Avis Budget (CAR 30.19, -3.20) has given up 9.6% after reporting disappointing results and adjusting its guidance.
The vehicle rental agency reported below-consensus second quarter earnings of $0.30 per share on a 0.2% year-over-year downtick in revenue to $2.24 billion, which was also shy of expectations.
Industry over-fleeting and higher per-unit fleet costs, resulting from lower used vehicle values, led to a 4.0% reduction in pricing in the Americas. Segment revenue fell 1.8% year-over-year to $1.57 billion. Rental days increased 2.0% while lower used vehicle values increased per-unit fleet costs by 9.6% to $344/unit. The challenging environment reduced adjusted earnings before interest, taxes, depreciation, and amortization by 41.1% to $96 million.
International revenue increased 3.5% to $673 million, thanks to an 11.0% improvement in volume, which was partly due to the December 2016 acquisition of FranceCars. Per-unit fleet costs grew 2.8% to $221 million.
Avis Budget adjusted its guidance for the full year, reducing earnings expectations to $2.40-$2.85 per share from $2.85-$3.30 per share. However, revenue guidance was reaffirmed with the company expecting sales between $8.80 billion and $8.95 billion, which is ahead of current market expectations. The company expects that Rental days in the Americas will increase between 1.5% and 2.5% year-over-year while international rental days growth is expected between 10.0% and 12.0% for the full year.
Shares of Avis Budget hit a 2017 low in in June before recovering the bulk of their year-to-date decline. However, today's report has sent the stock back to levels from mid-July. Peer Hertz (HTZ 14.74, -0.50) is down 3.3% ahead of this evening's quarterly report.