Hertz Reports Record Third Quarter Revenue and Earnings
The Hertz Corporation
Worldwide vehicle rental and leasing revenue in the Third Quarter was $1.160 billion, an increase of 5.7% over the comparable period last year, or an increase of 8.7% before the effects of foreign exchange translation. Worldwide industrial and construction equipment rental revenue was $269 million, a 15.5% increase over the same period last year, or an increase of 17.0% before the effects of foreign exchange, and same market revenue increased 4.0% over last year.
The Company expects diluted net income per share of $3.33 for the full year 2000, which includes a one-time net gain, related to the disposal of real property, of $0.05 per share diluted reported in the Second Quarter of this year. The Company continues to expect a weaker First Quarter of 2001 than the comparable period in 2000, but expects to achieve the average analysts' estimate of $3.42 net income per share for the full year 2001.
Craig R. Koch, President and Chief Executive Officer, said "we are pleased that we have achieved record earnings for the eleventh consecutive quarter. While it is still early in our 2001 planning cycle, and allowing for some economic moderation and a weaker First Quarter, we remain comfortable with the full year 2001 consensus estimate, which would be the eighth consecutive record year for Hertz. We are encouraged that the fundamentals, including pricing opportunities, support full-year profit growth for 2001."
DOMESTIC VEHICLE RENTAL, which includes airport and suburban markets, had pre-tax earnings for the Third Quarter of $162.5 million, up 3.9% over last year, generating an 18.8% margin. Revenues in the Third Quarter totaled $866.4 million, an increase of 7.4% over last year. Rental revenue in the Third Quarter grew by 7.7%, comprised of 9.7% transaction day growth, partially offset by a revenue per day decline of 1.9% compared with Third Quarter 1999. At airport locations, revenue per day declined by 0.4% year-over-year. There are now 634 suburban locations, an increase of 149 year-to-date, which generated Third Quarter revenue of $116 million, or a 32.7% increase year-over-year.
The Company expects that revenue per day will be down 2% to 3% in the Fourth Quarter 2000 with continued solid growth in transactions days. The outlook for 2001 is for no significant increases in revenue per day early in the year, compared with strong revenue per day growth in the same period of 2000. Growth in revenue per day is more likely to occur in the Second Quarter and later in 2001. These assumptions yield the following estimates:
U.S. Car Rental Consolidated Airport Revenue Per Day Transaction Days Revenue Per Day Q4-2000 (2%) to (3%) +8.5% to +9.5% (1.5%) to (2.5%) FY-2001 Flat to +1% +7% to +8% +1% to +2%
WORLDWIDE INDUSTRIAL AND CONSTRUCTION EQUIPMENT RENTAL generated pre-tax income of $22.1 million, down from the same period in 1999, but improved from the Second Quarter of 2000. The Company expects this business will achieve overall revenue growth in 2000 of 13% to 15%, with the pre-tax margin in the mid-single digit range. Pricing, down 4% in the first half of 2000, leveled off to a 1% decrease year-over-year. To improve profitability, the Company has slowed the growth of its network, implemented a staff restructuring, continued to focus on revenue management and mix-of-business, adopted a conservative 2001 fleet purchase program, and increased prices on high utilization equipment where market conditions warranted.
The Company expects worldwide equipment rental revenue to grow by 9% to 11% in 2001, with an improvement in pre-tax margin as more of its newer locations mature and cost reductions flow through to earnings. Network expansion will continue, focusing on specific markets with high revenue and profit opportunity. The Company noted that significant growth opportunities exist through market share improvement and the growth of equipment rental as an alternative to ownership.
INTERNATIONAL VEHICLE RENTAL AND LEASING generated total reported Third Quarter revenue of $293 million, about the same as the comparable period last year. However, the revenue increase was $35 million, or 12.4%, before the effect of foreign exchange. Rental revenue in the Third Quarter increased 13.5%, before foreign exchange, which is comprised of revenue per day and transaction day growth of 1.4% and 11.9%, respectively, led by strong transaction day growth in Europe, Brazil and the Caribbean. International pre-tax profits in the Third Quarter were $56.6 million, up 10.2% from the comparable period last year, including the adverse effects of foreign exchange and business disruptions related to fuel price disputes in several European countries. Also, the Company announced that on August 31, 2000 it had transferred, at the estimated fair value of $99.2 million, $16.4 million more than net book value, its car leasing businesses in Australia, New Zealand and the U.K. to Axus International, a subsidiary of Ford Motor Credit, that Hertz has managed under contract since January 2000.
The Company expects revenue per day for international car rental to be flat to up 1% during the Fourth Quarter and transaction day growth to be up 8% to 9% for the Quarter. The preliminary outlook for the full year 2001 is for revenue per day to be up 1% to 2% over the year 2000, with transaction day growth of 9% to 10% over the prior year.
Headquartered in Park Ridge, New Jersey, Hertz operates from approximately 6,500 locations in the U.S. and in over 140 foreign countries.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, forecasts and assumptions and involve risks and uncertainties, some of which are outside of the Company's control, that could cause actual outcomes and results to differ materially from current expectations. These risks and uncertainties include, among other things, price and product competition, changes in general economic and business conditions, wage inflation, economic and competitive conditions in markets and countries where the Company's customers reside and where the Company and its licensees operate, changes in capital availability or cost, costs and other terms related to the acquisition and disposition of automobiles and equipment, and certain regulatory and environmental matters. These forward-looking statements represent the Company's judgments as of the date of this release. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
THE HERTZ CORPORATION CONSOLIDATED STATEMENT OF INCOME (In Thousands of Dollars) Unaudited Three Months As % of Ended September 30, Total Revenue 2000 1999 2000 1999 Revenue $1,437,756 $1,344,808 100.0% 100.0% Expenses: Direct operating 600,000 564,976 41.7% 42.0% Depreciation of revenue earning equipment 367,393 336,773 25.6% 25.0% Selling, general and administrative 115,725 116,650 8.0% 8.7% Interest - net 119,046 93,714 8.3% 7.0% Total expenses 1,202,164 1,112,113 83.6% 82.7% Income before income taxes 235,592 232,695 16.4% 17.3% Income taxes 92,829 93,659 6.5% 7.0% Net income $142,763 $139,036 9.9% 10.3% Earnings per share: Basic $1.33 $1.29 Diluted $1.33 $1.28 Weighted average number of shares outstanding: Basic 107,427,227 108,032,375 Diluted 107,544,367 108,551,164 Nine Months As % of Ended September 30, Total Revenue 2000 1999 2000 1999 Revenue $3,862,288 $3,545,152 100.0% 100.0% Expenses: Direct operating 1,708,496 1,571,510 44.2% 44.3% Depreciation of revenue earning equipment 1,007,491 921,634 26.1 % 26.0% Selling, general and administrative 341,068 340,134 8.8% 9.6% Interest - net 307,335 250,211 8.0% 7.1% Total expenses 3,364,390 3,083,489 87.1% 87.0% Income before income taxes 497,898 461,663 12.9% 13.0% Income taxes 195,104 185,963 5.1% 5.2% Net income $302,794 $275,700 7.8% 7.8% Earnings per share Basic $2.81 $2.55 Diluted $2.81 $2.54 Weighted average number of shares outstanding: Basic 107,616,838 108,005,161 Diluted 107,790,428 108,685,605 BALANCE SHEET DATA (In Thousands of Dollars) Unaudited September 30, 2000 1999 Revenue earning equipment: Cars $5,790,113 $5,344,510 Other equipment 1,777,254 1,572,891 Total assets 11,191,424 10,159,373 Total debt 7,345,085 6,566,201 Stockholders' equity 1,917,024 1,636,705 THE HERTZ CORPORATION SUPPLEMENTARY INFORMATION (In Millions of Dollars) Unaudited Three Months Ended September 30, 2000 1999 % Inc.- Dec. Segment Results Revenue Vehicle Rental and Leasing Domestic $ 866.4 $ 806.9 7.4% International 293.3 290.5 1.0% Worldwide Vehicle Rental and Leasing 1,159.7 1,097.4 5.7% Industrial and Construction Equipment Rental 269.1 233.1 15.5% Corporate and Other 9.0 14.3 -37.1% Total $1,437.8 $1,344.8 6.9% Pretax Income Vehicle Rental and Leasing Domestic $ 162.5 $ 156.4 3.9% International 56.6 51.3 10.2% Worldwide Vehicle Rental and Leasing 219.1 207.7 5.5% Industrial and Construction Equipment Rental 22.1 32.5 -31.9% Corporate and Other (5.6) (7.5) 25.4% Total $ 235.6 $ 232.7 1.2% Vehicle Rental and Leasing Segment Operating Metrics Domestic Car Rental Operations (Consolidated)* Rental Revenue $ 864.8 $ 803.1 7.7% Transaction Days, in millions 20.98 19.12 9.7% Revenue Per Day, in whole dollars $ 41.21 $ 42.00 -1.9% International Car Rental Operations - Before F/X Rental Revenue $ 296.0 $ 260.8 13.5% Transaction Days, in millions 8.52 7.62 11.9% Revenue Per Day, in whole dollars $ 34.73 $ 34.24 1.4% Worldwide Car Rental Operations - Before F/X Rental Revenue $1,160.8 $1,063.9 9.1% Transaction Days, in millions 29.51 26.74 10.3% Revenue Per Day, in whole dollars $ 39.34 $ 39.79 -1.1% ______________________________________________________________________ | | | | | *Domestic Car Rental Operations (a) | | | | Suburban Car Rental | | Revenue $115.8 $ 87.3 32.7% | | Airport Car Rental Operations | | Rental Revenue $751.8 $712.7 5.5% | | Transaction Day Growth 5.9% | | Revenue Per Day Growth -0.4% | | | | Commercial Rentals | | Transaction Day Growth 2.8% | | Revenue Per Day Growth 0.3% | | Discretionary Rentals | | Transaction Day Growth 9.6% | | Revenue Per Day Growth -1.2% | | | | (a) Based on the Company's statistical tracking system. | |______________________________________________________________________| Industrial and Construction Equipment Rental Segment Operating Metrics Worldwide Same Market Revenue Growth - Before F/X +4.0% United States Rental Rate Change -1.1%
SOURCE: Hertz Corporation
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