Hertz’s 3Q Adjusted Income Hits Record High
Hertz Global Holdings saw all of its bottom-line financial metrics soar during the third quarter, including worldwide revenues, adjusted pre-tax income and corporate EBIDTA.
Hertz revealed this week that third-quarter worldwide revenues came in at $2.4 billion, an increase of 11.3 percent year-over-year (a 7.6-percent increase excluding the effects of foreign currency).
The company said worldwide car rental revenues for the quarter climbed 10.8-percent year-over-year (a 7.0-percent jump excluding the effects of foreign currency) to $2.1 billion.
Officials added revenues from worldwide equipment rental for the third quarter were $321.7 million, up 14.4 percent year-over-year (an 11.9-percent uptick excluding the effects of foreign currency).
As a result, Hertz determined its third-quarter adjusted pre-tax income settled at $346.9 million, versus $251.4 million in the same period a year ago. The company also stated its third-quarter pre-tax income on a GAAP basis was $295.7 million, versus $156.1 million in the same period last year.
Furthermore, the company found its corporate EBITDA for the third quarter came in at $525.7 million, an increase of 20.8 percent from the same period in 2010.
In other broad measurements, Hertz’s third-quarter adjusted net income was $223.2 million, versus $161.2 million in the same period last year. That tally resulted in adjusted diluted earnings per share for the quarter of 51 cents, compared with 39 cents for the third quarter of last year.
Third-quarter net income attributable to Hertz Global Holdings and subsidiaries’ common stockholders on a GAAP basis settled at $206.7 million or 47 cents per share on a diluted basis. A year earlier, it was $155.3 million or 36 cents per share on a diluted basis.
“In the third quarter, we delivered our highest revenues ever for worldwide car rental and both on a consolidated basis, and for worldwide car rental, we generated record GAAP and adjusted pre-tax and net income, as well as the highest adjusted pre-tax and net income margins in the company’s history,” highlighted Mark Frissora, the company’s chairman and chief executive officer.
“These record results were driven by a number of factors: 21.1 percent volume growth in U.S. insurance replacement; 30.9 percent volume growth in U.S. Advantage Rent-a-Car; and 14.4 percent revenue growth in worldwide equipment rental which helped HERC generate a corporate EBITDA margin of 42.1 percent for the quarter,” Frissora continued.
Hertz noted that it ended the third quarter with total debt of $12.51 billion and net corporate debt of $4.4 billion, compared with total debt of $11.69 billion and net corporate debt of $4.0 billion as of June 30.
Officials explained total debt increased in the third quarter primarily due to the assumption of Donlen’s variable fleet debt funding note facility in connection with the acquisition.
They added net corporate debt increased primarily due to increased borrowings under their senior ABL facility and a decrease in cash and cash equivalents.
Hertz went on to mention net cash provided by operating activities was $961.6 million in the third quarter, compared to $713.3 million in the same period last year, an increase of $248.3 million.
The company noted the increase was primarily due to an increase in net income before non-cash expenses.
More Details about Worldwide Car Rental Performance
Hertz indicated third-quarter worldwide car rental revenues rose 10.8 percent (a 7.0-percent increase excluding the effects of foreign currency) to $2.1 billion.
The company pointed out transaction days for the quarter increased 10.4 percent over the third quarter of last year, an 11.9-percent rise in the U.S. and a 7.7-percent uptick internationally.
Officials said U.S. off-airport total revenues for the third quarter increased 11.2 percent year-over-year, and transaction days increased 14.8 percent from the prior-year period.
They added worldwide rental rate revenue per transaction day for the quarter decreased 5.2 percent from the prior-year period. It was off by 6.3 percent U.S. and 3.3 percent internationally.
As a result, Hertz calculated its worldwide car rental adjusted pre-tax income for the third quarter to be $375.3 million, an increase of $68.2 million from $307.1 million in the prior year period.
“The result was driven by increased volume, strong residual values and strong cost management performance,” officials explained.
Because of these conditions, the company’s worldwide car rental operation achieved an adjusted pre-tax margin of 17.8 percent for the quarter, versus 16.1 percent in the prior-year period.
Hertz noted the third-quarter worldwide average number of company-operated cars — largely as a result of the Donlen acquisition — was 667,800, an increase of 37.1 percent over the prior-year period.
More Info about Worldwide Equipment Rental Performance
Hertz highlighted its third-quarter worldwide equipment rental revenues were $321.7 million, a 14.4-percent increase (an 11.9-percent increase excluding the effects of foreign currency) from the prior-year period.
The company tabulated that its third-quarter adjusted pre-tax income for worldwide equipment rental was $55.9 million, an improvement of $22.2 million from $33.7 million in the prior year time frame.
Officials said the gain was primarily attributable to the effects of increased volume and pricing and cost management initiatives.
They pointed out worldwide equipment rental achieved an adjusted pre-tax margin of 17.4 percent, and a corporate EBITDA margin of 42.1 percent for the quarter.
The company also acknowledged the average acquisition cost of rental equipment operated during the third quarter jumped by 5.1 percent year-over-year, and net revenue earning equipment as of Sept. 30 was $1.779 billion, a 4.5-percent rise from June 30.
Performance Outlook
Hertz reaffirmed its full-year revenues, corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share guidance provided on Aug. 2.
The company expects to generate worldwide revenues in the range of $8.15 billion to $8.25 billion, corporate EBITDA in the range of $1.360 billion to $1.395 billion, adjusted pre-tax income in the range of $635 million to $670 million, adjusted net income in the range of $401 million to $424 million and adjusted diluted earnings per share in the range of 91 cents to 96 cents (based on 440 million shares).