Avis (CAR) Reports Wider Q1 Loss, Provides '17 Guidance

Avis Budget Group Inc. (NASDAQ:CAR) reported first-quarter 2017 results wherein adjusted loss per share was 94 cents compared with a loss of 28 cents in the prior-year quarter. Adjusted loss was also wider than the Zacks Consensus Estimate of a loss of 51 cents.

GAAP loss for the quarter was $1.25 cents per share compared with loss of 53 cents in the prior-year quarter, due to decline in revenues.

Revenues for the quarter were $1,839 million compared with $1,881 million in the year-ago quarter. Revenues missed the Zacks Consensus Estimate of $1,854 million. Revenues declined primarily due to higher-than-expected fleet costs and continued pricing pressures.

Adjusted loss before interest, tax, depreciation and amortization was $27 million against adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $44 million in the year-ago quarter, driven by lower pricing and higher per-unit fleet costs in the Americas segment.

Segmental Performance

Americas reported revenues of $1,314 million compared with $1,364 in the prior-year quarter, primarily due to a 1% increase in rental days, offset by a 4% fall in pricing. Per-unit fleet costs increased 7% to $333 per month.

The International segment’s revenues were up 2% year over year to $525 million, due to the acquisition of France Cars, partially offset by a 6% decrease in pricing, including a 2% negative impact from currency movements.

Financials

Avis ended the quarter with cash and cash equivalents of $923 million. As of Mar 31, 2017, the company’s shareholders’ equity was $221 million. During the year, the company generated $447 million as cash flow from operating activities. Avis repurchased 1.5 million shares worth $50 million.

Guidance

Full-year 2017 revenues are expected to be in the range of $8.8−$8.95 billion. Movements in currency exchange rates are currently expected to hurt revenue growth by approximately $75 million.

Per-unit fleet costs are expected to be in the range of $285−$295 per month in 2017 compared with $285 in 2016. In the Americas segment, per-unit fleet costs are expected to be between $317 and $327. In the International segment, per-unit fleet costs are expected to be between $214 and $224 per month.

Adjusted EBITDA is expected to be in the range of $800−$880 million. For 2017, adjusted earnings per share are expected to be between $2.85 and $3.50. The company expects to repurchase $300 million or more stocks in 2017.

Aviscurrently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include CBIZ, Inc. (NYSE:CBZ) , S&P Global, Inc. (NYSE:SPGI) and Huron Consulting Group Inc. (NASDAQ:HURN) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CBIZ topped estimates twice in the trailing four quarters with an average earnings surprise of 18.4%.

S&P Global has a long-term earnings growth expectation of 12.3%. It has a positive earnings history, beating estimates in each of the trailing four quarters.

Huron has a long-term earnings growth expectation of 13.5%. It has a positive earnings history, beating estimates thrice in the trailing four quarters.

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