Hertz Q4 Loss Narrows, To Spin Off Equipment Rental Unit

(RTTNews) - Car and equipment rental firm Hertz Global Holdings, Inc. (HTZ) Tuesday reported a narrower loss for the fourth quarter, as revenues grew about 10 percent mainly due to acquisition of Dollar Thrifty. Both adjusted earnings per share as well as revenues missed analysts' expectations.

The firm also forecast adjusted earnings per share for first quarter and full year 2014 below estimates.

Separately, Hertz said its board approved plans to separate Hertz car and equipment rental businesses into two independent, publicly traded companies. In addition, the board approved a new share repurchase program totaling $1 billion which replaces the existing program.

The two companies would be 'Hertz,' comprised of the Hertz, Dollar, Thrifty and Firefly rental car businesses as well as Donlen, a provider of fleet leasing and management services, and 'HERC,' the Hertz Equipment Rental Corp.

The separation is intended to be in the form of a tax-free spin-off to Hertz shareholders. Hertz would receive net cash proceeds from a HERC spin-off of around $2.5 billion, which would be used to pay down Hertz debt and support the newly approved $1 billion share buyback program. The HERC separation is expected to be complete by early 2015.

For the fourth quarter, net loss attributable to Hertz Global Holdings, Inc., and Subsidiaries' common stockholders was $0.6 million or break even per share, compared to a loss of $36.8 million or $0.09 per share in the prior year.

On an adjusted basis, earnings per share totaled $0.26, while the firm posted $0.33 per share a year earlier. On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.32 per share for the quarter. Analysts' estimates typically exclude special items.

Mark Frissora, CEO said, "In a difficult fourth quarter, we achieved an adjusted earnings per share of $0.26 despite an estimated $0.12 impact of lower than expected pricing and higher expenses related to carrying extra fleet."

Worldwide revenues for the quarter grew 10.2 percent to $2.56 billion, but came below analysts' estimate of $2.62 billion.

U.S. car rental segment revenues increased 14.1 percent to $1.48 billion, mainly due to Dollar Thrifty, which was acquired on November 19, 2012, partially offset by the December 2012 divestiture of Advantage. U.S. off-airport total revenues rose 9.8 percent.

The U.S. average number of company-operated vehicles was 472,200, an increase of 22.4 percent from a year ago, largely due to the acquisition of Dollar Thrifty.

International car rental revenues were $544.2 million, up 5.8 percent from last year. Revenues from worldwide equipment rental were $400.9 million, an increase of 4 percent from last year.

Looking ahead to the first quarter, the company expects adjusted earnings per share to be in the range of $0.07 to $0.09. Analysts project first-quarter earnings of $0.19 per share.

For full year 2014, the firm anticipates adjusted earnings per share to be in the range of $1.70 to $2.00. Revenues are expected to be between $11.40 billion and $11.70. Street currently is looking for 2014 earnings of $2.07 per share, on annual revenues of $11.60 billion.

HTZ closed Monday's regular trading at $27.22, up 4.77 percent. In the pre-market activity on Tuesday, the shares are up 1.03 percent.