By Tina Bellon
(Reuters) -Hertz Global Holdings Inc on Wednesday said it posted a new record adjusted profit in the fourth quarter as demand for rental cars remained strong, but post-bankruptcy restructuring costs yielded a large net loss.
Shares initially tumbled 8% in after-hours trading after closing the regular session down 4.3%. They later pared those losses and were down 1%.
As the pandemic subsides, rental companies are seeing a resurgence of consumers wanting cars for travel. This coincides with a need to restock tighter vehicle fleets that have been hurt by global auto production shortages due to a chip crunch.
Hertz interim Chief Executive Officer Mark Fields said the company's goal was to grow its vehicle fleet profitably.
"We'll only increase our fleet to the extent that travel increases," Fields said in an interview with Reuters.
The Florida-based rental car company said adjusted earnings before interest, taxes, depreciation and amortization in the three months ended Dec. 31 came in at $628 million, ahead of an analyst estimate for $595 million, according to Refintiv data.
But on a net basis, Hertz recorded a $260 million loss, driven by charges related to its post-bankruptcy restructuring. Analysts polled by Refinitiv had not anticipated a net loss.
Average monthly revenue per vehicle - a core industry metric that represents pricing and vehicle utilization - was up some 30% compared to the fourth quarter in 2019, pre-pandemic.
The higher revenue is the result of an industry-wide drastic increase in prices as customer demand outstrips vehicle supply with consumers returning to the rental counter for leisure and business travel.
It reported fourth-quarter revenue of $1.9 billion, in line with Wall Street expectations.
Hertz made a stock market return last year after exiting U.S. bankruptcy proceedings and is raising debt to refinance expensive preferred stock it issued as part of the restructuring.
Fields, who will be replaced by former Goldman Sachs (NYSE:GS) finance chief Stephen Scherr on Feb. 28, mapped out an ambitious plan to lead the rental industry in electric vehicles. In November, the company said it placed an order for 100,000 Tesla (NASDAQ:TSLA) Inc vehicles to be delivered by the end of 2022.
The announcement led to confusion when Tesla Chief Executive Officer Elon Musk said the companies had not signed an agreement, adding Hertz was not receiving any discounts.
Tesla has been struggling with extended delivery timelines for its Model 3 sedan, putting Hertz's year-end delivery goal into question.
Fields declined to say how many Tesla deliveries Hertz had received or whether it would meet its year-end target, but said Teslas were currently available in over 30 cities and customer satisfaction was very strong.