Hertz Raises Guidance Despite Q3 Revenue Declines

Hertz Global Holdings reported third quarter 2009 worldwide revenues of $2 billion a 15.7 percent year-over-year decrease (13.4 percent in constant currency). Worldwide equipment rental revenue for the third quarter dropped 35.2 percent to $280.5 million compared with $433.1 million for last year’s third quarter. Worldwide car rental revenues dropped 11.5 percent.

Adjusted pre-tax income for the third quarter increased 15.5 percent to $195.3 million, compared with $160.1 million for the same period in 2008. Adjusted net income was $124.5 million, a 17.5 percent year-over-year boost.

“Our strong earnings performance in the third quarter reflects sustained progress on expense management and incremental revenue-generating initiatives which are offsetting soft, but improving business and travel demand and stabilizing equipment rental volume,” said Hertz chairman and CEO Mark Frissora. “As the global economy recovers, we expect our balanced approach to revenue growth, costs and cash management will result in continued improvement in key financial metrics. Additionally, with the recent completion of two Capital Market transactions totaling $3.3 billion, Hertz has achieved its U.S. fleet refinancing targets on favorable terms a year ahead of schedule.

For the equipment rental division, adjusted pre-tax income for the third quarter of 2009 was $25.2 million, a 68.9 percent drop from the same period a year ago, primarily attributable to the effects of reduced volume and pricing, partially offset by cost management initiatives. Hertz Equipment Rental Corp. achieved an adjusted pre-tax margin, based on revenues, of 9 percent and a corporate EBITDA margin, based on revenues, of 41.9 percent for the quarter.

Despite the declines, Hertz announced improved guidance on all financial metrics for full year 2009 based on stronger than forecast financial results in the third quarter and current projections for the fourth quarter of 2009. Hertz said its improved guidance is based on its favourable third quarter performance in its worldwide car rental business, as well as the improving macro outlook for the fourth quarter. Worldwide car rental adjusted pre-tax income for the third quarter increased 54.6 percent year over year.

Hertz revised its full-year guidance, now expecting full-year revenues in the range of $7 billion to $7.1 billion, compared with the previously predicted range of $6.7 billion to $7 billion. Projected corporate EBITDA is in the $950 million to $960 million range, compared with the previously predicted range of $900 million to $935 million.

HERC, based in Park Ridge, N.J., is No. 4 on the RER 100.

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