Budget Group Completes Reshaping of Its North
American Car and Truck Rental Business; Executes on
Restructuring and Refranchising Plan in Europe; And Reports
Fourth Quarter and Year-End Results
LISLE, Ill., March 9 Today, Budget Group, Inc.
released its fourth quarter and year-end 2000 results, outlined its multi-step
financing plan and provided guidance for 2001.
"Our announcement today reflects the full and complete reshaping of the
Company to a singular $2.4 billion core car and truck rental business. Over
the last 12 months we consolidated and realigned our North American Vehicle
Rental Operations and have transformed the Company from seven independent
operating units into two segments operating under a single management
structure. In Europe, we are executing our franchising and scale-back
strategy to substantially reduce our financial and operating risk, while
maintaining a strong franchising network representing Budget in every
strategic market in Europe. As a result, during the fourth quarter 2000, we
took a number of charges, most of which were non-cash. We recognize the
magnitude of these charges, however, they are a necessary step to strengthen
the Company's future earnings potential. All of these initiatives will result
in an estimated $125 million improvement in earnings for 2001 over 2000.
Earlier this year our banks approved our business plan, and in February, they
granted an amendment to our revolving credit facility allowing us to put in
motion the remaining fleet financings for 2001 and beyond," stated Sandy
Miller, chairman and chief executive officer for Budget Group, Inc.
For the fourth quarter 2000, the Company reported revenue of $538.0
million and a pre-tax loss from continuing operations of $149.4 million before
charges.
During the quarter, the Company took charges totaling $399.0 million.
Eighty-four percent of the charges were non-cash items. The cash impact of
the charges attributable to U.S. operations is approximately $23 million, and
approximately $41 million for Europe, only moderately affecting the cash
position and cash flow of the Company in 2001. The charges generally fell
into four categories:
- Charges related to the European operating model change, including the
write-off of goodwill and IT systems in Europe ($200 million)
- Charges related to asset valuations ($56 million), including an
adjustment to corporate equity investments
- Adjustments to truck inventory valuations resulting from a weak
wholesale market ($45 million)
- Charges related to uncollectible accounts receivable ($48 million)
The amount of the charges and their impact on cash flow was within the
scope of the announced amendment to the Company's revolving credit facility.
After the charges, the Company posted a fourth quarter pre-tax loss from
continuing operations of $548.4 million. This compares to a pre-tax loss of
$128.5 million for the prior year fourth quarter, which included charges of
$105.4 million largely related to work-force reductions, the integration of
Premier Car Rental into Budget and systems-related issues in the U.S. and
Europe.
For the full year ended December 31, 2000, the Company reported revenue of
$2,457.4 million and a pre-tax loss from continuing operations before charges
of $167.6 million.
Update on Fleet Financing
The Company recently received approval of an amendment to its revolving
credit facility. The credit facility is used primarily to provide credit
enhancement (letters of credit) for the company's fleet borrowings. The
amendment restores availability up to $550 million under the facility, which
is $85 million higher than the level previously allowed.
Receiving this amendment is a major milestone in the Company's multi-step
financing plan to fund its fleet needs for 2001 and beyond. The Company will
proceed with asset-backed offerings and other fleet financings necessary to
fund its peak fleet needs. These financings will replace debt that matures
over the next 10 months.
Fourth Quarter Operating Update
Revenue for the Domestic Car Rental segment was $339.6 million compared to
$343.9 million in the prior year fourth quarter. Before charges, fourth
quarter operating loss for domestic car rental was $7.6 million. Car rental
transactions for the quarter were up 0.8%, while revenue per day declined
1.8%. Utilization increased 20 basis points.
Mark Sotir, president and chief operating officer commented, "For the year, we
increased operating income, despite a very challenging environment during the
fourth quarter. Depressed car rental industry pricing was more than offset by
our continued cost-reduction efforts."
The Truck Rental segment in fourth quarter 2000 had revenue of
$168.2 million and an operating loss of $16.9 million before charges.
Utilization increased 70 basis points and fleet declined 7.2% compared to
prior year. Truck rental volume was down 5.9% and revenue per unit increased
slightly.
Outlook for 2001
Pre-tax income for 2001 domestic car and truck rental operations is
projected to be approximately $5 million, or earnings per share of 13 cents.
This represents an improvement of approximately $65 million over 2000. With
the impact of International, the Company expects a pre-tax loss of $35 to
$40 million, or a loss per share of $1.05 to $1.18. The negative impact on
earnings from the International division, primarily in the first quarter, will
diminish throughout the year as the Company completes its re-franchising plan.
The full effect of the re-franchising strategy in Europe, coupled with the
continued operating improvements in the North American car and truck rental
operations are expected to result in significantly improved earnings in
2002 and positive earnings per share.
For the full year, domestic car rental operating margin is expected to
increase 100 to 120 basis points compared to prior year. Car rental volume is
projected to be up 3 to 4%, while pricing is expected to be flat to up
1% compared to 2000.
For the first quarter 2001, the Company expects domestic car rental volume
to increase 2 to 3% and revenue per day to be down 2 to 3% as a result of the
pricing environment.
The full-year truck rental operating margin is projected to be between
10 and 12%. The increase in margin over prior year is expected to be driven
primarily by further fleet contraction, reductions in maintenance costs and an
anticipated 300 to 400 basis point improvement in utilization. Although the
truck fleet is projected to be down approximately 8%, volume is expected to
decline only slightly. Pricing is expected to be flat to up 1% as compared to
2000.
During the first quarter of 2001, the Company anticipates truck revenue
per day to be flat and volume to decline 3 to 4% versus prior year. An
anticipated reduction in fleet size of 9 to 10% and a subsequent improvement
in utilization of approximately 300 basis points is expected to drive a modest
year-over-year increase in first quarter operating income.
The company will host a conference call to discuss 2000 results and
2001 guidance on Friday, March 9, at 9:00 a.m. central time. The call will
also be audio-cast on its Web site at http://www.budget.com .
Budget Group, Inc. owns Budget Rent a Car Corporation and Ryder TRS, Inc.
Budget is the world's third largest car and truck rental system and Ryder TRS
is the nation's second largest consumer truck rental company. For more
information, visit the Company's Web site at http://www.budget.com.
Statements made in this press release that are not historical in nature
may include 'forward-looking statements' within the meaning of the federal
securities laws. It is important to note that these statements involve a
number of risks, uncertainties and other factors that could cause Budget
Group, Inc.'s actual results to differ materially from those projected in such
forward-looking statements. The expectations relating to the results of
operations for the fourth quarter of 2000 and outlook for 2001 are estimates
or expectations based on current assumptions which management believes to be
reasonable at this time. In addition, other risks to our business include
additional risk of losses from international operations; seasonality;
competition; general economic conditions; and the availability and terms of
financing for our business. These factors and conditions could be
substantially different than we currently anticipate, and the Company's
business could be affected by other factors, so that the Company's actual
future activities and results of operations may differ materially from the
forward-looking statements we have made in this press release. Additional
information concerning such matters is contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999, and other documents
subsequently filed by the Company with the SEC, all of which are available
from the SEC.
BUDGET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Period Ending December 31
(in thousands)
4th quarter Year to Date
2000 1999 2000 1999
OPERATING REVENUE:
Vehicle rental $515,038 $547,424 $2,354,378 $2,237,254
Royalty fees and other 22,930 25,768 103,000 112,203
Total operating
revenue 537,968 573,192 2,457,378 2,349,457
OPERATING EXPENSES:
Direct vehicle and
operating 423,624 270,420 1,189,869 976,894
Depreciation - vehicle 145,568 147,998 594,259 557,928
Selling, general and
administrative 379,623 202,143 829,735 591,299
Amortization and
non-vehicle
depreciation 65,804 18,560 128,381 69,479
Total operating
expenses 1,014,619 639,121 2,742,244 2,195,600
OPERATING INCOME (LOSS) (476,651) (65,929) (284,866) 153,857
OTHER EXPENSE:
Vehicle interest, net 57,892 47,478 226,131 182,142
Other interest, net 9,160 10,543 36,823 26,679
Total other expense 67,052 58,021 262,954 208,821
LOSS BEFORE INCOME
TAXES (543,703) (123,950) (547,820) (54,964)
Provision (benefit)
for income taxes 13,109 (52,400) 3,688 (23,826)
Distribution on trust
preferred securities 4,688 4,531 18,750 18,750
LOSS FROM CONTINUING
OPERATIONS (561,500) (76,081) (570,258) (49,888)
DISCONTINUED OPERATIONS:
LOSS FROM OPERATIONS
OF BUSINESS SEGMENTS
TO BE DISPOSED OF
(Net of income taxes) -- (4,570) -- (327)
ESTIMATED LOSS FROM
DISPOSAL OF BUSINESS
SEGMENTS, INCLUDING
PROVISION FOR
OPERATING LOSSES
DURING PHASE OUT
(Net of income taxes
in 1999) (34,353) (14,325) (34,353) (14,325)
(34,353) (18,895) (34,353) (14,652)
NET LOSS $(595,853) $(94,976) $(604,611) $(64,540)
4th quarter Year to Date
2000 1999 2000 1999
Weighted average
number of shares
outstanding -
Basic and
Diluted 37,255,000 37,175,000 37,255,000 36,430,000
Earnings per
share - Basic
and Diluted
Loss from
continuing
operations $(15.07) $(2.05) $(15.31) $(1.37)
Loss from
operations of
discontinued
segments to
be disposed of
(Net of income
taxes in 1999) -- $(0.12) -- $(0.01)
Estimated loss on
disposal of
discontinued
segment (Net of
income taxes in
1999) $(0.92) $(0.38) $(0.92) $(0.39)
Net loss $(15.99) $(2.55) $(16.23) $(1.77)
BUDGET GROUP, INC.
SEGMENT REPORTING
Period Ending December 31
(in thousands)
4th quarter Year to Date
2000 1999 2000 1999
REVENUE:
Car Rental -
Domestic $339,582 $343,943 $1,551,068 $1,442,826
Car Rental -
International 66,160 68,247 296,587 259,960
Truck Rental 168,159 180,666 733,988 734,877
Eliminations (35,933) (19,664) (124,265) (88,206)
Total Revenue $537,968 $573,192 $2,457,378 $2,349,457
OPERATING INCOME (LOSS):
Car Rental - Domestic $(97,808) $(19,248) $105,229 $140,175
Car Rental -
International (240,085) (30,123) (286,642) (20,707)
Truck Rental (84,838) (6,904) (26,134) 57,512
Corporate Overhead (53,920) (9,654) (77,319) (23,123)
Total Operating
Income (loss) $(476,651) $(65,929) $(284,866) $153,857
BUDGET RENT A CAR CORPORATION
4th QUARTER 2000 OPERATING STATISTICS
North America - Cars
2000 CHANGE FROM
4th QUARTER PRIOR 4th
QUARTER
Average Fleet 110,583 0.0%
Utilization 79.9% 20bps
Rental Days 8,125,787 0.2%
Daily Dollar Average $38.82 -1.8%
Rental Revenue $315,473,000 -1.6%
Transactions 1,917,388 0.8%
Revenue Per Unit $951 -1.7%
Length of Rental 4.24 -0.5%
North America - Trucks (Ryder & Budget)
2000 CHANGE FROM
4th QUARTER PRIOR 4th
QUARTER
Average Fleet 43,891 -7.2%
Utilization 51.5% 70bps
Rental Days 2,080,646 -5.9%
Daily Dollar Average $77.63 -0.5%
Rental Revenue $161,519,000 -6.4%
Transactions 613,883 -5.6%
Revenue Per Unit $1,227 0.9%
Length of Rental 3.39 -0.3%
