Hertz Reports Record Quarterly Income

Hertz Global Holdings Inc. reported third quarter 2011 worldwide revenues of $2.4 billion, an increase of 11.3 percent year-over-year — or a 7.6 percent increase excluding the effects of foreign currency.

Worldwide car rental revenues for the quarter increased 10.8 percent year-over-year — a 7.0 percent increase excluding the effects of foreign currency — to $2.1 billion.  This marks record worldwide car rental revenue for the company, according to Mark Frissora, Hertz chairman and CEO.

“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 said.

Third quarter 2011 adjusted pre-tax income was $346.9 million, versus $251.4 million in the same period in 2010, and income before income taxes ("pre-tax income"), on a GAAP basis, was $295.7 million, versus $156.1 million in the third quarter of 2010. Corporate EBITDA for the third quarter of 2011 was $525.7 million, an increase of 20.8 percent from the same period in 2010.

Third quarter 2011 adjusted net income(1) was $223.2 million, versus $161.2 million in the same period of 2010, resulting in adjusted diluted earnings per share for the quarter of $0.51, compared with $0.39 for the third quarter of 2010.

Third quarter 2011 net income attributable to Hertz Global Holdings Inc. and subsidiaries' common stockholders, or "net income," on a GAAP basis, was $206.7 million or $0.47 per share on a diluted basis, compared with a $155.3 million, or $0.36 per share on a diluted basis, for the third quarter of 2010.

Income Measurements, Third Quarter 2011 & 2010
The company ended the third quarter of 2011 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.

Total debt increased in the third quarter of 2011 primarily due to the assumption of Donlen Corporation's variable fleet debt funding note facility in connection with the acquisition. Net corporate debt increased primarily due to increased borrowings under Senior ABL Facility and a decrease in cash and cash equivalents.

Net cash provided by operating activities was $961.6 million in the third quarter of 2011, compared to $713.3 million in the same period last year, an increase of $248.3 million. The increase was primarily due to an increase in net income before non-cash expenses.

Worldwide Car Rental
Worldwide car rental revenues were $2.1 billion for the third quarter of 2011, an increase of 10.8 percent from the prior year period. Transaction days for the quarter increased 10.4 percent over the third quarter of 2010 — 11.9 percent U.S. and 7.7 percent International.

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. Worldwide rental rate revenue per transaction day (RPD) for the quarter decreased 5.2 percent [(6.3) percent U.S.; (3.3) percent International] from the prior year period.

Worldwide car rental adjusted pre-tax income for the third quarter of 2011 was $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. As a result, worldwide car rental achieved an adjusted pre-tax margin of 17.8 percent for the quarter, versus 16.1 percent in the prior year period.

The worldwide average number of Company-operated cars, largely as a result of the Donlen acquisition, for the third quarter of 2011 was 667,800 an increase of 37.1 percent over the prior year period.

Outlook
Hertz reaffirms its full year 2011 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 $0.91 to $0.96 (based on 440 million shares).

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