Avis Budget Group Inc. reported Nov. 3 revenue of $1.5 billion for the third quarter 2010, an increase of 3 percent from the year-ago period, and net income of $90 million, an increase of 58 percent from the third quarter 2009.
Third quarter adjusted EBITDA was $219 million compared with $165 million in third quarter 2009, excluding restructuring and transaction-related costs. Net income was $97 million, compared with net income of $69 million in third quarter 2009, excluding restructuring and transaction-related costs. All three of the Avis Budget's operating segments reported growth in adjusted EBITDA and margins.
"We delivered strong earnings growth this quarter, driven by positive volume growth and our vigilant focus on cost containment," said Ronald L. Nelson, Avis Budget Group chairman and chief executive officer. "Rental day trends turned positive this quarter as demand from both commercial and leisure customers continued to strengthen, and margins expanded significantly, reflecting our emphasis on profitable transactions, our permanently lowered fixed cost base and lower fleet costs."
In the third quarter, total car rental revenues increased 3 percent year-over-year, driven primarily by a 4 percent increase in rental days. While Avis Budget's average daily rate declined 2 percent year-over-year, reflecting difficult comparisons to last year's price growth, its average daily rate in third quarter 2010 was 6 percent higher than in 2008. In addition, ancillary revenues increased 3 percent per rental day in the quarter compared with third quarter 2009.
Car rental depreciation costs decreased slightly due to a 5 percent reduction in per-unit depreciation costs and a 4 percent increase in the company's average fleet. Excluding gas, other operating expenses in domestic and international car rental decreased 220 basis points to 44.3 percent of revenue, principally reflecting cost-saving and productivity improvement initiatives.
Domestic Car Rental
Revenue increased 2 percent primarily due to an increase in ancillary revenues. Rental days increased 4 percent and average daily rate decreased 4 percent in the quarter, reflecting difficult pricing comparisons with the prior-year third quarter.
Adjusted EBITDA increased $35 million as a result of a 7 percent decrease in per-unit depreciation costs, 2 percent growth in ancillary revenues on a per-rental-day basis, and cost-saving initiatives. Adjusted EBITDA includes $6 million of restructuring costs in third quarter 2010 compared with $1 million in third quarter 2009.
International Car Rental
Revenue increased 10 percent primarily due to a 3 percent increase in rental days and a 4 percent increase in average daily rate. Excluding foreign-exchange effects, average daily rate declined 2 percent, and ancillary revenues increased 7 percent per rental day.
Adjusted EBITDA increased 11 percent year-over-year primarily due to increased revenues and a $3 million favorable impact from exchange-rate movements.
Truck rental revenue increased 5 percent due to a 5 percent increase in rental days and a 1 percent increase in average daily rate.
Adjusted EBITDA improved primarily as a result of increased revenue and lower fleet costs, as the company's average rental fleet declined 10 percent.
In addition, Avis Budget said it incurred $5 million of expense related to the potential acquisition of Dollar Thrifty Automotive Group Inc.