Avis Budget Group, Inc. (
NASDAQ: CAR) today
reported results for its second quarter ended June 30, 2019.
Second Quarter Highlights:
- Record second quarter revenues of $2.3 billion,
including the negative impact of $46 million, or 2%, from currency
exchange rate movements
- Net income increased to $62 million, a $36 million
increase from prior year, for diluted earnings of $0.81 per
share
- Adjusted EBITDA increased to $175 million, up 9% from
prior year
- Adjusted diluted earnings of $0.79 per share increased
by 39%
- Reaffirm projected full-year 2019
guidance
- Increased share repurchase authorization by $100
million to a total of $250 million, or 9% of shares
outstanding
Total Company
We set record second quarter revenues with a 2% increase in
Rental Days, partially offset by currency exchange movements.
Overall Per-Unit Fleet Costs improved 8% year-over-year, while
utilization also improved 70 basis points. For the quarter, net
income was $62 million, or $0.81 per diluted share. Adjusted EBITDA
was $175 million and Adjusted net income was $61 million, or $0.79
per diluted share.
“In the second quarter, we achieved record revenues and improved
our Adjusted EBITDA margin by 90 basis points in constant currency.
We also achieved record Net Promoter Scores in both the Americas
and International regions,” said Larry De Shon, Avis Budget Group
President and Chief Executive Officer. “Our earnings were driven by
a continued focus on more profitable rentals as evidenced by our
eighth consecutive quarter of increased leisure pricing in the
Americas, and our ability to capitalize on a strong residual fleet
environment."
“We are executing on our strategic initiatives and are seeing
meaningful benefits from our partnerships with Lyft, Via, Fetch,
Waymo, and Otonomo. We are also pleased to announce our new
partnership with Uber to expand our ride-hail fleet initiative.
These initiatives continue to provide opportunities within the
mobility industry for our customers while improving profitability
and maintaining our position as a global leader in mobility
solution.
Americas
Revenues in the quarter were up 2% compared to the prior year
due to a 2% increase in Rental Days and a 1% increase in Revenue
per Day. Per-Unit Fleet Costs decreased by 10% as we continue to
utilize alternative disposition channels to take advantage of
strong residual values. Adjusted EBITDA increased to $152 million
and margin expanded to 9.3%.
Joe Ferraro, President, Americas commented, “Our record revenues
along with our growing alternative channel dispositions expanded
our Adjusted EBITDA margins over 250 basis points from the prior
year.”
International
Revenues in the quarter were 4% lower driven by a 6% impact from
currency exchange movements. Rental Days increased 3%, partially
offset by a 1% decrease in Revenue per Day, excluding exchange rate
effects. Per-Unit Fleet Costs were flat in the quarter, excluding
exchange rate effects, while utilization improved 60 basis points.
This resulted in Adjusted EBITDA of $39 million for the
quarter.
“Our customer approval rating hit record highs, increasing by
650 basis points over the prior year,” said Keith Rankin,
President, International.
Capital Allocation and Liquidity
In July, we completed an offering of $400 million of 5.75%
Senior Notes due July 2027. We subsequently redeemed a portion of
our outstanding 5.50% Senior Notes due April 2023.
As of June 30, 2019, our corporate debt was approximately $3,535
million and cash and cash equivalents totaled $534 million,
bringing net corporate debt to $3,001 million, and our net
corporate leverage ratio to 3.8x. We also announced that our share
repurchase authorization has been increased by an additional $100
million, which authorizes a total of $250 million in
repurchases.
Weighted average diluted shares outstanding were 76.4 million in
the quarter compared to 81.5 million in the prior year, a 6%
year-over-year reduction.
Investor Conference Call
We will host a conference call to discuss second quarter results
and its outlook on August 6, 2019, at 8:30 a.m. (ET). Investors may
access the call at ir.avisbudgetgroup.com or by dialing
(877)-407-2991 and a replay will be available on our website and at
(877)-660-6853 using conference code 13692335.
Outlook
Our full-year 2019 outlook includes non-GAAP financial measures
and excludes the effect of future changes in currency exchange
rates. We believe 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. We further believe 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 our future quarterly or
annual results.
2019 guidance:
$ millions * |
|
|
|
2019 Estimates |
Revenues |
|
|
|
$9,200 - $9,500 |
Adjusted EBITDA |
|
|
|
$750 - $850 |
Non-vehicle related
depreciation and amortization |
|
|
|
$200 - $215 |
Interest expense related to
corporate debt, net |
|
|
|
$180 - $190 |
Adjusted pretax income |
|
|
|
$350 - $450 |
Adjusted net income |
|
|
|
$260 - $320 |
Adjusted diluted earnings per
share |
|
|
|
$3.35 - $4.20 |
Capital expenditures |
|
|
|
$230 - $250 |
Cash taxes, vehicle programs
and other |
|
|
|
$70 - $120 |
Adjusted free cash flow |
|
|
|
$250 - $300 |
* Excluding Adjusted diluted earnings per
share.Non-vehicle related depreciation and amortization excludes
acquisition-related amortization expense.Interest expense related
to corporate debt, net excludes early extinguishment of debt.
$ change millions (better)/worse |
|
|
|
vs prior year |
Vehicle interest expense (rate
impact) |
|
|
|
$25 - $35 |
Adjusted EBITDA net currency translation |
|
|
|
$15 - $25 |
Americas
% change |
|
|
|
vs prior year |
Rental Days |
|
|
|
0.0% - 2.0% |
Revenue per Day |
|
|
|
0.0% - 1.5% |
Per-Unit Fleet Costs per Month |
|
|
|
(3.0%) - (7.0%) |
Revenue per Day and Per-Unit Fleet Costs per Month exclude
exchange rate effects.
International
% 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.
About Avis Budget Group
Avis Budget Group, Inc. is a leading global provider of mobility
solutions, both through its Avis and Budget brands, which have more
than 11,000 rental locations in approximately 180 countries around
the world, and through its Zipcar brand, which is the world's
leading car sharing network, with more than one million members.
Avis Budget Group operates most of its car rental offices in North
America, Europe and Australasia directly, and operates primarily
through licensees in other parts of the world. Avis Budget Group
has approximately 30,000 employees and is headquartered in
Parsippany, N.J. More information is available at
www.avisbudgetgroup.com.
Forward-Looking Statements
Certain statements in this press release constitute
“forward-looking statements.” Any statements that refer to outlook,
expectations or other characterizations of future events,
circumstances or results, including all statements related to our
future results, future fleet costs, acquisition synergies,
cost-saving initiatives, cash flows and future share repurchases
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, the high level of competition in the
mobility industry, changes in our fleet costs as a result of a
change in the cost of new vehicles, manufacturer recalls and/or the
value of used vehicles, disruption in the supply of new vehicles,
disposition of vehicles not covered by manufacturer repurchase
programs, the financial condition of the manufacturers that supply
our rental vehicles which could effect their ability to perform
their obligations under our repurchase and/or guaranteed
depreciation arrangements, any change in economic conditions
generally, particularly during our peak season and/or in key market
segments, any change in travel demand, including changes in airline
passenger traffic, any occurrence or threat of terrorism, any
changes to the cost or supply of fuel, risks related to
acquisitions or integration of acquired businesses, risks
associated with litigation, governmental or regulatory inquiries or
investigations, risks related to the security of our information
technology systems, disruptions in our communication networks,
changes in tax or other regulations, a significant increase in
interest rates or borrowing costs, our ability to obtain financing
for our global operations, including the funding of our vehicle
fleet via asset-backed securities markets, any fluctuations related
to the mark-to-market of derivatives which hedge our exposure to
exchange rates, interest rates and fuel costs, our ability to meet
the covenants contained in the agreements governing our
indebtedness, and our ability to accurately estimate our future
results and implement our strategy for growth and cost savings.
Other unknown or unpredictable factors could also have material
adverse effects on the Company’s performance or achievements.
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, 2018 and
in other filings and furnishings made by the Company with the
Securities and Exchange Commission (the "SEC") from time to time.
The Company undertakes no obligation to publicly update any
forward-looking statements to reflect subsequent events of
circumstances.
Non-GAAP Financial Measures and Key Metrics
This release includes financial measures such as Adjusted EBITDA
and Adjusted free cash flow, as well as other financial measures
that exclude certain items that are not considered generally
accepted accounting principles (“GAAP”) measures as defined under
SEC rules. Important information regarding such measures is
contained on Table 1, Table 4, Table 5 and Appendix I of this
release. The Company and its management believe that these non-GAAP
measures are useful to investors in measuring the comparable
results of the Company period-over-period. The GAAP measures most
directly comparable to Adjusted EBITDA, Adjusted free cash flow,
Adjusted pretax income (loss), Adjusted net income (loss) and
Adjusted diluted earnings (loss) per share are net income (loss),
net cash provided by operating activities, income(loss) before
income taxes, net income (loss) and diluted earnings (loss) per
share, respectively. Foreign currency translation effects on the
Company’s results are quantified by translating the current
period’s non-U.S. dollar-denominated results using the currency
exchange rates of the prior period of comparison including any
related gains and losses on currency hedges. Per-unit fleet costs,
which represent vehicle depreciation, lease charges and gain or
loss on vehicle sales, divided by average rental fleet, is
calculated on a per-month basis.
Share Repurchase Program
The Company’s share repurchases may occur through open market
purchases or trading plans pursuant to Rule 10b5-1 of the
Securities Exchange Act of 1934. The amount and timing of specific
repurchases are subject to market conditions, applicable legal
requirements and other factors. The repurchase program may be
suspended, modified or discontinued at any time without prior
notice. The repurchase program has no set expiration or termination
date.
Tables Follow
|
|
|
Table 1 |
Avis Budget Group, Inc. |
SUMMARY DATA SHEET |
(In millions, except per share data) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
Income
Statement and Other Items |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,337 |
|
|
$ |
2,328 |
|
|
0% |
|
$ |
4,257 |
|
|
$ |
4,296 |
|
|
(1%) |
Income (loss) before income taxes |
81 |
|
|
38 |
|
|
n/m |
|
(55 |
) |
|
(91 |
) |
|
40% |
Net income (loss) |
62 |
|
|
26 |
|
|
n/m |
|
(29 |
) |
|
(61 |
) |
|
52% |
Earnings (loss) per share - diluted |
0.81 |
|
|
0.32 |
|
|
n/m |
|
(0.39 |
) |
|
(0.75 |
) |
|
48% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Measures (non-GAAP) (A) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
175 |
|
|
161 |
|
|
9% |
|
174 |
|
|
163 |
|
|
7% |
Adjusted pretax income (loss) |
75 |
|
|
64 |
|
|
17% |
|
(18 |
) |
|
(28 |
) |
|
36% |
Adjusted net income (loss) |
61 |
|
|
46 |
|
|
33% |
|
2 |
|
|
(14 |
) |
|
n/m |
Adjusted earnings (loss) per share - diluted |
0.79 |
|
|
0.57 |
|
|
39% |
|
0.01 |
|
|
(0.17 |
) |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
June 30,2019 |
|
December 31,2018 |
|
|
|
|
|
|
|
|
Balance
Sheet Items |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
534 |
|
|
$ |
615 |
|
|
|
|
|
|
|
|
|
Vehicles, net |
14,278 |
|
|
11,474 |
|
|
|
|
|
|
|
|
|
Debt under vehicle programs |
12,456 |
|
|
10,232 |
|
|
|
|
|
|
|
|
|
Corporate debt |
3,535 |
|
|
3,551 |
|
|
|
|
|
|
|
|
|
Stockholders' equity |
376 |
|
|
414 |
|
|
|
|
|
|
|
|
|
Segment
Results |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
1,627 |
|
|
$ |
1,590 |
|
|
2% |
|
$ |
2,954 |
|
|
$ |
2,938 |
|
|
1% |
International |
710 |
|
|
738 |
|
|
(4%) |
|
1,303 |
|
|
1,358 |
|
|
(4%) |
Corporate and Other |
— |
|
|
— |
|
n/m |
|
— |
|
|
— |
|
n/m |
Total Company |
$ |
2,337 |
|
|
$ |
2,328 |
|
|
0% |
|
$ |
4,257 |
|
|
$ |
4,296 |
|
|
(1%) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
152 |
|
|
$ |
107 |
|
|
42% |
|
$ |
187 |
|
|
$ |
122 |
|
|
53% |
International |
39 |
|
|
71 |
|
|
(45%) |
|
18 |
|
|
74 |
|
|
(76%) |
Corporate and Other |
(16 |
) |
|
(17 |
) |
|
n/m |
|
(31 |
) |
|
(33 |
) |
|
n/m |
Total Company |
$ |
175 |
|
|
$ |
161 |
|
|
9% |
|
$ |
174 |
|
|
$ |
163 |
|
|
7% |
|
|
|
|
|
|
|
|
|
|
|
|
n/m |
Not meaningful. |
(A) |
See Table 5 for reconciliations
of non-GAAP measures and Appendix I for definitions. |
Table 2 |
Avis Budget Group, Inc. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In millions, except per share data) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
$ |
2,337 |
|
|
$ |
2,328 |
|
|
$ |
4,257 |
|
|
$ |
4,296 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Operating |
1,172 |
|
|
1,175 |
|
|
2,243 |
|
|
2,267 |
|
Vehicle depreciation and lease charges, net |
543 |
|
|
591 |
|
|
1,028 |
|
|
1,106 |
|
Selling, general and administrative |
313 |
|
|
321 |
|
|
597 |
|
|
617 |
|
Vehicle interest, net |
90 |
|
|
80 |
|
|
171 |
|
|
152 |
|
Non-vehicle related depreciation and amortization |
66 |
|
|
67 |
|
|
133 |
|
|
128 |
|
Interest expense related to corporate debt, net: |
|
|
|
|
|
|
|
Interest expense |
48 |
|
|
49 |
|
|
90 |
|
|
95 |
|
Early extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
5 |
|
Restructuring and other related charges |
23 |
|
|
4 |
|
|
44 |
|
|
10 |
|
Transaction-related costs, net |
1 |
|
|
3 |
|
|
6 |
|
|
7 |
|
Total
expenses |
2,256 |
|
|
2,290 |
|
|
4,312 |
|
|
4,387 |
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes |
81 |
|
|
38 |
|
|
(55 |
) |
|
(91 |
) |
Provision for
(benefit from) income taxes |
19 |
|
|
12 |
|
|
(26 |
) |
|
(30 |
) |
Net income
(loss) |
$ |
62 |
|
|
$ |
26 |
|
|
$ |
(29 |
) |
|
$ |
(61 |
) |
|
|
|
|
|
|
|
|
Earnings
(loss) per share - diluted |
|
|
|
|
|
|
|
Basic |
$ |
0.81 |
|
|
$ |
0.33 |
|
|
$ |
(0.39 |
) |
|
$ |
(0.75 |
) |
Diluted |
$ |
0.81 |
|
|
$ |
0.32 |
|
|
$ |
(0.39 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
Weighted
average shares outstanding |
|
|
|
|
|
|
|
Basic |
76.0 |
|
|
80.7 |
|
|
75.9 |
|
|
80.8 |
|
Diluted |
76.4 |
|
|
81.5 |
|
|
75.9 |
|
|
80.8 |
|
Table 3 |
Avis Budget Group, Inc. |
KEY METRICS SUMMARY |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Days (000’s) |
29,166 |
|
|
28,729 |
|
|
2% |
|
53,875 |
|
|
53,671 |
|
|
0% |
Revenue per Day, excluding exchange rate effects
(A) |
$ |
55.90 |
|
|
$ |
55.35 |
|
|
1% |
|
$ |
55.00 |
|
|
$ |
54.74 |
|
|
0% |
Average Rental Fleet |
454,608 |
|
|
452,526 |
|
|
0% |
|
425,808 |
|
|
425,578 |
|
|
0% |
Vehicle Utilization |
70.5 |
% |
|
69.8 |
% |
|
70 bps |
|
69.9 |
% |
|
69.7 |
% |
|
20 bps |
Per-Unit Fleet Costs per Month, excluding exchange rate effects
(A) |
$ |
289 |
|
|
$ |
322 |
|
|
(10%) |
|
$ |
293 |
|
|
$ |
322 |
|
|
(9%) |
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Days (000’s) |
14,877 |
|
|
14,375 |
|
|
3% |
|
27,333 |
|
|
25,889 |
|
|
6% |
Revenue per Day, excluding exchange rate effects
(A) |
$ |
50.62 |
|
|
$ |
51.31 |
|
|
(1%) |
|
$ |
51.07 |
|
|
$ |
52.44 |
|
|
(3%) |
Average Rental Fleet |
228,561 |
|
|
222,826 |
|
|
3% |
|
213,127 |
|
|
203,816 |
|
|
5% |
Vehicle Utilization |
71.5 |
% |
|
70.9 |
% |
|
60 bps |
|
70.9 |
% |
|
70.2 |
% |
|
70 bps |
Per-Unit Fleet Costs per Month, excluding exchange rate effects
(A) |
$ |
230 |
|
|
$ |
230 |
|
|
0% |
|
$ |
235 |
|
|
$ |
231 |
|
|
2% |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Days (000’s) |
44,043 |
|
|
43,104 |
|
|
2% |
|
81,208 |
|
|
79,560 |
|
|
2% |
Revenue per Day, excluding exchange rate effects
(A) |
$ |
54.12 |
|
|
$ |
54.00 |
|
|
0% |
|
$ |
53.68 |
|
|
$ |
53.99 |
|
|
(1%) |
Average Rental Fleet |
683,169 |
|
|
675,352 |
|
|
1% |
|
638,935 |
|
|
629,394 |
|
|
2% |
Vehicle Utilization |
70.8 |
% |
|
70.1 |
% |
|
70 bps |
|
70.2 |
% |
|
69.8 |
% |
|
40 bps |
Per-Unit Fleet Costs per Month, excluding exchange rate effects
(A) |
$ |
269 |
|
|
$ |
292 |
|
|
(8%) |
|
$ |
274 |
|
|
$ |
293 |
|
|
(6%) |
_______ |
|
|
|
|
|
|
Refer to Table 6
for key metrics calculations and Appendix I for key metrics
definitions. |
(A)The following metrics include changes in
currency exchange rates: |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per Day |
$ |
55.77 |
|
|
$ |
55.35 |
|
|
1% |
|
$ |
54.83 |
|
|
$ |
54.74 |
|
|
0% |
Per-Unit Fleet Costs per Month |
$ |
289 |
|
|
$ |
322 |
|
|
(10%) |
|
$ |
292 |
|
|
$ |
322 |
|
|
(9%) |
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per Day |
$ |
47.70 |
|
|
$ |
51.31 |
|
|
(7%) |
|
$ |
47.65 |
|
|
$ |
52.44 |
|
|
(9%) |
Per-Unit Fleet Costs per Month |
$ |
217 |
|
|
$ |
230 |
|
|
(6%) |
|
$ |
220 |
|
|
$ |
231 |
|
|
(5%) |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per Day |
$ |
53.04 |
|
|
$ |
54.00 |
|
|
(2%) |
|
$ |
52.42 |
|
|
$ |
53.99 |
|
|
(3%) |
Per-Unit Fleet Costs per Month |
$ |
265 |
|
|
$ |
292 |
|
|
(9%) |
|
$ |
268 |
|
|
$ |
293 |
|
|
(9%) |
Table 4 (page 1 of 2)
Avis Budget
Group, Inc. |
CONSOLIDATED
CONDENSED SCHEDULES OF CASH FLOWS AND ADJUSTED FREE CASH
FLOWS |
(In
millions) |
|
CONSOLIDATED CONDENSED SCHEDULE OF CASH FLOWS |
|
|
Six Months Ended June 30, 2019 |
Operating
Activities |
|
Net cash provided by operating activities |
$ |
965 |
|
|
|
Investing
Activities |
|
Net cash used in investing activities exclusive of vehicle
programs |
(84 |
) |
Net cash used in investing activities of vehicle programs |
(3,062 |
) |
Net cash used in investing activities |
(3,146 |
) |
|
|
Financing
Activities |
|
Net cash provided by (used in) financing activities exclusive of
vehicle programs |
(31 |
) |
Net cash provided by (used in) financing activities of vehicle
programs |
2,058 |
|
Net cash provided by (used in) financing activities |
2,027 |
|
|
|
Effect of changes
in exchange rates on cash and cash equivalents, program and
restricted cash |
4 |
|
Net change in cash
and cash equivalents, program and restricted cash |
(150 |
) |
Cash and
cash equivalents, program and restricted cash, beginning of period
(A) |
735 |
|
Cash and
cash equivalents, program and restricted cash, end of period
(B) |
$ |
585 |
|
|
_______ |
(A) |
Consists of cash and cash
equivalents of $615 million, program cash of $115 million and
restricted cash of $5 million. |
(B) |
Consists of cash and cash
equivalents of $534 million, program cash of $48 million and
restricted cash of $3 million. |
CONSOLIDATED SCHEDULE OF ADJUSTED FREE CASH FLOWS
(C) |
|
|
|
Six Months Ended June 30, 2019 |
Loss before income taxes |
$ |
(55 |
) |
Add-back of
non-vehicle related depreciation and amortization |
133 |
|
Add-back of
restructuring and other related costs |
44 |
|
Add-back of
transaction-related costs |
6 |
|
Working capital
and other |
(78 |
) |
Capital
expenditures |
(117 |
) |
Tax payments, net
of refunds |
(47 |
) |
Vehicle programs
and related (D) |
55 |
|
Adjusted
free cash flow |
(59 |
) |
|
|
Acquisition and
related payments, net of acquired cash (E) |
(38 |
) |
Dispositions, net
of tax payments (F) |
64 |
|
Borrowings, net of
debt repayments |
(10 |
) |
Restructuring and
other related payments |
(18 |
) |
Transaction-related payments |
(8 |
) |
Repurchases of
common stock |
(4 |
) |
Change in program
cash |
(67 |
) |
Change in
restricted cash |
(2 |
) |
Foreign exchange
effects, financing costs and other |
(8 |
) |
Net change
in cash and cash equivalents, program and restricted cash (per
above) |
$ |
(150 |
) |
|
_______ |
(C) |
The Company has revised its
definition of Adjusted free cash flow to exclude payments for
restructuring and other related charges. Our calculation of
Adjusted free cash flow may not be comparable to the calculation of
similarly-titled measures used by other companies. See Appendix I
for the definition of Adjusted free cash flow. |
(D) |
Includes vehicle-backed
borrowings (repayments) that are incremental to amounts required to
fund incremental (reduced) vehicle and vehicle-related assets. |
(E) |
Excludes $19 million of vehicles
purchased as a part of a North America licensee acquisition, which
was financed through incremental vehicle-backed borrowings, and
includes equity method investment of $3 million in our licensee in
Greece. |
(F) |
Proceeds received on the sale of
our equity method investment in Anji Car Rental & Leasing
Company Limited ("Anji"), net of cross-border withholding taxes of
$4 million. |
Table 4 (page 2 of 2)
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO ADJUSTED FREE CASH FLOW |
|
|
Six Months Ended June 30, 2019 |
Net cash provided by operating activities (per
above) |
$ |
965 |
|
Investing activities of vehicle programs |
(3,062 |
) |
Financing activities of vehicle programs |
2,058 |
|
Capital expenditures |
(117 |
) |
Proceeds received on sale of assets and nonmarketable equity
securities |
18 |
|
Change in program cash |
67 |
|
Change in restricted cash |
2 |
|
Acquisition and disposition-related payments |
(16 |
) |
Restructuring and other related payments |
18 |
|
Transaction-related payments |
8 |
|
Adjusted
free cash flow (per above) |
$ |
(59 |
) |
Table 5 (page 1 of 2)
Avis Budget Group, Inc. |
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP
MEASURES |
(In millions, except per share data) |
The accompanying press release includes certain non-GAAP
(generally accepted accounting principles) financial measures as
defined under SEC rules. To the extent not provided in the press
release or accompanying tables, we have provided the reasons we
present these non-GAAP financial measures and a description of what
they represent in Appendix I. For each non-GAAP financial measure a
reconciliation to the most comparable GAAP financial measure is
calculated and presented below with reconciliations of net income
(loss), income (loss) before income taxes and diluted earnings
(loss) per share to Adjusted EBITDA and our Adjusted earnings
measures.
|
|
|
Three Months Ended June 30, |
Reconciliation of net income to Adjusted
EBITDA: |
2019 |
|
2018 |
|
|
|
|
|
|
Net income |
$ |
62 |
|
|
$ |
26 |
|
|
Provision for
income taxes |
19 |
|
|
12 |
|
|
Income before
income taxes |
81 |
|
|
38 |
|
|
|
|
|
|
|
|
Add certain
items: |
|
|
|
|
Restructuring and other related charges |
23 |
|
|
4 |
|
|
Acquisition-related amortization expense |
14 |
|
|
19 |
|
|
Transaction-related costs, net |
1 |
|
|
3 |
|
|
Gain on sale of equity method investment in Anji
(A) |
(44 |
) |
|
— |
|
|
Adjusted
pretax income |
75 |
|
|
64 |
|
|
|
|
|
|
|
Add: |
Non-vehicle related
depreciation and amortization (excluding acquisition-related
amortization expense) |
52 |
|
|
48 |
|
|
|
Interest expense related to
corporate debt, net (excluding early extinguishment of debt) |
48 |
|
|
49 |
|
|
Adjusted
EBITDA |
$ |
175 |
|
|
$ |
161 |
|
|
|
|
|
|
|
Reconciliation of net income to adjusted net
income: |
|
|
|
|
|
|
|
|
Net
income |
$ |
62 |
|
|
$ |
26 |
|
|
Add certain items,
net of tax: |
|
|
|
|
|
Restructuring and other
related charges |
18 |
|
|
4 |
|
|
|
Acquisition-related
amortization expense |
10 |
|
|
13 |
|
|
|
Transaction-related costs,
net |
1 |
|
|
3 |
|
|
|
Gain on sale of equity method
investment in Anji |
(30 |
) |
|
— |
|
|
Adjusted
net income |
$ |
61 |
|
|
$ |
46 |
|
|
|
|
|
|
|
|
Earnings
per share - Diluted |
$ |
0.81 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
|
Adjusted
diluted earnings per share |
$ |
0.79 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
Shares
used to calculate Adjusted diluted earnings per share |
76.4 |
|
|
81.5 |
|
_______ |
|
(A) |
Reported within
operating expenses in our Consolidated Statements of
Operations. |
Table 5 (page 2 of 2)
|
|
|
Six Months Ended June 30, |
Reconciliation of net loss to Adjusted
EBITDA: |
2019 |
|
2018 |
|
|
|
|
|
|
Net loss |
$ |
(29 |
) |
|
$ |
(61 |
) |
|
Benefit from
income taxes |
(26 |
) |
|
(30 |
) |
|
Loss before
income taxes |
(55 |
) |
|
(91 |
) |
|
|
|
|
|
|
|
Add certain
items: |
|
|
|
|
Restructuring and other related charges |
44 |
|
|
10 |
|
|
Acquisition-related amortization expense |
31 |
|
|
32 |
|
|
Transaction-related costs, net |
6 |
|
|
7 |
|
|
Non-operational charges related to shareholder activist activity
(A) |
— |
|
|
9 |
|
|
Early extinguishment of debt |
— |
|
|
5 |
|
|
Gain on sale of equity method investment in Anji
(B) |
(44 |
) |
|
— |
|
|
Adjusted
pretax loss |
(18 |
) |
|
(28 |
) |
|
|
|
|
|
|
Add: |
Non-vehicle related
depreciation and amortization (excluding acquisition-related
amortization expense) |
102 |
|
|
96 |
|
|
|
Interest expense related to
corporate debt, net (excluding early extinguishment of debt) |
90 |
|
|
95 |
|
|
Adjusted
EBITDA |
$ |
174 |
|
|
$ |
163 |
|
|
|
|
|
|
|
Reconciliation of net loss to adjusted net income
(loss): |
|
|
|
|
|
|
|
|
Net
loss |
$ |
(29 |
) |
|
$ |
(61 |
) |
|
Add certain items,
net of tax: |
|
|
|
|
|
Restructuring and other
related charges |
34 |
|
|
8 |
|
|
|
Acquisition-related
amortization expense |
22 |
|
|
22 |
|
|
|
Transaction-related costs,
net |
5 |
|
|
6 |
|
|
|
Non-operational charges
related to shareholder activist activity |
— |
|
|
7 |
|
|
|
Early extinguishment of
debt |
— |
|
|
4 |
|
|
|
Gain on sale of equity method
investment in Anji |
(30 |
) |
|
— |
|
|
Adjusted
net income (loss) |
$ |
2 |
|
|
$ |
(14 |
) |
|
|
|
|
|
|
|
Loss per
share - Diluted |
$ |
(0.39 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
Adjusted
diluted earnings (loss) per share |
$ |
0.01 |
|
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
Shares
used to calculate Adjusted diluted earnings (loss) per
share |
76.4 |
|
|
80.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
_______ |
|
(A) |
Reported within
selling, general and administrative expenses in our Consolidated
Statements of Operations. |
(B) |
Reported within
operating expenses in our Consolidated Statements of
Operations. |
Table 6
Avis Budget Group, Inc. |
KEY METRICS CALCULATIONS |
($ in millions, except as noted) |
|
|
Three Months Ended June 30, 2019 |
|
Three Months Ended June 30, 2018 |
|
Americas |
|
International |
|
Total |
|
Americas |
|
International |
|
Total |
Revenue
per Day (RPD) |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
1,627 |
|
|
$ |
710 |
|
|
$ |
2,337 |
|
|
$ |
1,590 |
|
|
$ |
738 |
|
|
$ |
2,328 |
|
Currency exchange rate effects |
3 |
|
|
43 |
|
|
46 |
|
|
— |
|
|
— |
|
|
— |
|
Revenue excluding exchange rate effects |
$ |
1,630 |
|
|
$ |
753 |
|
|
$ |
2,383 |
|
|
$ |
1,590 |
|
|
$ |
738 |
|
|
$ |
2,328 |
|
Rental days (000's) |
29,166 |
|
|
14,877 |
|
|
44,043 |
|
|
28,729 |
|
|
14,375 |
|
|
43,104 |
|
RPD excluding exchange rate effects (in $'s) |
$ |
55.90 |
|
|
$ |
50.62 |
|
|
$ |
54.12 |
|
|
$ |
55.35 |
|
|
$ |
51.31 |
|
|
$ |
54.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle
Utilization |
|
|
|
|
|
|
|
|
|
|
|
Rental days (000's) |
29,166 |
|
|
14,877 |
|
|
44,043 |
|
|
28,729 |
|
|
14,375 |
|
|
43,104 |
|
Average rental fleet |
454,608 |
|
|
228,561 |
|
|
683,169 |
|
|
452,526 |
|
|
222,826 |
|
|
675,352 |
|
Number of days in period |
91 |
|
|
91 |
|
|
91 |
|
|
91 |
|
|
91 |
|
|
91 |
|
Available rental days (000's) |
41,369 |
|
|
20,799 |
|
|
62,168 |
|
|
41,180 |
|
|
20,277 |
|
|
61,457 |
|
Vehicle utilization |
70.5 |
% |
|
71.5 |
% |
|
70.8 |
% |
|
69.8 |
% |
|
70.9 |
% |
|
70.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Per-Unit
Fleet Costs |
|
|
|
|
|
|
|
|
|
|
|
Vehicle depreciation and lease charges, net |
$ |
394 |
|
|
$ |
149 |
|
|
$ |
543 |
|
|
$ |
437 |
|
|
$ |
154 |
|
|
$ |
591 |
|
Currency exchange rate effects |
— |
|
|
9 |
|
|
9 |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
394 |
|
|
$ |
158 |
|
|
$ |
552 |
|
|
$ |
437 |
|
|
$ |
154 |
|
|
$ |
591 |
|
Average rental fleet |
454,608 |
|
|
228,561 |
|
|
683,169 |
|
|
452,526 |
|
|
222,826 |
|
|
675,352 |
|
Per-unit fleet costs (in $'s) |
$ |
867 |
|
|
$ |
690 |
|
|
$ |
808 |
|
|
$ |
967 |
|
|
$ |
690 |
|
|
$ |
876 |
|
Number of months in period |
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
Per-unit fleet costs per month excluding exchange rate effects (in
$'s) |
$ |
289 |
|
|
$ |
230 |
|
|
$ |
269 |
|
|
$ |
322 |
|
|
$ |
230 |
|
|
$ |
292 |
|
|
Six Months Ended June 30, 2019 |
|
Six Months Ended June 30, 2018 |
|
Americas |
|
International |
|
Total |
|
Americas |
|
International |
|
Total |
Revenue
per Day (RPD) |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
2,954 |
|
|
$ |
1,303 |
|
|
$ |
4,257 |
|
|
$ |
2,938 |
|
|
$ |
1,358 |
|
|
$ |
4,296 |
|
Currency exchange rate effects |
9 |
|
|
93 |
|
|
102 |
|
|
— |
|
|
— |
|
|
— |
|
Revenue excluding exchange rate effects |
$ |
2,963 |
|
|
$ |
1,396 |
|
|
$ |
4,359 |
|
|
$ |
2,938 |
|
|
$ |
1,358 |
|
|
$ |
4,296 |
|
Rental days (000's) |
53,875 |
|
|
27,333 |
|
|
81,208 |
|
|
53,671 |
|
|
25,889 |
|
|
79,560 |
|
RPD excluding exchange rate effects (in $'s) |
$ |
55.00 |
|
|
$ |
51.07 |
|
|
$ |
53.68 |
|
|
$ |
54.74 |
|
|
$ |
52.44 |
|
|
$ |
53.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle
Utilization |
|
|
|
|
|
|
|
|
|
|
|
Rental days (000's) |
53,875 |
|
|
27,333 |
|
|
81,208 |
|
|
53,671 |
|
|
25,889 |
|
|
79,560 |
|
Average rental fleet |
425,808 |
|
|
213,127 |
|
|
638,935 |
|
|
425,578 |
|
|
203,816 |
|
|
629,394 |
|
Number of days in period |
181 |
|
|
181 |
|
|
181 |
|
|
181 |
|
|
181 |
|
|
181 |
|
Available rental days (000's) |
77,071 |
|
|
38,576 |
|
|
115,647 |
|
|
77,029 |
|
|
36,891 |
|
|
113,920 |
|
Vehicle utilization |
69.9 |
% |
|
70.9 |
% |
|
70.2 |
% |
|
69.7 |
% |
|
70.2 |
% |
|
69.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Per-Unit
Fleet Costs |
|
|
|
|
|
|
|
|
|
|
|
Vehicle depreciation and lease charges, net |
$ |
747 |
|
|
$ |
281 |
|
|
$ |
1,028 |
|
|
$ |
823 |
|
|
$ |
283 |
|
|
$ |
1,106 |
|
Currency exchange rate effects |
1 |
|
|
20 |
|
|
21 |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
748 |
|
|
$ |
301 |
|
|
$ |
1,049 |
|
|
$ |
823 |
|
|
$ |
283 |
|
|
$ |
1,106 |
|
Average rental fleet |
425,808 |
|
|
213,127 |
|
|
638,935 |
|
|
425,578 |
|
|
203,816 |
|
|
629,394 |
|
Per-unit fleet costs (in $'s) |
$ |
1,758 |
|
|
$ |
1,412 |
|
|
$ |
1,642 |
|
|
$ |
1,935 |
|
|
$ |
1,388 |
|
|
$ |
1,758 |
|
Number of months in period |
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
Per-unit fleet costs per month excluding exchange rate effects (in
$'s) |
$ |
293 |
|
|
$ |
235 |
|
|
$ |
274 |
|
|
$ |
322 |
|
|
$ |
231 |
|
|
$ |
293 |
|
_______ |
Our calculation of
rental days and revenue per day may not be comparable to the
calculation of similarly-titled metrics by other companies.
Currency exchange rate effects are calculated by translating the
current-year results at the prior-period average exchange rates
plus any related gains and losses on currency hedges. |
Appendix I
Avis Budget Group, Inc. |
DEFINITIONS OF NON-GAAP MEASURES AND KEY
METRICS |
Adjusted EBITDAThe accompanying press release
presents Adjusted EBITDA, which represents income (loss) from
continuing operations before non-vehicle related depreciation and
amortization, any impairment charges, restructuring and other
related charges, early extinguishment of debt costs, non-vehicle
related interest, transaction-related costs, net charges for
unprecedented personal-injury legal matters, non-operational
charges related to shareholder activist activity, gain on sale of
equity method investment in Anji and income taxes. Net charges for
unprecedented personal-injury legal matters and gain on sale of
equity method investment in Anji are recorded within operating
expenses in our consolidated condensed statement of
operations. Non-operational charges related to shareholder
activist activity include third party advisory, legal and other
professional service fees and are recorded within selling, general
and administrative expenses in our consolidated results of
operations. We have revised our definition of Adjusted EBITDA to
exclude the gain on sale of equity method investment in Anji. We
did not revise prior years’ Adjusted EBITDA amounts because there
were no gains similar in nature to this gain. Adjusted EBITDA
includes stock-based compensation expense and deferred financing
fee amortization totaling $12 million and $8 million in second
quarter 2019 and 2018, respectively, and totaling $23 million and
$20 million in the six months ended June 30, 2019 and 2018,
respectively.
We believe that Adjusted EBITDA is useful to investors as a
supplemental measure in evaluating the aggregate performance of our
operating businesses and in comparing our results from period to
period. Adjusted EBITDA is the measure that is used by our
management, including our chief operating decision maker, to
perform such evaluation. Adjusted EBITDA is also a component in the
determination of management's compensation. Adjusted EBITDA should
not be considered in isolation or as a substitute for net income or
other income statement data prepared in accordance with GAAP and
our presentation of Adjusted EBITDA may not be comparable to
similarly-titled measures used by other companies. A reconciliation
of Adjusted EBITDA from net income (loss) recognized under GAAP is
provided on Table 5.
Adjusted Earnings Non-GAAP MeasuresThe
accompanying press release and tables present Adjusted pretax
income (loss), Adjusted net income (loss) and Adjusted diluted
earnings (loss) per share, which exclude certain items. We believe
that these measures referred to above are useful to investors as
supplemental measures in evaluating the aggregate performance of
the Company. We exclude restructuring and other related charges,
transaction-related costs, costs related to early extinguishment of
debt and other certain items as such items are not representative
of the results of operations of our business less a provision for
income taxes derived utilizing applicable statutory tax rates for
each item. A reconciliation of our Adjusted earnings Non-GAAP
measures from the appropriate measures recognized under GAAP is
provided on Table 5.
Adjusted Free Cash FlowRepresents Net Cash
Provided by Operating Activities adjusted to reflect the cash
inflows and outflows relating to capital expenditures, the
investing and financing activities of our vehicle programs, asset
sales, if any, and to exclude debt extinguishment costs,
transaction-related costs, restructuring and other related charges
and non-operational charges related to shareholder activist
activity. We have revised our definition of Adjusted Free Cash Flow
to exclude restructuring and other related charges and have revised
prior years' Adjusted Free Cash Flow amounts accordingly. We
believe this change is meaningful to investors as it brings the
measurement in line with our other non-GAAP measures. We believe
that Adjusted Free Cash Flow is useful to management and investors
in measuring the cash generated that is available to be used to
repay debt obligations, repurchase stock, pay dividends and invest
in future growth through new business development activities or
acquisitions. Adjusted Free Cash Flow should not be construed as a
substitute in measuring operating results or liquidity, and our
presentation of Adjusted Free Cash Flow may not be comparable to
similarly-titled measures used by other companies. A reconciliation
of Adjusted Free Cash Flow to the appropriate measure recognized
under GAAP is provided on Table 4.
Available Rental DaysDefined as Average Rental
Fleet times the numbers of days in a given period.
Average Rental FleetRepresents the average
number of vehicles in our fleet during a given period of time.
Currency Exchange Rate EffectsRepresents the
difference between current-period results as reported and
current-period results translated at the prior-period average
exchange rates plus any related currency hedges.
Net Corporate DebtRepresents corporate debt
minus cash and cash equivalents.
Net Corporate LeverageRepresents Net Corporate
Debt divided by Adjusted EBITDA for the twelve months prior to the
date of calculation.
Per-Unit Fleet CostsRepresents vehicle
depreciation, lease charges and gain or loss on vehicles sales,
divided by Average Rental Fleet.
Rental DaysRepresents the total number of days
(or portion thereof) a vehicle was rented during a 24-hour
period.
Revenue per DayRepresents revenues divided by
Rental Days.
Vehicle UtilizationRepresents Rental Days
divided by Available Rental Days.
Contacts:
Media Contact:
Katie McCall
PR@avisbudget.com
Investor Contact:
David Calabria
IR@avisbudget.com
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