Avis Budget (CAR 27.98, -3.07, -9.89%) held a pre-market loss of
7.3% in response to disappointing results for the third quarter.
The car rental agency reported below-consensus third quarter earnings of $3.33/share on a 0.9% year/year increase in revenue to $2.78 bln, which was also shy of expectations.
Like many other companies, Avis Budget reported an increase in underlying pricing this quarter. The company was able to reduce its per-unit fleet costs in the Americas by 10%, resulting in adjusted EBITDA growth. However, that increase was offset by lower profitability in the company's International operations.
Looking at the segment breakdown, revenue in the Americas was little changed year-over-year at $1.84 bln. Rental volumes grew 1%, but that growth was offset by a negative impact from currency translations. Revenue per day was little changed ($60.94 vs $60.78 in the prior year period) as the company altered its loyalty accounting methods. Adjusted EBITDA grew 3.3% to $313 mln thanks to volume growth and a 10% decline in per-unit fleet costs (to $295 from $328). The decline in per-unit fleet costs was partially offset by higher vehicle interest expense, higher gasoline expense, and a 50-basis point year/year decline in utilization (to 72.3%).
International revenue grew 2.3% to $934 mln thanks to a 7% increase in volume, which outweighed a 2% decline in revenue per day (to $52.54 from $53.52). Adjusted EBITDA fell 8.3% to $178 mln as higher per-unit fleet costs (to $236 from $230), higher airport concession fees, and higher marketing spend outweighed growth in revenue. Vehicle utilization declined 40 basis points to 74.5%.
Looking ahead, Avis Budget expects that earnings for the fiscal year will be between $3.30/share and $3.70/share. Revenue is expected between $9.10 bln and $9.20 bln after previous guidance called for sales between $9.05 bln and $9.30 bln. Adjusted EBITDA is expected between $760 mln and $800 mln after previous guidance called for adjusted EBITDA between $740 mln and $820 mln.
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