Budget Group Reports Third Quarter Profits
27 October 2000
Budget Group Reports Third Quarter Profits
LISLE, Ill., Oct. 26 Budget Group, Inc.
released its third quarter 2000 results today, reporting net income from
continuing operations of $11.3 million and earnings per share of $0.30 on a
diluted basis. In the prior year third quarter, net income from continuing
operations was $29.8 million and earnings per share from continuing operations
were $0.70 on a diluted basis. The strength in North American Car Rental
operations helped offset continued losses for the quarter from Budget's
European operations. Budget Group reported revenue for the third quarter of
$707.9 million, compared to $695.2 million in 1999.
Third quarter revenue for the domestic Car Rental segment rose 5.4% to
$431.1 million, despite an unfavorable pricing environment within the
industry. Rental days in North America were up 5.8% and transactions rose
6.9%, compared to a very strong third quarter in the prior year. Operating
income was up slightly to $83.9 million, as the Company's continuing efforts
to reduce costs and increase productivity helped overcome the impact of the
weak pricing environment.
"Budget Rent a Car North America had a strong quarter, despite the
depressed industry pricing environment which is likely to continue into the
fourth quarter. Our year-to-date operating income of over $200 million is
evidence of the steady progress we have made, quarter after quarter, to take
costs out of the business while continuing to grow revenue at our airport and
neighborhood locations," said Mark Sotir, president and chief operating
officer, Budget Group, Inc.
The Truck Rental segment reported revenue of $218.3 million and operating
income of $37.4 million for the quarter. This compares to $228.6 million in
revenue and $39.4 million in operating income for the third quarter 1999. The
Company's continuing effort to bring fleet size in line with demand resulted
in a 3.6% reduction in average fleet in the quarter compared to prior year
third quarter. Utilization rose 160 basis points over third quarter 1999.
Sotir noted, "We are turning the corner on our truck operations. This is
the first quarter that we experienced a decrease in the truck fleet size. The
rise in utilization this quarter compared to prior year is a reversal of the
trend we experienced earlier in the year. Additionally, we are starting to
realize reductions in truck overhead costs, particularly in the area of
personnel."
Third quarter revenue from International Car Rental operations was up 6.6%
to $89.5 million. However, International reported an operating loss of
$17.3 million due to losses in European corporate operations. To stem further
losses in its European operations into 2001, Budget management is aggressively
implementing corrective actions. In addition to fleet reduction efforts,
which began in second quarter, the Company is reducing headcount, constricting
capital expenditures, and halting expansion of new distribution points.
Recently the Company closed on the sale of the Denmark operations and has
signed a letter of intent to refranchise its Puerto Rican operations. This is
in line with the Company's strategy to pursue alternative models to improve
international results, reduce capital investment, and increase its royalty fee
base while still allowing the Company to maintain a strong brand presence in
the international marketplace.
Budget Group also announced that, in keeping with its strategy to sell
non-core assets, it has closed on the sales of VPSI and Cruise America.
For its domestic car rental segment, the Company estimates rental days
during the fourth quarter will be up approximately 0.5% to 1% versus prior
year fourth quarter, while revenue per day is expected to be down
approximately 3% to 4% compared to the prior year fourth quarter. The
Company's estimated outlook for full year 2001 is to grow domestic car rental
days by 4% to 5% and increase revenue per day 1% to 2% percent.
The Company estimates truck rental days during the fourth quarter of 2000
will be flat to up 1% versus last year fourth quarter, while revenue per day
is expected to be down approximately 3% to 4% compared to fourth quarter 1999.
BUDGET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Period Ending September 30
(in thousands)
3rd quarter Year to Date
2000 1999 2000 1999
OPERATING REVENUE:
Vehicle rental $678,798 $663,027 $1,839,340 $1,689,830
Royalty fees and
other 29,092 32,161 80,070 86,435
Total operating
revenue 707,890 695,188 1,919,410 1,776,265
OPERATING EXPENSES:
Direct vehicle and
operating 273,510 266,337 766,245 706,474
Depreciation -
vehicle 160,283 146,538 448,691 409,930
Selling, general and
administrative 155,321 138,018 450,112 389,156
Amortization and
non-vehicle
depreciation 21,536 16,592 62,577 50,919
Total operating
expenses 610,650 567,485 1,727,625 1,556,479
OPERATING INCOME 97,240 127,703 191,785 219,786
OTHER EXPENSE:
Vehicle interest, net 61,007 50,960 168,239 134,664
Other interest, net 9,707 8,940 27,663 16,136
Total other expense 70,714 59,900 195,902 150,800
INCOME (LOSS) BEFORE
INCOME TAXES 26,526 67,803 (4,117) 68,986
Provision (benefit)
for income taxes 10,588 33,181 (9,421) 28,574
Distribution on trust
preferred securities 4,687 4,792 14,062 14,219
INCOME (LOSS) FROM
CONTINUING
OPERATIONS 11,251 29,830 (8,758) 26,193
DISCONTINUED OPERATIONS:
INCOME FROM OPERATIONS
OF BUSINESS SEGMENTS
TO BE DISPOSED OF
(Net of income taxes) -- 7,444 -- 4,243
NET INCOME (LOSS) $11,251 $37,274 $(8,758) $30,436
3rd quarter Year to Date
2000 1999 2000 1999
Weighted average
number of shares
outstanding -
Basic 37,250,000 36,768,000 37,249,000 36,179,000
Basic EPS - Income
(loss) from
continuing
operations $0.30 $0.81 $(0.24) $0.72
Basic EPS - Income
from operations of
discontinued
segments to be
disposed of
(Net of income taxes) -- $0.20 -- $0.12
Basic EPS - Net
Income (loss) $0.30 $1.01 $(0.24) $0.84
Weighted average
number of shares
outstanding -
Diluted 37,250,000 47,485,000 37,249,000 36,259,000
Diluted EPS -
Income (loss)
from continuing
operations $0.30 $0.70 $(0.24) $0.72
Diluted EPS -
Income from
operations of
discontinued
segments to be
disposed of
(Net of income taxes) -- $0.16 -- $0.12
Diluted EPS -
Net Income (loss) $0.30 $0.86 $(0.24) $0.84
BUDGET GROUP, INC.
SEGMENT REPORTING
Period Ending September 30
(in thousands)
3rd quarter Year to Date
2000 1999 2000 1999
REVENUE:
Car Rental
- Domestic $431,126 $409,092 $1,211,486 $1,098,883
Car Rental
- International 89,507 83,966 230,427 191,713
Truck Rental 218,322 228,594 565,829 554,211
Eliminations (31,065) (26,464) (88,332) (68,542)
Total Revenue $707,890 $695,188 $1,919,410 $1,776,265
OPERATING INCOME (LOSS):
Car Rental
- Domestic $83,916 $83,752 $203,037 $159,423
Car Rental
- International (17,311) 7,029 (46,557) 9,416
Truck Rental 37,356 39,391 58,704 64,416
Corporate Overhead (6,721) (2,469) (23,399) (13,469)
Total Operating
Income $97,240 $127,703 $191,785 $219,786
BUDGET RENT A CAR CORPORATION
3rd QUARTER 2000 OPERATING STATISTICS
North America - Cars
CHANGE FROM
2000 PRIOR
3rd QUARTER 3rd QUARTER
Average Fleet 126,622 6.3%
Utilization 84.8% -40bps
Rental Days 9,873,179 5.8%
Daily Dollar Average $40.43 -1.0%
Rental Revenue $399,161,000 4.7%
Transactions 2,205,907 6.9%
Revenue Per Unit $1,051 -1.5%
Length of Rental 4.48 -0.9%
North America - Trucks (Ryder & Budget)
CHANGE FROM
2000 PRIOR
3rd QUARTER 3rd QUARTER
Average Fleet 47,411 -3.6%
Utilization 55.6% 160bps
Rental Days 2,426,723 -0.8%
Daily Dollar Average $86.69 -2.8%
Rental Revenue $210,382,000 -3.6%
Transactions 735,313 -6.9%
Revenue Per Unit $1,479 0.1%
Length of Rental 3.30 6.8%