Press Release Details

PARSIPPANY, N.J., Aug. 3, 2011 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (Nasdaq:CAR) today reported results for its second quarter ended June 30, 2011. The Company reported revenue of $1.4 billion, an increase of 9% compared with 2010. Excluding certain items, Adjusted EBITDA increased 95% to $191 million and Adjusted EBITDA margin expanded by 600 basis points compared to the prior-year second quarter. Net income increased to $79 million and diluted earnings per share increased to $0.63, excluding certain items. Reported net income and diluted earnings per share, which include those items, were $52 million and $0.42, respectively. 

"We reported strong revenue and earnings growth in the second quarter, with both corporate and leisure volumes benefiting from our ongoing investments in driving brand awareness. Fleet costs also decreased substantially as a result of the ongoing strength of the used car market," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "The strategic growth initiatives that we have implemented, including our increased emphasis on inbound-international and small-business rentals, are driving incremental revenue and enhancing the vehicle-rental experience we offer. In addition, our plans for integrating Avis Europe plc are progressing well, and we look forward to realizing significant value from re-uniting our brands globally under one corporate umbrella."

Executive Summary

Revenue increased 9% in second quarter 2011 compared to second quarter 2010 primarily due to an 8% increase in rental day volume. Ancillary revenues, excluding gas and customer recoveries, grew 4% on a per-rental-day basis. Excluding certain items, second quarter Adjusted EBITDA increased 95% to $191 million, with Adjusted EBITDA margins improving by 600 basis points. The increase in margin was primarily due to a 30% decline in per-unit fleet costs, including gains on vehicle dispositions amid a particularly strong used-car market, lower vehicle financing costs and incremental savings from our productivity initiatives, partially offset by higher direct operating costs, including increased maintenance and damage expense, foreign-exchange effects and increased marketing costs. 

Business Segment Discussion

The following discussion of second quarter operating results focuses on revenue and Adjusted EBITDA for each of our operating segments. Revenue and Adjusted EBITDA are expressed in millions.

Domestic Car Rental

(Consisting of the Company's U.S. Avis and Budget car rental operations)

Revenue increased 8% primarily due to an 8% increase in volume, partially offset by a 2% decline in pricing. Adjusted EBITDA increased 177% driven by a 39% decrease in per-unit fleet costs, 5% growth in ancillary revenues on a per-rental-day basis, and our productivity initiatives, partially offset by higher marketing costs. Adjusted EBITDA includes $2 million of restructuring costs in second quarter 2010. 

International Car Rental

(Consisting of the Company's international Avis and Budget vehicle rental operations)

Revenue increased 20% primarily due to a 6% increase in rental days and a 13% increase in pricing. Excluding foreign-exchange effects, pricing was essentially unchanged, per-unit fleet costs declined 3%, and Adjusted EBITDA increased 3%.

Truck Rental

(Consisting of the Company's Budget Truck rental business)

Truck rental revenue increased 3% primarily due to a 10% increase in rental days and a 5% decline in pricing. The growth in volume, and the decline in pricing, was a result of the substantial growth we achieved in commercial rentals, which have a longer length of rental but lower pricing. Adjusted EBITDA grew 13% primarily as a result of increased revenue and higher vehicle utilization, which increased 13% year-over-year.

Other Items

• Acquisition of Avis Europe plc — The Company announced on June 14 that it had agreed to acquire Avis Europe plc, the independently-owned operator of the Avis and Budget brands in Europe, the Middle East, Africa and parts of Asia, for an aggregate equity purchase price of approximately $1.0 billion. The Company incurred $32 million of expenses in connection with the transaction in the second quarter, including $23 million of mark-to-market foreign-currency losses related to the purchase price. Avis Europe shareholders approved the transaction on August 1. The acquisition is scheduled to close in early October, subject to applicable court and regulatory approvals.
   
• Other Transactions — The Company continues to monitor developments with respect to the potential acquisition of Dollar Thrifty Automotive Group, Inc. We incurred $9 million of expense related to this potential transaction in the second quarter, including $7 million of acquisition-related interest expense.

Outlook

The Company believes it is well positioned for the ongoing rebound in travel volume and that the strategic initiatives it has implemented have accelerated its revenue and profit growth. 

• The Company estimates its domestic vehicle depreciation costs will decline 18-20% on a per-unit basis in 2011 compared with 2010, including an estimated 8-11% decline in the second half, as vehicle residual values have been significantly stronger than initially expected.
   
• The Company plans to keep its rental fleet in line with rental demand, which should result in year-over-year utilization remaining fairly steady during the second half of 2011.
   
• The Company expects its initiatives to reduce costs and enhance productivity will provide $55-65 million of incremental savings in 2011 compared to 2010, bringing the annual savings from the Company's actions since 2008 to $565-575 million.
   
• The Company expects that its effective tax rate in 2011 will be approximately 38-40%, excluding certain items.

Avis Budget Group generally does not provide volume, pricing, revenue or income projections.

Investor Conference Call

Avis Budget Group will host a conference call to discuss second quarter results on August 4, 2011, at 9:00 a.m. (ET). Investors may access the call live at www.avisbudgetgroup.com or by dialing (210) 234-0038 and providing the access code "Avis Budget." Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at www.avisbudgetgroup.com following the call. A telephone replay will be available from 12:00 p.m. (ET) on August 4 until 8:00 p.m. (ET) on August 18 at (402) 998-0863, access code: "Avis Budget."

About Avis Budget Group, Inc.

Avis Budget Group is a leading vehicle rental operator in the United States, Canada, Australia, New Zealand and certain other regions through its Avis and Budget brands. The Company also licenses its vehicle rental brands in more than 100 countries, enabling Avis and Budget to serve commercial and leisure travelers throughout the world.  Avis Budget Group is headquartered in Parsippany, N.J. and has more than 21,000 employees. For more information about Avis Budget Group, visit www.avisbudgetgroup.com.

The Avis Budget Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8891

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 generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results, including all statements related to future results, future fleet costs, our agreement to acquire Avis Europe and the financing thereof, and cost-saving initiatives are 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, our ability to consummate the acquisition of Avis Europe and the ability and timing to obtain regulatory approvals and financing (and any conditions thereto), the Company's ability to promptly and effectively integrate the businesses of Avis Europe and Avis Budget, any potential transaction with Dollar Thrifty Automotive Group, Inc., a weaker-than-anticipated economic environment, the high level of competition in the vehicle rental industry, greater-than-expected costs for new vehicles, disruption in the supply of new vehicles, disposition of vehicles not covered by manufacturer repurchase programs, the financial condition of the manufacturers of our cars, lower-than-anticipated airline passenger traffic, an occurrence or threat of terrorism, a significant increase in interest rates or borrowing costs, our ability to obtain financing for our operations, including the funding of our vehicle fleet via the asset-backed securities market and the financial condition of financial-guaranty firms that have insured a portion of our outstanding vehicle-backed debt, higher-than-expected fuel costs, fluctuations related to the mark-to-market of derivatives which hedge our exposure to exchange rates, interest rates and fuel costs, the Company's ability to meet or amend financial covenants associated with its borrowings, litigation, and the Company's ability to accurately estimate its future results and implement its strategy for cost savings and growth. Other unknown or unpredictable factors also could have material adverse effects on Avis Budget Group'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, 2010, 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 unless required by law.

This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained on Table 5 to this release.

Tables Follow

CONTACT: Media Contact:
         John Barrows
         (973) 496-7865
         PR@avisbudget.com
         
         Investor Contact:
         Neal Goldner
         (973) 496-5086
         IR@avisbudget.com