While Hertz and Avis continue the bidding war for Dollar Thrifty, the three public rental car companies reported second-quarter earnings in August.

Hertz Global Holdings reported a second quarter net loss of $25.1 million because of restructuring charges, compared with a profit of $3.9 million in the second quarter of 2009. Revenue rose 7.1 percent to $1.88 billion, though expenses grew 9.4 percent.

Rental days rose 8.9 percent, increasing 10 percent in the U.S. and 6.4 percent internationally. Revenue per day (RPD) slipped 0.1 percent. Worldwide car-rental revenue grew 9.3 percent while equipment-rental revenue decreased 4 percent, or 5.9 percent excluding currency fluctuations.

Hertz's revenue performance fell slightly short of Wall Street's expectations, according to the Wall Street Journal.

Avis Budget Group reported a second quarter pre-tax income of $29 million, compared with a loss of $2 million in the previous year. Revenue fell 1 percent to $1.3 billion. Domestic rental days declined 6 percent, while RPD increased 1 percent. Car rental revenue slipped 5 percent in the U.S., but grew 16 percent internationally. Average daily rate dipped less than 1 percent in the quarter.

The car-rental company's earnings beat Wall Street's expectations, though revenue was below analysts' estimates, according to the WSJ.

Meanwhile, Dollar Thrifty continues to outperform Wall Street's expectations. The company more than tripled its profit in the
second quarter, earning a net income of $42.3 million compared with $12.4 million a year earlier.

Revenue fell 0.8 percent to $396.2 million, though car rental revenue rose 2.9 percent. Total expenses fell about 14 percent during the period.

Dollar Thrifty boosted its full-year earnings forecast, although it lowered its vehicle-rental revenue expectations.

"We are very pleased that the company once again has produced another record quarter and is on pace to make 2010 the most profitable year in the history of the company," said CEO Scott Thompson during an earnings call with investors.


Revenue Drivers

In its second quarter earnings call, Hertz CEO Mark Frissora said that weakened consumer confidence has affected the company's leisure business; however, commercial business has accelerated. This is driving a shift in mix toward commercial business, he said.

Frissora noted that Hertz has added 27 Advantage airport locations and 298 new off-airport stores to its rental network since April 2009. Those new stores have not yet fully realized their revenue potential, he said.

Avis Budget reported a rebound in commercial activity as well, specifically with its largest corporate clients and small businesses.

The company reported that its ancillary revenues are up 28 percent over the last two years, attributable to GPS rentals, its emergency roadside assistance product and electronic toll payment service. Avis will soon a launch a satellite radio offering.

Hertz has seen similar success with upselling car classes, insurance coverage, roadside assistance, damage waivers, GPS and refueling.

Dollar Thrifty attributed much of its success in the quarter to "sweeping changes made in fleet planning and remarketing during 2009." Including gains from vehicle sales, the company realized fleet costs of $193 a month per unit. During the second quarter, the company sold some 18,400 risk vehicles and realized a gain of about $1,500 per vehicle sold.

Meanwhile, Dollar Thrifty attributed its slip in total revenue to a decline in vehicle leasing revenue, resulting from a planned reduction in vehicles leased to franchisees.

All three companies continue to benefit from the ongoing strength of the used-car market. The companies are not experiencing liquidity issues, and credit facilities are solid.