Budget Group Reports Q2 Results
28 July 2000
LISLE, Ill. - Budget Group, Inc. released its second quarter 2000 results
on Thursday reporting earnings per share of $0.27 and net income of $9.9 million.
In the prior year second quarter, earnings per share from continuing operations
were $0.42 on a diluted basis and net income was $16.1 million. Continuing
operations include results from the Company's core car and truck rental operations.
During the quarter, Budget Group made significant progress on its
restructuring plan to sell non-core assets and focus on its core car and truck
rental operations:
-- The Company has franchised all its remaining corporate-owned Budget Car
Sales retail facilities and sold its ownership interest in its car
sales joint venture with Triangle Automotive Group, LLC. In April, the
Company sold its two Ford dealerships. Additionally, the Company has
reached an agreement to sell its remaining Chrysler dealership, and
this sale is expected to close in the third quarter, pending final
approval from DaimlerChrysler Corporation. These transactions will
mark Budget Group's successful exit as an owner-operator of retail car
sales businesses. There are now 57 royalty fee-paying Budget Car Sales
franchise locations in the U.S.
-- Budget Group has reached an agreement in principle to sell Cruise
America, its recreational vehicle rental and sales subsidiary. The
Company also entered into an agreement in principle to sell VPSI, its
commuter van pooling operation. Both sales are expected to close by
September, subject to Hart-Scott-Rodino review and customary closing
conditions.
"We have passed some key milestones in our restructuring efforts. With
the pending sales of non-core assets, we will have achieved our goal to focus
entirely on our core car and truck rental businesses. In aggregate, the sales
of the non-core assets, including the previously announced sales of other
Budget Car Sales locations and our Licensee Leasing Program, will generate
approximately $140 million in cash and notes to free up capital for investment
in our core operations," said Sandy Miller, Chairman and CEO, Budget Group, Inc.
Revenue for the domestic Car Rental segment increased 12.1% to
$407.0 million for the second quarter 2000, compared to $363.0 million in the
prior year. Second quarter operating income from the domestic Car Rental
segment increased 53.4%, reaching $81.5 million compared to $53.2 million in
second quarter 1999. This follows on the 67% increase achieved in first
quarter 2000.
Budget Group President and Chief Operating Officer Mark Sotir noted,
"Domestic car rental operations continue to show strong improvements in
operating fundamentals and profitability. Our efforts to take costs out of
the business and increase our fleet utilization and labor productivity also
continue to deliver improved profit margins."
Revenue for the Truck Rental segment increased 5.1% for the quarter to
$197.5 million. This compares to $187.8 million in the second quarter 1999.
For the quarter, the Truck Rental segment earned operating income of
$29.7 million, in line with prior year second quarter operating income of
$30.0 million.
"During the quarter we sold nearly 2,500 trucks marshaled for disposal.
We are very focused on bringing our fleet capacity more closely in line with
demand and will continue efforts to reduce the size of our truck fleet to
maximize utilization throughout the balance of the year," noted Sotir.
"We continue to aggressively drive cost reductions throughout Budget
Group," added Sotir. "We are on target for our headcount eliminations and
have significantly reduced selling, general and administrative expenses
through cost-control measures and other personnel savings. We are also seeing
initial cost savings from our Budget and Ryder TRS consolidation efforts."
International Car Rental operations posted a revenue increase of 25%,
reaching $72.5 million in the second quarter. The costs from locations opened
or acquired in the previous year within Europe adversely impacted operating
margins. The Company reported an operating loss of $9.6 million from the
international Car Rental segment during second quarter 2000, compared to
operating income of $2.6 million for the same period in 1999.
Miller noted, "With North American car rental operations realizing the
benefits of our turnaround efforts and strategic initiatives under way in our
Truck Group, we are taking definitive actions to stem international losses.
Although expansion efforts and receivables issues from European system
conversions continue to be a drain on earnings, we are making significant
progress to ensure that these problems do not continue into 2001.
Additionally, we are evaluating various alternatives to improve our results in
Europe including a model that will reduce our capital investment, increase our
royalty fee base and allow us to maintain a strong brand presence in the
international marketplace."
Budget Group, Inc. owns Budget Rent a Car Corporation and Ryder TRS, Inc.
Budget is the world's third largest car and truck rental system and Ryder TRS
is the nation's second largest consumer truck rental company.
BUDGET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Period Ending June 30
(in thousands)
2nd quarter Year to Date
2000 1999 2000 1999
OPERATING REVENUE:
Vehicle rental $619,185 $557,336 $1,160,542 $1,026,803
Royalty fees and
other 27,616 29,906 50,978 54,274
Total operating
revenue 646,801 587,242 1,211,520 1,081,077
OPERATING EXPENSES:
Direct vehicle and
operating 239,299 215,193 482,979 419,231
Depreciation -
vehicle 145,526 134,563 288,408 263,390
Selling, general and
administrative 150,235 140,249 304,547 272,046
Amortization and
non-vehicle
depreciation 20,722 17,834 41,041 34,327
Total operating
expenses 555,782 507,839 1,116,975 988,994
OPERATING INCOME 91,019 79,403 94,545 92,083
OTHER EXPENSE:
Vehicle interest, net 58,444 41,405 107,232 83,704
Other interest, net 8,017 6,725 17,956 7,196
Total other expense 66,461 48,130 125,188 90,900
INCOME (LOSS) BEFORE
INCOME TAXES 24,558 31,273 (30,643) 1,183
Provision (benefit)
for income taxes 9,935 10,388 (20,009) (4,607)
Distribution on trust
preferred securities 4,687 4,804 9,375 9,427
INCOME (LOSS) FROM
CONTINUING OPERATIONS 9,936 16,081 (20,009) (3,637)
DISCONTINUED OPERATIONS:
INCOME (LOSS) FROM
OPERATIONS OF BUSINESS
SEGMENTS TO BE DISPOSED
OF (Net of income taxes) -- 131 -- (3,201)
NET INCOME (LOSS) $9,936 $16,212 $(20,009) $(6,838)
2nd quarter Year to Date
2000 1999 2000 1999
Weighted average
number of shares
outstanding - Basic 37,250,000 35,902,000 37,249,000 35,879,000
Basic EPS - Income
(loss) from
continuing operations $0.27 $0.45 $(0.54) $(0.10)
Basic EPS - Income
(loss) from operations
of discontinued
segments to be disposed
of (Net of income taxes) -- $0.00 -- $(0.09)
Basic EPS - Net Income
(loss) $0.27 $0.45 $(0.54) $(0.19)
Weighted average
number of shares
outstanding -
Diluted 37,250,000 46,818,000 37,249,000 35,879,000
Diluted EPS - Income
(loss) from
continuing operations $0.27 $0.42 $(0.54) $(0.10)
Diluted EPS - Income
(loss) from operations
of discontinued
segments to be disposed
of (Net of income taxes) -- $0.00 -- $(0.09)
Diluted EPS - Net
Income (loss) $0.27 $0.42 $(0.54) $(0.19)
BUDGET GROUP, INC.
SEGMENT REPORTING
Period Ending June 30
(in thousands)
2nd quarter Year to Date
2000 1999 2000 1999
REVENUE:
Car Rental - Domestic $406,972 $362,969 $780,360 $689,791
Car Rental -
International 72,543 58,048 140,920 107,747
Truck Rental 197,501 187,829 347,507 325,617
Eliminations (30,215) (21,604) (57,267) (42,078)
Total Revenue $646,801 $587,242 $1,211,520 $1,081,077
OPERATING INCOME (LOSS):
Car Rental - Domestic $81,544 $53,162 $119,121 $75,671
Car Rental -
International (9,556) 2,550 (29,246) 2,387
Truck Rental 29,693 29,996 21,348 25,025
Corporate Overhead (10,662) (6,305) (16,678) (11,000)
Total Operating Income $91,019 $79,403 $94,545 $92,083
BUDGET RENT A CAR CORPORATION
2nd QUARTER 2000 OPERATING STATISTICS
North America - Cars
2000 CHANGE FROM
2nd QUARTER PRIOR 2nd QUARTER
Average Fleet 123,465 9.5%
Utilization 83.4% 20 bps
Rental Days 9,368,780 9.7%
Daily Dollar Average $40.13 1.3%
Rental Revenue $375,952,000 11.2%
Transactions 2,231,812 11.1%
Revenue Per Unit $1,015 1.5%
Length of Rental 4.20 -1.2%
North America - Trucks (Ryder & Budget)
2000 CHANGE FROM
2nd QUARTER PRIOR 2nd QUARTER
Average Fleet 47,550 8.4%
Utilization 51.4% -150 bps
Rental Days 2,224,695 5.4%
Daily Dollar Average $84.78 0.4%
Rental Revenue $188,616,000 5.8%
Transactions 702,653 -2.6%
Revenue Per Unit $1,322 -2.4%
Length of Rental 3.17 8.2%