Avis Budget (CAR 37.93, -3.49) has given up 8.4% after reporting mixed results for the third quarter and lowering the high end of its guidance for the fiscal year.
The car rental agency reported above-consensus third quarter earnings of $3.10 per share on a 3.6% year-over-year increase in revenue to $2.75 billion, which was shy of expectations.
Avis Budget has faced a challenging operating environment since late 2014, and the weakness has shown up in the stock price. After trading near the $70 level in late 2014, the stock spent the next year and a half retreating into the $25 area. Shares of Avis Budget rebounded in 2016, but slid to a new cycle low in the middle of 2017. The stock climbed to a new 2017 high at the end of October, but the company's guidance cut has weighed on shares today.
Avis Budget expects that earnings for the full year will be between $2.45 and $2.65 per share after previous guidance called for earnings between $2.40 and $2.85 per share. Revenue is expected between $8.80 billion and $8.90 billion, modestly down from the previous forecast for sales between $8.80 billion and $8.95 billion.
Looking at third quarter results, revenue in the Americas increased 1.0% to $1.84 billion while adjusted EBITA declined 1.0% to $303 million. Per-unit fleet costs increased 5.0% to $326. The increase in revenue was driven by a 1.0% increase in volume and 2.0% growth in time and mileage revenue per day. The increase in per-unit fleet costs was partially offset by a 1.0% improvement in utilization, resulting from a reduced average fleet size.
International revenue grew 9.3% to $913 million while adjusted EBITDA rose 8.4% to $194 million. Per-unit fleet costs remained unchanged at $235 million. The increase in revenue resulted from a 13.0% increase in volume, which included a 6.0% benefit from FranceCars. Time and mileage revenue per day declined 1.0%.