Avis Budget Group (CAR) Q4 2014 earnings summary

Executive summary

• Record 2014 results: net revenue rose 7% to $8.485B and Adjusted EBITDA increased 14% to $876M; North America, International and Truck Rental each grew Adjusted EBITDA.

• Net income was $245M and diluted EPS $2.22 reported; excluding specified items, net income was $327M and diluted EPS $2.96, up 35% YoY.

• Growth reflected higher rental volume and pricing, acquisitions and continued efficiency work, while higher fleet costs and currency impacts offset part of the gains.

Financial highlights

• Net revenue increased 7% to $8.485B; vehicle rental revenue rose 6% to $6.026B and other revenue rose 10% to $2.459B.

• Rental days increased 5% and pricing rose 1% overall; ancillary revenue grew 9%, with $67M of incremental revenue from Zipcar.

• Net income was $245M versus $16M in 2013; reported diluted EPS was $2.22 versus $0.15, including specified debt extinguishment, restructuring and transaction costs.

• Operating cash flow was $2.579B; cash and cash equivalents ended the year at $624M, down $69M from year-end 2013.

Outlook and guidance

• 2015 worldwide rental and car-sharing demand was expected to increase, likely amid modest and uneven global economic growth; fleet access was expected to remain adequate.

• Planned further pricing increases in 2015 to improve returns and profitability; the Demand-Fleet-Price tool was slated for rollout in Europe and Australia.

• Expected 2015 non-vehicle property and equipment additions were ~$200M; plans included refinancing the remaining $223M of 9.375% Senior Notes due 2020.

• Management anticipated using most or all of the $284M remaining authorized share repurchase capacity in 2015; vehicle purchase commitments for the next 12 months totaled $6.7B.