Press Release Details

• Revenue increased 10% to $1.9 billion.

• Adjusted EBITDA increased 26% to $117 million

• Diluted earnings per share were $0.16, excluding certain items, on GAAP net income of $4 million.

• Company reaffirms its 2014 Adjusted EBITDA projections and raises its earnings per share estimate.

PARSIPPANY, N.J., May 7, 2014 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (Nasdaq:CAR) today reported results for its first quarter ended March 31, 2014. For the quarter, the Company reported revenue of $1.9 billion, a 10% increase compared with the prior-year first quarter. Adjusted EBITDA increased 26% to $117 million. The Company reported net income of $18 million, or $0.16 per share, excluding certain items, and GAAP net income of $4 million, or $0.03 per share.

"Our strong first quarter results were driven by volume growth and increases in both leisure and commercial pricing in North America," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "Our continued focus on growing in more profitable customer segments and channels continues to pay benefits; we completed two tuck-in acquisitions during the quarter that expand our global footprint; our acquisitions of Avis Europe, Zipcar, Apex and Payless all contributed to our improvement in earnings; and we returned $75 million in cash to shareholders through share repurchases."

The Company previously announced that it has expanded its share repurchase authorization by $235 million. This amount is in addition to the existing $200 million share repurchase program that the Company announced in August 2013, under which it has repurchased $125 million of stock through first quarter 2014.

Executive Summary

Revenue increased 10% in first quarter 2014 compared to first quarter 2013 primarily due to a 6% increase in rental days and the acquisitions of Payless and Zipcar. Excluding those acquisitions and the effect of currency movements, revenue grew 7% and pricing in North America increased 2% year-over-year. First quarter Adjusted EBITDA increased 26% to $117 million, primarily due to higher rental volumes and increased year-over-year pricing in North America and despite a $9 million negative impact from movements in currency exchange rates.

Zipcar, acquired by the Company in March 2013, contributed approximately $68 million to revenue and $5 million to Adjusted EBITDA in the first quarter. Payless Car Rental, acquired by the Company in July 2013, contributed $30 million to revenue and $6 million to Adjusted EBITDA in the first quarter.

Business Segment Discussion

The following discussion of first quarter operating results focuses on revenue and Adjusted EBITDA for each of our operating segments. As discussed in Table 1 of this release, the Company has reclassified its Zipcar operations outside of North America to be a component of its International segment and has modified the definition of Adjusted EBITDA to exclude restructuring expense, for all periods presented. Revenue and Adjusted EBITDA are expressed in millions.

Revenue increased 13% primarily due to the acquisitions of Zipcar and Payless, and a 4% increase in volume and 2% higher pricing, excluding Payless. Adjusted EBITDA increased 23% primarily due to higher volume and pricing, partially offset by a 7% increase in per-unit fleet costs. Excluding the acquisitions of Zipcar and Payless, revenue grew 6% and Adjusted EBITDA increased 11%. 

Revenue increased 7% primarily due to a 3% increase in rental days, a 1% increase in total revenue per rental day (which excludes licensee revenues and was comprised of a 7% increase in ancillary revenue per day and a 2% decline in reported pricing) and the acquisition of Zipcar.  Adjusted EBITDA was unchanged primarily due to revenue growth and synergies from the integration of our European operations, offset by a $9 million negative impact from currency exchange movements.

Truck Rental revenue declined 1% due to a 3% decrease in volume, as our truck rental fleet was 14% smaller in 2014.  Adjusted EBITDA improved by $3 million in the first quarter due to a 4% increase in pricing.

Other Items

• Share Repurchases- The Company repurchased approximately 1.6 million shares of its common stock at a cost of $75 million in the first quarter. As of March 31, 2014, the Company has repurchased a total of 3.2 million shares at a cost of approximately $125 million under the $200 million share repurchase program authorized in August 2013. In April 2014, the Company increased the repurchase authorization by $235 million.

• Debt Refinancing- In March, the Company completed an offering of €200 million (approximately $275 million) of senior notes due 2021 with a yield-to-maturity of approximately 4.85%. The Company used the proceeds from the offering in April to redeem a similar amount of its outstanding 8.25% senior notes due 2019.

• "Tuck-in" Acquisitions- In February, the Company acquired its existing Budget Car & Truck Rental licensee in Edmonton, Alberta, Canada. The investment of approximately $30 million, plus the cost of acquired fleet, enables the Company to expand its footprint while capturing a larger share of Canada's domestic, international-inbound and truck rental spend. In February, the Company also re-acquired the license rights to the Budget Car Rental brand in Portugal and now operates both the Avis and Budget brand there directly.

Outlook

The Company today reaffirmed its full-year 2014 Adjusted EBITDA estimate, and increased its 2014 revenue and earnings per share estimates. The Company expects:

• Full-year 2014 revenue will be approximately $8.4 billion to $8.6 billion, a 6% to 8% increase compared to 2013. In the Company's North America segment, rental days are expected to increase 4% to 6%, and pricing is expected to increase approximately 1% in 2014. The increase in projected revenue compared to the Company's prior estimate is primarily due to our acquisition of our Budget Edmonton licensee.

• Adjusted EBITDA will increase 7% to 17%, to approximately $825 million to $900 million.   

• Per-unit fleet costs in its North America segment will be approximately $300 to $310 per month in 2014, compared to $299 per month in 2013. Total Company fleet costs are expected to be $295 to $305 per unit per month in 2014, an increase of approximately 2% to 5% compared to 2013. 

• Interest expense related to corporate debt will be approximately $215 million, a reduction of $13 million compared to 2013.

• 2014 non-vehicle depreciation and amortization expense (excluding the amortization of intangible assets related to the acquisitions of Avis Europe and Zipcar) will be approximately $150 million to $155 million. 

• Pretax income will be approximately $455 million to $535 million, excluding certain items.

• Its effective tax rate in 2014 will be approximately 38%, excluding certain items, and its diluted share count will be approximately 111 to 112 million, including the effect of  repurchasing $200 million to $300 million of outstanding shares in 2014. 

Based on these expectations, the Company estimates that its 2014 diluted earnings per share, excluding certain items, will increase approximately 14% to 34% compared to 2013, to $2.50 to $2.95.

The Company also continues to target $1 billion or more of Adjusted EBITDA in 2015.

Investor Conference Call

Avis Budget Group will host a conference call to discuss first quarter results on May 8, 2014, at 8:30 a.m. (ET). Investors may access the call live at ir.avisbudgetgroup.com or by dialing (630) 395-0021 and providing the access code "Avis Budget." Investors are encouraged to dial in approximately 10 minutes prior to the call. A web replay will be available at ir.avisbudgetgroup.com following the call. A telephone replay will be available from 11:00 a.m. (ET) on May 8 until 8:00 p.m. (ET) on May 22 at (203) 369-1590, access code: "Avis Budget."

About Avis Budget Group

Avis Budget Group, Inc. is a leading global provider of vehicle rental services, both through its Avis and Budget brands, which have more than 10,000 rental locations in approximately 175 countries around the world, and through its Zipcar brand, which is the world's leading car sharing network, with more than 870,000 members. Avis Budget Group operates most of its car rental offices in North America, Europe and Australia directly, and operates primarily through licensees in other parts of the world. Avis Budget Group has approximately 29,000 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" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "forecast" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are based upon then current assumptions and expectations and are generally forward-looking in nature and not historical facts. Any statements that refer to outlook, expectations or other characterizations of future events, circumstances or results, including all statements related to our outlook, future results, future fleet costs, acquisition synergies, cost-saving initiatives and future share repurchases are also 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 Company's ability to promptly and effectively integrate the businesses of Zipcar, Payless and Avis Budget, any change in economic conditions generally, particularly during our peak season or in key market segments, the high level of competition in the vehicle rental industry, a change in our fleet costs as a result of a change in the cost for new vehicles 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 impact their ability to perform their obligations under our repurchase and/or guaranteed depreciation arrangements, any change in travel demand, including any change in airline passenger traffic, any occurrence or threat of terrorism, 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 the asset-backed securities market, any changes to the cost or supply of fuel, 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 financial and other covenants contained in the agreements governing our indebtedness, risks associated with litigation, regulation or governmental or regulatory inquiries or investigations involving the Company, changes to our share repurchase plans, and our ability to accurately estimate its future results and implement its strategy for cost savings and growth. Other unknown or unpredictable factors could also have material adverse effects on the Company's performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. 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, 2013, included under headings such as "Forward-Looking Statements", "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", and in other filings and furnishings made by the Company with the SEC from time to time. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.

This release includes financial measures such as Adjusted EBITDA and free cash flow, as well as metrics 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 5 and Table 6 of this release. The Company believes that these non-GAAP measures are useful in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Adjusted EBITDA, free cash flow and income (loss) before income taxes, net income (loss) and diluted earnings per share, excluding certain items, are income (loss) before income taxes, net cash provided by operating activities, net income (loss), net income (loss) and diluted earnings per share, respectively. Because of the forward-looking nature of the Company's forecasted non-GAAP measures, specific quantifications of the amounts that would be required to reconcile forecasted income (loss) before income taxes, net cash provided by operating activities, net income (loss) and diluted earnings per share are not available. The Company believes that there is a degree of volatility with respect to certain of the Company's GAAP measures which preclude the Company from providing accurate forecasted GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP measures to forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.

CONTACT: Media Contact:

         John Barrows

         (973) 496-7865

         PR@avisbudget.com

         

         Investor Contact:

         Neal Goldner

         (973) 496-5086

         IR@avisbudget.com