Hertz Global Holdings Inc.'s (HTZ) third-quarter profit grew 18%
as car and equipment rental sales each climbed.
Hertz has posted stronger sales for nearly three years as the
company benefits from a pickup in business and leisure travel since
the end of the recession, as well as from acquisitions.
The company's sales could soon be bolstered further by the
pending acquisition of smaller peer Dollar Thrifty Automotive Group
Inc. (DTG), if the companies are able to secure approval from the
Federal Trade Commission. The deal would end a long takeover saga
and consolidate the domestic industry to three major players.
Hertz recently gave the FTC more time to review the bid, saying
it won't close the deal prior to Nov. 16 without consent of the
FTC. Industry consolidation typically leads to regulatory questions
about competitiveness and consumer pricing, and in anticipation of
those concerns, Hertz has outlined a divestiture plan in an attempt
to obtain FTC approval.
Before the earnings release, a Hertz spokesman said the company
wouldn't grant interviews until after the Dollar Thrifty situation
is resolved. But the issue will likely come up when Hertz hosts a
conference call with analysts Thursday morning.
In the latest quarter, Hertz's smaller equipment rental
business, which the company has been beefing up as it expands into
new markets through acquisitions, continued to be a star performer.
The unit's sales grew 13%--outpacing the larger car-rental
segment's top-line improvement for the seventh consecutive
quarter.
In the largest car-rental business, transaction days were up
3.4% as growth in the domestic market offset weakness abroad. Total
car-rental revenue jumped 2.1% as domestic off-airport revenue
jumped 4.1%, though global rental-rate revenue per transaction
decreased 2.6%.
For the third quarter, Hertz reported earnings of $242.9
million, or 55 cents a share, up from $206.7 million, or 47 cents a
share, a year earlier. Excluding restructuring-related charges and
other impacts, adjusted earnings rose to 63 cents a share from 51
cents.
Revenue grew 3.4% to $2.52 billion, but would have risen 6.4%
excluding the effects of foreign currency.
Analysts surveyed by Thomson Reuters expected a profit of 61
cents a share on revenue of $2.59 billion.
The average number of Hertz-operated cars was 703,200, up 5.3%
from the prior year. The figure saw a lift last year after Hertz
acquired Donlen Corp. to expand the services the company can offer
its corporate customers.
Shares of Hertz, which affirmed its full-year targets, rose 1.8%
to $13.51 in after-hours trading.
Peer Avis Budget Group Inc. (CAR) is due to release
third-quarter results on Thursday. Hertz and Avis are based in
northern New Jersey and both delayed their earnings report dates in
the wake of Hurricane Sandy, which badly battered the state.
Write to John Kell at john.kell@dowjones.com
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