HERC doubles profits on 10.5% revenue growth
By Murray Pollok03 August 2011
Hertz Equipment Rental Co (HERC) reported a 13.5% increase in revenues to US$301.7 million for the second quarter of the year, with adjusted pre-tax profits more than doubling to $33.4 million from $14.4 million in the same period in 2010. The revenue increase after adjusting for foreign currency changes was 10.5%.
The equipment rental division also reported a $32 million charge for restructuring during the quarter.
Hertz said the improvement in profitability was primarily the result of increased volumes, higher pricing and lower costs. HERC achieved an adjusted pre-tax margin of 11.1%, and a corporate EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 37.4% for the quarter.
Mark Frissora, Hertz chairman and chief executive officer, said the results for the entire business, including car rental, were excellent and "attributable to strong year-over-year profit improvement in US rent-a-car and our equipment rental businesses, despite major investments in our strategic initiatives."
In May, Mr Frissora said Hertz may consider selling HERC in 12 to 24 months time when the business cycle had improved and the business was demonstrating its full value.
He told analysts; "That might be a time for us to consider spinning the company, merging it, doing something, and making rental car a pure play company".