Avis Budget Group (CAR) Q4 2016 earnings summary

Executive summary

• FY16 revenue rose 2% to $8.659B, the seventh consecutive year of revenue growth; net income fell 48% to $163M and Adjusted EBITDA declined 7% to $838M.

• More than 39M rental transactions were completed across ~180 countries; increased volume was offset by lower pricing, higher per-unit fleet costs and currency headwinds.

Financial highlights

• Net revenue was $8.659B vs. $8.502B; rental days increased 3%, while pricing decreased 2%, including a $36M negative currency impact.

• Net income was $163M vs. $313M; diluted EPS was $1.75 vs. $2.98, including restructuring, debt extinguishment, legal and transaction-related charges.

• Adjusted EBITDA was $838M, down $65M YoY; reported operating cash flow was $2.629B, and free cash flow was $472M.

Outlook and guidance

• Expected Adjusted EBITDA margin expansion of 3–5 points to 13%–15% over five years, supported by margin, efficiency and growth initiatives.

• For 2017, worldwide rental and car-sharing demand was expected to increase amid modest, uneven global growth; pricing increases would be pursued to improve returns and profitability.

• Planned 2017 non-vehicle property and equipment additions of ~$210M; most of the ~$300M remaining share-repurchase authorization was expected to be used during 2017.