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Avis Budget Group Reports Record 2012 Results

Stocks in this article: CAR

Executive Summary

Revenue increased 4% in fourth quarter 2012 compared to fourth quarter 2011 primarily due to a 6% increase in rental day volume and a 2% decrease in pricing. Ancillary revenues, excluding gas and customer recoveries, increased 8% driven by higher sales of insurance products and emergency roadside protection. Fourth quarter Adjusted EBITDA, excluding certain items, increased 22% to $78 million driven by strong growth in North America.

Full-year revenue increased 25% to $7.4 billion, primarily due to the acquisition of Avis Europe in October 2011. The increase was driven by 26% growth in rental days and a 33% increase in ancillary revenues, partially offset by a 3% decline in pricing.  Excluding the acquisition of Avis Europe, revenues increased 3% during 2012, primarily due to a 5% increase in rental days.

Business Segment Discussion

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

North America
(Consisting of the Company's U.S. car rental and Canadian vehicle rental operations)
  2012 2011 % change
Revenue  $ 1,060  $ 1,011 5%
Adjusted EBITDA  $ 47  $ 16 194%

Revenue increased 5% primarily due to a 5% increase in volume, while pricing declined less than 1%. Pricing improved over the course of the quarter, and was up 1% in December 2012 compared to December 2011. Adjusted EBITDA increased $31 million primarily due to higher revenue, a 4% decline in per-unit fleet costs and lower vehicle interest costs. Adjusted EBITDA includes $2 million of restructuring costs in fourth quarter 2011. 

(Consisting of the Company's international vehicle rental operations)
   2012 2011 % change
Revenue  $ 550  $ 532 3%
Adjusted EBITDA  $ 24  $ 37 (35%)

Revenue increased 3% primarily due to a 6% increase in volume and a 5% decrease in pricing partially due to the strong growth of Budget in Europe and the inclusion of New Zealand-based Apex Car Rentals, which was acquired in October 2012.  Adjusted EBITDA declined $13 million compared to fourth quarter 2011, but increased $2 million excluding restructuring costs and $7 million of unfavorable currency effects. Adjusted EBITDA includes $11 million of restructuring costs in fourth quarter 2012 versus $3 million in fourth quarter 2011.

Truck Rental
(Consisting of the Company's U.S. truck rental operations)
  2012 2011 % change
Revenue  $ 87  $ 86 1%
Adjusted EBITDA  $ 1  $ 9 (89%)

Truck rental revenue increased 1% primarily due to a 2% increase in volume, a 4% decrease in pricing and a 5% increase in ancillary revenue. Adjusted EBITDA declined $8 million due to higher fleet and fleet maintenance costs. Adjusted EBITDA includes $1 million of restructuring costs in fourth quarter 2012.

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