Avis Budget (CAR 29.20, -1.64) has tumbled 5.3% after reporting disappointing results for the first quarter and cutting its earnings guidance for the full year. Including today's decline, the stock is down 20.4% so far in 2017.
The car rental agency reported a below-consensus first quarter loss of $0.94 per share on a 2.2% year-over-year decline in revenue to $1.84 billion, which was also shy of expectations.
The decline in revenue resulted from a 5.0% drop in pricing, which was partially offset by a 3.0% increase in rental days. Higher per-unit fleet costs in the Americas and the shift of the Easter holiday from March (in 2016) to April also contributed to the decline in revenue.
Looking at the segment breakdown, revenue in the Americas declined 4.0% to $1.31 billion. Rental days increased 1.0% while pricing fell 4.0%. Per-unit fleet costs increased 7.0% to $333/month. Lower revenue and higher fleet costs resulted in an adjusted loss before interest, tax, depreciation, and amortization of $20 million.
International revenue grew 2.0% to $525 million. The acquisition of France Cars contributed to a 7.0% increase in volume. Pricing fell 6.0% with a 2.0% negative impact from currency movements. Per-unit fleet costs declined 3.0% to $215/month. Adjusted EBITDA increased to $7 million from $1 million one year ago. This included a $16 million benefit from currency translations.
The company has been taking measures to cut costs due to a challenging operating environment. More than $50 million in cost savings are expected for the full year. It is worth pointing out that the recent slowdown in auto sales has led to concerns about the pricing power of rental agencies when selling vehicles from inventory.
Avis Budget reaffirmed its revenue guidance for the year, expecting sales between $8.80 billion and $8.95 billion; however, earnings are expected to be between $2.85 per share and $3.50 per share, down from $3.05 per share to $3.75 per share. Adjusted EBITDA is expected between $800 million and $880 million, down from previous guidance for EBITDA between $840 million and $920 million.