Press Release Details

PARSIPPANY, N.J., Nov. 06, 2017 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (NASDAQ:CAR) today reported results for its third quarter ended September 30, 2017.

• Revenue grew 4% to a record $2.8 billion
• Net income of $245 million and earnings per diluted share of $2.91
• Adjusted EBITDA of $482 million and Adjusted diluted earnings per share of $3.10
• Company updates its full year 2017 Adjusted EBITDA and Adjusted diluted earnings per share estimates

"We had a record third quarter with both pricing and utilization improving in the Americas, strong volume growth partially offset by lower pricing in our International segment, and a relentless focus on cost reduction globally," said Larry De Shon, Avis Budget Group President and Chief Executive Officer.  "During the quarter, hurricanes Harvey, Irma and Maria caused massive devastation across large parts of the United States and Puerto Rico, and I am proud of our teams who worked tirelessly to ensure the safety of our employees and their families, as well as their work to move vehicles to the affected areas to support our customers and the relief agencies.  As a consequence of the hurricanes, we have updated our full year outlook to reflect the impact of the operational disruption we faced during the quarter."

Revenue of $2.8 billion in the third quarter increased 4% compared to the prior year, driven by a 5% increase in overall rental days benefiting from strong summer demand, with time and mileage revenue per day increasing in the Americas but lower in our International segment.  Total company per-unit fleet costs increased 3% and net income was $245 million, or $2.91 per diluted share.  Adjusted EBITDA increased 3% to a record $482 million compared to the prior year, Adjusted net income grew 15% to $260 million, and Adjusted diluted earnings per share increased 26% to $3.10 in the quarter.    

Business Segment Discussion
The following discussion of third quarter operating results focuses on revenue and Adjusted EBITDA for each of our segments.

Americas

Revenue growth in the quarter resulted from a 1% increase in volume and a 2% increase in time and mileage revenue per day (more than 1% in local currency), partially offset by lower ancillary revenue.  Per-unit fleet costs increased 5% in the third quarter, which was partially offset by a 1% improvement in utilization, as average fleet was reduced slightly compared to the prior year. Additional benefits were realized through our cost savings and efficiency initiatives, as well as our focus on disposing more of our used vehicles through alternative disposition channels. The Company estimates that the hurricanes negatively impacted revenue by $5 million and Adjusted EBITDA by approximately $15 million in the third quarter due to the loss of revenue from business disruption and property damage incurred, net of the positive impact from stronger used car values.  Consequently, Adjusted EBITDA was 1% lower in the quarter. 

International

Revenue grew 9% in the quarter, or 5% in local currency, driven by 13% higher volume, including a 6% benefit from FranceCars which was acquired in December 2016.  Volume growth was partially offset by 1% lower time and mileage revenue per day (down 5% in local currency).  The strong revenue performance, benefits from our cost reduction initiatives and a $9 million benefit from currency together resulted in an 8% increase in Adjusted EBITDA to a record $194 million.

Other Items

Share Repurchases - The Company repurchased approximately 783,000 shares of its common shares in the third quarter, or 1% of its shares outstanding, at a cost of $27 million, bringing the year-to-date share repurchases to 4.2 million shares at a cost of $127 million.  

Outlook
Our full-year 2017 outlook includes non-GAAP financial measures.  The Company believes that it is impracticable to provide a reconciliation to the most comparable GAAP measures due to the forward-looking nature of these forecasted Adjusted earnings metrics and the degree of uncertainty associated with forecasting the reconciling items and amounts.  The Company further believes that providing estimates of the amounts that would be required to reconcile the forecasted adjusted measures to forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors.  The after-tax effect of reconciling items could be significant to the Company's future quarterly or annual results.

The Company today updated its estimated full-year 2017 results as follows:

Additional Guidance Details: 

Americas

International

Investor Conference Call
Avis Budget Group will host a conference call to discuss third quarter results and its outlook on November 7, 2017, at 8:30 a.m. (ET).  Investors may access the call and supporting presentation materials at ir.avisbudgetgroup.com or by dialing (630) 395-0021 and providing the participant passcode 2995545.  Investors are encouraged to dial in approximately 10 minutes prior to the call.  A web replay will be available at ir.avisbudgetgroup.com following the call.  A telephone replay will be available from 11:00 a.m. (ET) on November 7 until 10:00 p.m. (ET) on November 21 at (203) 369-1536.     

About Avis Budget Group
Avis Budget Group, Inc. is a leading global provider of mobility solutions, both through its Avis and Budget brands, which have more than 11,000 rental locations in approximately 180 countries around the world, and through its Zipcar brand, which is the world's leading car sharing network, with more than one million members.  Avis Budget Group operates most of its car rental offices in North America, Europe and Australia directly, and operates primarily through licensees in other parts of the world.  Avis Budget Group has approximately 30,000 employees and is headquartered in Parsippany, N.J.  More information is available at www.avisbudgetgroup.com. 

Forward-Looking Statements
Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans," "may increase," "forecast" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are based upon then current assumptions and expectations and are generally forward-looking in nature and not historical facts. Any statements that refer to outlook, expectations or other characterizations of future events, circumstances or results, including all statements related to our outlook, future results, future fleet costs, acquisition synergies, cost-saving initiatives and future share repurchases are also forward-looking statements.

Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to, the Company's ability to promptly and effectively integrate acquired businesses, any change in economic conditions generally, particularly during our peak season or in key market segments, the high level of competition in the vehicle rental industry, a change in our fleet costs as a result of a change in the cost of new vehicles, manufacturer recalls and/or the value of used vehicles, disruption in the supply of new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers that supply our rental vehicles, which could impact their ability to perform their obligations under our repurchase and/or guaranteed depreciation arrangements, any change in travel demand, including changes in airline passenger traffic, any occurrence or threat of terrorism, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our global operations, including the funding of our vehicle fleet via the asset-backed securities market, any changes to the cost or supply of fuel, any fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, our ability to meet the financial and other covenants contained in the agreements governing our indebtedness, risks associated with litigation, governmental or regulatory inquiries or investigations involving the Company, changes in tax or other regulations, changes to our share repurchase plans, risks related to acquisitions, and our ability to accurately estimate our future results and implement our strategy for cost savings and growth.  Other unknown or unpredictable factors could also have material adverse effects on the Company's performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Avis Budget Group's Annual Report on Form 10-K for the year ended December 31, 2016 included under headings such as "Forward-Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in other filings and furnishings made by the Company with the SEC from time to time. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

Non-GAAP Financial Measures
This release includes financial measures such as Adjusted EBITDA and Adjusted free cash flow, as well as metrics that exclude certain items that are not considered generally accepted accounting principles ("GAAP") measures as defined under SEC rules.  Important information regarding such measures is contained on Table 1, Table 4 and Table 5 of this release. The Company and its management believe that these non-GAAP measures are useful to investors in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Adjusted EBITDA, Adjusted free cash flow, Adjusted pretax income, Adjusted net income and Adjusted diluted earnings per share are net income (loss), net cash provided by operating activities, income (loss) before income taxes, net income (loss) and diluted (loss) earnings per share, respectively.  Foreign currency translation impacts on the Company's results are quantified by translating the current period's non-U.S.-dollar-denominated results using the currency exchange rates of the prior period of comparison plus any related gains and losses on currency hedges. Per-unit fleet costs, which represents vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet excludes our U.S. truck rental operations and is calculated on a per-month basis.  

Contacts
Media Contact:
Alice Pereira
(973) 496-3916
PR@avisbudget.com 

Investor Contact:
Neal Goldner
(973) 496-5086
IR@avisbudget.com 

Tables Follow

Table 5

Avis Budget Group, Inc.
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP MEASURES
(In millions, except per share data)

The accompanying press release includes certain non-GAAP (generally accepted accounting principles) financial measures as defined under SEC rules. To the extent not provided in the press release or accompanying tables, we have provided below the reasons we present these non-GAAP financial measures, a description of what they represent and a reconciliation to the most comparable financial measure calculated and presented in accordance with GAAP.

DEFINITIONS

Adjusted EBITDA
The accompanying press release presents Adjusted EBITDA, which represents income from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring and other related charges, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, net charges for unprecedented personal-injury legal matters and income taxes. Net charges for unprecedented personal-injury legal matters are recorded within operating expenses in our consolidated statement of operations. We have revised our definition of Adjusted EBITDA to exclude costs associated with the separation of certain officers of the Company and our limited voluntary opportunity plan, which offers certain employees the limited opportunity to elect resignation from employment for enhanced severance benefits. Costs associated with the separation of certain officers and our limited voluntary opportunity plan are recorded as part of restructuring and other related charges in our consolidated statement of operations. We did not revise prior years' Adjusted EBITDA amounts because there were no costs similar in nature to these costs. Adjusted EBITDA includes stock-based compensation expense and deferred financing fee amortization totaling $7 million and $14 million in third quarter 2017 and 2016, respectively, and totaling $24 million and $41 million in the nine months ended September 30, 2017 and 2016, respectively.

We and our management believe that Adjusted EBITDA is useful to investors as a supplemental measure in evaluating the aggregate performance of our operating businesses and in comparing our results from period to period. Adjusted EBITDA is the measure that is used by our management, including our chief operating decision maker, to perform such evaluation. Adjusted EBITDA is also a component in the determination of management's compensation. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with GAAP and our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

Adjusted Earnings Metrics
The accompanying press release and tables present Adjusted pretax income, Adjusted net income and Adjusted diluted earnings per share for the three and nine months ended September 30, 2017 and 2016, which exclude certain items. We and our management believe that these measures referred to above are useful to investors as supplemental measures in evaluating the aggregate performance of the Company. We exclude restructuring expense, transaction-related costs, costs related to early extinguishment of debt and other certain items as such items are not representative of the results of operations of our business less a provision for income taxes derived utilizing applicable statutory tax rates for each item.

Reconciliations of net income, income before income taxes and diluted earnings per share to Adjusted EBITDA and our Adjusted earnings metrics are as follows:

Adjusted Free Cash Flow 

Represents Net Cash Provided by Operating Activities adjusted to reflect the cash inflows and outflows relating to capital expenditures, the investing and financing activities of our vehicle programs, asset sales, if any, and to exclude debt extinguishment costs and transaction-related costs. We believe that Adjusted Free Cash Flow is useful to management and investors in measuring the cash generated that is available to be used to repurchase stock, repay debt obligations, pay dividends and invest in future growth through new business development activities or acquisitions. Adjusted Free Cash Flow should not be construed as a substitute in measuring operating results or liquidity, and our presentation of Adjusted Free Cash Flow may not be comparable to similarly-titled measures used by other companies. A reconciliation of Adjusted Free Cash Flow to the appropriate measure recognized under GAAP is provided on Table 4.