Good morning and welcome to the Avis Budget Group Fourth 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, Eunice. Good morning, everyone, and thank you for joining us. On the call with me are Larry De Shon, our Chief Executive Officer and David Wyshner, our President and Chief Financial Officer. Before we begin, I'd like 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 adjusted results, which excludes 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 Chief Executive Officer, Larry De Shon.

Thank you, Neal and good morning. As you saw on last night's release, we had a record 2015 with the highest reported revenue and adjusted EBITDA in our company's history. Achieving record results in the year when industry fleet levels were elevated for much of the time, commercial volume was weaker than expected, and international pricing remained difficult, reflects the resilience of our business model and the hard work of our team. As I look back on 2015, we achieved several significant accomplishments that strengthen our company's global position. We acquired Maggiore, making us the largest car rental operator in Italy and also acquired our Avis and Budget licensee in Scandinavia and our Avis licensee in Poland. We completed the integration of our former licensee for Budget Southern California. We generated millions of dollars of what will be recurring savings through our Performance Excellence and Transformation 2015 initiatives. We generated more than $500 million of free cash flow, which is our fourth consecutive year exceeding $450 million. And we used the majority of that free cash flow to repurchase nearly $400 million of our own shares, representing 8% of our outstanding shares. Even with all of these achievements, I believe there is much more that we can accomplish. We have significant opportunities to leverage technology, both to enhance how we interact with our customers and to streamline our operations as well as drive higher margins. As you saw in the outlook we issued last night, we will be investing in those technologies that will put us in the best position to capture those opportunities in the years that follow. Our 2016 outlook reflects more than $50 million of incremental investments we are making in our business. Investments that are expensed rather than capitalized. The areas we're targeting for higher spending…

Thanks, David. In just a few months since I returned from Europe, I've had the chance to review most aspects of our business and I'm excited for the opportunities that are in front of us. A year ago, the industry was still dealing with an oversupply of cars, which we don't expect to recur this year. In terms of demand, while we expect the softness in commercial volumes to persist due to macroeconomic conditions, the addition of our new and expanded airline partnership should translate into strong leisure volumes this year. In terms of pricing, while we haven't assumed price growth in our 2016 forecast, I do think the environment is more constructive this year compared to last year. All major industry participants have implemented price increases in the last several months. With tighter industry fleets, we should be in a position to capture higher-yielding business, particularly during our peak periods. But it's the future that I'm really excited about. I believe, we have tremendous opportunities to change many things we do today to simplify the business, to change how our customers transact with us, and ultimately drive higher margins. Over the past few years, we've improved the customer experience through new websites and apps and driven incremental revenue through our Demand-Fleet-Pricing initiative. But we've only just begun the journey. By investing in new technology, such as self-service car rental and taking advantage of connected cars, nearly every process we do today has the opportunity to be improved. First, let me start with how we'll be using technology in the near term to impact our results. As David mentioned, our Transformation 2015 initiative is providing substantial benefits by strengthening, standardizing, and are globalizing some of our non-field functions. In addition, opportunity exists to leverage technology to improve some of our…

Thank you. We will now begin the question-and-answer session. Our first question comes from the line of Chris Woronka of Deutsche Bank. You may now ask your question.

Hey, good morning, guys. Larry, maybe I could start off with a big picture question, kind of ask you how you see your relationship with the OEMs evolving over time. They've, obviously, in some cases tried to get into a small part of your business, I guess, for various reasons. But how do you see it evolving over the next several years?

Thanks, Chris. We have an excellent relationship with our OEMs, and we talk to them frequently about matters of today and matters in the future. It's not a surprise that, I think, that you see OEMs getting into things like the car-sharing business. Obviously, they're all trying to sort out where they see themselves for the future of mobility. I think there's a lot of things that we can do together. We have talked to OEMs about strategies that we can look at in the future as it relates to technology that enables us to partner together to provide a better service outcome for our customer. So I just see the partnerships getting stronger as we go forward. Sure, they are testing certain car sharing, for example, as we're in the car-sharing business. But, overall, I think the partnerships are good. I think they'll continue to be good going forward. We're obviously a big purchaser of their vehicles. So I don't really see any issues there.

Okay, great. And maybe just an update on where you are, your thinking in terms of the prepaid options and also maybe some policy changes on cancellations, length of rental, that kind of thing?

Prepaid is an important part of the product offering that we have. We continue to try to push our prepaid, and our prepaid continues to grow globally. It's very strong internationally, and it's growing in the Americas as well. We have tried non-cancellation fees in the past. We've taken a look at it. We're obviously prepared to be able to do it, to execute on it. But when we tried it in the past in the U.S., we just didn't see the traction in the industry. So, therefore, it's something that we are not considering at the moment. But we do have it in Europe and we instituted it a few years ago in Europe, and it works well for us in Europe. And customers don't seem to really have an issue with it. In fact, I rarely see a customer complain as it relates to the cancellation fees. So I don't know. We'll see. We'll watch the marketplace and see how things progress.

Thank you. Our next question came from the line of Anj Singh of Credit Suisse. You may now ask your question Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning. Thanks for taking my questions. I was hoping first if you could just discuss what your guidance assumes for maybe the commercial volume outlook versus the leisure volume outlook. And I would be interested to hear what your perspective is on the commercial volume weakness you're experiencing ex-O&G. It seems like from other travel-related companies the outlook on commercial demand is relatively more optimistic. So just any thoughts around those factors. Thanks. David B. Wyshner - President & Chief Financial Officer: Sure. With respect to our expectations for 2016 in volume growth, we don't provide separate numbers for commercial and leisure, but I think it's fair to say that we expect leisure to be stronger than commercial, and certainly you can see that trend over the last six months of the year. In terms of what we're – I think the strength that we're having on the leisure side is a big part of the equation as well. And I think we're seeing some shift in terms of the mix of folks who are getting our planes and arriving. And as a result, it's helping on the leisure side and hurting us a little bit on the commercial side. And as I mentioned in my remarks, I think commercial softness that we're seeing is certainly most pronounced among oil and energy-related accounts, but there seems to be a bit of it pockets of other softness outside of those areas as well. When we look at some of the data that are out there, including some of the USTA data, we believe what we're seeing is consistent with what's going on in the marketplace, but I do understand that there have been a few other folks who are somewhat more optimistic or somewhat more bullish about recent trends in commercial travel. But I think the mix issue between leisure and commercial is impacting car rental and impacting us. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Okay. I appreciate it. And then as a follow-up, in light of your guidance and commentary on investments, could you help us with your thoughts on how you view margin expansion over time? It seems one of your competitors has a view of significantly increasing margins from a level that's currently about flat with yours in the Americas despite investments. And I realize there's many mix differences contributing to this. But where do you think your margins can go from here? And how long may it take to see the return on the investments that you're making? Thanks.

We know that there's margin expansion opportunities globally. We're very focused on it in international and there's a number of initiatives that are being put in place to continue to grow our margins there as well as there is in Americas. And what you see in these investments, I think, if you can think of them as building blocks to help us grow our margins over time. So as we won't necessarily see that much margin expansion in 2016, but we are putting in place the resources, the initiatives, the data analytics to get more granular, and particularly in our large cost center items to make sure that we can grow our business and grow it more efficiently. So I would think of this year as kind of building up to the opportunities that we can start to see margin expansion in the 2017, 2018 and beyond years. So we know there's opportunity, and the team is focused on margin growth. And these are initiatives that are really put in place to help us do that.

Thank you. Our next question comes from the line of Christopher Agnew of MKM Partners. Your line is now open.

Thanks very much. Good morning, Larry, David. First question; I know you touched on why you're not giving price guidance this year, but maybe just to be clear, are you seeing anything that would lead you to believe the industry can't or even has less ability to recover fleet cost inflation? And do any of your competitors have any cost advantages that would sort of allow them to take a different path in 2016? Thank you. David B. Wyshner - President & Chief Financial Officer: Good morning, Chris. On the pricing projection front, let me be clear, we are and have provided pricing guidance in the Americas and it's at zero percent or unchanged year-over-year. So I think there may be a little bit of confusion out there on that topic, but we haven't changed our approach. We're providing our thinking about pricing. It happens to be at flat year-over-year. And I think, clearly, we expect some cost pressures from fleet over the course of this year. And unfortunately, I think we are experiencing a lag between when we're starting to see those pressures impact us and when we're able to realize higher pricing. I think one way to look at what we've been talking about this morning is that we did see pricing that was down in fourth quarter and we've seen that so far this year. And so in order to get to the full-year pricing of flat, we are going to need some amount of price increase later in the year. And that is part of what's built in to our forecast of relatively unchanged pricing year-over-year in constant currency.

Thanks. And then a follow-up on – maybe a question on your approach to corporate leverage, I think at the low end of your guidance, it moves up to around 3.6 times. So how do you think about where leverage should be over the cycle and then your approach to share repurchases if it were to creep up? Thank you. David B. Wyshner - President & Chief Financial Officer: Sure. I think our thinking around leverage continues to be consistent and that is that our targeted range is three times to four times and that we'd prefer to be operating in the lower half of that range, unless we've recently completed a transaction that temporarily takes it up into the second half of that range. So we are aware that we've moved up a 0.2 point over the last year. We're down to 0.1 point compared to where we were two years ago, and we will continue to watch how that develops based on our EBITDA, cash flow and our share repurchases. But we are comfortable with the lower half of the range of three times to 3.5 times and a movement of a 0.1 turn or 0.2 turn in either direction is something that will happen from time to time.

Thank you. Next question comes from the line of Brian Johnson of Barclays. You may now ask your question.

(44:48-44:58) ...your predecessor talked about a kind of 12%, 13% EBITDA margin, long-term target. This year we're looking at kind of 9% to 10%-ish or this upcoming year with the investments you are making. Can you give us a few things, kind of one, how much of this investment, the $50 million has come about since you took over as CFO – CEO (45:24) versus things that were in process for a couple of years? And second, how would you kind of all other things being equal around pricing and fleet cost, see the payoff on these investments in terms of moving you back towards that target? David B. Wyshner - President & Chief Financial Officer: Hi, Brian. So, the way I would really think about it is that these investments are kind of ripe for the company at this time. So, every year we have a series of initiatives that are built up through a very thorough business plan, process and review. And we look at the resources we have in the organization, the number of initiatives that we have, and how much bandwidth we think that we have to really go out and tackle it. So, this year is just an evolution of those initiatives. So, if you think of self-service, this is something we've been looking at for a number of years, it's not something brand new this year. We were actually testing kind of early versions of self-service technology for rental car back in 2009, but it just wasn't right. The technology hadn't really advanced at this point. But now, we're taking a look at the technology that's out there and the number of providers that have this kind of technology, and we felt like this is the year to really start pushing forward on that…

Okay. And second question, kind of more shorter term, you mentioned that the OEMs were less than accommodating on some of the cap costs, you expect residuals to be down 1% to 2%. As we look within the car sales data in the new car market, we consistently see weakness in small and mid sedans which, a) maybe you could remind us what percent of your U.S. fleet those typically compose, both in terms of the sales pace and the pricing trends? So, what, couple questions, a) how much of your U.S fleet are those small to mid sedans and does it differ between risk and program? B) Why do you think the OEMs are holding the line when this is a category at least in the new car showrooms and which (49:22) consumers seem to be avoiding? And three, when you think about your fleet cost assumption, how are you kind of factoring this disconnect between OEMs wanting price on new sedans and the used market not supporting pricing on new sedans? David B. Wyshner - President & Chief Financial Officer: Sure. With respect to the mix of cars, we do have a broad mix, and smaller and mid-sized sedans represent a significant portion of that. We'll get the exact percentage for you. I don't have it in front of me right now. As we think about the issues with the OEMs and the acquisition of fleet, it is typically a discussion about purchasing a range of fleet. And we'll go through, in a situation such as the one we're in, where gas prices are quite low by historical standards. We're seeing, as you'd expect, more of a willingness to sell smaller, more fuel-efficient vehicles to us. We're seeing on the flipside, the residual values associated with those vehicles tend to be a little bit lower as well. So, our desire to change our mix as a result of the purchase prices being lower isn't necessarily there. And on the flipside, we have been growing the amount of non-core cars, and the amount of signature fleet in our mix to try to meet customer demand in that area and also, because that tends to be a more profitable portion of our fleet. And as a result, we end up having a discussion about wanting some vehicles that the manufacturers are doing really well selling on a retail basis right now. And in that context, it's a multi-point – multi-part negotiation for us to get the types of vehicles we want because we're not going to be in a situation where we're really happy just taking the sorts of vehicles that manufacturers most want to give to us. We have to consider the residual values that are out there, and we have to really consider meeting our customers' needs, and the various profitability associated with various vehicles.

Thank you. Next question comes from the line of Afua Ahwoi of Goldman Sachs. Your line is now open. Afua A. Ahwoi - Goldman Sachs & Co.: Thank you. Good morning, team. Just a question from me and then I'll ask my follow-up right away. First of all, on the pricing front, I think you mentioned earlier, I can't remember if it was Larry or David on that, you're seeing competitor price increases over the last few months, so I'm just curious if you can give some views or color as to why maybe those haven't stuck and why we're still seeing year-on-year declines through the fourth quarter and to-date. And then the second question on the – as we think about the $50 million investment or more than $50 million investment you're going to make, for modeling perspective, will that show up more on the SG&A line or on the operating – on the direct operating expense line? And how should we think about those going forward? Is it one-time? How many years, or is this just a new rate of investment we're going to have to get used to over the next few years? Thank you.

Sure. Good morning. So, on the price increases, the good news is that there have been a number of price increases that have gone in in the fourth quarter and into the first quarter. I think the difficulty is in the fourth quarter and first quarter, other than the two holiday periods in November and December, the industry is usually over fleeted in that period and was certainly over fleeted in the fourth quarter this year. And as you turn the quarter into the first quarter, that over fleeting continues as people look to try to get out of their fleet and sell cars and so forth. So, when you put the price increases in, I think there was pretty good matching by the industry of those price increases. But once you get into the core of the booking pattern, really the timing of the reservations are really coming in close in to the rental date, it just starts to fall apart because people are sitting on a lot of fleet. So, I think it will be easier as the year goes through, if there are price increases that are put through and fleets are tighter which we are expecting overall for this year compared to last year, you have a better opportunity to be able to yield your rates up and keep your rates up as you get closer into the booking pattern during those tighter fleet moments. But when you're in the fourth quarter going into the first quarter, there's a lot of available fleet, it's pretty difficult for those rates to hang in there as you get close into the booking pattern. David B. Wyshner - President & Chief Financial Officer: And then, hi Afua. On your second question, I think a significant – a portion of the cost will show up in SG&A, particularly things like incremental brand marketing, the enhancements to our loyalty program and new and expanded marketing partnerships will all be in that area. But I'd expect the majority to show up in our operating expenses, whether it's related to the self-service technology. The other technology investments we're making to drive cost reductions, the spending at Zipcar to expand ONE > WAY, and even the acceleration of growth in China, all those should impact direct operating costs. Afua A. Ahwoi - Goldman Sachs & Co.: Okay. Thanks. And I just asked about how long the investments would continue for.

It's pretty early yet to take a look at what investments we're going to have for 2017 and 2018, but I would expect that the investment level will be consistent with this year or perhaps slightly less that this year. That's the way I would think about it.

Thank you. Our final question comes from Kevin Milota of JPMorgan. You may now ask your question.

Hey. Good morning, everyone. Just have a question on the commercial side of the business here, what it feels like has been a challenging period for commercial over the last few years. What's the kind of immediate term to intermediate term strategy on how to make that business a healthier business, and actually get price from your commercial accounts? I mean, you see the hotel companies able to get pricing, airline companies able to get pricing from corporate accounts. So, what strategies are you planning to take to perhaps change that dynamic. And then, secondly, David, you mentioned 6 weeks and 16 year of stock buybacks, I'm sorry if I missed it, but what was the number of shares you bought back and the average price? Thank you.

Hi, Kevin. So, I would talk about commercial pricing increase in this way, if you take a look at the commercial accounts that we renewed in 2015, we renewed 70% approximately, 70% of our renewals were at flat rate or higher. So, we do push very hard to work with the accounts, to find those opportunities where we can get rate improvement overall for the business, overall for the year. And our sales teams continue to really work with our marketing teams to focus on ways to find those opportunities to do that. So, we'll continue to do that. We're taking a look at how we're using our resources as well as far as how we have them allocated to the different customer segments that we sell to. So, the teams are very focused on that and that renewal rate of 70% was similar in the year before that. So, there are some that are very competitive and will continue to always be very competitive, and we're going to work hard to maintain those accounts, but there's also opportunities as we take a look at how we grow our small business accounts and other non-contracted commercial accounts but we know that the rate per day there is higher. So, we'll be focusing in those customer segments and helping the organization with additional resources to really kind of grow in those segments as well, which will help overall the rate per day for commercial. David B. Wyshner - President & Chief Financial Officer: And on share repurchases so far this quarter, I would describe the repurchases in dollar terms as being fairly consistent with the fourth quarter and clearly the price at which we are repurchasing in the first six weeks of the year was lower than in the fourth quarter.

Okay. So, consistent, meaning do you have a dollar amount? David B. Wyshner - President & Chief Financial Officer: We'll disclose our first quarter share repurchases when we announce our first quarter results.

Okay. Before we close, I think it's important to reiterate why I'm still excited about our future. We're a leading participant in a large and growing industry offering essential service to travelers. We had record results in 2015 and have improved our margins by nearly 300 basis points over the past five years. We see tremendous opportunity to invest in and embrace technology to both improve the service we offer to our customers and substantially reduce our cost structure over time. And we'll be investing this year to begin to capture these opportunities, while at the same time, deploying most of the nearly $500 million of free cash flow we will generate this year in share repurchase. We 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 your interest in our company.

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