Shares of Avis Budget Group, Inc. CAR have declined 3.9% since its third-quarter 2019 earnings release on Oct 31. The decline can be attributed to the company’s lower-than-expected earnings and revenue performance and revised guidance. The company reduced the full-year guidance for revenues and lowered the higher end of its adjusted EBITDA view.
Notably, the company reported adjusted earnings per share of $2.96, which lagged the Zacks Consensus Estimate by 69 cents and decreased 11.1% year over year. Total revenues of $2.75 billion missed the consensus estimate by $91.9 million and decreased 0.9% year over year due to 1% decline in revenues per day partially offset by a 2% increase in rental days.
Full-year revenues are now anticipated in the range of $9.00-$9.20 billion compared with the prior guided range of $9.20-$9.50 billion. Adjusted EBITDA for 2019 is now expected in the range of $750-$800 million compared with the previously guided range of $750-$850 million.
Per-unit fleet costs increased 6% year over year and utilization improved 20 basis points.
Avis Budget Group, Inc. Price, Consensus and EPS Surprise
Avis Budget Group, Inc. price-consensus-eps-surprise-chart | Avis Budget Group, Inc. Quote
Let’s check out the quarterly numbers in detail.
Revenues by Segment
Americas segment revenues of $1.87 billion increased 1% year over year owing to 3% growth in rental days, partially offset by 2% decrease in revenues per day. Per-unit fleet costs improved 9%, with utilization improving 30 basis points. The segment accounted for 68% of total revenues.
International segment revenues of $885 million went down 5% year over year due to 1% decrease in rental days. Per-unit fleet costs grew 1%, excluding exchange rate effects, and utilization was flat. The segment contributed 32% to total revenues.
Adjusted EBITDA of $471 million declined 1% year over year. Adjusted EBITDA margin of 17.1% was flat year over year.
Adjusted EBITDA for Americas was $321 million compared with $313 million in the prior-year quarter. Internationally, adjusted EBITDA came in at $169 million compared with $178 million in the prior-year quarter.
Balance Sheet and Cash Flow
Avis Budget exited third-quarter 2019 with cash and cash equivalents of $615 million compared with $534 million at the end of the prior quarter. Corporate debt was $3.48 billion compared with $3.54 billion at the end of the prior quarter.
The company generated $966 million of cash from operating activities in the reported quarter. Adjusted free cash flow totaled $57 million and capital expenditures were $61 million.
The company repurchased roughly 2.1 million shares for a total of $59 million during the reported quarter.
Avis Budget reaffirmed its 2019 guidance for adjusted earnings, adjusted net income, adjusted pretax income and adjusted free cash flow.
Adjusted EPS is expected between $3.35 and $4.20. The current Zacks Consensus Estimate of $4.01 lies within the guided range.
Further, adjusted net income is projected in the range of $260-$320 million. Adjusted pretax income is expected between $350 million and $450 million. Adjusted free cash flow is expected between $250 million and $300 million.
Zacks Rank & Upcoming Releases
Avis Budget currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Fiserv FISV, ICF International ICFI and FLEETCOR Technologies FLT, each scheduled to release results on Nov 6.
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