Avis Budget Q2 Adj. Profit Matches View; Board Approves $200 Mln Share Buyback

(RTTNews) - Vehicle rental services provider Avis Budget Group, Inc. (CAR) on Tuesday reported a loss for the second quarter, as higher expenses more than offset an increase in revenues. However, adjusted earnings per share matched analysts' estimates and the company's board authorized a new $200 million share repurchase program.

Looking ahead to fiscal 2013, Avis Budget forecast earnings below Street expectations, but backed its fiscal 2013 revenue outlook. Shares of the company declined almost 4 percent in extended trades.

Ronald Nelson, Chairman and CEO of Avis Budget Group said, "Our second quarter results reflected volume growth in all regions and increased pricing in North America, offset by the significant year-over-year increase in North American fleet costs occasioned by the significant car-sale gains and depreciation adjustments recorded in the comparable quarter of last year."

Avis Budget's North American revenue for the quarter increased 9 percent to $1.29 billion, primarily due to the acquisition of car sharing network Zipcar, a 2 percent increase in volume and a 1 percent increase in pricing.

International revenue grew 5 percent to $608 million, due to a 6 percent increase in rental days, partly offset by a 2 percent decline in pricing.

Truck Rental revenue for the quarter declined 1 percent to $102 million, reflecting a 7 percent decrease in the company's truck rental fleet and a corresponding decrease in volume. These were largely offset by a 9 percent increase in pricing.

Avis Budget's second-quarter net loss was $28 million or $0.26 per share, compared to net income of $79 million or $0.66 per share in the year-ago period. The latest quarter's results include debt extinguishment expenses, transaction-related charges and restructuring costs.

Excluding these, adjusted net income for the quarter was $58 million or $0.50 per share, compared to $112 million or $0.94 per share in the same period last year. On average, analysts polled by Thomson Reuters expected the company to earn $0.50 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter rose 7 percent to $2.00 billion from $1.87 billion in the year-ago quarter. Analysts had a consensus revenue estimate of $2.01 billion for the quarter.

The increase in revenues was primarily due to the acquisition of Zipcar and a 3 percent increase in rental days. Zipcar, acquired by the company in March 2013, contributed approximately $76 million to revenues and $6 million to Adjusted EBITDA in the latest quarter.

Looking ahead to fiscal 2013, Avis forecasts earnings per share, excluding certain items, in a range of $2.05 to $2.35 per share. However, the company continues to expect full-year revenues of about $7.8 billion to $8.0 billion, representing a 6 percent to 9 percent increase compared to the prior year.

Analysts currently expect the company to report earnings of $2.36 per share for the year on revenues of $7.91 billion.

Nelson said, "Going forward, we expect volume and pricing trends in North America to remain favorable and fleet costs to stabilize. In addition, summer trends in Europe are also favorable, while the integration of Zipcar continues to progress as planned, with both cost savings and incremental revenue opportunities being realized."

Avis Budget now expects per-unit fleet costs in its North America segment to increase about 25 percent, to roughly $300 per month in 2013.

The company's board of directors has authorized a new share repurchase program that will enable it to purchase up to $200 million of its common stock.

CAR closed Tuesday's regular trading session at $30.78, down $0.64 or 2.04 percent on a volume of 1.73 million shares. In after-hours, the stock further declined $1.19 or 3.87 percent to $29.59.