Hertz Ups Profit Outlook

Hertz Global Holdings Inc. announced today that, based on 2010 efficiency savings revised to $410 million, lower fleet costs and continued improvements in the company's car rental business, it is increasing full year 2010 adjusted diluted earnings per share guidance to a range of $0.47 to $0.48.

This includes the negative impact of approximately two cents per share attributable to higher fourth quarter 2010 interest costs from a $700 million debt offering in September which will reduce ongoing interest costs by $15 million annually between 2011 and 2016, when the funds are used to pay down higher-cost debt.

Hertz also announced that it anticipates doubling GAAP income before income taxes for the third quarter of 2010 and increasing adjusted pre-tax income by approximately 30 percent for the same period, the fifth consecutive quarter of year-over-year adjusted pre-tax income growth. The resulting adjusted diluted earnings per share for the third quarter are estimated at $0.40 compared with $0.31 for the same period last year. Third quarter GAAP diluted earnings per share are estimated to be $0.36 versus $0.15 for the same period last year. The increases are attributable to several factors including lower fleet costs and a third quarter sales increase exceeding 11 percent in the company's largest business, U.S. car rental, its fourth consecutive quarter of year-over-year revenue growth.

Mark P. Frissora, the company's chairman and chief executive officer, said, "Despite additional costs to expand our global car rental network, including off-airport and Advantage in the U.S., third quarter results are likely to exceed our internal expectations, demonstrating the long-term durability of our balanced efficiency and growth strategies. These strategies have enabled Hertz to improve adjusted pre-tax income five consecutive quarters, and to increase U.S. car rental revenues four consecutive quarters as we exit the worst recession in the company's 92-year history.

"Our success in the third quarter is due to higher than forecasted efficiency improvements, including lower fleet costs, as well as stronger pricing and demand in the U.S. and Europe car rental businesses, which are anticipated to generate exceptional results. For the third quarter, HERC is expected to record positive year-over year revenue growth for the first time in two years. Additionally, HERC's adjusted pre-tax income is also expected to improve by more than 30 percent year-over-year, with a corporate EBITDA margin of approximately 40 percent, more evidence that our equipment rental business stabilized in the third quarter."

Frissora, commenting on the company's outlook for the fourth quarter of 2010, said, "We expect fourth quarter results will reflect continued growth in our car rental businesses led by resilient commercial rental activity across our largest markets, as well as strong same-store growth in Advantage and off-airport in the U.S. These improvements are likely to be partially offset by lower leisure demand, as the fourth quarter is typically a trough period in this market, and by slightly softer pricing due to mix shifts (e.g., Advantage and off-airport growth), difficult year-over-year comparisons and competitive pressure. Also, we are achieving additional fleet efficiencies, in depreciation costs and utilization, across our car rental markets.

"We expect HERC will continue to generate sequential and year-over-year growth in revenues, adjusted pre-tax income and corporate EBITDA, with a corporate EBITDA margin approaching 42 percent for the quarter. While we have aged the HERC fleet to an average of approximately 50 months, which generates higher maintenance costs, these increases are being offset by other fleet and labor efficiencies, as well as solid same-store revenue growth across HERC's North American markets."

"As a result, we are increasing full-year 2010 adjusted diluted EPS guidance to a range of between $0.47-$0.48. The range would have been $0.49 - $0.50 per share but for higher fourth quarter interest charges attributable to a $700 million high yield debt refinancing, completed in September. The refinancing longer term will result in approximately $75 million lower ongoing interest costs between 2011 and 2016. The increased guidance is partially attributable to higher than forecasted full year 2010 efficiency savings, now estimated at $410 million," Frissora concluded.

Hertz plans to announce its third quarter results and host a conference call to discuss such results in early November.

The company reaffirms its full year 2010 revenue and corporate EBITDA guidance, provided on April 26, 2010, in the range of $7.5 billion to $7.7 billion, and $1.080 billion to $1.095 billion, respectively. The ompany has revised full year 2010 estimated efficiency savings from $380 million to $410 million. The ompany has also increased its full year 2010 forecast adjusted pre-tax income and adjusted diluted earnings per share guidance, as follows: