The car-rental company said it hasn't received all due payments from its sale of the Advantage brand to Simply Wheelz, forcing it to terminate the contract and evaluate its options. To cover the amounts due, Hertz has taken a $4 million reserve on the quarter and a $40 million impairment charge to cover any losses on the sale.
The car-rental company said adjusted net profit had climbed 20.5% to $337.7 million, excluding one-time charges, from the year-ago quarter.
Earnings of 73 cents a share on $3.1 billion in revenue, 22% higher than a year earlier, beat Wall Street expectations of 71 cents a share on revenue of $3.06 billion, according to Thomson Reuters surveys. Car-rental revenue in the U.S. jumped 32.6% to $1.76 billion, thanks to the purchase of rival company Dollar Thrifty last year.
Hertz reaffirmed its full-year 2013 earnings forecast of between $1.68 and $1.78 a share on revenue in the range of $10.8 billion to $10.9 billion.
TheStreet Ratings team rates HERTZ GLOBAL HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about its recommendation:
"We rate HERTZ GLOBAL HOLDINGS INC (HTZ) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."