(Bloomberg) — Avis Budget Group Inc. reported a record first-quarter profit, which sent shares up by double digits in after-hours trading on strong results, helped by a recovery in U.S. travel demand and near-record used-car prices.
The rental car company reported adjusted earnings per share on Monday of $9.99, tripling analyst estimates as U.S. rentals nearly matched the first quarter in 2019, before the Covid-19 pandemic brought travel to a halt. Soaring used-car prices for vehicles Avis offloaded cut per-vehicle fleet costs by 90%, padding profit margins.
“Despite the impact of Omicron on the first half of the quarter, our team was able to quickly pivot to manage the significantly increasing demand during the back half of the quarter,” Joe Ferraro, Avis Budget Group’s chief executive officer, said in a statement. “We focused on diligent fleet management and continued cost optimization to generate a new record first quarter adjusted Ebitda.”
Shares of the Parsippany, New Jersey-based company pared a postmarket gain of as much as 14%, trading up 5.5% to $296.06 as of 5:42 p.m. in New York. The stock is up 35% so far this year.
High used-car prices for vehicles cut deprecation costs to almost nothing. A year ago, monthly depreciation totaled $208 per car, but that fell to just $20 a car in the the most recent quarter.
Revenue also beat estimates handily, rising 77% to $2..43 billion. Demand for rental vehicles climbed above pre-pandemic levels in the U.S. Avis reported more than 27,000 rental days, compared to under 25,000 in the first quarter of 2019. But International travel lagged, with just 8,581 rental days compared to 12,500 three years ago.
Avis said its utilization rate for the quarter — a measure of how much of its fleet is being rented out — was 67.4%, compared to 69.4% two years ago.
(Updates with utilization rate in final pargraph. An earlier version corrected spelling of company’s name in headline)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
