Avis Budget Group Inc. (CAR) posted first-quarter 2011 net income of $7.0 million compared with a net loss of $38.0 million in the year-ago period. Excluding extraordinary items, quarterly income came in at $12.0 million or 11 cents a share. Earnings per share for the quarter topped the Zacks Consensus Estimate of a loss of 5 cents, significantly improving from the prior-year quarter loss of 13 cents a share.
Continued focus on productivity and cost containment initiatives, better travel trends and lower fleet costs drive the company to post better-than-expected financial results for the first quarter of fiscal 2011.
The company reported a 7.0% jump in net revenues to $1,235.0 million from $1,153.0 million in the year-ago period. Total revenue also surpassed the Zacks Consensus Estimate of $1,210.0 million. The increase was mainly attributable to a 7.0% rise in rental day volume. However, the growth was partially offset by a 1.0% decline in pricing. Growth in Ancillary revenues of 3.0% also contributed to the revenue increase.
By segment, domestic car rental revenue rose 6.0% to $929.0 million in the quarter primarily attributable to a 7.0% volume expansion. This was partially offset by a 3.0% fall in pricing. International car rental revenue growth came in at 15.0% to $231.0 million primarily due to 7.0% increase in rental days and increased pricing of 7.0%. Avis’ truck rental increased 6.0% to $75.0 million primarily due to a 17.0% increase in rental days, partially offset by a 7.0% decline in pricing.
The company’s adjusted EBITDA more than doubled to $81.0 million from $38.0 million reported in the year-ago period. EBITDA margin increased by 330 basis points to 6.6% mainly attributable to lower per-unit fleet cost, lower vehicle financing cost and incremental savings from cost-saving measures.
The company ended the quarter with cash and cash equivalents of $913.0 million and total debt of $5,111.0 million compared with $911.0 million of cash and $4,515.0 million of debt in the year-ago period. Moreover, during the quarter, Avis generated a cash flow of $277.0 million from its operating activities and a free cash flow of $6.0 million.
Avis Budget expects domestic vehicle depreciation costs to lower by 5.0% to 8.0% on a per unit basis in 2011 compared with 2010. The company is continuing with its efforts to reduce costs and enhance productivity through its Performance Excellence initiative and five-point cost-reduction and efficiency improvement plan.
The company expects its cost-saving initiatives to provide an incremental $50.0– $60.0 million of year-over-year savings in 2011. Since 2008, total annual savings from these initiatives are expected to be in the range of $560.0 million and $570.0 million in 2011.
Avis Budget Group is the leading general-use vehicle rental company in North America, Australia and New Zealand. Moreover, a formidable network of more than 6,500 rental locations and 350,000 vehicles enables the company to strengthen its well-established position in a highly competitive vehicle rental industry.
The company faces intense competition from other established players, such as Hertz Global Holdings Inc. (HTZ), Enterprise Rent-A-Car, Dollar Thrifty Automotive Group Inc. (DTG) and Ryder System Inc. (R).
Avis Budget shares maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation. Besides, the company retains a long-term ‘Outperform’ recommendation.
This is a sample profile field. Vitalstocks is the operating company for Stockbloghub. This will place the picture of the author or company in the profile. Here is another extra line of information.
Powered by Facebook Comments