Avis Budget Group, Inc. (CAR)
Q3 2010 Earnings Conference Call
November 4, 2010 9:00 AM ET
Neal Goldner - VP, IR
Ron Nelson – Chairman and CEO
David Wyshner – EVP and CFO
John Healy – North Coast Research
Emily Shanks – Barclays Capital
Chris Agnew – MKM Partners
Neil Portus – Goldman Sachs
Chris Dougherty – Oppenheimer & Co.
Michael Millman – Millman Research Associates
Previous Statements by CAR
» Avis Budget Group, Inc. Q2 2010 Earnings Call Transcript
» Avis Budget Group, Inc. Q1 2010 Earnings Call Transcript
» Avis Budget Group, Inc. Q4 2009 Earnings Call Transcript
Thank you. Good morning to everyone and thank you for joining us. On the call with me are Ron Nelson, our Chairman and Chief Executive Officer; and David Wyshner, our Executive Vice President and Chief Financial Officer.
Before we discuss our results for the third quarter, I would like to remind everyone that the company will be making statements about its future results and expectations which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on the current expectations and the current economic environment and are inherently subject to economic, competitive, and other uncertainties and contingencies beyond the control of management.
You should be cautioned that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in our earnings release which was issued last night and our second quarter Form 10-Q, and our Form 10-K, and in other SEC filings.
If you did not receive a copy of our press release, it is available on our website at avisbudgetgroup.com. Also, certain non-GAAP financial measures will be discussed in this call and these measures are reconciled to the GAAP numbers in our press release.
Now I’d like to turn the call over to Avis Budget Group’s Chairman and Chief Executive Officer Ron Nelson.
Thanks, Neal, and good morning to all of you. While many of the people listening to this call probably spend a lot of time dissecting every word regarding the Dollar Thrifty situation, our strong third quarter results clearly illustrate that for the 21,000 Avis Budget Group employees around the world, it has thankfully been business as usual. Amidst the challenge and distraction that a lengthy M&A process necessarily involves, the store was being minded. We continued our focus on driving growth, profitability, and margins. We continued our important work on improving the rental experience at every customer touch point, and we continued to diligently pursue cost-savings and productivity opportunities that still exist within our infrastructure.
I do want to comment briefly on the Dollar Thrifty opportunity upfront so that we can then focus most of our time this morning on our business fundamentals. As you know, in July we submitted a bid to acquire Dollar Thrifty Automotive Group for $46.50 per share in cash and stock, and in September increased our offer to approximately $53 a share. On September 30th, Dollar Thrifty shareholders voted not to approve the proposed merger with Hertz, and Hertz subsequently terminated its merger agreement with Dollar Thrifty and withdrew its anti-trust application for the FTC.
On October 5th, we and Dollar Thrifty announced that we had agreed to cooperate to pursue anti-trust clearance of our proposed acquisition of DTG. We also affirmed our commitment to pursue an acquisition of Dollar Thrifty on the previously announced terms. Dollar Thrifty represents a substantial growth opportunity for our company, and our offer represents a premium evaluation of the Dollar Thrifty shareholders. Beyond that, there isn’t much to report. We continue to diligently pursue the proposed transaction. We and Dollar Thrifty have provided the FTC with literally millions of pages of documents and data. We believe several of our competitors, licensee and others, have also provided large amounts of requested information to the government.
The FTC is reviewing that information. And while we continue to have a regular productive dialog with the FTC, they have not provided us with a view as to whether, when, or under what condition they will approve our proposed transaction. We do believe it is appropriate for them to take the time to understand the fundamentals and competitive realities of the vehicle rental business. There are a significant number of details that cause our industry to differ sharply from others, and we continue to work cooperatively with the FTC to bring those details into clearer focus.
With that, we don’t intend to say anything else or to speculate regarding the Dollar Thrifty transaction on this call. So we’d ask you to refrain from asking any related questions during the Q&A.
Turning to our business, we’re happy to report strong third quarter results that reflect positive revenue growth, strengthening traveling trends, continued cost control, expanded margins, and increased earnings. I think the headline speaks for itself. We delivered our best quarterly bottom line performance since 2005 with adjusted EBITDA of $219 million, up over 30% excluding certain items. Year-to-date, our international EBITDA is up 31%, our domestic EBITDA is up 53%, and our truck EBITDA is up 114%, all on an adjusted basis. The risk of being immodest (ph), we think this growth is a significant accomplishment than an otherwise tepid economic recovery.