Budget Group Reports First Quarter Results in Line with
Guidance
Company Provides Guidance of $1.30 to $1.40 EPS for Remaining Nine Months
LISLE, Ill., April 26 Budget Group, Inc. today
announced financial results for the first quarter ended March 31, 2001.
"Our first quarter performance was in line with the guidance we previously
provided. We met the liquidity needs of the first quarter and successfully
completed several key steps in our fleet financing plan. Our success in
securing $825 million in fleet funding affirms our ability to execute our 2001
business plan. We are on target in the execution of our European
refranchising strategy that will return our International segment to
profitability. Domestic car and truck operations during the quarter performed
to plan as cost reduction initiatives and asset utilization efforts helped
reduce the impact of the slowing U.S. economy on our business. We are pleased
with the progress in our truck rental operations and the significant
improvements in utilization and operating margin. This is the first quarter
in over two years that we have seen operating margin improve," stated Budget
Group chairman and chief executive officer Sandy Miller.
In line with its guidance, the Company reported a pre-tax loss of
$89.4 million compared to a pre-tax loss in the prior year first quarter of
$55.2 million. Over one third of the first quarter loss is attributed to
European operations which are being transitioned or closed under our
refranchising strategy. Transforming Europe to a substantially franchise
economic model should preclude losses of this magnitude in future quarters.
First Quarter Highlights
-- Domestic Car Rental utilization increased 180 basis points to
84.4 percent, among the highest in the industry. This builds on the
progress made over the last two years to improve asset control. Car
rental volume remained flat to a strong prior year, despite the decline
in airport passenger travel during the quarter. As expected, the
industry pricing environment drove domestic car rental revenue per day
down 2.7 percent compared to first quarter 2000 when rates were up over
4 percent.
-- Truck Rental operating margins improved by 120 basis points over prior
year. Truck utilization increased 390 basis points and revenue per
unit increased 5.6 percent as truck fleet reduction efforts brought
average fleet for the quarter down 11.3 percent to 40,358 units.
-- Europe is fixed: the Company has substantially executed its scale-back
and refranchising strategy. For the second half of the year, Europe
will be substantially cash-flow neutral and positioned to collect up to
$20 million in annualized royalty fees upon full completion of the
refranchising strategy.
Mark Sotir, president and chief operating officer, noted, "We continue to
improve operating efficiencies which have offset the impact of economic
factors. Our airport and local market presence and our strong mix of leisure,
corporate and insurance replacement business lessens the effect of a slowdown
in any one of these market segments."
Fleet Financing
To date, the Company has achieved the following milestones in its multi-
step fleet financing plan:
-- On February 9, 2001, Budget Group received an amendment to its
revolving credit facility which restored availability up to
$550 million. The revolving credit facility is used primarily to
provide credit enhancement for the Company's fleet borrowings.
-- On March 30, the Company secured a $350 million asset-backed financing
facility to finance the acquisition of vehicles during its peak rental
season.
-- On April 18, the Company completed the sale of $475 million of asset
backed medium term notes (MTNs) through an institutional private
placement. In response to demand, the Company sold $75 million more
than originally planned. Proceeds will be used to retire maturing
asset-backed medium term notes.
Net Income and EPS Guidance
For the second quarter, the Company expects domestic car rental volume to
be flat to down 1 percent and revenue per day to be down 2 to 3 percent
compared to the prior year. Truck revenue per day is expected to be flat to
down 1 percent and volume is projected to be down 4 to 5 percent. Net income
for the second quarter is expected to be between $10 million and $12 million,
or earnings per share of $0.27 to $0.32. For the remaining nine months of the
year, the Company expects net income of approximately $52 million to
$56 million which equates to an estimated earnings per share of
$1.30 to $1.40.
BUDGET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Period Ending March 31
(in thousands)
1st quarter
2001 2000
OPERATING REVENUE:
Vehicle rental $511,636 $541,357
Royalty fees and other 17,848 19,409
Total operating revenue 529,484 560,766
OPERATING EXPENSES:
Direct vehicle and operating 249,298 245,962
Depreciation - vehicle 138,758 142,882
Selling, general and administrative 145,258 148,077
Amortization and non-vehicle depreciation 18,628 20,319
Total operating expenses 551,942 557,240
OPERATING INCOME (LOSS) (22,458) 3,526
OTHER EXPENSE:
Vehicle interest, net 55,764 48,788
Other interest, net 11,152 9,939
Total other expense 66,916 58,727
LOSS BEFORE INCOME TAXES (89,374) (55,201)
Provision (benefit) for income taxes 1,000 (29,944)
Distribution on trust preferred securities 4,688 4,688
LOSS FROM CONTINUING OPERATIONS (95,062) (29,945)
DISCONTINUED OPERATIONS:
INCOME FROM OPERATIONS OF BUSINESS
SEGMENTS TO BE DISPOSED OF (Net of income taxes) -- --
NET LOSS ($95,062) ($29,945)
1st quarter
2001 2000
Earnings per share - Basic and diluted
EPS - Loss from continuing operations ($2.55) ($0.80)
EPS - Income from operations of discontinued
segments to be disposed of (Net of income taxes) -- --
EPS - Net loss ($2.55) ($0.80)
Weighted average number of shares
outstanding - Basic and diluted 37,258,000 37,248,000
BUDGET GROUP, INC.
SEGMENT REPORTING
Period Ending March 31
(in thousands)
1st quarter
2001 2000
REVENUE:
Car Rental - Domestic $364,213 $373,388
Car Rental - International 54,682 68,377
Truck Rental 136,724 146,053
Eliminations (26,135) (27,052)
Total Revenue $529,484 $560,766
OPERATING INCOME (LOSS):
Car Rental - Domestic $18,043 $37,577
Car Rental - International (27,879) (19,690)
Truck Rental (6,206) (8,345)
Corporate Overhead (6,416) (6,016)
Total Operating Income ($22,458) $3,526
BUDGET RENT A CAR CORPORATION
1st QUARTER 2001 OPERATING STATISTICS
North America - Cars
2001 CHANGE FROM
1st QUARTER PRIOR 1st QUARTER
Average Fleet 114,565 -1.1%
Utilization 84.4% 180 bps
Rental Days 8,699,825 0.0%
Revenue Per Day $38.40 -2.7%
Rental Revenue $334,100,000 -2.7%
Transactions 1,999,644 -0.9%
Revenue Per Unit $972 -1.6%
Length of Rental 4.35 0.7%
North America - Trucks (Ryder & Budget)
2001 CHANGE FROM
1st QUARTER PRIOR 1st QUARTER
Average Fleet 40,358 -11.3%
Utilization 48.7% 390 bps
Rental Days 1,768,172 -4.7%
Revenue Per Day $76.40 -1.7%
Rental Revenue $135,088,000 -6.3%
Transactions 564,415 -3.2%
Revenue Per Unit $1,116 5.6%
Length of Rental 3.13 -1.6%
