For the quarter, revenue increased 9% to $1.8 billion.
Adjusted EBITDA increased 46% to $114 million, excluding certain items.
Diluted earnings per share were $0.15, excluding certain items, on a GAAP net loss of $28 million.
Full-year diluted earnings per share were $2.20, excluding certain items, on GAAP net income of $16 million.
Free Cash Flow exceeds $400 million.
Company issues estimates of its full-year 2014 results.
PARSIPPANY, N.J., Feb. 19, 2014 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (Nasdaq:CAR) today reported results for its fourth quarter and year ended December 31, 2013. For the quarter, the Company reported revenue of $1.8 billion, a 9% increase compared with the prior-year fourth quarter. Excluding certain items, Adjusted EBITDA increased 46% to $114 million, net income increased to $17 million, and diluted earnings per share increased to $0.15. The Company reported a GAAP net loss of $28 million in the traditionally slower fourth quarter primarily due to restructuring costs incurred in Europe and debt-extinguishment expenses.
For the year, the Company reported revenue of $7.9 billion, an increase of 8% compared with 2012. Excluding certain items, Adjusted EBITDA decreased 8% to $769 million, the second-highest total in the Company's history, and net income was $256 million, or $2.20 per diluted share. The Company reported GAAP net income of $16 million.
"We had a strong year as we continued to realize the benefits of our long-term strategic plan. Our initiatives to accelerate growth in higher-profit customer segments and channels drove both strong volume and positive pricing. We also made a number of investments that not only expanded our global footprint, but also positioned us to benefit from faster-growing markets, highlighted by our acquisition of Zipcar," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "We capped the year by delivering a 46% increase in Adjusted EBITDA in the fourth quarter, reflecting strong revenue growth and margin expansion, while continuing to return cash to shareholders through share repurchases."
Executive Summary
Revenue increased 9% in fourth quarter 2013 compared to fourth quarter 2012 primarily due to a 6% increase in rental days and the acquisition of Zipcar. Excluding Payless and the effect of currency movements, pricing in North America was essentially unchanged year-over-year. Fourth quarter Adjusted EBITDA increased 46% to $114 million, excluding certain items, primarily due to increased earnings in our North America segment.
Full-year revenue increased 8% to $7.9 billion. The increase was driven by 4% growth in rental days, a 1% increase in North American pricing, and an 11% increase in ancillary revenues. Adjusted EBITDA was $769 million for the full year, excluding certain items, a decline of 8% compared to 2012 primarily due to below-trend fleet costs in 2012 that normalized in 2013. The Company generated free cash flow of $460 million during 2013, bringing its total free cash flow over the last 24 months to $978 million.
Zipcar, acquired by the Company in March 2013, contributed approximately $74 million to revenue and $11 million to Adjusted EBITDA in the fourth quarter. For the full year, Zipcar contributed approximately $246 million to revenue and $25 million to Adjusted EBITDA, excluding certain items. Zipcar entered six new metropolitan markets in 2013.
Payless Car Rental, acquired by the Company in July 2013, contributed $21 million to revenue in the fourth quarter and $44 million to revenue for the full year. Payless' contribution to Adjusted EBITDA was not significant.
Business Segment Discussion
The following discussion of fourth quarter operating results focuses on revenue and Adjusted EBITDA for each of our operating segments. Revenue and Adjusted EBITDA are expressed in millions.
Other Items
- Share Repurchases- The Company repurchased approximately 720,000 shares of its common stock at a cost of $26 million in the fourth quarter, under the $200 million share repurchase program authorized in August. For the full year, the Company's share repurchases totaled 1.6 million shares at a cost of approximately $50 million.
- Debt Refinancing- In November, the Company completed a private offering of $250 million of senior notes due 2017 with an interest rate of LIBOR plus 2.75%. The Company used the proceeds from the offering to redeem all of its $150 million outstanding floating rate senior notes due 2014, to repay approximately $45 million of its floating rate term loan due 2016, and to repurchase approximately $48 million of other outstanding corporate debt.
- Asset-Backed Debt Offering - In February 2014, the Company's Avis Budget Rental Car Funding subsidiary issued approximately $675 million in five-year asset-backed notes with a weighted-average interest of 2.6%. The proceeds from the borrowing will provide funds for the repayment of maturing vehicle-backed debt and the acquisition of cars in the United States.
- Annual Stockholders Meeting - We have scheduled our 2014 Annual Meeting of Stockholders for May 23, 2014 in Wilmington, Del. Stockholders of record as of the close of business on March 27, 2014 will be entitled to vote at the annual meeting.
Outlook
The Company today issued its estimates of its full-year 2014 results. The Company expects:
- Full-year 2014 revenue will be approximately $8.3 billion to $8.5 billion, a 5% to 7% increase compared to 2013. In the Company's North America segment, rental days are expected to increase 3% to 5%, and pricing is expected to increase approximately 1% in 2014.
- Adjusted EBITDA will increase 7% to 17%, to approximately $825 million to $900 million, excluding certain items.
- Per-unit fleet costs in its North America segment will be approximately $300 to $310 per month in 2014, compared to $299 per month in 2013. Total Company fleet costs are expected to be $295 to $305 per unit per month in 2014, an increase of approximately 2% to 5% compared to 2013.
- Interest expense related to corporate debt will be approximately $220 million, a reduction of $8 million compared to 2013.
- 2014 non-vehicle depreciation and amortization expense (excluding the amortization of intangible assets related to the acquisitions of Avis Europe and Zipcar) will be approximately $150 million to $155 million.
- Pretax income will be approximately $450 million to $530 million, excluding certain items.
- Its effective tax rate in 2014 will be approximately 38%, excluding certain items, and its diluted share count will be approximately 114 million, including the effect of completing the remainder of the Company's existing $200 million share repurchase authorization in 2014.
Based on these expectations, the Company estimates that its 2014 diluted earnings per share, excluding certain items, will increase approximately 11% to 30% compared to 2013, to $2.45 to $2.85.
The Company is continuing its award-winning efforts to reduce costs and enhance productivity through its Performance Excellence process-improvement initiative. The Company estimates that these efforts generated more than $50 million in benefits in 2013 compared to 2012 and expects that such initiatives will provide incremental benefits of more than $50 million in 2014. In addition, the Company expects to achieve incremental synergy benefits in 2014 from its acquisition and continued integration of Avis Europe, Payless and Zipcar.
The Company also continues to target $1 billion or more of Adjusted EBITDA, excluding certain items, in 2015.
Investor Conference Call
Avis Budget Group will host a conference call to discuss fourth quarter results on February 20, 2014, 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 access code "Avis Budget." 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 February 20 until 8:00 p.m. (ET) on March 7 at (203) 369-3578, access code: "Avis Budget."
Investor Day
Avis Budget Group will host an Investor Day meeting on February 24, 2014 in New York City. The day will include presentations by members of the Company's senior leadership team, a question-and-answer period, and an informal lunch providing institutional investors the opportunity to interact with management. Advance registration is required to attend the event. The Investor Day will be webcast live and a replay will be available following the conclusion of the event. To register or to access the webcast, please visit ir.avisbudgetgroup.com.
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 860,000 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 29,000 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 and cost-saving initiatives 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 the businesses of Zipcar, Payless and Avis Budget, 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 for new vehicles 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 any change 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, regulation or governmental or regulatory inquiries or investigations involving the Company, and our ability to accurately estimate its future results and implement its 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, 2012 and quarterly report on Form 10-Q for the quarter ended September 30, 2013, 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 financial measures such as Adjusted EBITDA, free cash flow, pretax income and diluted earnings per share, which exclude certain items under each measure and 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 to 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, pretax income and diluted earnings per share, excluding certain items under each measure, are net income, net cash provided by operating activities, income (loss) before income taxes and diluted earnings per share. Because of the forward-looking nature of the Company's forecasted non-GAAP Adjusted EBITDA, free cash flow, pretax income and diluted earnings per share, excluding certain items, specific quantifications of the amounts that would be required to reconcile forecasted net income, net cash provided by operating activities, pretax 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