Avis Budget Group Inc. today reported results for its second quarter, which ended June 30, 2012. For the quarter, the company reported revenue of $1.9 billion — a 32% increase compared with the prior-year second quarter, primarily due to the effects of the acquisition of Avis Europe

Excluding certain items, Adjusted EBITDA increased 39% to $266 million, driven by increased revenues and lower per-unit fleet costs in North America. The company reported net income of $112 million and a GAAP net income of $79 million that was impacted by debt extinguishment costs and acquisition-related charges.

For the quarter, the acquisition of Avis Europe, which was completed on Oct. 3, 2011, contributed revenue of $417 million and Adjusted EBITDA of $46 million, excluding certain items.

Excluding Avis Europe, the company's revenue grew 3% in the second quarter and Adjusted EBITDA increased 15% — excluding certain items — and volume increased 5% and pricing declined 3%.

Overall, the 32% revenue increase is primarily due to a 34% increase in rental days, a 3% decrease in average daily rate and a 43% increase in ancillary revenues.

"Our second quarter results reflected rental volume increases across all regions, organic earnings growth, a significant contribution from the Avis Europe acquisition and continued margin expansion," said Ronald L. Nelson, Avis Budget Group chairman and CEO. "Looking ahead, our summer reservation trends have been positive throughout the world, the effects of a weak economy in Europe appear manageable thus far and the integration of Avis Europe is progressing as expected, giving us added confidence in our ability to achieve a run-rate of more than $35 million in annual synergy benefits by the fourth quarter."

North America

Revenue increased 3% primarily due to a 6% increase in volume and a 5% increase in ancillary revenues, partially offset by a 3% year-over-year decline in pricing. Pricing decreased 2% excluding foreign-currency effects. Adjusted EBITDA increased 18%, primarily due to increased revenue and a 13% decline in per-unit fleet costs.

International

Revenue increased 264% primarily due to the acquisition of Avis Europe. Excluding the acquisition, revenue increased 4% primarily as a result of a 3% increase in volume and a 1% increase in average daily rate on a constant-currency basis, partially offset by currency effects that caused reported pricing to decline 3%.

Specifically for Avis Budget EMEA statistics, revenue in the company's Europe, Middle East and Africa operations increased 2% on a constant-currency basis in second quarter 2012 compared to second quarter 2011, and declined 9% on a reported basis. The change in revenue reflects a 2% increase in rental days and a 14% decline in average daily rate driven primarily by currency-exchange rates. Pricing decreased approximately 3% on a constant-currency basis due largely to the strong growth experienced by the Budget brand.

Adjusted EBITDA increased $39 million due to a $33 million contribution from the company’s European operations, including $12 million of restructuring costs and organic revenue growth.

Truck Rental

Truck rental revenue was unchanged as a 1% increase in pricing was offset by a similar decline in volume. Adjusted EBITDA decreased by $1 million primarily due to higher vehicle maintenance expense.
Other Items

Outlook

Financial Outlook: Avis Budget said that it expects its full-year 2012 revenue to be approximately $7.2 billion to $7.5 billion — a 22-27% increase compared to 2011. The decline in the company's revenue estimate compared to its previous estimate of $7.3 billion to $7.6 billion is due to movement in currency-exchange rates.

The company reports that it continues to expect its 2012 Adjusted EBITDA to be approximately $825 million to $875 million, excluding certain items, which is an increase of 35% to 43% compared to the prior year. Fleet costs in North America are expected to decline 3% to 8% on a per-unit basis compared to 2011, consistent with the company's prior estimate.

The company also expects that its pretax income will be approximately $450 million to $505 million, excluding certain items.

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