Hertz Global Holdings Inc. (NYSE: HTZ) announced on Monday that, due to what the company believes is excess industry capacity, it now outlook its first quarter and full year 2016 U.S. car rental revenue and consolidated first quarter adjusted earnings per share to be lower than previously expected. Share of Hertz slumped 9.33% to $8.80 during Monday morning.
"We are disappointed that the pricing pressure experienced late in 2015 further intensified in the first quarter of 2016. However, we believe that industry capacity will likely moderate as seasonal demand improves establishing the foundation for a relative improvement in pricing as we head into the peak summer season," said President and Chief Executive Officer John Tague.
Hertz remain expectation for achieve $350 million of incremental savings in 2016. Similar to 2015, the company outlook a lower rate of savings realization during the first half of the year as targeted initiatives ramp up throughout 2016.
According to the Hertz’s announcement, the company expects U.S. car rental revenue per available car day—calculated as total revenues less revenue from fleet subleases and ancillary revenues associated with retail car sales, divided by available car days—to decline between 2.5% to 3.5% versus the prior-year quarter. Hertz also mention it now sees full-year revenue flat to 1.5% lower, compared with its prior guidance of 1.5% to 2.5% growth.
The company affirmed its earnings before interest, taxes, depreciation and amortization forecast for 2016 which will project a range between $1.6 billion and $1.7 billion. Hertz announced that it expects diluted earnings per share to range between $0.95 and $1.10 in 2016 on an adjusted basis. According to FactSet. financial analysts had forecast diluted earnings per share of $1.05.