Avis Budget Group (CAR) reported Monday it had swung to a first-quarter loss as the car hire giant shouldered costs for its acquisition of Avis Europe. The added boost of the purchase helped the car rental company book a double-digit surge in revenue and core earnings growth.
For the three months ended March 31, Avis posted a loss of $23 million, or 22 cents per share, compared with a year-earlier profit of $7 million, or 6 cents per share. After items, the company reported a core profit of 12 cents per share in the latest period, up from 11 cents a year earlier.
Revenue surged 31% to $1.62 billion, roughly matching the $1.6 billion it had predicted for the quarter.
"We are pleased with our first quarter results, with organic revenue growth ahead of enplanement growth and Adjusted EBITDA reaching record levels, excluding certain items," Avis Budget's chairman and chief executive officer Ronald L. Nelson said.
"Travel demand across the majority of our markets remains healthy, and residual values of our vehicles in North America have proven to be significantly stronger than our original expectations. Our integration of Avis Europe is progressing as expected, and we remain confident in our ability to achieve $35 million in annual synergy benefits by the first anniversary of the acquisition."
Avis last week rolled out a far stronger-than-expected earnings forecast for the year ahead, saying it is seeing strong travel demand and a robust market for selling its used vehicles. Revenue from the company's North American business was up 4% at $1.04 billion as increased volume and ancillary revenue helped offset weaker pricing.
The company's international operations, meanwhile, saw revenue more than triple to $510 million with a boost from Avis Europe. Excluding the acquisition, Avis said revenue rose 13% on a 6% increase in volume and a 5% increase in pricing due to foreign-currency movements.
Looking ahead, the company said it expects its full-year 2012 revenue to be approximately $7.3 billion to $7.6 billion and adjusted EBITDA to be approximately $825 million to $875 million, excluding certain items.
Avis Budget expects that its North America fleet costs will decrease 3% to 8% on a per-unit basis in 2012 compared to the prior year.