Budget Group Reports Earnings for Q4 and Year
24 February 1998
Budget Group Reports Earnings of $.17 Per Share for 4th Quarter Exceeding Consensus Analysts' Estimates of $.16 Per Share and Reports $1.60 Per Share for the Year
DAYTONA BEACH, Fla., Feb. 24 -- Budget Group, Inc.
released its fourth quarter results today, reporting diluted earnings per
share of 17 cents for the quarter ended December 31, 1997, compared to a loss
of 33 cents a year ago. Net income for the fourth quarter increased to
$4.5 million compared to a loss of $3.7 million in the prior year's quarter.
Fourth quarter revenues increased to $412.5 million from $96.4 million.
Operating income increased to $43.4 million from $2.0 million. The magnitude
of the increases was due primarily to the acquisition of Budget Rent a Car
Corporation (BRAC) on April 29, 1997.
Diluted earnings per share for the year ended December 31, 1997, were
$1.60, ahead of consensus estimates of $1.56. Net income for the year ended
December 31, 1997, increased to $36.9 million compared to $4.5 million in
1996. Annual revenues increased to $1,303.8 million from $357.4 million and
operating income increased to $171.3 million from $35.3 million.
The operating results herein for the fourth quarter represent three full
months of combined operations for BRAC, Budget Car Sales, Van Pool Services,
and Premier Car Rental. Results for the year ended December 31, 1997,
represent eight months of operating results from BRAC, five months from
Premier Car Rental and a full year from the former Team Rental Group (renamed
Budget Group last April), which also includes Budget Car Sales and Van Pool
Services. Results for 1996 discussed herein relate only to the operations of
the former Team Rental Group unless otherwise noted.
"In 1997 we achieved the goals we set for ourselves and communicated to
investors when we acquired Budget Rent a Car last April," stated Sandy Miller,
Chairman and CEO of Budget Group, Inc. "With improved pricing in the industry
and better yield management, our U.S. car rental Daily Dollar Average (DDA)
for the quarter was up $2.22 or 5.8% over prior year quarter pro forma,
reaching $40.34," added Miller. U.S. rental days (volume) for the quarter
increased 10% over the prior year quarter pro forma. Gross rental margin
(revenue per unit less holding cost per unit) of 57.2% represents an increase
of 380 basis points over the prior year quarter pro forma.
During the quarter the company also closed on the purchase of franchise
operations in St. Louis and Syracuse. Continuing its strategy to acquire key
franchised markets for greater consistency of service and control, corporate-
owned locations now account for over 80% of the U.S. Budget System.
"We are right on strategy for our BRAC operations, reaching target
improvements for revenue, gross margin and earnings. We continue to build
momentum with our new fleet diversity brand campaign that launched in
September, and the high-margin VIP Pickup program continues to drive
incremental revenue, reaching over $10 million since its introduction in
September," said Miller. Over 26,000 travel agents have enrolled in Unlimited
Budget, a breakthrough, Budget-branded Mastercard debit card program that
rewards travel agents who book Budget. While bookings are up overall from
travel agents, closed transactions are up 54% at travel agencies where one or
more agents are enrolled in Unlimited Budget. Nearly 60% of all Budget
airport reservations are booked through travel agents. Contracted corporate
revenue is up 14% and transactions are up 10% for the year, with most of the
growth coming in the second half of the year.
Following on the success of the third quarter, the Budget Truck Rental
division experienced record growth in utilization, transactions, revenue and
profits for the fourth quarter. Revenue of $34.3 million, up 20.9% over the
prior year's quarter pro forma, was the highest of any fourth quarter in the
history of Budget Truck Rental. Pre-tax profit rose 128%. Fourth quarter
transactions increased 16.5% over prior year's fourth quarter, while rental
days rose 22.9% and utilization improved 310 basis points. "We're seeing
tremendous growth in local and one-way consumer truck rentals as a result of
increased marketing efforts. We have launched our preferred vendor
relationship with Cendant (formerly HFS and CUC), which now recommends Budget
Rent a Truck to new home buyers through its realtors at Coldwell Banker, ERA
and Century 21," stated Miller.
Budget Car Sales revenue reached $67.4 million for the quarter, up
$27.7 million from the same quarter last year. Annual car sales revenue
totaled $240 million, an increase of 79% over prior year. Units sold under
the Budget Car Sales banner totaled 3,715 for the quarter, a substantial
increase from the prior year quarter's units sold of 2,432. Units sold for
the year totaled 14,015 up 85.9% over prior year. The increase was due to the
addition of the car sales operations of BRAC as well as the opening of new
stores. The year ended with a total of 26 dealerships in operation. Jeff
Congdon, president of Budget Car Sales, notes, "Unlike the auto super-store
concept, our retail car sales strategy of operating smaller scale locations in
secondary markets continues to be profitable."
Revenues for the fourth quarter from Premier Car Rental reached
$12.9 million. Premier was acquired on July 31, 1997 and prior period data
does not exist. This is the first full quarter of operating results since
acquiring Premier. Since the acquisition, Premier has opened 50 new
locations, for a current total of 150 locations, and entered four new
geographic markets.
Van Pool Services' total revenue in 1997 was $34.9 million, an increase of
5.6% over 1996 levels. Two weeks ago, Van Pool Services closed on its
acquisition of Vipre B.V., a transport management and vanpooling services
company serving commuters in The Netherlands and Belgium. Van Pool Services
acquired Vipre from Philips Electronics N.V.
On January 28, 1998, the company closed on its acquisition of Cruise
America, Inc. Cruise America had revenues of $95.6 million and pretax income
of $3.8 million for its fiscal year ended April 30, 1997. Cruise America
operates 17 company-owned facilities and 74 satellite rental centers
throughout North America, with a fleet of more than 4,300 recreational
vehicles.
Cruise America's low cost, modular-unit fleet allows the company to
refurbish the camper portion of its vehicles and remount them on new truck
chassis. The used truck chassis are converted at a nominal cost into delivery
trucks and then sold at attractive prices into the large market for pre-owned
trucks.
Budget Group, Inc., through subsidiary companies and their franchisees,
operates Budget Car and Truck Rental, the third largest worldwide car and
truck rental system, with over 3,200 airport and local market locations in
more than 110 countries and territories. In addition, the Company owns
Premier Car Rental, which serves the insurance replacement market through a
network of 150 locations in 17 major U.S. markets. Budget Car Sales is one of
the largest independent retailers of late model vehicles in the United States,
operating 26 retail car sales facilities. The company also operates airport
parking facilities at certain locations and through Van Pool Services leases
3,500 vans for van pooling operations in 60 urban areas.
Certain items in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 and as such may involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of Budget to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
forward-looking statements speak only as of the date of this press release.
Budget expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in Budget's expectations with regard thereto or any change
in events, conditions or circumstances on which any statement is based.
BUDGET GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Period Ending December 31
(In Thousands, Except Share Data)
4th Quarter Year to Date
1997 1996 1997 1996
OPERATING REVENUE
Vehicle Rental $328,214 $56,719 $1,014,105 $223,250
Sales of Vehicles 67,369 39,631 239,992 134,120
Royalty Fees and Other 16,963 -- 49,665 --
Total operating
revenues 412,546 96,350 1,303,762 357,370
OPERATING COSTS AND EXPENSES
Direct vehicle
and operating 47,470 10,706 128,408 35,098
Depreciation - vehicles 90,653 16,752 278,495 60,735
Depreciation - nonvehicles 2,146 674 14,192 2,589
Cost of car sales 58,415 36,020 205,791 113,747
Advertising, promotion
and selling 24,201 5,882 93,265 22,983
Facilities 29,457 5,482 95,558 20,406
Personnel 89,522 14,858 247,862 53,097
General and administrative 23,797 3,592 60,451 11,605
Amortization 3,473 375 8,454 1,843
Total operating costs
and expenses 369,134 94,341 1,132,476 322,103
OPERATING INCOME 43,412 2,009 171,286 35,267
OTHER (INCOME) EXPENSE
Interest - vehicle 30,528 6,794 93,796 25,336
Interest - other 7,304 215 19,933 2,776
Interest - restricted cash (1,813) (260) (5,744) (781)
Interest - related party -- -- -- 118
Total other (income)
expense 36,019 6,749 107,985 27,449
INCOME BEFORE INCOME TAXES 7,393 (4,740) 63,301 7,818
Provision for income taxes 2,921 (1,074) 26,375 3,321
NET INCOME $4,472 $(3,666) $36,926 $4,497
Shares outstanding 25,650,000 11,253,000 20,466,000 9,224,000
Basic EPS 0.17 (0.33) 1.80 0.49
Diluted shares
outstanding 26,420,000 11,253,000 26,245,000 9,488,000
Diluted EPS 0.17 (0.33) 1.60 0.47
BUDGET RENT A CAR CORPORATION
4TH QUARTER 1997 OPERATING STATISTICS
U.S. Vehicle Rental
1997 CHANGE FROM
4TH QUARTER PRIOR 4TH QUARTER
(PRO FORMA)
U.S. CARS
Average Fleet 85,558 11.4%
Utilization 78.0% - 96 bps
Rental Days 6,142,116 10.0%
Daily Dollar Average $40.34 5.8%
Rental Revenue $247,742,662 16.4%
Transactions 1,569,736 9.5%
Revenue Per Unit $969 5.8%
U.S. TRUCKS
Average Fleet 11,222 16.3%
Utilization 58.4% 310 bps
Rental Days 602,862 22.9%
Daily Dollar Average $56.94 - 1.6%
Rental Revenue $34,325,620 20.9%
Transactions 130,419 16.5%
Revenue Per Unit $1,020 4.0%
SOURCE Budget Group, Inc.