Budget Group Reports Q1 Results
28 April 1998
Budget Group Reports First Quarter Results Ahead of Expectations
DAYTONA BEACH, Fla., April 27 -- Budget Group, Inc.
released its first quarter operating results today, reporting a
loss per share of 9 cents, excluding one-time charges related to the merger
between Budget Group and Cruise America. These results were one cent better
than consensus estimates. When giving effect to the one-time merger charges,
which totaled $1.6 million pre-tax, the Company reported a loss of 12 cents
per share for the first quarter ended March 31, 1998. The merger between
Budget Group and Cruise America was completed on January 28, 1998, and was
accounted for as a pooling-of-interests.
Budget Group revenues for the quarter increased to $456 million from
$116 million in the prior year first quarter. Excluding one-time charges
related to the Cruise America merger, operating income increased to
$35.8 million from $4 million and the net loss was $2.5 million. Also in the
quarter, Budget Group announced an agreement to acquire Ryder TRS. The Ryder
TRS acquisition cleared the FTC last week.
The operating results herein represent three full months of combined
operations for Budget Rent a Car Corporation, Budget Car Sales, Van Pool
Services, Premier Car Rental and Cruise America. Results for 1997 discussed
herein relate only to the operations of the former Team Rental Group (renamed
Budget Group in April 1997 concurrent with the acquisition of Budget Rent a
Car Corporation) and Cruise America unless otherwise noted.
First quarter rental revenue from Budget Rent a Car U.S. corporate
operations increased 12.5% to $259.6 million, versus pro forma prior year
first quarter revenues of $230.7 million. Rental days (volume) were up 11.1%
on a pro forma basis. Daily dollar average for Budget's U.S. car operations
was up 1.3%, or 50 cents per rental day, over the prior year quarter pro
forma, reaching $39.66. Daily dollar average was up 3.0%, taking into account
fleet mix issues such as more low-cost VIP Pickups and fewer luxury cars such
as Lincoln Town Cars. Gross rental margin (revenue per unit less holding
costs per unit) was 57.4%, down 80 basis points below prior year pro forma due
primarily to early disposal of vehicles as the company down-fleeted in
response to poor weather conditions in Florida and California. Budget Group
Chairman and CEO Sandy Miller noted, "We're continuing to see pricing
strengthen in the industry, and we are taking advantage of these opportunities
to yield up. The diminution of gross rental margin reflects Budget's
discipline in maintaining yield, rather than simply cutting rates to maintain
volume in softer markets. We are maintaining our strategy of pursuing higher
margin business. Dollar average continues to trend up over prior year. In
addition to the increases in DDA throughout last year and in the first quarter
of 1998, we're seeing a 2.1% increase in DDA for the month of April."
On April 1, Budget Rent a Car launched its new frequent renter program,
Perfect Drive, to continue to build loyalty among business and leisure
travelers. "We've offered customers a frequent renter awards program since
1992. Our new Perfect Drive program has a number of enhancements and members
will soon be able to link directly to our new paperless, automated express
service, Fastbreak, which kicks off this summer," said Miller. "Perfect Drive
was designed to keep current loyal renters and to attract new customers. With
Perfect Drive and Fastbreak, customers will try Budget and stay, not only for
the awards, but for the quality service and good value Budget provides,"
Miller added.
Continuing its strategy to acquire franchise locations in key markets,
Budget closed on purchases of rental operations in Quebec (including
Montreal); Austria; Spain; San Juan, Puerto Rico; California (north coast
area); Garden City, N.Y.; and Christchurch, New Zealand.
For the third consecutive quarter, Budget Truck Rental experienced record
operating results. Rental revenue of $31.3 million was up 30% over prior year
quarter pro forma. Budget Group's pending acquisition of Ryder TRS has
cleared the FTC, and the Company expects to close on the deal late in the
second quarter.
Revenues from Budget Car Sales increased to $92.0 million for the quarter
up from $43.3 million for first quarter 1997 pro forma. With 29 stores open
at the end of the quarter, units sold retail increased to 4,859.
During the first quarter, which is typically the off-season for
recreational vehicle rentals, Cruise America reported revenue of
$11.2 million. Reservation builds for its peak summer season are strong.
Budget Group is already realizing synergies from this acquisition as Cruise
America now rents local and One-Way Budget trucks from a number of its
locations, and recreational vehicles are now available for rent in several
Budget operations. To reduce Budget Truck Rental fleet costs, Cruise America
has already delivered 20 modular body trucks to the Budget One-Way fleet.
Cruise America engineers have also built a prototype airport shuttle bus
conversion, demonstrating the potential to reduce the costs of these types of
vehicles as well.
Regarding other Budget Group companies, Premier Car Rental revenue reached
$12.8 million. Premier opened locations in two new markets, Albany, N.Y., and
Charlotte, N.C., and additional locations in Indianapolis and Albuquerque.
The company now receives reservations through a direct electronic link from
the claims offices of major insurance carriers to its rental locations.
Premier is also beta testing a new state-of-the-art integrated front- and
back-office automated system. Van Pool Services revenue grew to $9.5 million,
up 15% over prior year quarter pro forma due primarily to increased contract
revenue from its existing markets and expansion of its vehicle leasing
business.
Budget Group, Inc., through subsidiary companies and their franchisees,
operates Budget Car and Truck Rental, the third largest worldwide car and
truck rental system. In addition, the Company owns Premier Car Rental, which
serves the insurance replacement market. Budget Car Sales is one of the
largest independent retailers of late model vehicles in the United States.
Cruise America is the largest recreational vehicle rental and sales company in
North America. Budget Group also operates airport parking facilities and
through Van Pool Services leases vans for van pooling.
This press release does not constitute "proxy solicitation material"
within the meaning of Regulation 14A and Schedule 14A of the Securities
Exchange Act of 1934, as amended.
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 March 31
(In Thousands, Except Share Data)
1st Quarter
1998 1997
OPERATING REVENUE
Vehicle rental $339,955 $62,022
Sales of vehicles 97,291 53,735
Royalty fees and other 18,739 581
Total operating revenues 455,985 116,338
OPERATING COSTS AND EXPENSES
Direct vehicle and operating 46,874 10,649
Depreciation - vehicles 94,096 19,352
Depreciation - non-vehicles 4,429 891
Cost of vehicle sales 86,142 45,603
Advertising, promotion and selling 35,623 7,169
Occupancy 32,246 6,214
Personnel 94,790 17,348
General and administrative 22,572 4,563
Merger expenses - pooling 1,595 --
Amortization expense 3,439 546
Total operating costs and
expenses 421,806 112,335
OPERATING INCOME 34,179 4,003
OTHER (INCOME) EXPENSE
Interest - vehicle 34,421 8,435
Interest - other 8,450 807
Interest - restricted cash (2,991) (723)
Interest - related party 0 0
Total other (income) expense 39,880 8,519
LOSS BEFORE INCOME TAXES (5,701) (4,516)
Provision for income taxes 2,280 1,215
NET LOSS $(3,421) $(3,301)
Shares outstanding 27,445,000 12,875,000
Basic EPS (0.12) (0.26)
BUDGET RENT A CAR CORPORATION
FIRST QUARTER OPERATING STATISTICS
U.S. VEHICLE RENTAL
1998 CHANGE FROM
1st QUARTER PRIOR 1st QUARTER
(PROFORMA)
U.S. CARS
Average Fleet 89,964 14.8%
Utilization 80.9% (260) bps
Rental Days 6,546,444 11.1%
Daily Dollar Average $39.66 1.3%
Rental Revenue $259,645,432 12.5%
Transactions 1,620,241 11.6%
Revenue Per Unit $962 (1.9)%
U.S. TRUCKS
Average Fleet 11,733 29.3%
Utilization 53.1% 150 bps
Rental Days 561,252 33.2%
Daily Dollar Average $55.74 (2.0)%
Rental Revenue $31,282,648 30.5%
Transactions 129,375 26.1%
Revenue Per Unit $889 0.9%
SOURCE Budget Group, Inc.