ANC Rental Corporation Reports Q1 Loss But Reaffirms Full Year Forecast
FORT LAUDERDALE, Fla.--April 30, 2001--ANC Rental Corporation today announced a net loss for the first quarter 2001 of $33.0 million or $0.73 per share, compared to $24.5 million last year. In making this announcement, ANC simultaneously reaffirmed confidence in its full year forecast. Revenue for the three-month period was $769.1 million or $39.7 million below last year.Comparative results of operations were impacted by:
| -- | On-going price competition in the North American airport market |
| -- | Weakening economic conditions particularly in the latter half of the quarter which impacted volume levels |
| -- | Higher operating costs, which are the result of the Company downsizing its fleet to a more optimal level, and costs incurred to lower personnel and selling, general and administrative costs, which will benefit the remainder of the year |
| -- | Higher non-vehicle interest expense, the result of the Company's post-spin capital structure |
| -- | Non-cash charges relating to the Company's sale and leaseback transactions and the application of new accounting standards. |
Commenting, Chairman and Chief Executive Officer Michael S. Egan said, "During this period we did many things that laid the foundation for our Company attaining profitability. We implemented our new operating plan which was introduced when I took over earlier this year. We have taken steps to improve revenue per car month and fleet utilization, as well as action to reduce our expenses." Mr. Egan continued, "We have also recently completed a series of sale and leaseback transactions which will provide needed liquidity to support the Company's financial position during its turn-around."
Revenue Results
Consolidated revenue for the quarter was $769.1 million as compared to $808.8 million last year, a decrease of 4.9%. Volume was lower by 3.1% primarily in North America with declines in in-bound tour business and commercial business. Pricing for the quarter declined 1.2% excluding the effects of foreign exchange. During the quarter, the Company announced price increases in North America and took other pricing actions which served to improve the quarter's revenue per day over the fourth quarter of 2000.
Cost Initiatives
The Company initiated a series of cost control actions in the quarter including:
-- Realigning its fleet inventory to levels consistent with expected
future demand and, in connection with this, incurred higher
turn-back costs
-- Reducing its workforce in excess of 750 positions with annual
savings approximating $25.0 million, for which the Company
incurred a charge of $2.0 million
-- Reprioritizing its marketing and administrative plans which should
reduce spending on a year to year basis. The Company continues to
focus on cost reduction programs to further reduce selling,
general and administrative costs.
Financing Transactions
The Company completed a series of sale and leaseback transactions during the quarter generating proceeds of $81.7 million. The proceeds will initially be used for working capital purposes and then will be used in September 2001 to pay down the interim loan. In connection with these sale and leaseback transactions, $3.7 million of losses were reported on the properties sold. In April, the Company closed additional sale and leaseback transactions yielding proceeds of $15.1 million.
Accounting change
The Company adopted a new financial accounting standard (SFAS 133) which changed the accounting rules for its interest rate hedges. The cumulative effect of adopting this change on January 1, 2001 was a non-cash increase to net income of $7.1 million, net of tax. The impact of applying this principle for the first quarter resulted in a non-cash charge of approximately $2.0 million, net of tax.
Q2 and Full Year Outlook
The Company expects continued economic weakness and a competitive pricing environment throughout the remainder of the second quarter. However, the Company believes that as a result of its revised operating plan, new pricing policies and cost reduction programs, it will achieve analyst earnings estimates of $0.42 to $0.50 per fully diluted share for the year.
ANC Rental Corporation
Consolidated Statements of Operations (Unaudited)
($ in millions except per share and statistical amounts)
Three Months As % of
Ended March 31, Total Revenue
------------------ ---------------
2001 2000 2001 2000
------- ------- ----- -----
Revenue:
Alamo $ 301.0 $ 315.2 39.1% 39.0%
National 321.5 338.0 41.8 41.8
------- ------- ----- -----
North America 622.5 653.2 80.9 80.8
Alamo Local Market 63.5 70.2 8.3 8.6
International 83.1 85.4 10.8 10.6
------- ------- ----- -----
Total Revenue 769.1 808.8 100.0 100.0
Direct operating costs 336.3 345.0 43.7 42.7
Vehicle depreciation, net 241.6 229.5 31.4 28.4
Selling, general,
and administrative 157.8 183.0 20.5 22.6
Severance / transition
cost 2.0 7.4 0.3 0.9
Amortization of
intangible assets 2.5 2.5 0.3 0.3
Interest expense, net
of income 88.2 81.3 11.5 10.1
Fair value adjustment
on interest rate hedges 3.3 -- 0.4 --
Loss on sale and
leaseback transaction 3.7 -- 0.5 --
Other (income) expense, net (0.6) 0.3 (0.1) --
------ ------ ----- -----
Loss before income taxes (65.7) (40.2) (8.5) (5.0)
Benefit for income taxes 25.6 15.7 3.3 2.0
------ ------ ----- -----
Net loss before cumulative
effect of change in
accounting principle (40.1) (24.5) (5.2) (3.0)
Cumulative effect of change
in accounting principle,
net of tax 7.1 -- 0.9 --
------ ------ ----- -----
Net loss $ (33.0) $ (24.5) (4.3)% (3.0)%
====== ====== ===== =====
Loss per share before
cumulative effect of
change in accounting
principle:
Basic & diluted $ (0.89) $ (0.54)
Loss per share:
Basic & diluted $ (0.73) $ (0.54)
Shares used in computing
per share amounts:
Basic & diluted 45.2 45.1
ANC Rental Corporation
Consolidated Statements of Operations (Unaudited)
($ in millions except per share and statistical amounts)
Three months ended March 31,
-------------------
Key Operating Statistics 2001 2000 Change
------------------------------- ------- ------- ---------
Revenue per day $ 35.72 $ 36.38 (1.8)%
Revenue per day, net of
foreign exchange translation $ 36.08 $ 36.51 (1.2)%
Charge days in millions 21.2 21.9 (3.1)%
Utilization 77.5% 77.8% (29)bps
Other Data
-------------------------------
Vehicle interest expense $ 72.4 $ 77.9 $ (5.5)
Non-vehicle interest expense 17.1 3.5 13.6
Non-vehicle depreciation and
amortization 31.2 23.2 8.0
Capital expenditures 12.8 19.8 (7.0)
Balance Sheet Data March 2001 December March 2000
2000
------------------------------- --------- --------- ---------
Cash $ 25.4 $ 21.4 $ 7.5
Restricted cash 416.4 321.9 167.7
Vehicles, net 4,688.6 4,451.4 4,879.8
Vehicle debt 4,261.0 4,228.9 4,682.5
Other debt 273.2 276.7 107.3
Shareholders' equity 826.3 892.6 857.1
ANC Rental Corporation
Divisional Information - Supplemental Data (Unaudited)
-------------------------------
For the three months ended March 31,
-------------------------------
NORTH AMERICA 2001 2000 % Change
------- ------- ------
Revenue(1)
Alamo $ 301.0 $ 315.2 (4.5)%
National 321.5 338.0 (4.9)%
------- -------
Total Revenue(1) $ 622.5 $ 653.2 (4.7)%
Key Operating Statistics-
North America
-------------------------
Alamo revenue per day $ 35.89 $ 36.04 (0.4)%
National revenue per day $ 38.80 $ 40.25
(3.6)%
Total North American revenue
per day $ 37.32 $ 38.07 (2.0)%
Alamo charge days(1) 8.4 8.7 (4.1)%
National charge days(1) 8.1 8.2 (1.1)%
------- -------
Total North American
charge days(1) 16.5 16.9 (2.7)%
North American utilization 79.3% 79.5% (20)bps
ALAMO LOCAL MARKET 2001 2000 % Change
------- ------- ------
Revenue(1) $ 63.5 $ 70.2 (9.5)%
Key Operating Statistics-
Alamo Local Market
-------------------------
Revenue per day $ 26.74 $ 25.52 4.8%
Charge days(1) 2.4 2.7 (13.7)%
Utilization 70.2% 75.2% (500)
INTERNATIONAL 2001 2000 % Change
------- ------- ------
Revenue (1) $ 83.1 $ 85.4 (2.7)%
Key Operating Statistics
-International
------------------------
Revenue per day $ 33.64 $ 36.93 (8.9)%
Revenue per day, net of
foreign exchange $ 36.79 $ 38.16 (3.6)%
translation
Charge days (1) 2.4 2.3 6.3%
Utilization 73.3% 69.3% 400 bps
Notes:
(1) amounts reflected in millions