Free 7-day Trial
All Articles and Columns »

Avis Budget Group Inc. Reports Operating Results (10-Q)

August 06, 2010 | About:
10qk

10qk

18 followers
Avis Budget Group Inc. (CAR) filed Quarterly Report for the period ended 2010-06-30.

Avis Budget Group Inc. has a market cap of $1.12 billion; its shares were traded at around $10.92 with a P/E ratio of 45.4 and P/S ratio of 0.3. CAR is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Columbia Wanger of Columbia Wanger Asset Management, Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
This is the annual revenues and earnings per share of CAR over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CAR.


Highlight of Business Operations:

Total expenses decreased $49 million (4%) principally due to (i) a $54 million (14%) decrease in vehicle depreciation and lease charges resulting from a 3% decline in our average car rental fleet and a reduction in per-unit fleet costs, (ii) a $9 million (1%) decrease in direct operating expenses largely resulting from the 5% decrease in car rental days and ongoing cost controls and (iii) a $6 million decrease in restructuring charges. These year-over-year decreases were partially offset by (i) a $12 million increase in selling, general and administrative expenses primarily related to marketing and commission expenditures and due-diligence costs associated with a potential acquisition and (ii) a $5 million increase in vehicle interest. The second quarter decrease in expenses includes a $16 million adverse impact from movements in foreign currency exchange rates. As a result of these items and a $1 million decrease in our provision for income taxes, our net income increased by $32 million in the three months ended June 30, 2010 compared to the prior-year period.

The revenue decrease of $50 million was comprised of a $52 million (7%) decrease in T&M revenue, partially offset by a $2 million (1%) increase in ancillary and other revenues. The decrease in T&M revenue was principally the result of a 6% decrease in rental days and a 1% decrease in T&M revenue per day. Ancillary and other revenues increased $2 million despite the reduced rental days, reflecting a $3 million increase in gasoline sales which was more than offset in Adjusted EBITDA by $10 million of higher gasoline costs, including a loss on our gas hedge. While revenues from rentals of GPS navigation units, sales of insurance products and other items were down 1% mainly due to reduced rental days, we experienced a 5% increase in ancillary revenues per rental day, excluding gasoline and customer recoveries.

We continued to achieve significant benefits from our cost-saving initiatives. Adjusted EBITDA benefited from $53 million (16%) of decreased fleet depreciation and lease charges, reflecting a 3% decrease in the average size of our domestic rental fleet and a 14% decrease in per-unit fleet costs. Adjusted EBITDA also reflected a $22 million (3%) decrease in operating expenses, including (i) a $27 million decrease in expenses related to fleet size, including maintenance and damage, agency operator commissions, credit card fees and other costs, amid lower rental volumes, (ii) a $7 million decrease in employee costs, rents and other expenses related primarily to reduced domestic staffing levels and the closure of unprofitable locations and (iii) $4 million lower restructuring costs. These lower expenses were offset by (i), an $8 million increase in vehicle interest primarily driven by higher outstanding debt balances during the quarter and (ii) a $6 million increase in selling, general and administrative expenses primarily related to marketing cost.

The revenue increase of $29 million was comprised of a $16 million (13%) increase in T&M revenue and a $13 million (22%) increase in ancillary revenues. The total increase in revenue includes a $25 million benefit related to foreign currency exchange rates, impacting T&M revenue by $17 million and ancillary revenues by $8 million, and was largely offset in Adjusted EBITDA by the opposite impact on expenses of $16 million. Rental days declined 1% year-over-year, and T&M revenue per day remained flat excluding foreign-exchange effects.

Total expenses decreased $95 million (4%) principally due to (i) a $111 million (15%) decrease in vehicle depreciation and lease charges resulting from a 9% decline in car per-unit fleet costs and a 7% decline in our average car rental fleet, (ii) a $37 million (3%) decrease in direct operating expenses largely resulting from the 9% decrease in car rental days, reduced staffing levels and other cost-saving actions, and (iii) a $10 million decrease in restructuring charges. These year-over-year decreases were partially offset by a (i) a $40 million expense related to the extinguishment of a portion of our corporate debt and associated interest rate swaps, which occurred in first quarter 2010, and (ii) a $10 million increase in vehicle interest. The decrease in total expense includes an adverse impact from foreign currency exchange rates of $52 million. As a result of these items and an $8 million increase in our benefit from income taxes, our net loss decreased $43 million in the six months ended June 30, 2010 compared to the prior-year period.

The revenue decrease of $130 million was comprised of a $131 million (8%) decrease in T&M revenue and a $1 million (0%) increase in ancillary revenues. The decrease in T&M revenue was principally the result of a 9% decrease in rental days, partially offset by 1% increase in T&M revenue per day. The $1 million increase in ancillary and other revenues was due to a $5 million increase in gasoline sales, which was more than offset in Adjusted EBITDA by $12 million of higher gasoline costs. While revenue from GPS navigation unit rentals, sales of insurance products and other items decreased primarily due to the decline in rental days, ancillary revenue, excluding gasoline and customer recoveries, increased 9% measured on a per rental day basis.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.3/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide