Avis Budget Group Inc. reported revenue of $1.2 billion for the first quarter 2010, a decrease of 3 percent compared to the first quarter 2009. The car and truck rental company had a pretax loss of $66 million, including a $40 million expense related to the early extinguishment of corporate debt.
Excluding unusual items, first quarter EBITDA was $39 million and pretax loss was $25 million, compared with an EBITDA loss of $3 million and a pretax loss of $63 million in the year-ago period.
"Our price increases and cost-saving initiatives allowed us to grow our EBITDA and margins in the first quarter as we continued our focus on profitable rental transactions and keeping our fleet size in line with demand," said Ronald L. Nelson, Avis Budget Group chairman and chief executive officer. "Importantly, each of our operating segments reported a year-over-year improvement in EBITDA, and volume comparisons strengthened each month during the quarter and again in April, led by an improvement in business travel. We continue to be optimistic about our earnings potential for the year."
Executive Summary
In the first quarter, total car rental revenues decreased 4 percent year-over-year, driven primarily by a 12 percent decrease in rental days offset by a 7 percent increase in average daily rate. Both commercial and leisure rentals contributed positively to the gain in average daily rate. In
addition, domestic ancillary revenue increased 12 percent in the quarter on a per-rental-day basis. Excluding the effects of foreign currency, average daily rate increased 3 percent.
Car depreciation costs decreased 17 percent due to a 7 percent reduction in per-unit depreciation costs and an 11 percent decline in the company's average fleet. Excluding gas, other operating expenses decreased to 51.4% of revenue, principally reflecting cost-saving and productivity improvement initiatives. Selling, general and administrative costs declined $4 million compared to the prior year, excluding the effects of foreign currency, reflecting cost savings and productivity improvements.
Domestic Car Rental
Revenue declined 8 percent primarily due to a 13 percent decrease in rental days, partially offset by a 3 percent increase in average daily rate. Despite the decline in rental volumes, EBITDA increased $27 million as a result of higher pricing, a 10 percent decrease in per-unit depreciation costs and the company's cost-saving initiatives. In addition, ancillary revenues grew 12 percent on a per-rental-day basis. EBITDA includes $1 million of restructuring costs in first quarter 2010 compared with $5 million in first quarter 2009.
International Car Rental
Revenue increased 23 percent primarily due to a 36 percent increase in average daily rate and a 10 percent decrease in rental days. Excluding the benefit of foreign exchange, average daily rate increased 8 percent EBITDA increased 53 percent year-over-year primarily due to a $7 million favorable impact from exchange rates, improved pricing and lower per-unit depreciation costs on a constant-currency basis.
Truck Rental
Truck rental revenue increased 1 percent primarily due to a 1 percent increase in revenue per day. EBITDA improved primarily due to operating and fleet cost savings and higher pricing, as well as improved one-way rental volumes. EBITDA in first quarter 2009 included $1 million of restructuring costs.
