Avis Budget Group Inc. published May 1 preliminary results for its first quarter ended March 31, 2012 and estimates of its full-year 2012 results.
For the first quarter, the company expects to report revenue of $1.6 billion, an increase of approximately 30% compared with the first quarter 2011. Excluding certain items, Adjusted EBITDA is expected to increase more than 40% compared to first quarter 2011, to approximately $119 million. The company expects to report net income of approximately $14 million, excluding certain items, and a GAAP net loss of approximately $23 million due to debt extinguishment costs and acquisition-related charges.
Further, the company expects its full-year 2012 revenue to be $7.3 billion to $7.6 billion, a 24% to 29% increase compared to 2011. The company also expects its 2012 Adjusted EBITDA to be $825 million to $875 million, excluding certain items, an increase of 35% to 43% compared to 2011.
"We are pleased with our preliminary first quarter results, with our vehicle rental operations performing modestly better than we had projected and Adjusted EBITDA reaching record levels due to the residual values of our vehicles being significantly stronger than our original expectations," said Ronald L. Nelson, Avis Budget Group chairman and CEO. "Travel demand across the majority of our markets remains healthy, and our integration of Avis Europe is progressing as expected."
The company now expects its North American fleet costs to decrease 3% to 8% on a per-unit basis in 2012 compared to the prior year. Consistent with its long-standing policy, the company has prospectively revised the depreciation rates on many of the vehicles in its North American car rental fleet to reflect the significantly stronger residual values it currently foresees.
"When we put our 2012 business plan together, our assumption was that used car values would continue to moderate following the spike in residual values that we observed after the earthquake in Japan in 2011. That moderation has not occurred, as residual values have remained at historically high levels," said David B. Wyshner, Avis Budget Group senior executive vice president and chief financial officer. "Our recent experience in selling used vehicles in North America has been outstanding, and we have revised our outlook for fleet costs accordingly."
The revenue increase was driven primarily by a higher net revenue margin associated with two new subscription tiers launched in the second quarter.