PARSIPPANY, N.J., May 3, 2011 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (Nasdaq:CAR) today reported results for its first quarter ended March 31, 2011. The Company reported revenue of $1.2 billion, an increase of 7% compared with 2010. Excluding certain items, Adjusted EBITDA increased 113% to $83 million and Adjusted EBITDA margin expanded by 330 basis points compared to the prior year first quarter. Net income increased to $12 million, excluding costs related to the potential acquisition of Dollar Thrifty. Reported net income, which includes those costs, was $7 million.
"We delivered solid revenue and earnings growth in the quarter as improved travel trends, a continued focus on productivity and cost containment, and lower-than-expected fleet costs more than overcame the weather-related disruptions we faced," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "Our near-term strategic growth initiatives are well under way, our new marketing programs are resonating with customers, and we are excited about the investments we are making to drive profitable revenue growth."
Revenue increased 7% in first quarter 2011 compared to first quarter 2010 primarily due to a 7% increase in rental day volume, partially offset by 1% lower pricing. Ancillary revenues, excluding gas and customer recoveries, grew 3% on a per-rental-day basis. Excluding certain items, first quarter Adjusted EBITDA increased 113% to $83 million, with Adjusted EBITDA margins improving by 330 basis points. The increase in margin was primarily due to an 11% decline in per-unit fleet costs, including gains and losses on vehicle dispositions, lower vehicle financing costs and incremental savings from our cost-saving initiatives, partially offset by higher marketing costs.
Business Segment Discussion
The following discussion of first quarter operating results focuses on revenue and Adjusted EBITDA for each of our operating segments. Revenue and Adjusted EBITDA are expressed in millions.
Domestic Car Rental
(Consisting of the Company's U.S. Avis and Budget car rental operations)
Revenue increased 6% primarily due to a 7% increase in volume, partially offset by a 3% decline in pricing. Adjusted EBITDA increased $41 million driven by a 16% decrease in per-unit fleet costs, 4% growth in ancillary revenues on a per-rental-day basis, and our cost-saving initiatives. Adjusted EBITDA includes $1 million of restructuring costs in first quarter 2010.
International Car Rental
(Consisting of the Company's international Avis and Budget vehicle rental operations)
Revenue increased 15% primarily due to a 7% increase in rental days and a 7% increase in pricing; excluding foreign-exchange effects, pricing declined 1%. The decline in pricing reflects difficult comparisons with the prior year's first quarter, when pricing increased 8%, excluding foreign-exchange effects. Adjusted EBITDA was essentially unchanged, excluding exchange-rate effects, as floods in Australia and the earthquake in New Zealand, two of our largest International markets, impacted travel demand in those countries.
(Consisting of the Company's Budget Truck rental business)
Truck rental revenue increased 6% primarily due to a 17% increase in rental days and a 7% decline in pricing. The growth in volume, and the decline in pricing, reflected the substantial growth we achieved in commercial rentals, which have a longer length of rental but lower pricing. Adjusted EBITDA improved primarily as a result of increased revenue and higher vehicle utilization, which increased 23% year-over-year.
- — The Company continues to pursue the acquisition of Dollar Thrifty Automotive Group, Inc. (NYSE:DTG), the fourth-largest car rental company in the United States. Avis Budget Group and Dollar Thrifty have been working together to obtain antitrust clearance for the proposed acquisition. In the first quarter, we incurred $9 million of expense related to this potential transaction, including approximately $7 million of acquisition-related interest expense.
- — In March 2011, the Company amended the terms of its $2.05 billion vehicle-backed bank conduit facility used to help finance the Company's Domestic Car Rental fleet. This amendment reduced the borrowing spreads the Company will pay on vehicle-backed borrowings, and is expected to generate an estimated $6 million of savings in 2011.
- — In May 2011, the Company expanded and extended its principal $1.2 billion corporate revolving credit facility to mature in 2016. As a result, the Company reduced its borrowing spreads under the facility by 150 basis points, which is expected to generate more than $5 million of interest expense savings in 2011.
The Company believes it is well positioned for the ongoing rebound in travel volume. In addition, the strategic initiatives the Company is implementing to accelerate profitable growth are expected to benefit results in 2011 and beyond.
- The Company now estimates its domestic vehicle depreciation costs will decline 5-8% on a per-unit basis in 2011 compared with 2010, as vehicle residual values during the first four months of 2011 have been significantly stronger than previously expected.
- The Company plans to keep its rental fleet in line with rental demand, which will result in year-over-year utilization remaining fairly steady.
- The Company expects its initiatives to reduce costs and enhance productivity will provide $50-60 million of incremental savings in 2011 compared to 2010, bringing the annual savings from the Company's actions since 2008 to $560-570 million.
- The Company expects that its effective tax rate in 2011 will be approximately 38-40%.
Avis Budget Group generally does not provide volume, pricing, revenue or income projections.
Investor Conference Call
Avis Budget Group will host a conference call to discuss first quarter results on May 4, 2011, at 9:00 a.m. (ET). Investors may access the call live at www.avisbudgetgroup.com or by dialing (210) 234-0038 and providing the access code "Avis Budget." Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at www.avisbudgetgroup.com following the call. A telephone replay will be available from 12:00 p.m. (ET) on May 4 until 8:00 p.m. (ET) on May 18 at (402) 220-9670, access code: "Avis Budget."
About Avis Budget Group, Inc.
Avis Budget Group is a leading vehicle rental operator in the United States, Canada, Australia, New Zealand and certain other regions through its Avis and Budget brands. The Company also licenses its vehicle rental brands in more than 100 countries, enabling Avis and Budget to serve commercial and leisure travelers throughout the world. Avis Budget Group is headquartered in Parsippany, N.J. and has more than 21,000 employees. For more information about Avis Budget Group, visit .
Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "forecast" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results, including all statements related to future results, future fleet costs, our potential acquisition of Dollar Thrifty, and cost-saving initiatives are forward-looking statements.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, the ability, terms, and timing to consummate the potential transaction between the Company and Dollar Thrifty and the ability and timing to obtain regulatory approvals and financing (and any conditions thereto), the Company's ability to promptly and effectively integrate the businesses of Dollar Thrifty and Avis Budget, a weaker-than-anticipated economic environment, the high level of competition in the vehicle rental industry, greater-than-expected costs for new vehicles, disruption in the supply of new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers of our cars, lower-than-anticipated airline passenger traffic, an occurrence or threat of terrorism, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our operations, including the funding of our vehicle fleet via the asset-backed securities market and the financial condition of financial-guaranty firms that have insured a portion of our outstanding vehicle-backed debt, higher-than-expected fuel costs, fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, the Company's ability to meet or amend financial covenants associated with its borrowings, litigation, and the Company's ability to accurately estimate its future results and implement its strategy for cost savings and growth. Other unknown or unpredictable factors also could have material adverse effects on Avis Budget Group's performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Avis Budget Group's Annual Report on Form 10-K for the year ended December 31, 2010, included under headings such as "Forward-Looking Statements", "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in other filings and furnishings made by the Company with the SEC from time to time. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.
This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained on Table 5 to this release.
CONTACT: Media Contact: John Barrows (973) 496-7865 PR@avisbudget.com Investor Contact: Neal Goldner (973) 496-5086 IR@avisbudget.com