credit Suisse. You may ask your question. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Hi. Thanks for taking my questions. First off, I was hoping you could discuss your comments on shifting to more risk cars for 2016. I realize this is something rather fluid with regards to residuals, but how do you expect this to translate to fleet depreciation per unit in the Americas for next year? Do you think you will be any more susceptible to declining residuals? Will this be manageable through the use of alternative disposition channels? Anything to help us out there? Thanks. David B. Wyshner - Chief Financial Officer & Senior Executive VP: Sure. I would interpret the comment of potentially increasing a few points on risk as being more focused on the fact that our risk and program mix is not changing significantly from where it was this year than anything noteworthy. It may move a few points – risk may move up a few points, but that would still have it below where it was in 2014 and 2013. So, I don't really see us having a significant increase in terms of our exposure there and we view it as a normal amount of variation around a relatively conservative posture that we take in terms of our fleet composition. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Okay, got it. And then a follow-up question on the pricing topic. I'm just trying to balance your outlook on pricing in light of the commentary on some patches of weaker demand. So do you think that the factors you called out with regards to some tighter fleet in the industry and the rollout of the demand forecaster, et cetera, will continue…

Our final question comes from Afua Ahwoi of Goldman Sachs. You may ask your question. Afua A. Ahwoi - Goldman Sachs & Co.: Hello. Good morning. Just two quick ones from me. First, on the – if we look back to the past year and a half, is there any way you can quantify to us maybe if you've gained any volume from maybe the internal disruptions that were going on at Hertz? And if so, do you forecast that to abate or it will take some time for you to work your way through? And then, I guess, as we think about the -- I think it's been touched on, so apologies if I forgot it. But, if you think about the fleet cost increase for the full year, how much of that is the benefits you've seen to date versus your outlook for what you'll sell for the rest of the year also going higher? Or is it just flowing through the gains you've seen already? Thank you. David B. Wyshner - Chief Financial Officer & Senior Executive VP: Sure. Good morning. Let me work through them in reverse. In terms of fleet costs, we have had some gains in the first half of the year So I think what we are seeing in terms of fleet costs improvement is slightly more front-end loaded because of the gains. But, as I mentioned earlier, the per-unit decline in fleet cars should be relatively consistent from the first half to the second half. And then with respect to the volume gains or the opportunity for volume gains, our share at the airports has been relatively consistent year-over-year and has been relatively consistent in the 27% to 28% range for the last five-years running. So, we've been consistent with what we've said there over time about looking to hold on to our share but not necessarily growing it over that period of time. And I think that has been and continues to be important to us. There's certainly some accounts where we've – large commercial accounts where we've had some additional opportunities due to disruption and issues at some of our competitors, and we've looked to seize those but it hasn't resulted in a significant change or movement in our share. Afua A. Ahwoi - Goldman Sachs & Co.: Perfect. Thank you.

For closing remarks, the call is being turned back to Mr. Ronald Nelson. Please go ahead, sir.

Thanks. So before we close, I think it's important to reiterate what I believe are the key points from today's call. We're on track for record earnings this year with comparisons easing in the second half at a competitor likely rectifying its over-fleeted situation. We believe pricing in the second half of the year should be stronger than in the first. We're enthusiastic about how the summer is shaping up in Europe. And throughout our organization, we have lowered our fleet costs and rigorously controlled non-fleet expenses in order to drive margin growth. And finally, given where our stock is currently trading, we intend to be significantly more aggressive in buying our own stock in the second half of the year. We do have an active investor calendar this quarter with several events planned and we look forward to seeing many of you during our travels. With that, I want to thank you for your time and interest in our company today.

This concludes today's conference call. You may disconnect at this time.