Hertz Global Holdings last week reported record first-quarter 2007 revenues of $1.92 billion, an increase of 7.6 percent from $1.78 billion in the same period in 2006. Revenues from worldwide equipment rental were $389.9 million, up 7.4 percent from $363.1 million in the prior-year period.
Corporate EBITDA for the first quarter of 2007 was $238 million, an increase of 19.8 percent from $198.7 million in the first quarter of 2006, while adjusted pre-tax income, a measurement the company believes better reflects financial results from ongoing operations, was $16.1 million, compared with a loss of $11.6 million in the prior-year period.
The company incurred a loss before taxes and minority interest of $90.6 million during the quarter, a result that includes more than $50 million of non-recurring charges, compared with a $63.3 million loss in the first quarter of 2006. The first quarter is typically the weakest for car and equipment rental companies due to the seasonality of the businesses, the company said.
The company's loss for the first quarter of 2007 is attributable, in part, it said to a $32.6 million restructuring charge and an additional non-cash interest charge of $19.2 million, primarily related to debt restructuring. The company said it anticipates annualized savings of approximately $140 million from previously announced job reductions, and $8.5 million in annualized savings attributable to debt restructuring. There will be additional restructuring actions during 2007, which will be announced when plans are finalized.
Adjusted net income was $6.3 million, resulting in adjusted earnings per share for the quarter of $0.02, based on the pro-forma post-IPO diluted number of shares outstanding (324.8 million), compared with a loss of $10.8 million, or $(0.03) per share, in the prior year period. The company incurred a net loss of $62.6 million for the first quarter of 2007, or $(0.19) per share on a fully diluted basis, compared with a loss of $49.2 million, or $(0.21) per share on a fully diluted basis in the same period last year.
“Hertz achieved strong first-quarter operating results due to revenue growth and additional progress on our cost management initiatives, as we reduced direct operating expenses by 2.4 percentage points of revenues compared with the first quarter of 2006,” said Mark Frissora, chairman and CEO. “Our revenue growth is the result of geographic, market and product diversification. Our global platforms, complementary rental businesses and cost-management discipline set Hertz apart from the competition and are driving our financial performance.”
The company attributes its equipment rental revenue growth to the strength of its business in its U.S., Canada, France and Spain markets, and the diversification of its product and market mix. Pricing increased by 1.7 percent despite the effects of the slower non-residential construction business in the U.S., as well as the unfavorable year-over-year comparisons in the Gulf Coast regions, which experienced heavy hurricane-related rental demand in the first quarter of 2006. This will continue to impact the year-over-year comparisons for the second quarter, although at a lower level, before it subsides, the company said.
Corporate EBITDA in the rental business improved to $173.9 million for the quarter, an 18.7-percent increase over $146.5 million in the first quarter 2006.
The average acquisition cost of rental equipment operated during the first quarter of 2007 increased 12.1 percent to $3.09 billion, and net revenue earning equipment as of March 31, was $2.42 billion, a 10.4 percent increase over the amount as of March 31, 2006.
The company re-affirmed its full-year 2007 outlook. It forecasts revenues of $8.5 billion to $8.6 billion, an increase of 5 to 7 percent for both car and equipment rental; corporate EBITDA in the range of $1.54 billion to $1.57 billion, an increase of between 12 to 14 percent; adjusted pre-tax income in the range of $600 million to $630 million, an increase of between 23 and 29 percent; and adjusted net income of $372 million to $395 million, an increase of between 24 to 32 percent, or $1.15 to $1.22 per share, based on the pro forma post-IPO diluted number of shares outstanding (324.8 million).
Park Ridge, N.J.-based HERC is No. 3 on the RER 100.
