Hertz Global Holdings has reported revenues of $2.5 billion for the third quarter, which is up 3.4% compared to the same period last year. Adjusted pre-tax income reached a record $424.8 million, up 22.5%; while pre-tax income on a GAAP basis increased 24.8% to $368.9 million. Corporate EBITDA rose 15.5% to a record $607 million. Adjusted net income was up from $223.2 million to a record $280.3 million, while net income on a GAAP basis rose from $206.7 million to $242.9 million.
Revenues for the company’s worldwide car rental business jumped 2.1% during the third quarter to a record $2,152.6 million, while transaction days rose 3.4% to reach a record. Total revenues for off-airport locations in the US rose 4.1%, while transaction days jumped 6.3%. Revenue per transaction day from global rental rates fell 2.6%, while the US saw a 2.8% decline. Revenue per transaction day continues to be hit by the shift in airport and off-airport hires. After adjusting for this mix, revenue per transaction day only fell 2.1% in the US.
Growth in off-airport hires – particularly replacement vehicles – had a negative impact on revenue per transaction day. However, the profits contributed from off-airport operations is significantly growing. Continued pressure on commercial pricing has seen new rivals aggressively discount hires in a bid to gain market share. Improved pricing on commercial rentals in Europe is being more than offset by negative leisure pricing, where demand is weakest.
Adjusted pre-tax income for Hertz’s global car rental business increased from $375.3 million to a record $428.7 million. This was mostly driven by a rise in volume, lower net depreciation per vehicle and strong cost management, but it was somewhat offset by the fall in revenue per transaction day. Adjusted pre-tax margins hit a record 19.9%.
The average number of vehicles the company had in its fleet across the globe was 703,200, up 5.3% compared to the third quarter of last year and up 2.2% year-over-year (excluding the Donlen acquisition). Hertz noted that its fleets were under tighter management during the period because of the negative pricing environment. US fleet efficiency reached 82.8%, an all-time high, resulting in tempered volume growth.
During its financial results, Hertz Global Holdings also reaffirmed its estimated full-year figures from May. It expects to generate between $8.9 billion and $9 billion in worldwide revenues across its entire group. It also predicts Corporate EBITDA to be between $1.6 billion and $1.66 billion; adjusted pre-tax income to be between $870 million and $940 million; and adjusted net income to be between $570 million and $620 million.
Hertz chairman and chief executive Mark P. Frissora says that he’s particularly happy with the company’s ability to improve the consolidated adjusted operating margin during the third quarter, even though worldwide macro economic conditions have been soft. The boost to margins was driven by administrative, general and selling expenses as a percentage of sales, $145 million saved through incremental efficiency, and a 220bp fall in consolidated adjusted direct operations. On top of this, its equipment rental business saw an 18.6% increase in revenues during the period in the US. This easily outperformed rivals as they gained momentum in new markets, with a new fleet.