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Zipcar shares zoom higher after Q3 results, boosted full year sales outlook

Last updated: 11:00 09 Nov 2012 EST, First published: 12:00 09 Nov 2012 EST

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Zipcar (NASDAQ:ZIP) shares soared in early deals Friday, a day after it posted strong third quarter results and raised its full-year sales guidance. 

It also said it is on track for its first full year of profitability in 2012. Shares in the company were higher by 24 per cent late morning Friday, lately changing hands at $7.49. 

The car sharing service reported third quarter net income of $4.3 million, or 10 cents per share, compared to a profit of $0.65 million, or 2 cents per share, a year earlier.

The latest quarter includes a gain of $1.7 million on the sale of Zero Emission Vehicle credits. 

The company said that excluding the credits, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $6.5 million, from $4.6 million in the prior year period.

Revenue rose 15 per cent to $78.2 million, mainly due to an 18 per cent increase in membership to more than 767,000 members at quarter end. 

Usage revenue per vehicle per day was unchanged at $65 versus the prior year period. 

Usage revenue represented $66.9 million in the third quarter, compared to $58.8 million a year earlier. 

Fee revenue represented 14.3 per cent of total revenue in the latest period, compared to 13.6 per cent in the prior year period.

In the company's established markets - Boston, New York, Washington, D.C., and San Francisco - third quarter sales grew 15 per cent due to new member additions. Income before tax for these markets rose to 29 per cent of revenue. 

"Our results reflect another quarter of solid revenue growth and increased profitability," said CFO Ed Goldfinger. 

"The margin expansion we reported reflects continued operational efficiencies as well as the positive impact of the transition of our domestic fleet to lower cost ABS financing which has progressed ahead of plan for the year."

Looking ahead, for the fourth quarter, Zipcar expects revenue in the range of $67 to $71 million, with net income expected to range from breakeven to $3.0 million. 

For the full year, sales are anticipated in the range of $275 to $279 million, with profit between $1.0 to $4.0 million.  The full year sales outlook is up from its prior view of $272 to $278 million.

The company said the newest outlook includes the estimated impact from Hurricane Sandy, with respect to lost revenue, vehicle damage and increased operating costs. 

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