Avis Budget Doubles Net Income in Q2

Avis Budget Group Inc. today reported second quarter 2011 revenue of $1.4 billion, an increase of 9 percent compared with 2010. Excluding certain items, Adjusted EBITDA increased 95 percent to $191 million and net income doubled to $52 million compared with the second quarter 2010. 

"We reported strong revenue and earnings growth in the second quarter, with both corporate and leisure volumes benefiting from our ongoing investments in driving brand awareness. Fleet costs also decreased substantially as a result of the ongoing strength of the used car market," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. 

"The strategic growth initiatives that we have implemented, including our increased emphasis on inbound-international and small-business rentals, are driving incremental revenue and enhancing the vehicle-rental experience we offer. In addition, our plans for integrating Avis Europe plc are progressing well, and we look forward to realizing significant value from re-uniting our brands globally under one corporate umbrella." 

Metrics and Outlook

Domestically, revenue increased 8 percent primarily due to an 8 percent increase in volume, partially offset by a 2 percent decline in pricing. Per-unit fleet costs declined by 39 percent, while ancillary revenues grew 5 percent on a per-rental-day basis.

Truck rental revenue increased 3 percent primarily due to a 10 percent increase in rental days and a 5 percent decline in pricing. The growth in volume, and the decline in pricing, was a result of the substantial growth achieved in commercial rentals, which have a longer length of rental but lower pricing.

The Company incurred $32 million of expenses in connection with the Avis Europe transaction in the second quarter, including $23 million of mark-to-market foreign-currency losses related to the purchase price. The acquisition is scheduled to close in early October, subject to applicable court and regulatory approvals.

The company said it continues to monitor developments with respect to the potential acquisition of Dollar Thrifty Automotive Group Inc., for which it incurred $9 million of expense related to this potential transaction in the second quarter, including $7 million of acquisition-related interest expense.

The company estimates its domestic vehicle depreciation costs will decline 18-20 percent on a per-unit basis in 2011 compared with 2010, including an estimated 8-11 percent decline in the second half, as vehicle residual values have been significantly stronger than initially expected.

The company plans to keep its rental fleet in line with rental demand, which should result in year-over-year utilization remaining fairly steady during the second half of 2011.


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