- The Washington Times - Monday, July 23, 2001

People need to rent cars, even in tough economic times.
Rental company Rent-A-Wreck, a used car rental business based in Owings Mills, Md., says it is going strong, despite releasing a fourth-quarter earnings report that showed the company's income fell by two-thirds.
Rent-A-Wreck's operating income declined 66 percent from $1 million in the fourth quarter of fiscal 2000 to $344,935 in its fiscal 2001 year, but this was mainly because of its repurchasing of stock options, the company announced July 13. The company's fiscal year ends March 31.
The company posted a loss for the quarter of $90,000 on sales of $1.52 million from no earnings on sales of $1.58 million a year earlier.
The company spent $1.2 million in the third quarter ended March 31 on the repurchasing of 957,721 stock options.
Rent-A-Wreck has 669 locations worldwide, 21 overseas and 21 in Maryland, says company spokesman Jason Manelli.
"We are doing phenomenally," says Ken Blum, president of Rent-A-Wreck. "Everything increased. We used available cash to repurchase stock, which obviously increases shareholder value."
The company's stock has hovered between $1.38 and $2 in the last year. It closed at $1.61 Friday on the Nasdaq Small Cap Market.
Other rental companies concede that a decline in business travel is hurting them.
"Business travel as a whole is soft," says Robin West, the director of public affairs at Hertz Rent A Car.
The manager of Baltimore's Reliable Rent A Car, Susan Martinez, says the number of cars her store has been renting is down from where it usually is at this time of year. She has noticed that Maryland residents are renting cars and going on vacation less.
High gas prices, fewer people getting their cars fixed immediately when they experience problems and fewer people taking vacations have contributed to the falling number of rentals, Miss Martinez says.
Justin McNaull, spokesman for AAA Mid-Atlantic, says car rentals are down throughout the travel industry.
"Individuals may be more restrained in their travel budgets," he says. "There is a significant drop-off in business travel."
Enterprise Rent A Car, which has more than 100 locations in Maryland, has not been affected by the drop in business travel, says company spokeswoman Christy Conrad. People are taking more day trips, she says.
As with Enterprise, Mr. Blum says that his company has not experienced a drop in business since its business is based more on local people in need of cars and not so much on business or leisure travelers.
Rent-A-Wreck actually did better business and grew more this year than last year, which enabled it to repurchase its stock, Mr. Blum says. The company had to take a hit in earnings this year to take advantage of its "unique opportunity" to buy back options, he says.
For the fiscal year ended March 31, net income dropped 68 percent to $263,022 (4 cents per diluted share) from $820,629 (14 cents) in 2000. Sales grew 9 percent to $6.85 million from $6.28 million.
Diluted shares reflect options, warrants and other securities convertible into common stock.
Without the expenses associated with its repurchase of options, Rent-A-Wreck's net income would have been $1 million (19 cents), the company says.
Rent-A-Wreck plans to expand into new markets with Priceless, a franchise program started in 1997 that features rental vehicles not more than three years old, Mr. Manelli says.
Mr. Blum says he is not concerned by the looks of his company's fourth-quarter earnings report and expects Rent-A-Wreck to grow.

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