Revenue was $1.9 billion and increased 4% in constant currency.
Adjusted EBITDA was unchanged at $117 million.
Diluted earnings per share increased 6%, to $0.17, excluding certain items, on a GAAP net loss of $9 million.
Company reaffirms its 2015 Adjusted EBITDA and earnings per share estimates.
PARSIPPANY, N.J., May 4, 2015 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (Nasdaq:CAR) today reported results for its first quarter ended March 31, 2015. For the quarter, the Company reported revenue of $1.9 billion and Adjusted EBITDA of $117 million. The Company reported net income of $19 million, or $0.17 per share, excluding certain items, and GAAP net loss of $9 million, or $0.09 per share.
"Our first quarter results were in line with our expectations, despite uneven economic conditions internationally as well as what we believe was industry-wide over-fleeting in North America," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "Used-vehicle prices have been constructive, and we have right-sized our fleet and taken steps to reduce costs. Looking forward, as we move into the peak travel months, we expect travel demand and pricing to firm, and our full-year earnings projections remain unchanged."
Executive Summary
Revenue declined 1% in first quarter 2015 compared to first quarter 2014 primarily due to a 5% increase in rental days in the Americas, offset by an approximately $85 million negative impact from movements in currency exchange rates. First quarter Adjusted EBITDA remained unchanged at $117 million. Results benefited from increased rental volumes and from movements in currency exchange rates, which favorably impacted Adjusted EBITDA by $17 million in the quarter. These positives were offset by inflationary cost pressures, a weather-related reduction in fleet utilization, and $7 million in legal expense incurred to settle in principle two long-standing U.S. cases.
Business Segment Discussion
The following discussion of first quarter operating results focuses on revenue and Adjusted EBITDA for each of our operating segments. As discussed in Table 6 of this release, the Company has made a change to its reportable segments. The operating results of the Company's North America, South America, Central America, and Caribbean operations are now reported in the Company's Americas reportable segment. Revenue and Adjusted EBITDA are expressed in millions.
Other Items
- Share Repurchases- The Company repurchased approximately 500,000 shares of its common stock at a cost of $31 million in the first quarter. As of March 31, 2015, the Company has repurchased a total of 7.7 million shares at a cost of approximately $375 million since initiating its share repurchase program in August 2013.
- Acquisitions- In January, the Company completed its acquisition of its Avis and Budget licensee for Norway, Sweden and Denmark, which operates both the Avis and Budget brands at major locations throughout the region including Oslo, Stockholm, Copenhagen and Sweden's Arlanda and Goldberg airports. The purchase price of approximately $50 million was funded with available cash.In April, the Company completed its acquisition of Maggiore Group, Italy's fourth-largest vehicle rental business. Maggiore is the largest independent vehicle rental operator in Italy. The net purchase price of approximately $160 million was funded with incremental corporate borrowings and available cash.In April, the Company increased its ownership of its Avis and Budget licensee in Brazil from 50% to 100%, by purchasing equity and debt interests in the business for approximately $40 million.
- Debt Refinancing- In March, the Company completed an offering of $375 million of senior notes due 2025 with an interest rate of 5.25%. The Company used proceeds from the offering to redeem all $223 million of its outstanding 9.75% senior notes due 2020, and to finance a portion of its acquisition of Maggiore Group.
- Exchange Rates- Currency exchange rates are expected to have a negative full-year impact on Adjusted EBITDA, but had a positive year-over-year impact in the first quarter. This is due to the difference in timing between when hedging gains must be recognized and when the underlying exposure being hedged will be recorded.
Outlook
The Company today reaffirmed its full-year 2015 results. The Company expects:
- Full-year 2015 revenue will be approximately $8.8 billion, a roughly 4% increase compared to 2014. In the Company's Americas segment, rental days are expected to increase 5% to 7%, and pricing is expected to increase 1% to 2% in constant currency in 2015. Movements in currency exchange rates are negatively impacting revenue growth by approximately six points, and the Company's forecast now includes Maggiore's results from the date of acquisition.
- Adjusted EBITDA will increase 3% to 14%, to approximately $900 million to $1 billion, including an approximately $40 million negative impact from movements in currency exchange rates.
- Per-unit fleet costs in its Americas segment will be approximately $310 to $320 per month in 2015, compared to $310 in 2014. Total Company per-unit fleet costs are expected to be $290 to $300 per month in 2015, compared to $305 in 2014, with the decrease principally attributable to movements in currency exchange rates.
- Interest expense related to corporate debt will be approximately $200 million.
- 2015 non-vehicle depreciation and amortization expense (excluding the amortization of intangible assets related to acquisitions) will be approximately $165 million.
- Pretax income will be approximately $535 million to $635 million, excluding certain items.
- Its effective tax rate in 2015 will be 37% to 38%, excluding certain items, and its diluted share count will be approximately 106 million, including the effect of completing the remainder of the Company's existing share repurchase authorization in 2015.
Based on these expectations, the Company estimates that its 2015 diluted earnings per share, excluding certain items, will increase 6% to 27% compared to 2014, to $3.15 to $3.75. Such estimate includes a negative impact from currency exchange rates of approximately fifteen cents per share.
Investor Conference Call
Avis Budget Group will host a conference call to discuss first quarter results on May 5, 2015, at 8:30 a.m. (ET). Investors may access the call live at ir.avisbudgetgroup.com or by dialing (630) 395-0021 and providing the participant passcode 2995545. Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at ir.avisbudgetgroup.com following the call. A telephone replay will be available from 11:00 a.m. (ET) on May 5 until 8:00 p.m. (ET) on May 19 at (203) 369-1484.
About Avis Budget Group
Avis Budget Group, Inc. is a leading global provider of vehicle rental services, both through its Avis and Budget brands, which have more than 10,000 rental locations in approximately 175 countries around the world, and through its Zipcar brand, which is the world's leading car sharing network, with more than 900,000 members. Avis Budget Group operates most of its car rental offices in North America, Europe and Australia directly, and operates primarily through licensees in other parts of the world. Avis Budget Group has approximately 30,000 employees and is headquartered in Parsippany, N.J. More information is available at www.avisbudgetgroup.com.
Forward-Looking Statements
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 based upon then current assumptions and expectations and are generally forward-looking in nature and not historical facts. Any statements that refer to outlook, expectations or other characterizations of future events, circumstances or results, including all statements related to our outlook, future results, future fleet costs, acquisition synergies, cost-saving initiatives and future share repurchases are also 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 Company's ability to promptly and effectively integrate acquired businesses, any change in economic conditions generally, particularly during our peak season or in key market segments, the high level of competition in the vehicle rental industry, a change in our fleet costs as a result of a change in the cost of new vehicles, manufacturer recalls and/or the value of used vehicles, disruption in the supply of new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers that supply our rental vehicles, which could impact their ability to perform their obligations under our repurchase and/or guaranteed depreciation arrangements, any change in travel demand, including changes in airline passenger traffic, any occurrence or threat of terrorism, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our global operations, including the funding of our vehicle fleet via the asset-backed securities market, any changes to the cost or supply of fuel, any fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, risks associated with litigation, governmental or regulatory inquiries or investigations involving the Company, changes to our share repurchase plans, risks related to acquisitions, and our ability to accurately estimate our future results and implement our strategy for cost savings and growth. Other unknown or unpredictable factors could also have material adverse effects on the Company'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, 2014, 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 financial measures such as Adjusted EBITDA and free cash flow, as well as metrics that exclude certain items that are not considered generally accepted accounting principles ("GAAP") measures as defined under SEC rules. Important information regarding such measures is contained on Table 1 and Table 5 of this release. The Company believes that these non-GAAP measures are useful in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Adjusted EBITDA, free cash flow and income before income taxes, net income and diluted earnings per share, excluding certain items, are income before income taxes, net cash provided by operating activities, net income, net income and diluted earnings per share, respectively. Because of the forward-looking nature of the Company's forecasted non-GAAP measures, specific quantifications of the amounts that would be required to reconcile forecasted income before income taxes, net cash provided by operating activities, net income and diluted earnings per share are not available. The Company believes that there is a degree of volatility with respect to certain of the Company's GAAP measures which preclude the Company from providing accurate forecasted GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP measures to forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
CONTACT: Media Contact:
John Barrows
(973) 496-7865
PR@avisbudget.com
Investor Contact:
Neal Goldner
(973) 496-5086
IR@avisbudget.com