Hertz Reports Record Third Quarter Revenue and Earnings
13 October 2000
Hertz Reports Record Third Quarter Revenue and Earnings
PARK RIDGE, N.J., Oct. 13 The Hertz Corporation
reported record Third Quarter revenues of $1.438 billion, an
increase of 6.9%, or $93 million, over the comparable period last year, and a
9.6% increase before the effects of foreign exchange translation. Net income
for the quarter was a record $142.8 million or $1.33 per share on a diluted
basis. The per share amount represents a $0.05 increase year-over-year and is
$0.03 above the average of analysts' estimates as published by First Call.
Worldwide vehicle rental and leasing revenue in the Third Quarter was
$1.160 billion, an increase of 5.7% over the comparable period last year, or
an increase of 8.7% before the effects of foreign exchange translation.
Worldwide industrial and construction equipment rental revenue was
$269 million, a 15.5% increase over the same period last year, or an increase
of 17.0% before the effects of foreign exchange, and same market revenue
increased 4.0% over last year.
The Company expects diluted net income per share of $3.33 for the full
year 2000, which includes a one-time net gain, related to the disposal of real
property, of $0.05 per share diluted reported in the Second Quarter of this
year. The Company continues to expect a weaker First Quarter of 2001 than the
comparable period in 2000, but expects to achieve the average analysts'
estimate of $3.42 net income per share for the full year 2001.
Craig R. Koch, President and Chief Executive Officer, said "we are pleased
that we have achieved record earnings for the eleventh consecutive quarter.
While it is still early in our 2001 planning cycle, and allowing for some
economic moderation and a weaker First Quarter, we remain comfortable with the
full year 2001 consensus estimate, which would be the eighth consecutive
record year for Hertz. We are encouraged that the fundamentals, including
pricing opportunities, support full-year profit growth for 2001."
DOMESTIC VEHICLE RENTAL, which includes airport and suburban markets, had
pre-tax earnings for the Third Quarter of $162.5 million, up 3.9% over last
year, generating an 18.8% margin. Revenues in the Third Quarter totaled
$866.4 million, an increase of 7.4% over last year. Rental revenue in the
Third Quarter grew by 7.7%, comprised of 9.7% transaction day growth,
partially offset by a revenue per day decline of 1.9% compared with Third
Quarter 1999. At airport locations, revenue per day declined by 0.4%
year-over-year. There are now 634 suburban locations, an increase of 149
year-to-date, which generated Third Quarter revenue of $116 million, or a
32.7% increase year-over-year.
The Company expects that revenue per day will be down 2% to 3% in the
Fourth Quarter 2000 with continued solid growth in transactions days. The
outlook for 2001 is for no significant increases in revenue per day early in
the year, compared with strong revenue per day growth in the same period of
2000. Growth in revenue per day is more likely to occur in the Second Quarter
and later in 2001. These assumptions yield the following estimates:
U.S. Car Rental Consolidated Airport
Revenue Per Day Transaction Days Revenue Per Day
Q4-2000 (2%) to (3%) +8.5% to +9.5% (1.5%) to (2.5%)
FY-2001 Flat to +1% +7% to +8% +1% to +2%
WORLDWIDE INDUSTRIAL AND CONSTRUCTION EQUIPMENT RENTAL generated pre-tax
income of $22.1 million, down from the same period in 1999, but improved from
the Second Quarter of 2000. The Company expects this business will achieve
overall revenue growth in 2000 of 13% to 15%, with the pre-tax margin in the
mid-single digit range. Pricing, down 4% in the first half of 2000, leveled
off to a 1% decrease year-over-year. To improve profitability, the Company
has slowed the growth of its network, implemented a staff restructuring,
continued to focus on revenue management and mix-of-business, adopted a
conservative 2001 fleet purchase program, and increased prices on high
utilization equipment where market conditions warranted.
The Company expects worldwide equipment rental revenue to grow by 9% to
11% in 2001, with an improvement in pre-tax margin as more of its newer
locations mature and cost reductions flow through to earnings. Network
expansion will continue, focusing on specific markets with high revenue and
profit opportunity. The Company noted that significant growth opportunities
exist through market share improvement and the growth of equipment rental as
an alternative to ownership.
INTERNATIONAL VEHICLE RENTAL AND LEASING generated total reported Third
Quarter revenue of $293 million, about the same as the comparable period last
year. However, the revenue increase was $35 million, or 12.4%, before the
effect of foreign exchange. Rental revenue in the Third Quarter increased
13.5%, before foreign exchange, which is comprised of revenue per day and
transaction day growth of 1.4% and 11.9%, respectively, led by strong
transaction day growth in Europe, Brazil and the Caribbean. International
pre-tax profits in the Third Quarter were $56.6 million, up 10.2% from the
comparable period last year, including the adverse effects of foreign exchange
and business disruptions related to fuel price disputes in several European
countries. Also, the Company announced that on August 31, 2000 it had
transferred, at the estimated fair value of $99.2 million, $16.4 million more
than net book value, its car leasing businesses in Australia, New Zealand and
the U.K. to Axus International, a subsidiary of Ford Motor Credit, that Hertz
has managed under contract since January 2000.
The Company expects revenue per day for international car rental to be
flat to up 1% during the Fourth Quarter and transaction day growth to be up 8%
to 9% for the Quarter. The preliminary outlook for the full year 2001 is for
revenue per day to be up 1% to 2% over the year 2000, with transaction day
growth of 9% to 10% over the prior year.
Headquartered in Park Ridge, New Jersey, Hertz operates from approximately
6,500 locations in the U.S. and in over 140 foreign countries.
This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, forecasts and
assumptions and involve risks and uncertainties, some of which are outside of
the Company's control, that could cause actual outcomes and results to differ
materially from current expectations. These risks and uncertainties include,
among other things, price and product competition, changes in general economic
and business conditions, wage inflation, economic and competitive conditions
in markets and countries where the Company's customers reside and where the
Company and its licensees operate, changes in capital availability or cost,
costs and other terms related to the acquisition and disposition of
automobiles and equipment, and certain regulatory and environmental matters.
These forward-looking statements represent the Company's judgments as of the
date of this release. The Company disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
THE HERTZ CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In Thousands of Dollars)
Unaudited
Three Months As % of
Ended September 30, Total Revenue
2000 1999 2000 1999
Revenue $1,437,756 $1,344,808 100.0% 100.0%
Expenses:
Direct operating 600,000 564,976 41.7% 42.0%
Depreciation of revenue
earning equipment 367,393 336,773 25.6% 25.0%
Selling, general and
administrative 115,725 116,650 8.0% 8.7%
Interest - net 119,046 93,714 8.3% 7.0%
Total expenses 1,202,164 1,112,113 83.6% 82.7%
Income before income
taxes 235,592 232,695 16.4% 17.3%
Income taxes 92,829 93,659 6.5% 7.0%
Net income $142,763 $139,036 9.9% 10.3%
Earnings per share:
Basic $1.33 $1.29
Diluted $1.33 $1.28
Weighted average number of shares outstanding:
Basic 107,427,227 108,032,375
Diluted 107,544,367 108,551,164
Nine Months As % of
Ended September 30, Total Revenue
2000 1999 2000 1999
Revenue $3,862,288 $3,545,152 100.0% 100.0%
Expenses:
Direct operating 1,708,496 1,571,510 44.2% 44.3%
Depreciation of revenue
earning equipment 1,007,491 921,634 26.1 % 26.0%
Selling, general and
administrative 341,068 340,134 8.8% 9.6%
Interest - net 307,335 250,211 8.0% 7.1%
Total expenses 3,364,390 3,083,489 87.1% 87.0%
Income before income
taxes 497,898 461,663 12.9% 13.0%
Income taxes 195,104 185,963 5.1% 5.2%
Net income $302,794 $275,700 7.8% 7.8%
Earnings per share
Basic $2.81 $2.55
Diluted $2.81 $2.54
Weighted average number of shares outstanding:
Basic 107,616,838 108,005,161
Diluted 107,790,428 108,685,605
BALANCE SHEET DATA
(In Thousands of Dollars)
Unaudited
September 30,
2000 1999
Revenue earning equipment:
Cars $5,790,113 $5,344,510
Other equipment 1,777,254 1,572,891
Total assets 11,191,424 10,159,373
Total debt 7,345,085 6,566,201
Stockholders' equity 1,917,024 1,636,705
THE HERTZ CORPORATION
SUPPLEMENTARY INFORMATION
(In Millions of Dollars)
Unaudited
Three Months Ended September 30,
2000 1999 % Inc.- Dec.
Segment Results
Revenue
Vehicle Rental and Leasing
Domestic $ 866.4 $ 806.9 7.4%
International 293.3 290.5 1.0%
Worldwide Vehicle Rental
and Leasing 1,159.7 1,097.4 5.7%
Industrial and Construction
Equipment Rental 269.1 233.1 15.5%
Corporate and Other 9.0 14.3 -37.1%
Total $1,437.8 $1,344.8 6.9%
Pretax Income
Vehicle Rental and Leasing
Domestic $ 162.5 $ 156.4 3.9%
International 56.6 51.3 10.2%
Worldwide Vehicle Rental
and Leasing 219.1 207.7 5.5%
Industrial and Construction
Equipment Rental 22.1 32.5 -31.9%
Corporate and Other (5.6) (7.5) 25.4%
Total $ 235.6 $ 232.7 1.2%
Vehicle Rental and Leasing Segment Operating Metrics
Domestic Car Rental Operations (Consolidated)*
Rental Revenue $ 864.8 $ 803.1 7.7%
Transaction Days, in millions 20.98 19.12 9.7%
Revenue Per Day,
in whole dollars $ 41.21 $ 42.00 -1.9%
International Car Rental Operations - Before F/X
Rental Revenue $ 296.0 $ 260.8 13.5%
Transaction Days, in millions 8.52 7.62 11.9%
Revenue Per Day,
in whole dollars $ 34.73 $ 34.24 1.4%
Worldwide Car Rental Operations - Before F/X
Rental Revenue $1,160.8 $1,063.9 9.1%
Transaction Days, in millions 29.51 26.74 10.3%
Revenue Per Day,
in whole dollars $ 39.34 $ 39.79 -1.1%
______________________________________________________________________
| |
| |
| *Domestic Car Rental Operations (a) |
| |
| Suburban Car Rental |
| Revenue $115.8 $ 87.3 32.7% |
| Airport Car Rental Operations |
| Rental Revenue $751.8 $712.7 5.5% |
| Transaction Day Growth 5.9% |
| Revenue Per Day Growth -0.4% |
| |
| Commercial Rentals |
| Transaction Day Growth 2.8% |
| Revenue Per Day Growth 0.3% |
| Discretionary Rentals |
| Transaction Day Growth 9.6% |
| Revenue Per Day Growth -1.2% |
| |
| (a) Based on the Company's statistical tracking system. |
|______________________________________________________________________|
Industrial and Construction Equipment Rental Segment Operating Metrics
Worldwide Same Market Revenue Growth - Before F/X +4.0%
United States Rental Rate Change -1.1%