Boston, MA 03/17/2014 (wallstreetpr) – Spin-off
On March 14, 2014, Financial Times reported that Hertz Global Holdings Inc. (NYSE:HTZ) will spin-off of its equipment rental business unit. The news had a positive impact on investors and the stock reported an upward move (more than 7%) on Monday and closed at a price of $27.22. The stock is traded in 52 weeks price range of $19.73-$29.81.
Details of the activities are not clear; it may be a spin-off or a combination of both spin-off and a merger. However, the deal is valued at about $4.5 billion by Hertz. It expects that the company may highlight on the activities in 4Q2013 on March 18, 2014.
Segments
Primarily, Hertz Global Holdings Inc. (NYSE:HTZ) generates 80% of its revenue from car rental from both the U.S. and international market; however, focus on equipment business due to its stronger rental volumes and pricing. Overall, equipment rental business accounted $1.1 billion i.e. about 14% of Hertz’s revenue. It includes rentals over industrials, oil & gas, construction and specialty markets.
In 3Q2013, North American rental revenues were up by 12.3%, primarily due to increased volumes and improved pricing. The growth is largely driven by expansion in industrials, oil & gas and specialty markets. This improves free cash flow as a result of increased investment related to equipment rental fleet growth and non-fleet capital expenditure.
Outlook
Hertz Global Holdings Inc. (NYSE:HTZ) expects potential growth in fleet across sectors in 4Q2013 in equipment business. However, slower recovery in construction business, which represents nearly 40% overall equipment unit, may affect the company’s revenue as well as operating profit (EBITDA). Therefore, company’s focus towards construction business is falling regularly and the separation will have significant impact going forward.
