Cop
This spreadsheet supports STUDENT analysis of the case, "Bidding For Hertz: Leveraged Buyout" (UVA-F-1560)
right (c) 2008 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved.
Hertz Historical Consolidated Income Statement ($ millions) 2002
2003
2004
2005E
(1)
RAC Revenue Direct Op Ex & SG&A Gross EBITDA Fleet Depreciation Fleet Interest Adjusted EBITDA
$4,542.7 2,676.3 1,866.4 1,216.7 270.9 378.8
$4,852.2 2,943.9 1,908.3 1,256.4 276.2 375.7
$5,490.1 3,393.9 2,096.2 1,231.9 310.2 554.1
$6,051.7 3,845.2 2,206.5 1,362.2 380.1 464.2
HERC Revenue Direct Op Ex & SG&A Gross EBITDA Fleet Depreciation Fleet Interest Adjusted EBITDA
1,095.7 722.2 373.5 282.8 95.4 -4.7
1,081.5 717.9 363.6 267.0 78.9 17.7
1,185.9 749.6 436.3 231.4 74.3 130.6
1,358.0 805.1 552.9 228.0 96.6 228.3
Total Adjusted EBITDA Non-Fleet Depreciation Operating Company Interest Expense
374.1 157.6 0.0
393.4 156.0 0.0
684.7 182.7 0.0
692.5 184.7 0.0
Pretax Income Book Taxes Minority Interest
216.5 77.9 0.0
237.4 85.5 0.0
502.0 180.7 3.2
507.8 182.9 9.7
$138.6
$151.9
$321.3
$324.9
Net Income (1)
Reflects pre-LBO estimated net income for 2005.
Hertz Historical Consolidated Balance Sheet ($ millions) 2002 Assets Cash and Equivalents Fleet Cash Enhancement Accounts Receivable Manufacturer Receivables Inventories Prepaid Expenses Other Assets Total Current Assets
2003
2004
2005E
(1)
601.3 0.0 799.1 473.8 71.8 83.8 42.3 2,072.1
1,110.1 0.0 1,308.2 511.9 73.4 90.3 45.6 3,139.5
1,237.9 0.0 1,225.1 600.1 83.3 100.1 44.1 3,290.6
1,102.9 0.0 1,004.2 629.7 92.7 113.1 36.5 2,979.1
7,425.8 1,111.8 519.0 0.0 11,128.7
7,793.3 1,169.8 536.9 0.0 12,639.5
9,122.9 1,236.2 544.4 0.0 14,194.1
9,767.3 1,354.6 534.6 0.0 14,635.6
Liabilities & Stockholders’ Equity Accounts Payable Accrued Liabilities Accrued Taxes Total Current Liabilities Total Long-Term Debt
506.2 789.4 52.8 1,348.4 7,043.2
757.9 736.4 111.4 1,605.7 7,627.9
786.0 835.7 130.1 1,751.8 8,428.0
758.0 819.7 129.3 1,707.0 9,180.3
Public Liability & Property Damage Deferred Taxes Commitments & Contingencies Minority Interest
353.5 462.1 0.0 0.0
398.8 721.2 0.0 0.0
391.7 849.7 0.0 4.9
374.3 636.0 0.0 12.7
9,207.2
10,353.6
11,426.1
11,910.3
1,921.8 11,129.0
2,285.8 12,639.4
2,767.9 14,194.0
2,725.9 14,636.2
Fleet, Net PP&E Net Existing Goodwill & Intangibles New Goodwill & Intangibles Total Assets
Total Liabilities Total Equity Total Liabilities & Equity (1)
Reflects pre-LBO estimated balance sheet for 2005. Small differences in historical total assets and total liabiliti
s and equity in 2002-2004 are due to rounding.
Projected Income Statement ($ millions) (1)
2005 PF
2006
2007
2008
2009
2010
Business Segments: RAC
Revenue Direct Op Ex & SG&A Gross EBITDA
6,051.7 3,845.2 2,206.5
6,535.8 4,032.8 2,503.0
6,993.3 4,231.0 2,762.3
7,412.9 4,455.1 2,957.8
7,783.6 4,605.6 3,178.0
8,133.9 4,828.2 3,305.7
Fleet Depreciation
1,362.2
1,544.7
1,652.9
1,752.0
1,839.6
1,922.4
366
408.1
449.5
479.0
505.6
529.9
478.3
550.2
660.0
726.8
832.7
853.4
1,358.0 805.1 552.9
1,493.8 863.1 630.7
1,613.3 919.0 694.3
1,710.1 968.8 741.3
1,787.1 999.5 787.6
1,840.7 1,031.3 809.4
228.0
249.5
269.5
285.7
298.5
307.5
0.0
0.0
0.0
0.0
0.0
0.0
Adjusted EBITDA
324.9
381.1
424.8
455.6
489.1
501.9
Hertz Corporation (HertzCo) Total Adjusted EBITDA RAC Non-Fleet Depreciation HERC Non-Fleet Depreciation Operating Company (total) EBIT
803.2 145.9 38.8 618.5
931.3 154.4 41.8 735.1
1,084.8 159.0 43.0 882.8
1,182.3 161.0 45.0 976.3
1,321.8 163.0 46.0 1,112.8
1,355.3 165.0 47.0 1,143.3
Op Co Interest Expense: Term Loan facility (RAC), 8.0% Senior ABL facility, 7% Euro notes, 7.88% Senior unsecured notes, 8.875% Existing senior notes, 7.00% Senior subordinated notes, 10.5% Total Op Co interest expense
460.8
144.0 28.0 15.8 177.5 56.0 63.0 484.3
148.5 28.0 15.8 177.5 56.0 63.0 488.8
150.1 28.0 15.8 177.5 56.0 63.0 490.4
142.2 28.0 15.8 177.5 56.0 63.0 482.5
125.4 28.0 15.8 177.5 56.0 63.0 465.7
Pretax Income
157.7
250.8
394.0
486.0
630.3
677.6
56.8
90.3
141.8
174.9
226.9
243.9
100.9
160.5
252.2
311.0
403.4
433.7
1,031.2
1,180.9
1,354.3
1,468.0
1,620.3
1,662.8
Fleet Interest Adjusted EBITDA HERC
Revenue Direct Op Ex & SG&A Gross EBITDA Fleet Depreciation Fleet Interest
(2)
Book Taxes (36%) Net Income Corporate EBITDA
(3)
(1)
Reflects 2005PF income statement in Exhibit 2 adjusted for LBO capital structure (and associated increase in tot Transaction costs are excluded for simplicity.
(2)
(3)
Fleet interest exceeds the interest rate times the average year-end balances on the fleet debt due to additi onal ABS debt incurred intra-year to meet seasonal peaks in automobile rentals.
Sum of RAC adjusted EBITDA and HERC gross EBITDA
Projected Income Statement ($ millions) 2005 PF
(1)
2006
2007
2008
2009
2010
Business Segments: RAC
Revenue Direct Op Ex & SG&A Gross EBITDA
6,051.7 63.54% 36.46%
6,535.8 61.70% 38.30%
6,993.3 60.50% 39.50%
7,412.9 60.10% 39.90%
7,783.6 59.17% 40.83%
8,133.9 59.36% 40.64%
Fleet Depreciation
17.69%
17.69%
17.69%
17.69%
17.69%
17.69%
Fleet Interest
6.05%
6.24%
6.43%
6.46%
6.50%
6.51%
Adjusted EBITDA
7.90%
8.42%
9.44%
9.80%
10.70%
10.49%
Revenue Direct Op Ex & SG&A Gross EBITDA
1,358.0 59.29% 40.71%
1,493.8 57.78% 42.22%
1,613.3 56.96% 43.04%
1,710.1 56.65% 43.35%
1,787.1 55.93% 44.07%
1,840.7 56.03% 43.97%
Fleet Depreciation
11.04%
11.20%
11.20%
11.20%
11.20%
11.20%
0.0
0.0
0.0
0.0
0.0
0.0
23.92%
25.52%
26.33%
26.64%
27.37%
27.27%
10.84%
11.60%
12.60%
12.96%
13.81%
13.59%
8.35%
9.15%
10.26%
10.70%
11.63%
11.46%
Op Co Interest Expense: Term Loan facility (RAC), 8.0% Senior ABL facility, 7% Euro notes, 7.88% Senior unsecured notes, 8.875% Existing senior notes, 7.00% Senior subordinated notes, 10.5% Total Op Co interest expense
6.22%
0.0 0.0 0.0 0 0.0 0.0 6.03%
0.0 0.0 0.0 0 0.0 0.0 5.68%
0.0 0.0 0.0 0 0.0 0.0 5.38%
0.0 0.0 0.0 0 0.0 0.0 5.04%
0.0 0.0 0.0 0 0.0 0.0 4.67%
Pretax Income
2.13%
3.12%
4.58%
5.33%
6.59%
6.79%
0.0
0.0
0.0
0.0
0.0
0.0
1.36%
2.00%
2.93%
3.41%
4.21%
4.35%
HERC
Fleet Interest
(2)
Adjusted EBITDA Hertz Corporation (HertzCo) Total Adjusted EBITDA RAC Non-Fleet Depreciation HERC Non-Fleet Depreciation Operating Company (total) EBIT
Book Taxes (36%) Net Income
l interest expense).
(1)
Projected Balance Sheet ($ millions) 2005 PF
(2)
2006
2007
2008
2009
2010
RAC Fleet
300 317 1,004 630 93 113 37 2,493 9,767 7,701
161 342 1,088 666 100 123 40 2,520 10,960 8,733
172 366 1,166 713 108 131 42 2,699 11,750 9,344
182 388 1,236 756 114 139 45 2,861 12,455 9,905
191 407 1,297 794 120 146 47 3,002 13,065 10,400
199 426 1,352 829 125 152 49 3,132 13,613 10,868
HERC Fleet PP&E, Net Goodwill & Intangibles Total Assets
2,066 1,355 3,915 17,530
2,227 1,445 3,915 18,841
2,405 1,463 3,915 19,827
2,550 1,460 3,915 20,691
2,665 1,474 3,915 21,456
2,745 1,516 3,915 22,177
758 820 129 1,707
821 888 140 1,850
880 952 150 1,983
933 1,009 159 2,102
979 1,059 167 2,205
1,020 1,103 174 2,298
1,800
1,856
1,876
1,778
1,568
1,319
4,300
4,902
5,258
5,585
5,873
6,146
1,800 600
2,096 600
2,272 600
2,433 600
2,575 600
2,709 600
0
0
0
0
0
0
Senior ABL Facility, 7.0%
400
400
400
400
400
400
Senior Euro notes, 7.88%
200
200
200
200
200
200
2,000
2,000
2,000
2,000
2,000
2,000
800
800
800
800
800
800
600 12,500 374 636 13 15,230
600 13,454 374 689 13 16,380
600 14,006 374 739 13 17,115
600 14,395 374 783 13 17,667
600 14,616 374 821 13 18,029
600 14,775 374 856 13 18,316
2,300
2,461
2,713
3,024
3,427
3,861
17,530
18,841
19,827
20,691
21,456
22,177
Assets Cash and Equivalents Fleet Cash Enhancement Accounts Receivable Manufacturer Receivables Inventories Prepaid Expenses Other Assets
Total Current Assets Fleet
Liabilities & Stockholders’ Equity Accounts Payable Accrued Liabilities Accrued Taxes
Total Current Liabilities Long-term Debt: Term Loan facility (RAC), 8.0% U.S. ABS notes, 4.5%
(3) (3)
International ABS notes, 4.9% Existing ABS debt, 4.0% Fleet (ABS) financing facilty
Senior unsecured notes, 8.875% Existing senior subordinated notes, 7.0% Senior subordinated notes, 10.5% Total Long-Term Debt Public Liability & Property Damage Deferred Taxes Minority Interest Total Liabilities Total Equity Total Liabilities & Equity (1)
Small differences in the totals and the sum of individual line items are due to rounding.
(2) (3)
Reflects 2005 balance sheet in Exhibit 3 adjusted for LBO capital structure.
ABS debt balances increase over time due to increases in RAC fleet from growth and rising vehicle costs.
You're Reading a Preview Unlock full access with a free trial.
Download With Free Trial
You're Reading a Preview Unlock full access with a free trial.
Download With Free Trial
Comparable Company Analysis ($ millions)
(1)
Company
Stock Price (8/15/05)
Equity Value
Enterprise Value (EV)
(2)
LTM Financials Revenue EBITDA EBITDA Margin
Price E 2005E
Car Rental Amerco Cendant Dollar-Thrifty
$58.01 $20.54 $32.30
$1,236 $22,117 $846
$1,929 $26,417 $661
$2,047 $20,454 $1,481
$298 $3,119 $107
14.60% 15.20% 7.20%
19.1 14.6 15
Equipment Rental United Rentals Ashtead Group Atlas Copco
$18.49 $2.04 $18.02
$1,440 $675 $10,942
$4,212 $1,567 $11,823
$3,013 $1,144 $6,270
$785 $246 $1,495
26.10% 21.50% 23.80%
10.8 16.9 16.8
(1)
Cendant held Avis and other travel related businesses. RSC Equipment Rentals was a division of Atlas Copco.
(2)
Enterprise Value for car and truck rental represents the value of the operating company, such that the associated multiples re operating company. Similarly, EBITDA for car rental represents adjusted EBITDA. Dollar Thrifty’s enterprise value is less th debt is fleet-based (there is no operating company debt) and because Dollar Thrifty has $185 million in excess cash.
Treasury and Corporate Rates - August 2005 3-month T-bill 5-year Treasury Bond 10-year Treasury Bond Corporate BBB Bonds
3.44% 4.12% 4.26% 5.98%
Business Segments: RAC
2005
Revenue Direct Op Ex & SG&A Gross EBITDA
6,051.7 3,845.2 2,206.5
Fleet Depreciation
1,362.2
Fleet Interest
366
Adjusted EBITDA
478.3
HERC
Revenue Direct Op Ex & SG&A Gross EBITDA Fleet Depreciation Fleet Interest
(2)
Adjusted EBITDA
1,358.0 805.1 552.9 228.0 0.0 324.9
Multiple EBIDTA Enterprise Value EBIDTA Multiple of RAC 7.040 478.3 3367.30 EBIDTA Multiple of HREC 6.548 324.9 2127.43
Book Value of Fleet Fleet Equity Enterprise Value Debt Cash Equity value
9,767 1269.749 13992 12,500 616.60 2108.88
arnings 2006E
15.7 12.3 13.7
Value/LTM Revenue EBITDA Multiple
0.94 1.29 0.45
6.473 8.470 6.178 7.040
8.7 11.8 15.2
1.4 1.37 1.89
5.366 6.370 7.908 6.548
resent the multiples for the n equity value because all of its
3367.3
2006
2007
2008
2009
2010
Cost of debt Cost of equity
2.43% 22.17%
2.38% 22.17%
2.30% 22.17%
2.25% 22.17%
2.18% 22.17%
Debt Equity
12,500 2,300
13,454 2,461
14,006 2,713
14,395 3,024
14,616 3,427
Wd We
84.46% 15.54%
84.54% 15.46%
83.77% 16.23%
82.64% 17.36%
81.01% 18.99%
5.50%
5.44%
5.53%
5.71%
5.98%
WACC
Beta Risk free rate RM-Rfr
1.62 3.44% 11.56%