Budget Group Reports First Quarter Results
26 April 2000
Budget Group Reports First Quarter Results
LISLE, Ill., April 26 Budget Group, Inc. (NYSE: BD)
released its first quarter 2000 results today, reporting an after-tax loss
from continuing operations of $29.9 million, or a loss of $0.80 per share.
This compares to a net loss from continuing operations of $19.7 million, or
$0.55 loss per share for the prior year first quarter. Continuing operations
include results from the Company's core car and truck rental operations.
Budget Group successfully completed a number of actions to consolidate its
car and truck rental operations, sell off non-core assets and exit the car
sales business as part of its restructuring plan to focus on its core car and
truck rental operations:
-- The Company closed 38 Premier Car Rental stores and converted 89
locations to Budget in January.
-- Budget completed the sale of its Licensee Leasing Program in March and
sold one new car dealership in April. When the second Ford dealership
closes on April 27, 2000, these transactions will have generated an
aggregate of nearly $70 million in cash.
-- One Budget Car Sales store was transferred to the joint venture with
Triangle Automotive Group, LLC. In addition, the Company has signed an
agreement to re-franchise four Budget Car Sales stores in Indiana to an
outside party. The transaction is expected to close at the end of
April.
-- In March, the Company repurchased warrants from the former shareholders
of Ryder TRS for $17.8 million. In April, the Company reached
agreements to satisfy its make-whole obligation with former
shareholders of Ryder TRS for approximately $30 million in cash.
David Siegel, president and chief operating officer, noted, "We have made
significant progress in exiting the car sales business as an owner/operator
and creating a new revenue stream through royalty fees for Budget Group as a
franchisor of the Budget Car Sales brand and used car concept. By the end of
April, the Company will have a total of 47 franchised Budget Car Sales
locations across the U.S. Our sale of non-core assets is proceeding as
planned, with negotiations underway to sell Cruise America and VPSI."
First Quarter Operating Results
Revenue for the Car Rental segment increased 17.3% to $441.8 million for
the first quarter 2000, compared to $376.5 million in the prior year. First
quarter operating income from the Car Rental segment was $17.9 million, versus
$22.3 million in first quarter 1999. The decline in operating income from
prior year was primarily due to expansion efforts in international operations.
Revenue from Budget Rent a Car North American corporate operations, which
represents 78% of this segment, was up 13.2% for the quarter. Budget Rent a
Car continues to experience strong increases in business rentals as it signs
new commercial accounts interested in Fastbreak, Budget's express service with
paperless transactions. Budget also signed agreements with two major consumer
travel clubs during the quarter, which are expected to drive more leisure
business throughout the year. Operating income from Budget Rent a Car North
America increased 68% over the prior year first quarter and operating margins
improved 330 basis points.
Budget Group's President of North American Vehicle Rental Operations,
Mark Sotir noted, "Budget North America continues to post strong transaction,
revenue, and earnings growth. During the quarter, we realized a 10.9%
increase in transactions and a 4.3% increase in dollar average, despite
downward pricing pressure from a lower tier competitor. With the integration
of our insurance replacement business, we anticipate growth trends in the
local market to continue to improve throughout the summer."
Results from Budget International included the first full quarter of
results from start-up operations in Germany, following the termination of its
former German licensee. The Company began operations under the Budget Rent a
Car brand in Germany in mid-October 1999 and now has 70 corporate and
franchised locations in major markets throughout the country. Rental revenue
from Budget International increased 38% over prior year to $68.4 million
driven largely by corporate expansion efforts. Seasonal first quarter losses,
operating losses related to start-up operations and continued system
conversion issues in Europe offset operating income improvements in North
America. The Company is taking a number of actions to improve operating
margins in its international operations.
Revenue for the Truck Rental segment increased 8.9% for the quarter,
reaching $150.0 million in the first quarter 2000, compared to $137.8 million
in first quarter 1999. For the quarter, the truck segment experienced an
operating loss of $8.3 million compared to an operating loss of $5.0 million
in the prior year first quarter.
Commenting on the Truck Rental performance, Sotir noted, "We are
intensely focused on improving the basics of our truck rental business to
increase profitability. We have identified the need to reduce excess capacity
in our truck fleet brought about by fleet conversions and are taking
aggressive actions to maximize vehicle utilization. We will continue to step
up efforts throughout the balance of the year to right-size the truck fleet.
The savings we will realize from these actions will help reduce the additional
fleet costs we are currently carrying."
Budget Group Chairman and CEO Sandy Miller stated, "With the progressing
sale of non-core assets, the settlement of the Ryder TRS make-whole payment
and other restructuring efforts underway, we are focused on improving earnings
and reducing costs in our core businesses. 2000 is a transitional year for
Budget Group as we consolidate and restructure our truck rental business and
implement best practices and margin improvement efforts in Europe. The
successful turnaround in Budget Rent a Car North America is delivering solid
increases in revenue and profitability."
BUDGET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Period Ending March 31
(in thousands, except share and per share data)
1st quarter
2000 1999
OPERATING REVENUE:
Vehicle rental $541,357 $469,467
Royalty fees and other 23,362 24,368
Total operating revenue 564,719 493,835
OPERATING EXPENSES:
Direct vehicle and operating 243,680 204,038
Depreciation - vehicle 142,882 128,827
Selling, general and administrative 154,312 131,797
Amortization and non-vehicle
depreciation 20,319 16,493
Total operating expenses 561,193 481,155
OPERATING INCOME 3,526 12,680
OTHER EXPENSE:
Vehicle interest, net 48,788 42,299
Other interest, net 9,939 471
Total other expense 58,727 42,770
LOSS BEFORE INCOME TAXES (55,201) (30,090)
Benefit for income taxes (29,944) (14,995)
Distributions on trust preferred
securities 4,688 4,623
LOSS FROM CONTINUING OPERATIONS (29,945) (19,718)
DISCONTINUED OPERATIONS:
LOSS FROM OPERATIONS OF BUSINESS
SEGMENTS TO BE DISPOSED OF
(Net of income taxes) -- (3,332)
NET LOSS ($29,945) $(23,050)
Weighted average number of shares
outstanding - Basic and Diluted 37,248,000 35,856,000
EARNINGS PER SHARE - BASIC AND DILUTED:
Loss from continuing operations $ (0.80) $(0.55)
Loss from operations of discontinued
segments to be disposed of
(Net of income taxes) $(0.00) $ (0.09)
Net loss $(0.80) $ (0.64)
BUDGET GROUP, INC.
SEGMENT REPORTING
Period Ending March 31
(in thousands)
1st quarter
2000 1999
REVENUE:
Car Rental $441,765 $376,521
Truck Rental 150,006 137,788
Eliminations (27,052) (20,474)
Total Revenue $564,719 $493,835
OPERATING INCOME (LOSS):
Car Rental $17,887 $22,346
Truck Rental (8,345) (4,971)
Corporate Overhead (6,016) (4,695)
Total Operating Income $3,526 $12,680
BUDGET GROUP, INC.
1st QUARTER 2000 OPERATING STATISTICS
Budget Rent a Car - North America Cars
2000 CHANGE FROM
1st QUARTER PRIOR 1st QUARTER
Average Fleet 115,807 7.9%
Utilization 82.6% -40bps
Rental Days 8,704,007 8.6%
Daily Dollar Average $39.45 4.3%
Rental Revenue $343,415,000 13.2%
Transactions 2,016,830 10.9%
Revenue Per Unit $988 4.9%
Length of Rental 4.32 -2.0%
North America - Trucks (Ryder & Budget)
2000 CHANGE FROM
1st QUARTER PRIOR 1st QUARTER
Average Fleet 45,477 10.3%
Utilization 44.8% -10bps
Rental Days 1,855,702 11.3%
Daily Dollar Average $77.71 -1.8%
Rental Revenue $149,230,000 8.9%
Transactions 582,845 1.4%
Revenue Per Unit $1,057 0.8%
Length of Rental 3.18 9.7%