Avis Budget Group Reports Results for Fourth Quarter and Full Year 2009
Excluding unusual items, the Company generated full-year EBITDA of $243 million and a pretax loss of $6 million, and fourth quarter EBITDA of $14 million and a pretax loss of $51 million.
Avis Budget Group, Inc. (NYSE: CAR) today reported results for its fourth quarter and full year, which ended December 31, 2009. The Company reported full-year revenue of $5.1 billion and a pretax loss of $77 million, including $20 million of restructuring charges and $33 million of non-cash impairment charges. For the fourth quarter, the Company reported revenue of $1.2 billion and a pretax loss of $88 million, including $5 million of restructuring charges and a $32 million non-cash impairment charge.
"In the fourth quarter, we saw a continuation of trends from the third quarter, specifically, strong pricing, tepid demand, a healthy used-car market and rigorous cost control throughout our operations. This enabled us to post significant year-over-year improvement in earnings," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "Our decisions to remain tight-fleeted and further reduce unprofitable transactions helped us increase our Domestic Car Rental EBITDA by more than $80 million versus the prior-year quarter, despite lower revenues and lower rental volumes. Our ongoing cost reductions were also critical to our improved results.
"As we look into 2010, we expect year-over-year rental volume comparisons to improve over the course of the year, cost-saving initiatives to provide incremental benefits and the used car market to remain healthy. We also expect our per-unit fleet costs to decline year-over-year as we add more model-year 2010 vehicles to our fleet," Mr. Nelson said.
Executive Summary
Fourth Quarter Results
In the fourth quarter, total car rental revenues decreased 9% year-over-year, driven primarily by a 19% decrease in rental days and a 13% increase in time and mileage revenue per day. Domestic ancillary revenues grew 9% on a per-rental-day basis.
Our car fleet costs decreased 21% due to a 3% decrease in our per-unit fleet costs and an 18% reduction in our average fleet. Other operating expenses, excluding net gasoline and insurance-related impacts, decreased 80 basis points to 52.6% of revenue, principally reflecting cost-saving and productivity improvement initiatives. Selling, general and administrative costs increased 10 basis points as a percentage of revenue to 10.9% primarily due to the absence of incentive compensation expense in fourth quarter 2008.
Truck rental revenue decreased 2% and EBITDA increased as cost savings were partially offset by a 2% decline in rental days, and time and mileage revenue per day was essentially unchanged.
In the fourth quarter, we recorded a $5 million restructuring charge related to our cost-reduction and efficiency improvement plan, as well as a $32 million non-cash impairment charge related to our investment in Carey Holdings, Inc.
Full-Year Results
For the full year, total car rental revenues decreased 15% versus the previous year, driven by a 20% decline in rental days partially offset by a 6% increase in time and mileage revenue per day. Leisure pricing was strong, particularly in the second half of 2009. Commercial pricing also increased modestly. Our rental days declined year-over-year due to the effects of reduced airline passenger volumes and our actions to reduce volume from unprofitable channels and transactions. Our off-airport revenues decreased 15%, to approximately $700 million, and we closed 124 under-performing off-airport locations during the year. Domestic ancillary revenue growth of 15% per rental day was driven by pricing actions and higher penetration rates.
Our car fleet costs decreased 16% due to a 3% increase in our per-unit fleet costs and a 19% reduction in our average fleet. Other operating expenses, excluding net gasoline and insurance-related impacts, decreased 40 basis points to 49.9% of revenue, principally reflecting cost-saving initiatives and productivity improvements. Selling, general and administrative costs decreased 20 basis points as a percentage of revenue to 10.5%, primarily due to cost-saving initiatives, partially offset by the absence of incentive compensation expense in 2008.
Truck rental revenue decreased 7% as rental days declined 7% and time and mileage revenue per day decreased 1%. EBITDA increased significantly, as we achieved substantial cost savings.
