PARSIPPANY, N.J. — After what has been a very busy period for Avis Budget Group as new developments continue to emerge in its efforts to acquire Dollar Thrifty Automotive Group, the company's top executive said this week that in the second quarter Avis moved closer to achieving its margin and profitability targets.

Avis' net income came in a $26 million, up from a $6 million loss in the second quarter of 2009. Pre-tax income was $29 million. In the second quarter of 2009, it was a $2 million loss.

Not including restructuring or transaction-related expenses, Avis posted adjusted EBITDA of $98 million during the quarter, up from $67 million in the year-ago period. And with the same items taken out of consideration, Avis saw pre-tax income of $34 million, up from $6 million from the prior-year period.

Avis also took in $1.3 billion in revenue, down 1 percent year-over-year.

Avis noted that there were gains in adjusted EBITDA and margins in all three of its business segments, including domestic car rental, international car rental and truck rental.

"Our second-quarter results demonstrate that we are continuing to make progress toward our goal of restoring margins and increasing profitability," explained Ronald Nelson, the company's chairman and chief executive officer.

"Our rental-day volume comparisons continue to improve each quarter; our per-unit fleet costs have declined; and our highly profitable ancillary revenues again increased on a per-rental-day basis," he added. "In addition, our cost-saving initiatives are generating meaningful benefits amid the current moderate economic recovery.

"We're encouraged that improving revenue trends, incremental cost savings and declining per-unit fleet costs are providing us with the opportunity to show solid earnings growth this year," Nelson continued.

Looking at the company's executive summary, there was a 2-percent dip in Avis' total car rental revenues. Pushing this decline for the most part were rental days falling by 5 percent. The average daily rate climbed 1 percent, offsetting the rental-day drop.

"In addition, domestic ancillary revenue increased 5 percent per rental day in the quarter," officials noted. "Average daily rate decreased less than 1 percent compared with the prior year, excluding the effects of foreign currency."

Thanks to per-unit depreciation costs falling 11 percent and the average fleet dipping 3 percent, there was a 13-percent drop-off in car rental depreciation costs, according to the company. 

Other operating expenses — not including gas — were at 47.1 percent of revenue, which is a dip of 100 basis points. This was due largely to measures Avis put in place relating to cost-saving and productivity improvement.

SG&A expenses — without including the foreign currency impact — showed a $6 million year-over-year jump.  Driving this was higher marketing costs and other expenses. The cost savings partially offset those expenses, officials said. 

Continuing on, Avis offered a breakdown of each of its business units, beginning with the domestic car rental operations.

Domestic Car Rental

Revenue here was down 5 percent year-over-year at $981 million. Officials attributed most of this drop off to a decrease in rental days, which fell 6 percent.

There was less than a 1-percent dip in average daily rates for the quarter. However, the price increase at the start of June pushed up the average daily rate for that particular month.

And although rental volume fell, adjusted EBITDA was at $52 million, a 41-percent upswing. This was spurred by per-unit depreciation costs falling 14 percent and cost-cutting measures. Moreover, there was a 5-percent gain in ancillary revenue on a per-rental-day basis.

Included in the adjusted EBITDA costs for this period are $2 million in restructuring expenses. Included in the year-ago period was $6 million in expenses for the same purpose.

International Car Rental

Moving along, revenue in this segment was at $212 million, up 16 percent year-over-year. This was pushed up mostly by the average daily rate increase, as this measure climbed 13 percent. When foreign-exchange impacts are taken out of the equation, though, there was a relative flatness in the average daily rate.

Adjusted EBITDA for the international car rental segment came in at $32 million, a gain of 78 percent year-over-year. As far as the major causes for this gain, officials pointed to a decrease in per-unit depreciation costs on a constant-currency basis and the exchange rate having a favorable impact of $9 million.

Officials also pointed out that the adjusted EBITDA from a year ago took into account restructuring expenses of $1 million.

Truck Rental

Revenue for the truck rental segment totaled $100 million, up 3 percent from year-ago figures. This was thanks mostly to the average daily rate climbing 2 percent and rental days moving upward 1 percent.

And due to the gain in revenue, along with lower per-unit fleet costs and smaller-interest expenses, adjusted EBITDA jumped 78 percent to $16 million.

The year-ago adjusted EBITDA of $9 million included restructuring costs of $1 million.

2010 Projections

Finally, the company also looked at what is expected for the rest of 2010. Avis anticipates that it will see strides made in the year-over-year volume trends. Avis is looking to continue aligning its rental fleet size with retail demand.

Avis projects that there will be about an 8 percent to 10 percent drop in domestic vehicle deprecation costs per unit for full-year 2010.

"The company is continuing its efforts to reduce costs and enhance productivity and expects that its cost-saving initiatives will provide at least $50-70 million of incremental savings in 2010 compared to 2009, bringing the total annual savings from the company's actions to $465-485 million in 2010," officials shared.