Avis Budget Group today reported results for its second quarter, which ended June 30.
"Our strong second quarter results reflect continued global volume growth and higher underlying pricing in the Americas leading to meaningful margin improvement," said Larry De Shon, Avis Budget Group president and CEO. "We made a number of strategically important tuck-in acquisitions during the quarter and are also very excited about our recent announcements regarding Amazon, Lyft, and Luxury Retreats, which was acquired by Airbnb in February 2017, as we expand our reach to include some of the leading innovators in their respective industries."
Revenue growth in the quarter was driven by a 4% increase in volume, higher Americas underlying pricing under our historical T&M per day metric and a 2% benefit from currency exchange rates. This strong revenue performance combined with a 5% reduction in local currency per-unit fleet costs and a 50 basis point improvement in utilization enabled the company to drive a 15% increase in adjusted EBITDA. Net income was $26 million, or $0.32 per diluted share and adjusted net income improved 84% to $46 million, or $0.57 per diluted share.
Revenue growth in the quarter was driven by a 2% increase in volume. Revenue per day was 1% lower, primarily due to lower ancillary revenue and the change in loyalty accounting, but was 1% higher under our historical T&M per day metric. This revenue growth together with 7% lower per-unit fleet costs and a 70 basis point improvement in utilization resulted in adjusted EBITDA increasing 11% to $107 million in the quarter.
|$ millions||2018 Estimates|
|Revenues||$9,050 - $9,300|
|Adjusted EBITDA||$740 - $820|
|Adjusted pretax income||$340 - $420|
|Adjusted net income||$245 - $315|
|Adjusted diluted earnings per share||$3.00 - $3.85|
|Adjusted free cash flow||$325 - $375|
Revenue growth in the quarter was driven by 6% higher volume and a $40 million benefit from foreign currency rates, partially offset by 2% lower local currency revenue per day (also 2% lower under our historical T&M metric). The strong revenue growth, unchanged per-unit fleet costs, improved utilization and a $19 million benefit from currency resulted in adjusted EBITDA improving by 20% to $71 million for the quarter.
Avis' corporate debt was approximately $3.6 billion at the end of the second quarter of 2018 and cash and cash equivalents totaled $489 million, compared to $3.6 billion of corporate debt and $611 million of cash and cash equivalents at Dec. 31, 2017. The rental company repurchased 1.6 million shares of its common shares in the second quarter, or 2% of its shares outstanding, at a cost of $67 million. Weighted average diluted shares outstanding (as used to calculate adjusted diluted earnings per share) were 81.5 million in the second quarter compared to 85.2 million the prior year, a 4% year-over-year reduction.
Avis also announced that its share repurchase authorization has been increased by an additional $250 million, which gives it $283 million of available repurchase authorization from July 1 going forward.
Avis' full-year 2018 outlook includes non-GAAP financial measures and excludes the effect of future changes in currency exchange rates. The company believes 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 metrics and the degree of uncertainty associated with forecasting the reconciling items and amounts.
Avis further believes 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 reconciling items could be significant to the Company's future quarterly or annual results.