Hertz Posts Another Income Jump in 3Q

PARK RIDGE, N.J. - 

Hertz Global Holdings extended its string of quarterly increases in adjusted pre-tax income to five in a row during the third quarter.

Company executives said Wednesday that their third quarter adjusted pre-tax income totaled $253.6 million. That amount constituted increase of $58.3 million or 29.9 percent from the income level the company generated in the third quarter of last year, which was $195.3 million.

Meanwhile, Hertz also mentioned its income before taxes on a GAAP basis was $158.3 million in the third quarter. Management determined that figure more than doubled the amount from the third quarter of 2009, which came in at $75.8 million.

Furthermore, the company reported corporate EBITDA for the third quarter was $437.2 million, an increase of 12.7 percent from the same period in 2009.

Executives calculated that its worldwide third-quarter revenues totaled $2.2 billion, marking a year-over-year increase of 7.1 percent.

Elsewhere, Hertz indicated that it took $15.2 million in restructuring and related charges in the third quarter. Executives explained the charges were primarily attributable to costs associated with the closure of equipment rental locations and process reengineering. The company expects the restructuring and related charges to continue to diminish throughout the remainder of 2010.

Management also determined Hertz ended the third quarter with total debt of $12.05 billion and net corporate debt of $3.78 billion. The company compared those figures with a total debt amount of $11.69 billion and net corporate debt figure of $3.64 billion as of June 30.

Officials pointed out their total debt increased primarily due to the private offering of $700 million of 7.5 percent senior notes that closed on Sept. 30 and were partly offset by a decrease in fleet debt related to seasonality.

Also, Hertz highlighted that net cash provided by operating activities was $904.7 million in the third quarter compared with $608.8 million during the year-ago period.

Hertz chairman and chief executive officer Mark Frissora offered his commentary about how the company performed.

“In the third quarter, we increased adjusted pre-tax income year-over-year for the fifth consecutive quarter and doubled GAAP pre-tax income compared with the third quarter of 2009,” Frissora began.

“These third quarter, year-over-year improvements are attributable to 11.4 percent revenue growth in U.S. car rental, our largest business, strong performance by our European car rental unit and efficiency improvements, including lower fleet costs,” he continued.

“Also, HERC generated revenue growth in the third quarter for the first time in two years, and recorded a 33.7 percent year-over-year improvement in adjusted pre-tax income as well as a corporate EBITDA margin of 40 percent,” Frissora went on to say. “Despite continued investments in our global car rental network, especially in the Advantage and U.S. off-airport businesses, we anticipate generating strong adjusted pre-tax income results for the fourth quarter.”

More Details on Vehicle Rental Activity

Executives shared that the worldwide average number of Hertz-operated vehicles for the third quarter was 487,100, an increase of 8.8 percent over the prior year period.

Hertz reported that its worldwide car rental revenues totaled $1.9 billion for the third quarter. That amount represented an 8.3-percent increase from the year-ago quarter.

Executives stated transaction days for the quarter increased 8.2 percent from the prior-year period. They added U.S. off-airport total revenues for the third quarter increased 15.8 percent and transaction days increased 10.4 percent year-over-year.

The company also mentioned third quarter rental rate revenue per transaction day edged higher by 1.1 percent over last year.

Those advances allowed Hertz to post a 19.7-percent increase in third quarter worldwide car rental adjusted pre-tax income to $309.3 million. A year ago, the company generated $258.3 million.

As a result, Hertz said it achieved an adjusted pre-tax margin, based on revenues, of 16.2 percent for the quarter versus 14.7 percent in the prior year period.

“The result was driven by increased volume and strong cost management performance,” company officials noted.

Equipment Rental Performance Update

Hertz determined its third quarter worldwide equipment rental revenues came in at $281.2 million. The amount was a 0.2-percent increase from the third quarter of last year.

As a result, Hertz’s adjusted third quarter pre-tax income for worldwide equipment rental totaled $33.7 million, marking a 33.7-percent rise the year-ago period when the company generated $25.2 million.

Executives revealed worldwide equipment rental achieved an adjusted pre-tax margin based on revenues of 12.0 percent, a 300 basis point improvement over the prior year period. Their corporate EBITDA margin based on revenues came in at 40.0 percent for the quarter.

Like on its vehicle rental business, Hertz said the gains were “primarily attributable to the effects of increased volume and cost management initiatives.”

The company shared that the average acquisition cost of rental equipment operated during the third quarter decreased by 5.0 percent year-over-year and net revenue earning equipment as of Sept. 30, was $1.68 billion, an 11.2-percent decrease from the amount as of the date last year.

Overall Outlook

Back on Oct. 20, the company announced it had reaffirmed its full-year 2010 revenue and corporate EBITDA guidance, provided on April 26. The range was $7.5 billion to $7.7 billion and $1.080 billion to $1.095 billion respectively.



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