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Hertz’s third-quarter net income fell 12 percent, stung by higher expenses and a charge related to difficulties surrounding the sale of its Advantage brand. Adjusted results and revenue topped Wall Street expectations, however, and shares edged higher before the opening bell.
DETAILS: U.S. car rental revenue climbed 33 percent mostly due to Hertz’ acquisition of rival Dollar Thrifty. International car revenue rose about 10 percent. Worldwide equipment rental revenue increased 11 percent.
Hertz also said that Simply Wheelz LLC, which it sold the Advantage brand to, has not been making the proper payments due under their agreements. Hertz said it terminated sublease contracts with Simply Wheelz on Saturday and is now evaluating its options. Hertz took a third-quarter reserve of $4 million to cover amounts due but not paid as of September’s end. It also recorded a $40 million impairment charge to cover its expected loss on the sale.
Hertz approved a buyback of up to $300 million of its common stock as well.
NUMBERS: Hertz Global Holdings Inc. earned $214.7 million, or 47 cents per share, for the three months ended Sept. 30. That’s down from $242.9 million, or 55 cents per share, a year earlier.
Total expenses climbed to $2.74 billion from $2.15 billion.
Stripping out the charge and other items, earnings were 73 cents per share.
Analysts polled by FactSet expected earnings of 71 cents per share.
Revenue rose 22 percent to $3.07 billion from $2.52 billion. Wall Street was looking for $3.06 billion in revenue.
FUTURE: Hertz still expects 2013 adjusted earnings of $1.68 to $1.78 per share on revenue between $10.8 billion and $10.9 billion. Analysts predict earnings of $1.74 per share on revenue of $10.81 billion.
STOCK: The shares rose 40 cents to $24.20 in premarket trading.