NAPLES, Fla. - Hertz plans to spin off its equipment rental business into a separate publicly traded company.
The car rental company says it will receive about $2.5 billion in net proceeds as part of the transaction and plans to use it to pay down debt and to support a new $1 billion stock buyback. Hertz also reported a smaller loss for the fourth quarter.
Its shares edged up in premarket trading Tuesday.
The new business will be called Hertz Equipment Rental Corp. The company rents equipment such as air compressors and tools, earthmoving equipment and power generators, forklifts and material handling, pumps, and trucks and trailers. It also sells new and used equipment and its Hertz Entertainment Services unit rents lighting and related aerial products used mostly by the U.S. entertainment industry.
Hertz Equipment Rental has about 335 branches in the U.S., Canada, France, Spain, China, Saudi Arabia and through international franchisees. It had more than $1.5 billion in revenue in 2013.
The spinoff will leave Hertz with the Hertz, Dollar, Thrifty and Firefly rental car businesses and Donlen, which provides fleet leasing and management services. The company has about 11,555 rental locations in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Last year the rental car and fleet leasing business had $9.23 billion in revenue.
Its board has approved the separation plans. Mark Frissora will remain chairman and chief executive of Hertz.
The equipment rental company will determine its management and board as separation plans are finalized.
Hertz Global Holdings Inc. anticipates the spinoff closing by early next year.
The new $1 billion stock repurchase program replaces a $300 million buyback announced last year. Hertz used about $87.5 million under that buyback.
Its stock edged up 8 cents to $27.30 in premarket trading about 2 1/2 hours before the market open.
The company also reported its fourth-quarter and full-year financial results on Tuesday. For the three months ended Dec. 31, Hertz lost $600,000, or had break-even per share results. A year earlier it lost $36.8 million, or 9 cents per share.
Excluding certain items, earnings were 26 cents per share.
Revenue climbed 10 percent to $2.56 billion from $2.32 billion.
Analysts polled by FactSet expected earnings of 32 cents per share on revenue of $2.61 billion.
For the full year Hertz earned $346.2 million, or 76 cents per share. That compares with $238.6 million, or 53 cents per share, in the previous year. Adjusted earnings were $1.63 per share. Annual revenue increased 19 percent to $10.77 billion from $9.02 billion.
Hertz foresees 2014 adjusted earnings of $1.70 to $2 per share, with revenue in a range of $11.4 billion to $11.7 billion. Wall Street anticipates earnings of $2.07 per share on revenue of $11.6 billion.