Hertz Swings to Q2 Profit, Raises Guidance for 2011

Hertz Global Holdings Inc. reported second quarter 2011 worldwide revenues of $2.1 billion, an increase of 10.3 percent year-over-year (a 5.8 percent increase without gains from currency exchange rates). Worldwide car rental revenues for the quarter increased 9.8 percent year-over-year (a 5.0 percent minus foreign currency gains) to $1.8 billion. U.S. car rental adjusted pre-tax income for the second quarter up 46.8 percent over the prior year period.

Revenues from worldwide equipment rental for the second quarter were $301.7 million, up 13.5 percent year-over-year (a 10.5 percent increase minus foreign currency gains).

Second quarter 2011 net income was $55 million, compared with a net loss of $25.1 million, for the second quarter of 2010.

Mark P. Frissora, the company's chairman and chief executive officer, said, "It is especially gratifying to see our global team drive Hertz's profitability to levels we haven't seen before. Second quarter 2011 adjusted pre-tax income beat our 2007 pre-recession second quarter by over $27 million, on $100 million lower revenues, with pre-tax margins which were 170 bps higher than 2007, and 380 bps above last year. These excellent results were attributable to strong year-over-year profit improvement in U.S. rent-a-car and our equipment rental businesses, despite major investments in our strategic initiatives."

Hertz has increased its full year 2011 guidance for revenues, corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share.

Car Rental Metrics

Worldwide car rental revenues were $1.8 billion for the second quarter of 2011, an increase of 9.8 percent (a 5.0 percent increase minus foreign currency gains) from the prior year period.

Worldwide car rental adjusted pre-tax income for the second quarter of 2011 was $242.2 million, an increase of $67.3 million from $174.9 million in the prior year period. The result was driven by increased volume, strong residual values and strong cost management performance, according to Hertz. As a result, worldwide car rental achieved an adjusted pre-tax margin of 13.7 percent for the quarter, versus 10.9 percent in the prior year period.

In the U.S., transaction days for the quarter increased 8.3 percent over second quarter of 2010. U.S. off-airport total revenues for the second quarter increased 9 percent year-over-year, and transaction days increased 9.7 percent from the prior year period.

Rental rate revenue per transaction day (RPD) for the quarter in the U.S. decreased 4.3 percent from the prior year period.

The worldwide average number of company-operated cars for the second quarter of 2011 was 487,600, an increase of 8.7 percent over the prior year period. The Company noted that ongoing structural changes in U.S. rental car fleet management as well as a strong residual market helped improve net depreciation to historic levels.

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