Budget Group Reports Third Quarter Results
28 October 1998
Budget Group Reports Third Quarter Results
DAYTONA BEACH, Fla., Oct. 27 -- Budget Group, Inc.
released its third quarter operating results today, reporting earnings per
share up 39% to $1.38. Net income for the third quarter increased 98% to
$61.3 million from $30.9 million in the prior year. Revenues increased 63% to
$856.6 million from $524.9 million. Operating income increased 63% to $157.0
million from $96.5 million in the prior year.
The operating results for third quarter 1998 represent three full months
of combined operations for Budget Rent a Car Corporation (BRAC), Ryder TRS,
Budget Car Sales, Van Pool Services (VPSI), Premier Car Rental and Cruise
America. The 1997 third quarter results represent three full months of
combined operations for BRAC, Budget Car Sales, VPSI and Cruise America and
two months from Premier Car Rental.
Revenue for Budget Rent a Car North American corporate car rental
operations reached $335.8 million, up 11% over prior year. Excluding recent
licensee acquisitions, revenue was up 5.0% and rental days (volume) were up
2.3% over the prior year third quarter. Daily dollar average was up 2.6% over
the prior year, reaching $42.75, due to the company's continued disciplined
pricing actions.
During the quarter BRAC launched its new express service, Fastbreak. The
quarter was negatively impacted by start-up costs associated with Fastbreak.
Currently, Budget offers Fastbreak service at over 90 locations. Fastbreak's
paperless rental service allows customers to quickly speed through the rental
process.
The truck rental division continued its strong performance with revenues
from Ryder TRS, Budget Truck Rental and Cruise America reaching $262.5 million
in the third quarter. Operating income was $56.9 million. (Comparisons to
the prior year period are not meaningful given the magnitude of the Ryder TRS
acquisition.)
Revenue from Budget Car Sales reached $171.7 million for the quarter, up
from $71.0 million in the prior year. Revenue from Budget Car Sales includes
proceeds from the sale of units at retail and wholesale. With a total of
36 stores open at the end of the quarter, units sold retail increased to
7,957 compared to 24 stores selling 4,277 units the prior year third quarter.
The third quarter was positively affected by favorable insurance claims
experience causing a reduction in self-insurance reserves. The impact after
tax was 1.3% of total operating revenue for the third quarter, consistent with
improving trends in losses since Budget Group acquired BRAC in April 1997.
Budget Group Chairman and CEO Sandy Miller commented, "We achieved our
revenue targets for car rental operations and are very pleased with our DDA
growth. We continue to see improvement in BRAC operating margins, although
same-market transaction growth was negatively impacted by Budget's efforts to
hold price."
"The outstanding performance of our truck operations continues. For
example, Ryder TRS is on track to lower its maintenance expense and Budget
Truck Rental continues to grow at a rapid pace. We have slowed expansion plans
for Budget Car Sales as we attempt to improve under-performing stores to
better match our car sales business model. We expect expansion efforts to
resume in the second half of 1999," concluded Miller.
Budget Group, Inc. is a global network of vehicle rental and sales
companies operating in three principal segments: Car Rental, Truck Rental and
Car Sales. In Car Rental, Budget Group, through subsidiary companies and their
franchisees, operates Budget Rent a Car Corporation, the world's third largest
car and truck rental system, and Premier Car Rental, the nation's third
largest company serving the insurance replacement market. The company also
operates Van Pool Services, the U.S. leader in commuter van pooling services,
and Budget Airport Parking, a system of airport parking units located adjacent
to Budget Rent a Car facilities in select locations. In Truck Rental, Budget
Group operates Ryder TRS, the nation's second largest consumer truck rental
company; Budget Truck Rental, the third largest consumer truck rental company;
and Cruise America, the largest recreational vehicle rental and sales company
in North America. In Car Sales, Budget Group operates Budget Car Sales, one
of the leading independent retailers of late model vehicles in the U.S. with
36 new and used car dealerships.
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. Additional information concerning such matters is
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, 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 INCOME
Period Ending September 30
(in thousands)
3rd quarter Year to Date
1998 1997 1998 1997
OPERATING REVENUE:
Vehicle rental $644,666 $423,365 $1,434,762 $737,065
Retail vehicle sales 183,321 80,871 421,357 201,898
Royalty fees and other 28,582 20,616 70,787 34,371
Total operating revenue 856,569 524,852 1,926,906 973,334
OPERATING EXPENSES:
Direct vehicle and
operating 245,227 166,525 573,320 307,100
Depreciation - vehicle 144,151 107,728 356,341 198,411
Cost of retail
vehicle sales 165,993 70,398 377,188 173,668
Selling, general and
administrative 127,970 74,779 329,465 142,113
Amortization and
non-vehicle
depreciation 16,189 8,924 36,929 17,704
Merger expenses - pooling 0 0 1,595 0
Total operating
expenses 699,530 428,354 1,674,838 838,996
OPERATING INCOME 157,039 96,498 252,068 134,338
OTHER (INCOME) EXPENSE:
Interest, net 53,414 42,742 137,455 77,610
Debt extinguishment costs 0 0 9,454 0
Total other (income)
expense 53,414 42,742 146,909 77,610
INCOME BEFORE INCOME TAXES103,625 53,756 105,159 56,728
Provision for income taxes 37,658 22,862 37,211 24,572
Distribution on Trust
preferred securities 4,692 0 5,342 0
INCOME BEFORE EXTRAORDINARY
ITEM 61,275 30,894 62,606 32,156
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT
(Net of income
taxes of $26,602) 0 0 (45,296) 0
NET INCOME $61,275 $30,894 $17,310 $32,156
3rd quarter Year to Date
1998 1997 1998 1997
Weighted average number
of shares outstanding 35,942,000 21,579,000 30,765,000 17,803,000
Basic EPS - Income before
extraordinary item 1.70 1.43 2.03 1.81
Basic EPS - Extraordinary Item0.00 0.00 (1.47) 0.00
Basic EPS - Net Income 1.70 1.43 .56 1.81
Weighted average number of
shares outstanding
- Diluted 47,016,000 32,554,000 38,946,000 25,842,000
Diluted EPS - Income before
extraordinary item 1.38 0.99 1.78 1.38
Diluted EPS - Extraordinary
Item 0.00 0.00 (1.16) 0.00
Diluted EPS - Net Income 1.38 0.99 .62 1.38
BUDGET GROUP, INC.
SEGMENT REPORTING
Period Ending September 30
(in thousands)
3rd quarter Year to Date
1998 1997 1998 1997
REVENUE:
Car Rental $443,616 $393,757 $1,161,673 $686,043
Truck Rental and Sales262,464 84,923 427,062 155,221
Retail Car Sales 171,665 71,030 396,581 171,410
Eliminations (21,176) (24,858) (58,410) (39,340)
Total Revenue $856,569 $524,852 $1,926,906 $973,334
OPERATING INCOME:
Car Rental $108,357 $78,809 $188,258 $109,536
Truck Rental and Sales 56,851 19,330 84,864 27,624
Retail Car Sales (4,489) (761) (7,074) (239)
Corporate Overhead (3,680) (880) (13,980) (2,583)
Total Operating
Income $157,039 $96,498 $252,068 $134,338
BUDGET RENT A CAR CORPORATION
3rd QUARTER 1998 OPERATING STATISTICS
North American Car Rental
1998 CHANGE FROM
3rd QUARTER PRIOR 3rd QUARTER*
Average Fleet 104,235 2.6%
Utilization 81.9% -23 bps
Rental Days 7,856,024 2.3%
Daily Dollar Average $42.75 2.6%
Rental Revenue $335,833,401 5.0%
Transactions 1,929,111 2.0%
Revenue Per Unit $1,074 2.3%
Based on same-market comparison representing BRAC and Team Rental
operations combined in April 1997; excluding recent licensee acquisitions.