NEW YORK (AP) -- Hertz plans to spin off its equipment rental business into a separate publicly traded company.
The car rental company said Tuesday that 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 adjusted earnings for the fourth quarter that missed analysts' expectations. Its forecast for 2014 adjusted earnings was also below Street expectations.
Its shares fell in midday 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 approximately 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 Park Ridge, N.J.-based 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 CEO 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 slipped 40 cents, or 1.5 percent, to $26.82 in midday trading. Its shares are up 26 percent over the past year.
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 breakeven per share results, versus a loss of$36.8 million, or 9 cents per share, a year ago. Excluding certain items, earnings were 26 cents per share. Analysts polled by FactSet expected adjusted earnings of 32 cents per share.
Revenue rose 10 percent to $2.56 billion from $2.32 billion. Analysts expected $2.61 billion.
For the full year, Hertz earned $346.2 million, or 76 cents per share, up from $238.6 million, or 53 cents per share, a year ago. 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.
Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.