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Avis Budget Group Delivers Ninth Consecutive Year of Revenue Growth

February 25, 2019 Financial No Comments Email Email

Avis Budget Group, Inc. (NASDAQ: CAR) today reported results for its fourth quarter and full year ended December 31, 2018.

  • Revenues grew 2% to $2.1 billion in the fourth quarter and 3% for the full year to $9.1 billion
  • Americas per-unit fleet costs were 7% lower for both the quarter and the year excluding exchange rate effects
  • Net income was $13 million ($0.16 diluted earnings per share) in the quarter and $165 million ($2.06 diluted earnings per share) for the year
  • Adjusted EBITDA was $142 million in the fourth quarter and $781 million in the full year
  • Adjusted diluted earnings per share increased 18% to $0.53 in the quarter and 28% to $3.65 for the year
  • Company provides 2019 guidance

“Our Company had a very successful 2018, expanding margin and reporting our ninth consecutive year of revenue growth,” said Larry De Shon, Avis Budget Group President and Chief Executive Officer.  “We ended the year strong, reporting record fourth quarter Adjusted EBITDA and Adjusted earnings per share, driven by a more than 2% increase in Americas pricing and substantially lower overall per-unit fleet costs.”

“Looking forward, we are investing in our future and leveraging innovation to build on our position as a leading global provider of mobility solutions, while also focusing on improving our profitability today,” said De Shon.

Total Company

Three Months Ended December 31,
$ millions 2018 2017 % change
Revenues 2,050 2,019 2%
Net Income 13 220 n/m
Adjusted EBITDA 142 140 1%
Adjusted Net Income 41 38 8%

n/m   not meaningful

  • Revenue grew 2% in the quarter, driven by a 3% increase in volume, partially offset by $32 million (2%) effect from currency exchange movements. A strong increase in Americas pricing was offset by a lower International performance
  • The Company delivered a 6% improvement in overall per-unit fleet costs in the quarter
  • For the quarter, net income was $13 million, the prior year benefiting from the 2017 Tax Act.  Adjusted EBITDA increased 1% to a record $142 million and increased 4% excluding exchange rate effects. Adjusted net income grew 8% to $41 million, or $0.53 per diluted share, an 18% increase


 Three Months Ended December 31,
$ millions 2018 2017 % change
Revenues 1,404 1,382 2%
Adjusted EBITDA 123 107 15%
  • Revenues in the quarter improved 2% over the prior year with both higher commercial and leisure pricing
  • Per-Unit Fleet Costs were 7% lower driven by a strong used car market and a fourth quarter record number of cars sold through alternative disposition channels
  • Adjusted EBITDA increased 15% to a fourth quarter record $123 million and margin expanded by 100 basis points

“Our pricing for the quarter was the highest year-over-year increase since 2014 as we pursued rate over volume to drive higher value rentals,” said Joe Ferraro, President Americas.


Three Months Ended December 31,
$ millions 2018 2017 % change
Revenues 646 637 1%
Adjusted EBITDA 35 45 (22%)
  • Revenue growth in the quarter was driven by higher volume, partially offset by pressure on pricing and a $28 million (4%) impact from currency exchange
  • Per-Unit Fleet Costs were unchanged in the quarter and utilization improved by 40 basis points
  • Adjusted EBITDA was $35 million for the quarter, with increased volume, strong cost controls and the increased utilization offset by lower pricing and $3 million impact from currency exchange movements

“We improved utilization in the quarter and increased commercial volume double-digits, partially offset by the continued difficult pricing environment in Europe,” said Mark Servodidio, President International.

Finance and Liquidity

During 2018, we amended the terms of our Floating Rate Term Loan due 2022 and Senior revolving credit facility maturing 2021 and extended the maturities to 2025 and 2023, respectively. We completed two five-year U.S. asset-backed note offerings totaling $950 million, extended our $2.7 billion asset-backed conduit facilities to November 2020, and increased the capacity of our €1.65 billion European rental fleet securitization to €1.8 billion and extended its maturity to 2021. We also issued €350 million of 4¾% euro-denominated Senior Notes due January 2026, the proceeds of which were used to redeem all $400 million of our outstanding 5⅛% Senior Notes due June 2022.

Our corporate debt was approximately $3,551 million at the end of the fourth quarter and cash and cash equivalents totaled $615 million.

Note:  Corporate debt maturities exclude capital leases which are secured by liens on the related assets, short-term debt and current
portion of long-term debt and $11 million per annum of Term Loan amortization, net of deferred financing fees.

Capital Allocation

We spent $91 million on tuck-in acquisitions in 2018, including acquiring Turiscar in Portugal, Morini in Italy and licensees in Germany, France and the U.S. We also purchased a 40% stake in our Avis and Budget licensee in Greece.

We repurchased 5.9 million of our common shares in 2018 at a cost of $200 million, including repurchasing 2.5 million shares in the fourth quarter at a cost of $71 million. Weighted average diluted shares outstanding (as used to calculate Adjusted diluted earnings per share) were 80.1 million at year end compared to 84.8 million in the prior year, a 6% year-over-year reduction.

The Company’s full-year 2019 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 measures 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 such reconciling items could be significant to the Company’s future quarterly or annual results.

The Company today provides its 2019 guidance:

$ millions * 2019 Estimates
Revenues $9,200 – $9,500
Adjusted EBITDA $750 – $850
Adjusted pretax income $350 – $450
Adjusted net income $260 – $320
Adjusted diluted earnings per share $3.35 – $4.20
Adjusted free cash flow $250 – $300
Excluding Adjusted diluted earnings per share.

Additional guidance details:


% change vs prior year
Rental days 0.0% – 2.0%
Revenue per Day 0.5% – 2.5%
Per-Unit Fleet Costs per Month 1.0% – 3.0%
Revenue per Day and Per-Unit Fleet Costs per Month exclude exchange rate effects.


% change vs prior year
Rental days 3.0% – 6.0%
Revenue per Day (1.0%) – (4.0%)
Per-Unit Fleet Costs per Month 0.0% – 2.0%
Revenue per Day and Per-Unit Fleet Costs per Month exclude exchange rate effects.

Investor Conference Call
Avis Budget Group will host a conference call to discuss fourth quarter and full year results and its outlook on February 21, 2019, at 8:30 a.m. (ET).  Investors may access the call at or by dialing (630) 395-0021 and providing the participant passcode 2995545.  The supporting presentation will also be available at  Investors are encouraged to dial in approximately 10 minutes prior to the call.  A replay will be available at following the call.  A telephone replay will also be available from 11:00 a.m. (ET) on February 21, 2019 until 10:00 p.m. (ET) on March 21, 2019 at (402) 220-6430.

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