Avis Budget Group Inc. (CAR), the leading general-use vehicle rental company, released preliminary first quarter 2012 results, projecting revenue to be $1.6 billion, up 30% from the year-ago quarter, citing modestly better performance in its vehicle rental operations. The Zacks Consensus revenue estimate is pegged at $1,619 million.
Adjusted EBITDA for the quarter is anticipated to increase over 40% year over year to record level of $119 million, mainly due to stronger-than-expected residual values for the company’s vehicles. Adjusted net income, excluding special items, is expected to be nearly $14 million in the first quarter. Including debt extinguishment costs and acquisition-related charges, the company is expected to report a net loss of $23 million.
As per Avis Budget, travel demand across most of its markets remained strong in the first quarter, while it continued to smoothly progress on the integration of the recently acquired Avis Europe business.
Additionally, Avis Budget came up with its forecast for fiscal 2012. The company expects full-year total revenue in the range of $7.3 - $7.6 billion, implying a year-over-year growth of 24% to 29%.
Adjusted EBITDA for fiscal 2012 is expected to increase 35% - 43% year over year to $825 - $875 million. The company anticipates full-year net interest expense of about $255 million, non-vehicle depreciation and amortization expense of $110 million and adjusted pre-tax income in the range of $460 - $510 million.
Effective tax rate for fiscal 2012 is guided in the 34% - 38% range, while diluted shares outstanding is projected to be approximately $125 million. Adjusted earnings per share for fiscal 2012 are expected in the range of $2.35 to $2.65. The current Zacks Consensus Estimate for fiscal 2012 stands at $2.50 per share.
Avis Budget Group is the leading vehicle rental company in North America, Australia and New Zealand. Moreover, a formidable network of more than 10,000 rental locations and 350,000 vehicles enable the company to strengthen its well-established position in a highly competitive vehicle rental industry.
The company faces intense competition from other established players, such as Hertz Global Holdings Inc. (HTZ), Enterprise Rent-A-Car, Dollar Thrifty Automotive Group Inc. (DTG) and Ryder System Inc. (R).
We maintain our long-term Neutral recommendation on Avis Budget. The company currently has a Zacks #3 Rank, implying a short-term Hold rating.
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