Press Release Details

PARSIPPANY, N.J., Nov. 05, 2018 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (NASDAQ: CAR) today reported results for its third quarter ended September 30, 2018.

• Revenues grew to a record $2.8 billion in the third quarter on both higher volume and increased underlying pricing in the Americas
• Americas per-unit fleet costs reduced by 10%
• Net income of $213 million and earnings per diluted share of $2.68
• Adjusted Net Income increased 2% to $265 million and Adjusted earnings per diluted share of $3.33 were 7% higher
• Adjusted EBITDA was $476 million with Americas delivering a record quarter
• Company reaffirms its full-year projected 2018 Adjusted EBITDA

"Our Americas segment delivered record profits and a 50 basis point margin improvement in the third quarter driven by increased volume, higher underlying pricing and substantially lower per-unit fleet costs, partially offset by a challenging European environment this summer," said Larry De Shon, Avis Budget Group President and Chief Executive Officer.  "As we enter the fourth quarter, industry fleet levels in the Americas are tight, leading to the best pricing environment we’ve seen in some time.  As a result, we currently anticipate Americas Revenue per Day to increase for the fourth quarter and initial expectations for 2019 are looking good, helped by our new revenue management system, improving ancillary revenues and the absence of the impact of loyalty accounting."

Revenue growth in the quarter was driven by a 3% increase in overall volume and higher Americas underlying pricing under our historical T&M per day metric, partially offset by $31 million, or 1% impact from exchange rate effects. The Company also delivered 7% improvement in overall per-unit fleet costs in the quarter excluding exchange rate effects.  For the quarter, net income was $213 million, or $2.68 per diluted share.  Adjusted EBITDA was $476 million with Adjusted net income improving 2% to $265 million, or $3.33 per diluted share, a 7% increase.

Business Segment Discussion

Americas

Revenues during the quarter were essentially in-line with the prior year, with 1% higher rental volumes being offset by a $9 million negative effect from currency exchange rate movements.  Revenue per Day was unchanged primarily due to the change in loyalty accounting, but pricing under our historical T&M per day metric increased 1%.  Adjusted EBITDA increased 3% to a record $313 million in the quarter with the benefit of volume growth and 10% lower per-unit fleet costs being partially offset by increased vehicle interest expense, higher gasoline expense and lower utilization related to record number of vehicle recalls.

International

Revenue growth in the quarter was driven by 7% higher volume, despite the challenging European Leisure environment this summer, partially offset by 2% lower Revenue per Day excluding exchange rate effects and a $22 million, or 2% impact from currency exchange movements.  Adjusted EBITDA was $178 million for the quarter with the benefit of revenue growth being offset by a 3% increase in per-unit fleet costs excluding exchange rate effects, higher airport concession fees, increased marketing and a $5 million impact from currency.

Balance Sheet

The Company's corporate debt was approximately $3.6 billion at the end of the third quarter and cash and cash equivalents totaled $605 million, compared to $3.6 billion of corporate debt and $611 million of cash and cash equivalents at December 31, 2017.

Other Items

The Company repurchased 1.8 million shares of its common shares in the third quarter, or 2% of its shares outstanding, at a cost of $61 million and have repurchased 3.5 million shares year-to-date at a cost of $129 million. Weighted average diluted shares outstanding (as used to calculate Adjusted diluted earnings per share) were 81.0 million year-to-date compared to 85.5 million the prior year, a 5% year-over-year reduction.

In October, the Company completed an offering of €350 million aggregate principal amount of 4.75% senior notes due 2026.  The Company used the proceeds from the notes offering, together with cash on hand, to redeem all $400 million of its outstanding 5.125% senior notes due 2022. As a consequence, the Company now has no corporate debt maturities until 2023.

Outlook
Our full-year 2018 outlook includes non-GAAP financial measures and excludes the effect of future changes in currency exchange rates.  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 2018 results as follows:

* Excluding Adjusted diluted earnings per share.

Additional Guidance Details:

Americas

Revenue per day and per-unit fleet costs exclude the effect of changes in currency exchange rates. Revenue per day also
reflects the effect of the newly adopted revenue recognition standard pertaining to customer loyalty programs.

International

Revenue per day and per-unit fleet costs exclude the effect of changes in currency exchange rates.

Investor Conference Call
Avis Budget Group will host a conference call to discuss third quarter results and its outlook on November 6, 2018, at 8:30 a.m. (ET).  Investors may access the call at ir.avisbudgetgroup.com or by dialing (630) 395-0021 and providing the participant passcode 2995545.  The supporting presentation will also be available at ir.avisbudgetgroup.com.  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 6 until 10:00 p.m. (ET) on December 6 at (402) 220-0222.

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 Australasia directly, and operates primarily through licensees in other parts of the world. Avis Budget Group has approximately 31,000 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 effect 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, 2017 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 Securities and Exchange Commission (the "SEC") from time to time. 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,Table 5 and Appendix I 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 (loss), Adjusted net income (loss) and Adjusted diluted earnings (loss) per share are net income (loss), net cash provided by operating activities, income(loss) before income taxes, net income (loss) and diluted earnings (loss) per share, respectively. Foreign currency translation effects 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 represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet, is calculated on a per-month basis.

Share Repurchase Program
The Company’s share repurchases may occur through open market purchases or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. The repurchase program may be suspended, modified or discontinued at any time without prior notice. The repurchase program has no set expiration or termination date.

CONSOLIDATED SCHEDULE OF ADJUSTED FREE CASH FLOWS (B)

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 the reasons we present these non-GAAP financial measures and a description of what they represent in Appendix I. For each non-GAAP financial measure a reconciliation to the most comparable GAAP financial measure is calculated and presented below.

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

Appendix I

Avis Budget Group, Inc.
DEFINITIONS OF NON-GAAP MEASURES AND DRIVERS

Adjusted EBITDA
The accompanying press release presents Adjusted EBITDA, which represents income (loss) 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, non-operational charges related to shareholder activist activity 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 non-operational charges related to shareholder activist activity. Non-operational charges related to shareholder activist activity include third party advisory, legal and other professional service fees and are recorded within selling, general and administrative expenses 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 $12 million and $7 million in third quarter 2018 and 2017, respectively, and totaling $32 million and $24 million in the nine months ended September 30, 2018 and 2017, 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. A reconciliation of Adjusted EBITDA from net loss recognized under GAAP is provided on Table 5.

Adjusted Earnings Metrics
The accompanying press release and tables present Adjusted pretax income (loss), Adjusted net income (loss) and Adjusted diluted earnings (loss) per share, 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 and other related charges, 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. A reconciliation of our Adjusted Earnings Metrics from the appropriate measures recognized under GAAP is provided on Table 5.

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, transaction-related costs and non-operational charges related to shareholder activist activity. We have revised our definition of Adjusted Free Cash Flow to exclude non-operational charges related to shareholder activist activity. We did not revise prior years’ Adjusted Free Cash Flow amounts because there were no costs similar in nature to these 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.

Available Rental Days
Defined as Average Rental Fleet times the numbers of days in a given period.

Average Rental Fleet
Represents the average number of vehicles in our fleet during a given period of time.

Currency Exchange Rate Effects
Represents the difference between current-period results as reported and current-period results translated at the prior-period average exchange rate.

Per-Unit Fleet Costs
Represents vehicle depreciation, lease charges and gain or loss on vehicles sales, divided by Average Rental Fleet.

Rental Days
Represents the total number of days (or portion thereof) a vehicle was rented during a 24-hour period.

Revenue per Day
Represents revenues divided by Rental Days.

Vehicle Utilization
Represents Rental Days divided by Available Rental Days.

Contacts Media Contact: Alice Pereira (973) 496-3916 PR@avisbudget.com  Investor Contact: Neal Goldner (973) 496-5086 IR@avisbudget.com