Back to top

Image: Bigstock

Avis Budget's (CAR) Loss Narrows in Q1, Guidance Intact

Read MoreHide Full Article

Avis Budget Group, Inc. (CAR - Free Report) reported better-than-expected first-quarter 2018 financial results.

Adjusted loss was 74 cents per share compared with a loss of 94 cents in the year-ago quarter. The figure was narrower than the Zacks Consensus Estimate of a loss of $1.04.

Total revenues of $1,968 million beat the Zacks Consensus Estimate of $1,954 million. The figure was up 7% year over year. The top line benefited from higher demand, strong pricing in the Americas segment and favorable foreign currency movement of 3% coupled with increased efficiency in business. All the segments posted solid performance in the reported quarter.

 

Shares of Avis Budget barely moved in afterhours trading. The stock rallied 64.5% in the past year compared with the S&P 500’s and industry’s gain of 11% and 8%, respectively.

 

Revenues by Segment

Americas segment revenues increased 3% year over year to $1,348 million. Segment revenues were positively impacted by 3% higher volume growth. It accounted for 68.5% of total revenues.

International segment revenues increased 18% year over year to $620 million. Segment revenues were positively impacted by 9% higher volume growth and $61 million (12%) benefit from foreign currency. However, this was partially offset by 2% lower local currency revenue per day.It contributed 31.5% of total revenues.

Operating Results

Adjusted EBITDA in first-quarter 2018 came in at $2 million against a loss of $27 million in the prior-year quarter. Notably, adjusted EBITDA improved on the back of strong revenue growth and reduced per-unit fleet costs (on local currency basis).

Adjusted EBITDA for Americas was $15 million in first-quarter 2018 against a loss of $20 million in the year-ago quarter. Revenue growth along with 4% lower per-unit fleet costs and 120 basis points improvement in utilization drove the segment’s adjusted EBITDA figure.

Adjusted EBITDA for International declined to $3 million in the reported quarter from $7 million in the year-ago quarter. The decrease was due to lower pricing, higher expenses related to investments for marketing purposes and raised airport concession fees.

Total operating expenses increased to $2,097 million from $2,004 million in the year-ago quarter.

Balance Sheet and Cash Flow

Avis Budget exited first-quarter 2018 with cash and cash equivalents of $544 million compared with $923 million in the year-ago quarter. As of Mar 31, 2018, long-term debt was $3,607 million compared with $3,599 million at the end of 2017.

The company generated $503 million of cash from operating activities in the reported quarter compared with $447 million in the year-ago quarter.

2018 Outlook

Avis Budget reaffirmed its guidance for 2018.The company expects revenues to be in the range of $9.200-$9.450 billion. The Zacks Consensus Estimate stands at $9.30 billion, well within the guided range.

Current year earnings per share are expected to be between $2.90 and $3.75. The Zacks Consensus Estimate of $3.33 falls within the guided range.

Further, the companyexpects adjusted free cash flow between $325 million and $375 million. Adjusted EBITDA is anticipated in the range of $740-$820 million. Adjusted net income is expected in the range of $240-$310 million. Adjusted pretax income is expected in the range of $330-$410 million.

Zacks Rank & Upcoming Releases

Avis Budget currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like Gartner, Inc. (IT - Free Report) , The Dun & Bradstreet Corp. (DNB - Free Report) and Broadridge Financial Solutions Inc. (BR - Free Report) . While Garter and Dun & Bradstreet will release first-quarter 2018 results on May 8 and May 9, respectively, Broadridge will report third-quarter fiscal 2018 numbers on May 8.

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>

Published in