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Hertz Posts Quarterly Profit On Cost-Cutting, Higher Rentals

Reuters
Tuesday, 13 Mar 2007 | 10:59 AM ET

Hertz Global on Monday posted a quarterly profit helped by cost savings and solid performance in its car and equipment rental units.

Operating expenses were cut by more than two percentage points of revenue compared with the year-ago quarter, even as advertising spending increased, Chief Executive Mark Frissora said in a statement.

The rental-car operator said net income for the fourth quarter was $39.8 million, or 14 cents a share, compared with a loss of $27.6 million, or 12 cents a share, in the year-ago quarter.

On an adjusted basis, income for the quarter rose to $81.7 million, or 25 cents a share, from $32.4 million, or 10 cents a share, in the prior year period.

Revenue increased 8% to $1.99 billion, helped by higher car rental revenue of $1.55 billion in the quarter.

Analysts on average were expecting earnings of 5 cents a share, excluding items, on revenue of $1.98 billion, according to Reuters Estimates.

Hertz said it expects improved revenue and profitability in 2007.

Revenue is projected between $8.5 billion and $8.6 billion for 2007, compared with analysts' expectations of $8.6 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) is forecast between $1.54 billion and $1.57 billion. Analysts' average EBITDA view is $2.43 billion.

Adjusted net income is expected to be $372 million to $395 million, or $1.15 to $1.22 a share. Analysts are expecting 72 cents a share, before items.

Hertz forecast mid-single digit demand growth in the U.S. and European car rental markets in 2007.

Its 2007 model year unit car costs are set to rise by less than 6% in the United States, while those in Europe are expected to increase by about 10%, Hertz said.

The company said its equipment rental business would further penetrate the industrial and pump equipment rental markets, to partially offset the slowing U.S. non-residential construction market.

Equipment rental operations contributed a fifth of the company's fourth-quarter revenue.

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