Hertz Withdraws Full-Year Financial Forecast

August 20, 2014

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Rental car company Hertz said it is withdrawing its full-year financial forecast and expects 2014 results to be "well below" its previous guidance due to business challenges and costs related to a review of the past three years' results.

The company said in a regulatory submission that its full-year results would be affected by operational challenges, including recalls by car makers, higher-than-expected operating expenses and weak demand in its equipment rental business.

In addition, the company said the divestiture of its equipment rental business, announced in March, could be delayed beyond the previously announced early 2015 date due to its accounting review.

Hertz said in June that it would restate or correct financial results for the past three years to fix accounting errors originating in 2011.

The company previously said it had identified errors totalling USD$46.3 million in prior periods.

In the filing, the company said second-quarter US rental car revenue increased 4 percent, while rental car revenue-per-day rose 2 percent.

Limited fleet availability due to recalls by car manufacturers hurt U.S. rental car revenues, Hertz said.

International rental car revenue rose 7 percent, driven by higher demand in Europe and New Zealand, and its worldwide equipment business recorded sales growth of 1 percent.

The company, which has yet to report its first-quarter results, said this month it would be unable to report second-quarter results by August 11, citing the accounting review.

The company warned in May that it would not report first-quarter results on time and said it had identified errors that might cause it to restate its 2011 financial statements.

Hertz's accounting problems come as the car rental industry is picking up because business and leisure travel is increasing along with an improving economy in the United States.