ESTERO, Fla., Oct. 30, 2020 /PRNewswire/ — Hertz Global Holdings, Inc. (OTC: HTZGQ) today announced that its common stock will start trading exclusively on the over-the-counter market. Stock quotations will be available on the OTC Bulletin Board (Pink Sheets) under the ticker symbol HTZGQ.
The NYSE determined that Hertz was no longer suitable for listing following the Company’s May 22, 2020 Chapter 11 filing and its review of the Company’s appeal of the delisting. The stock will no longer trade on the NYSE effective October 30, 2020.
ESTERO, Fla., Oct. 19, 2020 /PRNewswire/ — Hertz Global Holdings, Inc., (NYSE: HTZ), a global leader in car rental, today announced that Alexandra (Alex) Brooks has been appointed to Senior Vice President and Chief Accounting Officer, effective November 1, 2020. Ms. Brooks will oversee the company’s global accounting operations, financial shared services, tax and risk management.
Ms. Brooks previously had served as Senior Vice President, Internal Audit at Hertz since June 2020. She has more than 25 years of experience in finance, accounting and audit. Prior to joining Hertz, Ms. Brooks was Vice President, Internal Audit at Aptiv PLC, a global technology company, and before that was the Chief Financial Officer for Champion Windows and Home Exteriors, a home improvement company. She has also held a variety of leadership roles at the General Electric Company, including Global Controller for the Aviation segment, Executive Technical Advisor to the Corporate Audit Staff and Global Controller for the Plastics division. Additionally, Ms. Brooks worked at the General Motors Company in a variety of finance and accounting roles and began her career with Pricewaterhouse Coopers.
Ms. Brooks is a Certified Public Accountant with an MBA from Wayne State University and a Bachelor of Science in accounting from the University of Rhode Island.
"In a short time, Alex has made significant contributions to Hertz," said Kenny Cheung, Executive Vice President and Chief Financial Officer. "I know her leadership and extensive accounting, finance and audit experience will continue to serve Hertz well as we further progress our efforts to ensure a strong future for the company."
About Hertz
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin American, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit www.hertz.com.
ESTERO, Fla., Oct. 16, 2020 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) today announced that it has secured commitments for debtor-in-possession ("DIP") financing totaling $1.65 billion and has filed a motion for approval of the financing by the U.S. Bankruptcy Court for the District of Delaware.
Hertz President and CEO Paul Stone said, "This new financing will provide additional financial flexibility as we continue to navigate the pandemic’s effects on the travel industry and take steps to best position our business for the future. We are pleased with the strong interest from our pre-petition first-lien lenders and appreciate their support of Hertz and our future opportunities as a rental car leader."
The proposed DIP financing will support the Company as it moves through its next stage of its Chapter 11 process. The financing is to be provided by certain of the Company’s pre-petition first-lien lenders and is expected to be structured as a delayed draw term loan debtor facility. Up to $1 billion can be used to provide equity for vehicle acquisition in the U.S. and Canada. Up to $800 million can be used for working capital and general corporate purposes. The financing is subject to finalization of definitive documentation, Court approval and other customary conditions, and a hearing is scheduled for October 29, 2020.
Moelis & Co. is serving as investment banker, FTI Consulting is serving as Hertz’s financial advisor and White & Case LLP is serving as Hertz’s legal advisor.
About Hertz The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin American, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit www.hertz.com.
ESTERO, Fla., Oct. 14, 2020 /PRNewswire/ — Hertz today announced that for the second consecutive year it has earned the No. 1 overall ranking for Customer Satisfaction in the J.D. Power 2020 North America Rental Car Satisfaction Study, which surveys leisure and business customers. Hertz also received top honors in the following categories: reservation process, pick-up process and rental car, which includes satisfaction with the overall vehicle and its cleanliness.
"From the beginning of their journey to the end, our customers’ satisfaction is the heartbeat of everything we do," said Hertz President and CEO Paul Stone. "While the rental car and overall travel industry has faced challenges during the pandemic, I’m grateful to our employees for taking great care of our customers and implementing our enhanced measures that enabled us to continue providing a safe, fast and easy rental experience."
As traveler needs shifted amid the pandemic, Hertz quickly adapted to meet customer expectations. The car rental brand raised the bar on its already high standards for safety and cleanliness by introducing the Hertz Gold Standard Clean seal. Each vehicle is sealed immediately following a rigorous 15-point cleaning and sanitization process that follows U.S. Centers for Disease Control and Prevention (CDC) guidelines. This is a first-of-its-kind practice in the car rental industry.
To further help customers travel safely and confidently, Hertz launched new capabilities within its mobile app this year to facilitate a touchless rental experience by enabling them to select and purchase more products and services digitally. These enhancements complement the low-touch and touchless solutions that Hertz offers through its Hertz Gold Plus Rewards loyalty program. Gold Plus Rewards members can minimize or eliminate personal contact by skipping the counter at many airports and going straight to their car. When they return, members can drop off their car and go with Hertz’s eReceipt and Express Return service. Hertz Gold Plus Rewards is free to join and benefits are immediately available.
To celebrate its second consecutive J.D. Power No. 1 ranking and thank its customers, Hertz is offering a free car class upgrade for a limited time. Additionally, through December 31, 2020, Hertz will award a free two-day rental to five customers each week who share their positive Hertz experience on social media with a written story, photo or video using #1Hertz. For more details and official rules, visit: Hertz.com/JDPower.
About Hertz
Hertz, one of the most recognized brands in the world and currently ranked #1 in Customer Satisfaction by J.D. Power, has a long-standing legacy of providing a fast and easy experience designed to make every journey special. It starts with top-rated vehicles to fit every traveler’s needs, delivered with a caring touch and personalized services including its award-winning Hertz Gold Plus Rewards loyalty program, Ultimate Choice, Mobile Wi-Fi, and more. Wherever and whenever you need to go, at Hertz, we’re here to get you there. To learn more or reserve a vehicle, visit Hertz.com.
Hertz pioneered the car rental industry more than 100 years ago and today is owned by Hertz Global Holdings, Inc. which includes Dollar and Thrifty vehicle rental brands and fleet management leader Donlen Corporation.
ESTERO, Fla., Sept. 28, 2020 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) (the "Company" or "Hertz") a global leader in car rental, today announced that Kenny K. Cheung, recently promoted to Executive Vice President of Finance, Chief Operational Finance and Restructuring Officer, assumed the role of Chief Financial Officer, effective September 24, 2020. He succeeds R. Eric Esper, who has resigned to pursue a new opportunity and will remain with Hertz as Chief Accounting Officer until November 1, 2020, to assist in the transition of those responsibilities.
Previously, Mr. Cheung served as Senior Vice President of Global Financial Planning & Analysis and Chief Financial Officer of North America at Hertz. He joined the Company in December 2018. Prior to that, he held financial leadership roles with Nielsen Holdings, PLC, most recently as Global Chief Audit Executive, and prior to that as a regional Chief Operating Officer after serving as regional Chief Financial Officer. Prior to Nielsen, Mr. Cheung worked for General Electric in various roles across Supply Chain, Operations, and Financial Planning & Analysis.
Paul Stone, CEO of Hertz said, "Kenny has developed a deep understanding of our business and we’re pleased that he is stepping into this role and expanding his financial leadership responsibilities at this important time as we continue taking steps to best position Hertz for the future."
About Hertz
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit: www.hertz.com.
ESTERO, Fla., Aug. 14, 2020 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) ( the "Company" or "Hertz") a global leader in car rental, today announced that Chief Financial Officer (CFO) Jamere Jackson, has resigned to pursue a new opportunity. Mr. Jackson will remain with Hertz until September 11, 2020, to assist in the transition of his responsibilities.
The Company also today announced the promotion of R. Eric Esper to Executive Vice President of Finance, Chief Financial Officer, and Kenny K. Cheung to Executive Vice President of Finance, Chief Operational Finance and Restructuring Officer, effective immediately. They will report directly to Paul Stone, Hertz’s President and Chief Executive Officer, as will the Company’s Treasurer, Scott Massengill.
Mr. Esper has served as Senior Vice President and Chief Accounting Officer of Hertz since November 2018. He previously served as Vice President and Controller of the Company beginning March 2018. From July 2010 to March 2018, Mr. Esper held a variety of financial leadership roles with Norwegian Cruise Line Holdings Ltd., most recently as Vice President, Brand Finance & Strategy, and Vice President and Controller. Prior to that, Mr. Esper was with PricewaterhouseCooper, LLC. He is a Certified Public Accountant.
Mr. Cheung has served as Senior Vice President of Global Financial Planning & Analysis and Chief Financial Officer of North America at Hertz. He joined the Company in December 2018. He previously held a variety of financial leadership roles with Nielsen Holdings, PLC ("Nielsen"), an information, data and measurement firm, most recently as Global Chief Audit Executive, and prior to that as a regional Chief Operating Officer after holding the position of regional Chief Financial Officer. Prior to Nielsen, Mr. Cheung worked for General Electric in various roles across Supply Chain, Operations, and FP&A.
Mr. Massengill has served as Senior Vice President and Treasurer of Hertz since July 2008. Prior to joining Hertz, Mr. Massengill served as Chief Financial Officer for the $2 billion domestic residential heating and air conditioning business division of Trane Inc. (formerly American Standard Companies Inc.) from 2005 to 2008. Prior to that, he was Vice President and Treasurer at American Standard from 2001 to 2005. Mr. Massengill has also held management level financial positions at Bristol–Myers Squibb, AlliedSignal and Exxon.
"The finance function is extremely important. This leadership structure provides us with deep expertise that will be especially valuable as we navigate the uncertainty around travel that the global pandemic has produced and as we work our way through the bankruptcy process," said Stone. "We’re fortunate to have incredible bench strength on our Finance team. I’ve worked closely with Eric, Kenny and Scott for several years, and appreciate the value they add through the different perspectives they bring, while remaining tightly aligned on vision and strategy."
About Hertz
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit: www.hertz.com.
ESTERO, Fla., Aug. 10, 2020 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported results for its second quarter 2020 with revenue of $832 million, a net loss attributable to the Company of $847 million and Adjusted Corporate EBITDA of negative $587 million. Liquidity at the end of the second quarter was $1.4 billion.
"In the second quarter, like so many companies whose revenues have sharply declined due to the pandemic’s significant impact on global travel, we had to make difficult but necessary decisions to strengthen and position the company for growth for many years to come," said Paul Stone, President and Chief Executive Officer of Hertz Global. "The toughest decisions have been those that impact the livelihood of our dedicated workforce and our voluntarily reorganizing under Chapter 11 in North America. We are moving through our reorganization process and remain focused on emerging an even stronger global rental car leader better positioned to serve our customers around the world."
In the second quarter, global revenue declined 67%. While air travel around the world experienced a significant slowdown, and the U.S. car sales market was extremely limited until May, the Company worked to align labor with rental demand, cancel new-fleet orders, return program vehicles, cut all non-essential spending and capital expenses, and consolidate off-airport rental locations for efficiency. As a result, the Company reduced global direct operating and SG&A expenses by 47% year-over-year in the second quarter.
Global revenue in April, May and June, while down versus prior year, showed sequential monthly improvement as states and countries began to re-open. During the quarter, Hertz Global capitalized on positive trends in its new driver and delivery service offering and saw an increase in cargo trucks and van rentals off airport. Insurance replacement rentals also experienced a restart as more cars returned to the highways. Leisure air travel began to pick up heading into the domestic July 4th holiday in the U.S. However, a rise in COVID-19 infections in the south and west since then caused the positive leisure trend to slow again.
The U.S. used-car market experienced a strong rebound in May and June. At the end of the second quarter, the number of vehicles in the global fleet was 29% lower year over year. The Company is capitalizing on the robust demand and record-high resale pricing by significantly ramping up its used-car sales efforts in North America.
"We continue to make disciplined adjustments to our cost structure based on revenue fluctuations and expect to generate about $2.5 billion in annualized savings," said Stone. "Our priority is fleet management. The continued strong used-car market allows us to continue to sell cars aggressively as we right-size the fleet to align with market realities. Across the business, our team is laser-focused on capturing revenue, driving efficiency and advancing critical technology. In the U.S., we continue to capitalize on rental opportunities off airport, while ensuring customer service levels remain best-in-class. Internationally, our fleet is trending toward demand levels. And our Donlen leasing business remains stable. Finally, continuing to keep our teams and our customers safe in this unpredictable environment is of utmost importance to everyone at Hertz."
In addition to following social distancing best practices and daily employee health assessments at Hertz, Dollar and Thrifty locations, the Company raised the bar on its high standards for safety and cleanliness. Every vehicle is being sealed and certified ‘Hertz Gold Standard Clean’ after undergoing a 15-point cleaning and sanitization process that follows global health agency guidelines and uses EPA-approved products. The Company also has directed that masks be worn by all employees in its field and corporate locations across the U.S. Similarly, masks are now required for U.S. customers to help protect not only the renters, but also the tens of thousands of Hertz employees working to serve our customers every day. The Company’s Ultimate Choice vehicle pick-up option and digital app for adding ancillary products and services allows renters to bypass the counter for a contactless experience.
U.S. RENTAL CAR ("U.S. RAC") SUMMARY __________________________________________________________________
U.S. RAC
Three Months Ended
June 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total revenues
$
533
$
1,784
(70)
%
Adjusted EBITDA
$
(470)
$
156
NM
Adjusted EBITDA Margin
(88)
%
9
%
Average Vehicles (in whole units)
502,763
554,794
(9)
%
Vehicle Utilization
28
%
82
%
Transaction Days (in thousands)
12,964
41,173
(69)
%
Total RPD (in whole dollars)
$
38.17
$
42.54
(10)
%
Total RPU Per Month (in whole dollars)
$
328
$
1,052
(69)
%
Depreciation Per Unit Per Month (in whole dollars)
$
271
$
247
10
%
NM – Not meaningful
Total U.S. RAC revenues were down 70% year-over-year. Airport rental car volume declined 82%, roughly in line with airline travel weakness resulting from COVID-19 restrictions. Off airport volume declined 47% as the impact on demand for insurance replacement rentals was less severe than travel-related rentals and demand for delivery vans increased. The mix shift in volume from airport rentals to lower-priced, longer-length off-airport rentals contributed to a 10% decrease in Total RPD. Off airport revenues comprised 60% of total revenues for the segment versus 32% for the second quarter 2019.
Depreciation Per Unit Per Month was impacted by residual values on certain vehicle models.
During the quarter, the Company reduced the size of the U.S. operating fleet and took measures to align staffing levels and operating costs with the decline in demand. The aggressive cost reduction actions and lower volume drove a $547 million decrease in direct operating and selling, general and administration expenses.
The Company remains focused on sustainable cost-savings and right-sizing its U.S. RAC fleet.
INTERNATIONAL RENTAL CAR ("INTERNATIONAL RAC") SUMMARY _______________________________________________________________________________________________________
International RAC
Three Months Ended
June 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total revenues
$
135
$
560
(76)
%
Adjusted EBITDA
$
(127)
$
56
NM
Adjusted EBITDA Margin
(94)
%
10
%
Average Vehicles (in whole units)
129,615
186,881
(31)
%
Vehicle Utilization
36
%
77
%
Transaction Days (in thousands)
4,256
13,125
(68)
%
Total RPD (in whole dollars)
$
32.56
$
42.68
(24)
%
Total RPU Per Month (in whole dollars)
$
356
$
999
(64)
%
Depreciation Per Unit Per Month (in whole dollars)
$
215
$
189
14
%
NM – Not meaningful
Total International RAC revenues were down 76% year-over-year on a constant currency basis. Airport rental car volume declined 84%, roughly in line with airline travel weakness resulting from COVID-19 restrictions. Off airport volume declined 47% as the impact of the pandemic was less substantial for local rentals. The mix shift in volume from airport rentals to lower-priced, longer-length off-airport rentals contributed to a 24% decrease in Total RPD. Off airport revenues comprised 71% of total revenues for the segment versus 40% for the second quarter 2019.
Depreciation Per Unit Per Month increased primarily due to the impact of lower residual values on risk vehicles and shortened hold periods on certain program vehicles.
During the quarter, the Company significantly reduced the size of the International operating fleet and eliminated non-essential spend. International RAC direct operating and selling, general and administration expenses were down $210 million year-over-year in the quarter.
The Company remains focused on sustainable cost-savings and right-sizing its International fleet.
ALL OTHER OPERATIONS SUMMARY ___________________________________________________________
All Other Operations
Three Months Ended
June 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total revenues
$
164
$
167
(1)
%
Adjusted EBITDA
$
23
$
24
(3)
%
Adjusted EBITDA Margin
14
%
14
%
Average Vehicles (in whole units) – Donlen
196,018
207,704
(6)
%
All Other Operations primarily is comprised of the Company’s Donlen leasing and fleet management operations. Revenue and Adjusted EBITDA for the quarter remained relatively stable.
As previously announced, on May 22, 2020, Hertz Global and its operating subsidiary, The Hertz Corporation ("Hertz") (and together with Hertz Global, the "Companies") and certain of their direct and indirect subsidiaries in the United States and Canada filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code (the "Reorganization").
The Reorganization provides the time to put in place a new, stronger financial foundation to move successfully through the COVID-19 pandemic and to better position the Companies for the future. Throughout the Reorganization process, all of Hertz’s businesses globally, including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers. All reservations, promotional offers, vouchers, and customer and loyalty programs, including rewards points, are expected to continue as usual.
Information related to the Reorganization is included in the Hertz Global and Hertz Form 10-Qs for the quarterly period ended June 30, 2020 filed with the Securities and Exchange Commission ("SEC") and on the Hertz website, IR.Hertz.com. Additional information, including access to documents filed with the Bankruptcy Court, is also available online at https://restructuring.primeclerk.com/hertz, a website administered by Prime Clerk, LLC, a third-party bankruptcy claims and noticing agent.
RESULTS OF THE HERTZ CORPORATION ________________________________________________________________
The Company’s operating subsidiary, The Hertz Corporation ("Hertz"), posted the same revenues as the Company for the second quarter of 2020. Hertz’s second quarter 2020 pre-tax loss was $1.2 billion versus the Company’s pre-tax loss of $1.0 billion. The difference between Hertz’s and the Company’s GAAP results is primarily due to Hertz’s write off in the second quarter of 2020 of $133 million due from the Company. The non-GAAP profitability metrics for Hertz are materially the same as those for Hertz Global.
SELECTED FINANCIAL DATA, SUPPLEMENTAL SCHEDULES, NON-GAAP MEASURES AND DEFINITIONS ________________________________________________________________________________________________________________________________________________
Following is selected financial data of Hertz Global. Also included are Supplemental Schedules, which are provided to present segment results, and reconciliations of non-GAAP measures to their most comparable GAAP measure. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout this earnings release and provides the usefulness of non-GAAP measures to investors and additional purposes for which management uses such measures.
ABOUT HERTZ ___________________________
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit: www.hertz.com.
Certain statements contained or incorporated by reference in this release, and in related comments by the Company’s management, include "forward-looking statements." Forward-looking statements include information concerning the Company’s liquidity and its possible or assumed future results of operations, including descriptions of its business strategies. These statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate in these circumstances. The Company believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and the Company’s actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on Forms 10-K, 10-Q and 8-K filed or furnished to the Securities and Exchange Commission ("SEC"). Among other items, such factors could include: the Company’s ability to navigate the Chapter 11 process, including obtaining Bankruptcy Court approval for certain requirements, complying with and operating under the requirements and constraints of the Bankruptcy Code, negotiating and consummating a Chapter 11 plan, developing, funding and executing the Company’s business plan and continuing as a going concern; the Company’s ability to maintain a listing of its common stock on the New York Stock Exchange; the value of the Company’s common stock due to the Chapter 11 process; levels of travel demand, particularly with respect to business and leisure travel in the United States and in global markets; the length and severity of the COVID-19 pandemic and the impact on the Company’s vehicle rental business as a result of travel restrictions and business closures or disruptions; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic factors; general economic uncertainty and the pace of economic recovery, including in key global markets, when the COVID-19 pandemic subsides; the Company’s ability to successfully restructure the Company’s substantial indebtedness or raise additional capital; the Company’s post-bankruptcy capital structure; the Company’s ability to maintain an effective employee retention and talent management strategy and resulting changes in personnel and employee relations the recoverability of the Company’s goodwill and indefinite-lived intangible assets when performing impairment analysis; the Company’s ability to dispose of vehicles in the used-vehicle market, use the proceeds of such sales to acquire new vehicles and to reduce exposure to residual risk; actions creditors may take with respect to the vehicles used in the rental car operations; significant changes in the competitive environment and the effect of competition in the Company’s markets on rental volume and pricing, including on the Company’s pricing policies or use of incentives; occurrences that disrupt rental activity during the Company’s peak periods; the Company’s ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in the Company’s rental operations accordingly; increased vehicle costs due to declining value of the Company’s non-program vehicles; the Company’s ability to maintain sufficient liquidity and the availability to it of additional or continued sources of financing for the Company’s revenue earning vehicles and to refinance its existing indebtedness; risks related to the Company’s indebtedness, including its substantial amount of debt, its ability to incur substantially more debt, the fact that substantially all of the Company’s consolidated assets secure certain of its outstanding indebtedness and increases in interest rates or in its borrowing margins; the Company’s ability to meet the financial and other covenants contained in its senior credit facilities and letter of credit facilities, its outstanding unsecured senior notes, its outstanding senior second priority secured notes and certain asset-backed and asset-based arrangements; the Company’s ability to access financial markets, including the financing of its vehicle fleet through the issuance of asset-backed securities; fluctuations in interest rates, foreign currency exchange rates and commodity prices; the Company’s ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); the Company’s ability to prevent the misuse or theft of information it possesses, including as a result of cyber security breaches and other security threats; the Company’s ability to adequately respond to changes in technology, customer demands and market competition; the Company’s ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles it purchases; the Company’s recognition of previously deferred tax gains on the disposition of revenue earning vehicles; financial instability of the manufacturers of the Company’s vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs; an increase in the Company’s vehicle costs or disruption to the Company’s rental activity, particularly during peak periods, due to safety recalls by the manufacturers of the Company’s vehicles; the Company’s ability to execute a business continuity plan; the Company’s access to third-party distribution channels and related prices, commission structures and transaction volumes; the Company’s ability to retain customer loyalty and market share; risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws, the Company’s ability to repatriate cash from non-U.S. affiliates without adverse tax consequences, the Company’s exposure to fluctuations in foreign currency exchange rates and the Company’s ability to effectively manage its international operations after the United Kingdom’s withdrawal from the European Union; a major disruption in the Company’s communication or centralized information networks; a failure to maintain, upgrade and consolidate the Company’s information technology systems; costs and risks associated with litigation and investigations or any failure or inability to comply with laws and regulations or any changes in the legal and regulatory environment, including laws and regulations relating to environmental matters and consumer privacy and data security; the Company’s ability to maintain its network of leases and vehicle rental concessions at airports in the U.S. and internationally; the Company’s ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy;; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, where such actions may affect the Company’s operations, the cost thereof or applicable tax rates; risks relating to the Company’s deferred tax assets, including the risk of an "ownership change" under the Internal Revenue Code of 1986, as amended; the Company’s exposure to uninsured claims in excess of historical levels; risks relating to the Company’s participation in multiemployer pension plans; shortages of fuel and increases or volatility in fuel costs; changes in accounting principles, or their application or interpretation, and the Company’s ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results and other risks and uncertainties described from time to time in periodic and current reports that the Company files with the SEC.
Additional information concerning these and other factors can be found in the Company’s filings with the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
______________________
FINANCIAL INFORMATION AND OPERATING DATA _____________________________________________________________________________
SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA
Three Months Ended
June 30,
As a Percentage of Total Revenues
Six Months Ended
June 30,
As a Percentage of Total Revenues
(In millions, except per share data)
2020
2019
2020
2019
2020
2019
2020
2019
Total revenues
$
832
$
2,511
100
%
100
%
$
2,755
$
4,618
100
%
100
%
Expenses:
Direct vehicle and operating
704
1,388
85
%
55
%
1,945
2,655
71
%
57
%
Depreciation of revenue earning vehicles and lease charges
610
634
73
%
25
%
1,286
1,226
47
%
27
%
Selling, general and administrative
168
258
20
%
10
%
377
490
14
%
11
%
Interest expense, net:
Vehicle
132
127
16
%
5
%
250
238
9
%
5
%
Non-vehicle
44
72
5
%
3
%
101
144
4
%
3
%
Total interest expense, net
176
199
21
%
8
%
351
382
13
%
8
%
Technology-related intangible and other asset impairments
193
—
23
%
—
%
193
—
7
%
—
%
Other (income) expense, net
2
(12)
—
%
—
%
(15)
(31)
(1)
%
(1)
%
Reorganization items, net
23
—
3
%
—
%
23
—
1
%
—
%
Total expenses
1,876
2,467
225
%
98
%
4,160
4,722
151
%
102
%
Income (loss) before income taxes
(1,044)
44
(125)
%
2
%
(1,405)
(104)
(51)
%
(2)
%
Income tax (provision) benefit
192
(4)
23
%
—
%
196
(3)
7
%
—
%
Net income (loss)
(852)
40
(102)
%
2
%
(1,209)
(107)
(44)
%
(2)
%
Net (income) loss attributable to noncontrolling interests
5
(2)
1
%
—
%
6
(1)
—
%
—
%
Net income (loss) attributable to Hertz Global
$
(847)
$
38
(102)
%
2
%
$
(1,203)
$
(108)
(44)
%
(2)
%
Weighted-average number of shares outstanding:
Basic
144
96
143
96
Diluted
144
97
143
96
Earnings (loss) per share:
Basic
$
(5.86)
$
0.40
$
(8.39)
$
(1.13)
Diluted
$
(5.86)
$
0.40
$
(8.39)
$
(1.13)
Adjusted Net Income (Loss)(a)
$
(508)
$
71
$
(760)
$
(12)
Adjusted Diluted Earnings (Loss) Per Share(a)
$
(3.51)
$
0.74
$
(5.30)
$
(0.12)
Adjusted Corporate EBITDA(a)
$
(587)
$
207
$
(830)
$
203
(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule II.
Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC. CONDENSED STATEMENT OF OPERATIONS BY SEGMENT Unaudited
Three Months Ended June 30, 2020
Three Months Ended June 30, 2019
(In millions)
U.S. Rental Car
Int’l Rental Car
All Other Operations
Corporate
Hertz Global
U.S. Rental Car
Int’l Rental Car
All Other Operations
Corporate
Hertz Global
Total revenues:
$
533
$
135
$
164
$
—
$
832
$
1,784
$
560
$
167
$
—
$
2,511
Expenses:
Direct vehicle and operating
561
136
6
1
704
1,052
330
7
(1)
1,388
Depreciation of revenue earning vehicles and lease charges
408
81
121
—
610
411
106
117
—
634
Selling, general and administrative
63
39
8
58
168
119
55
7
77
258
Interest expense, net:
Vehicle
98
23
11
—
132
90
24
13
—
127
Non-vehicle
(21)
—
(3)
68
44
(47)
(1)
(5)
125
72
Total interest expense, net
77
23
8
68
176
43
23
8
125
199
Technology-related intangible and other asset impairments
—
—
—
193
193
—
—
—
—
—
Other (income) expense, net
2
(3)
—
3
2
(5)
—
—
(7)
(12)
Reorganization items, net
(1)
—
—
24
23
—
—
—
—
—
Total expenses
1,110
276
143
347
1,876
1,620
514
139
194
2,467
Income (loss) before income taxes
$
(577)
$
(141)
$
21
$
(347)
$
(1,044)
$
164
$
46
$
28
$
(194)
$
44
Income tax (provision) benefit
192
(4)
Net income (loss)
$
(852)
$
40
Net (income) loss attributable to noncontrolling interests
5
(2)
Net income (loss) attributable to Hertz Global
$
(847)
$
38
Supplemental Schedule I (continued)
HERTZ GLOBAL HOLDINGS, INC. CONDENSED STATEMENT OF OPERATIONS BY SEGMENT Unaudited
Six Months Ended June 30, 2020
Six Months Ended June 30, 2019
(In millions)
U.S. Rental Car
Int’l Rental Car
All Other Operations
Corporate
Hertz Global
U.S. Rental Car
Int’l Rental Car
All Other Operations
Corporate
Hertz Global
Total revenues:
$
1,914
$
502
$
339
$
—
$
2,755
$
3,304
$
993
$
321
$
—
$
4,618
Expenses:
Direct vehicle and operating
1,530
401
13
1
1,945
2,028
614
13
—
2,655
Depreciation of revenue earning vehicles and lease charges
871
170
245
—
1,286
797
203
226
—
1,226
Selling, general and administrative
180
85
5
107
377
241
111
14
124
490
Interest expense, net:
Vehicle
183
44
23
—
250
166
47
25
—
238
Non-vehicle
(68)
(1)
(8)
178
101
(92)
(3)
(9)
248
144
Total interest expense, net
115
43
15
178
351
74
44
16
248
382
Technology-related intangible and other asset impairments
—
—
—
193
193
—
—
—
—
—
Other (income) expense, net
(19)
—
—
4
(15)
(13)
—
—
(18)
(31)
Reorganization items, net
(1)
—
—
24
23
—
—
—
—
—
Total expenses
2,676
699
278
507
4,160
3,127
972
269
354
4,722
Income (loss) before income taxes
$
(762)
$
(197)
$
61
$
(507)
$
(1,405)
$
177
$
21
$
52
$
(354)
$
(104)
Income tax (provision) benefit
196
(3)
Net income (loss)
$
(1,209)
$
(107)
Net (income) loss attributable to noncontrolling interests
6
(1)
Net income (loss) attributable to Hertz Global
$
(1,203)
$
(108)
Supplemental Schedule II
HERTZ GLOBAL HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURE – ADJUSTED NET INCOME (LOSS), ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE AND ADJUSTED CORPORATE EBITDA Unaudited
Three Months Ended June 30,
Six Months Ended June 30,
(In millions, except per share data)
2020
2019
2020
2019
Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share:
Net income (loss) attributable to Hertz Global
$
(847)
$
38
$
(1,203)
$
(108)
Adjustments:
Income tax provision (benefit)
(192)
4
(196)
3
Vehicle and non-vehicle debt-related charges(a)
18
13
30
26
Technology-related intangible and other asset impairments(b)
193
—
193
—
Restructuring and restructuring related charges(c)
41
4
47
10
Information technology and finance transformation costs(d)
8
38
25
60
Acquisition accounting-related depreciation and amortization(e)
13
14
27
27
Reorganization items, net(f)
23
—
23
—
Pre-reorganization and non-debtor financing charges(g)
45
—
45
—
Other items(h)
21
(16)
(5)
(34)
Adjusted pre-tax income (loss)(i)
(677)
95
(1,014)
(16)
Income tax (provision) benefit on adjusted pre-tax income (loss)(j)
169
(24)
254
4
Adjusted Net Income (Loss)
$
(508)
$
71
$
(760)
$
(12)
Weighted-average number of diluted shares outstanding
144
97
143
96
Adjusted Diluted Earnings (Loss) Per Share(k)
$
(3.51)
$
0.74
$
(5.30)
$
(0.12)
Adjusted Corporate EBITDA:
Net income (loss) attributable to Hertz Global
(847)
38
(1,203)
(108)
Adjustments:
Income tax provision (benefit)
(192)
4
(196)
3
Non-vehicle depreciation and amortization(l)
57
51
110
99
Non-vehicle debt interest, net of interest income
44
72
101
144
Vehicle debt-related charges(a)(m)
15
9
24
19
Technology-related intangible and other asset impairments(b)
193
—
193
—
Restructuring and restructuring related charges(c)
41
4
47
10
Information technology and finance transformation costs(d)
8
38
25
60
Reorganization items, net(f)
23
—
23
—
Pre-reorganization and non-debtor financing charges(g)
45
—
45
—
Other items(h)(n)
26
(9)
1
(24)
Adjusted Corporate EBITDA
$
(587)
$
207
$
(830)
$
203
Supplemental Schedule II (continued)
(a)
Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
(b)
Represents the impairment of technology-related intangible assets and capitalized cloud computing implementation costs. These costs relate to the Company’s corporate operations ("Corporate").
(c)
Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.
(d)
Represents costs associated with the Company’s information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes. These costs relate primarily to Corporate.
(e)
Represents incremental expense associated with the amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
(f)
Represents charges incurred associated with the Reorganization, including professional fees. The charges relate primarily to Corporate.
(g)
Represents charges incurred prior to the Reorganization comprised of preparation charges for the Reorganization, such as professional fees and certain non-debtor financing charges. For U.S. RAC, International RAC and Corporate charges incurred for the three and six months ended June 30, 2020 are $15 million, $2 million and $28 million, respectively.
(h)
Represents miscellaneous items. In 2020, includes a $20 million gain on the sale of non-vehicle capital assets in U.S. RAC, which was recorded in the first quarter, partially offset by second quarter charges of $18 million for losses associated with certain vehicle damages of which $15 million impacts U.S. RAC and $3 million impacts International RAC. In 2019, includes a $20 million gain on marketable securities in Corporate, of which $9 million was recorded in the second quarter, and a $12 million gain on the sale of non-vehicle capital assets in U.S. RAC, of which $4 million was recorded in the second quarter.
(i)
Adjustments by caption on a pre-tax basis are as follows:
Increase (decrease) to expenses
Three Months Ended
June 30,
Six Months Ended
June 30,
(In millions)
2020
2019
2020
2019
Direct vehicle and operating
$
(54)
$
(15)
$
(70)
$
(27)
Selling, general and administrative
(56)
(38)
(64)
(68)
Interest expense, net:
Vehicle
(30)
(9)
(39)
(19)
Non-vehicle
(3)
(4)
(6)
(7)
Total interest expense, net
(33)
(13)
(45)
(26)
Intangible and other asset impairments
(193)
—
(193)
—
Other income (expense), net
(3)
13
10
32
Reorganization items, net
(23)
—
(23)
—
Total adjustments
$
(362)
$
(53)
$
(385)
$
(89)
(j)
Derived utilizing a combined statutory rate of 25% for the three and six months ended June 30, 2020 and 2019 applied to the respective Adjusted Pre-tax Income (Loss).
(k)
Adjustments used to reconcile diluted earnings (loss) per share on a GAAP basis to Adjusted Diluted Earnings (Loss) Per Share are comprised of the same adjustments, inclusive of the tax impact, used to reconcile net income (loss) to Adjusted Net Income (Loss) divided by the weighted-average diluted shares outstanding during the period.
(l)
Non-vehicle depreciation and amortization expense for U.S. RAC, International RAC, All Other Operations and Corporate for the three months ended June 30, 2020 are $46 million, $5 million, $2 million and $4 million, respectively, and for the three months ended June 30, 2019 are $39 million, $6 million, $3 million and $3 million, respectively. Non-vehicle depreciation and amortization expense for U.S. RAC, International RAC, All Other Operations and Corporate for the six months ended June 30, 2020 are $87 million, $11 million, $5 million and $7 million, respectively, and for the six months ended June 30, 2019 are $76 million, $12 million, $5 million and $6 million, respectively.
(m)
Vehicle debt-related charges for U.S. RAC, International RAC and All Other Operations for the three months ended June 30, 2020 are $9 million, $5 million and $1 million, respectively, and for the three months ended June 30, 2019 are $5 million, $3 million, and $1 million, respectively. Vehicle debt-related charges for U.S. RAC, International RAC and All Other Operations for the six months ended June 30, 2020 are $15 million, $8 million and $1 million, respectively, and for the six months ended June 30, 2019 are $11 million, $6 million and $2 million, respectively.
(n)
Also includes an adjustment for non-cash stock-based compensation charges in Corporate.
Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC. RECONCILIATIONS OF KEY METRICS REVENUE, UTILIZATION AND DEPRECIATION Unaudited
U.S. Rental Car
Three Months Ended
June 30,
Percent Inc/(Dec)
Six Months Ended
June 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
2020
2019
Total RPD
Total revenues
$
533
$
1,784
$
1,914
$
3,304
Ancillary retail vehicle sales revenue
(38)
(33)
(70)
(62)
Total Rental Revenues
$
495
$
1,751
$
1,844
$
3,242
Transaction Days (in thousands)
12,964
41,173
44,529
76,754
Total RPD (in whole dollars)
$
38.17
$
42.54
(10)
%
$
41.41
$
42.24
(2)
%
Total Revenue Per Unit Per Month
Total Rental Revenues
$
495
$
1,751
$
1,844
$
3,242
Average Vehicles (in whole units)
502,763
554,794
510,672
528,281
Total revenue per unit (in whole dollars)
$
985
$
3,156
$
3,611
$
6,137
Number of months in period (in whole units)
3
3
6
6
Total RPU Per Month (in whole dollars)
$
328
$
1,052
(69)
%
$
602
$
1,023
(41)
%
Vehicle Utilization
Transaction Days (in thousands)
12,964
41,173
44,529
76,754
Average Vehicles (in whole units)
502,763
554,794
510,672
528,281
Number of days in period (in whole units)
91
91
182
181
Available Car Days (in thousands)
45,751
50,486
92,942
95,619
Vehicle Utilization(a)
28
%
82
%
48
%
80
%
Depreciation Per Unit Per Month
Depreciation of revenue earning vehicles and lease charges
$
408
$
411
$
871
$
797
Average Vehicles (in whole units)
502,763
554,794
510,672
528,281
Depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
$
812
$
741
$
1,706
$
1,509
Number of months in period (in whole units)
3
3
6
6
Depreciation Per Unit Per Month (in whole dollars)
$
271
$
247
10
%
$
284
$
251
13
%
(a)
Calculated as Transaction Days divided by Available Car Days.
Supplemental Schedule III (continued)
HERTZ GLOBAL HOLDINGS, INC. RECONCILIATIONS OF KEY METRICS REVENUE, UTILIZATION AND DEPRECIATION Unaudited
International Rental Car
Three Months Ended
June 30,
Percent Inc/(Dec)
Six Months Ended
June 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
2020
2019
Total RPD
Total revenues
$
135
$
560
$
502
$
993
Foreign currency adjustment(a)
4
—
12
(4)
Total Rental Revenues
$
139
$
560
$
514
$
989
Transaction Days (in thousands)
4,256
13,125
13,119
23,252
Total RPD (in whole dollars)
$
32.56
$
42.68
(24)
%
$
39.18
$
42.49
(8)
%
Total Revenue Per Unit Per Month
Total Rental Revenues
$
139
$
560
$
514
$
989
Average Vehicles (in whole units)
129,615
186,881
138,801
169,814
Total revenue per unit (in whole dollars)
$
1,072
$
2,997
$
3,703
$
5,824
Number of months in period (in whole units)
3
3
6
6
Total RPU Per Month (in whole dollars)
$
356
$
999
(64)
%
$
617
$
970
(36)
%
Vehicle Utilization
Transaction Days (in thousands)
4,256
13,125
13,119
23,252
Average Vehicles (in whole units)
129,615
186,881
138,801
169,814
Number of days in period (in whole units)
91
91
182
181
Available Car Days (in thousands)
11,795
17,006
25,262
30,736
Vehicle Utilization(b)
36
%
77
%
52
%
76
%
Depreciation Per Unit Per Month
Depreciation of revenue earning vehicles and lease charges
$
81
$
106
$
170
$
203
Foreign currency adjustment(a)
3
—
4
(1)
Adjusted depreciation of revenue earning vehicles and lease charges
$
84
$
106
$
174
$
202
Average Vehicles (in whole units)
129,615
186,881
138,801
169,814
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
$
648
$
567
$
1,254
$
1,190
Number of months in period (in whole units)
3
3
6
6
Depreciation Per Unit Per Month (in whole dollars)
$
215
$
189
14
%
$
209
$
198
6
%
(a)
Based on December 31, 2019 foreign exchange rates.
(b)
Calculated as Transaction Days divided by Available Car Days.
Supplemental Schedule III (continued)
HERTZ GLOBAL HOLDINGS, INC. RECONCILIATIONS OF KEY METRICS REVENUE, UTILIZATION AND DEPRECIATION Unaudited
Worldwide Rental Car
Three Months Ended
June 30,
Percent Inc/(Dec)
Six Months Ended
June 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
2020
2019
Total RPD
Total revenues
$
668
$
2,344
$
2,416
$
4,296
Ancillary retail vehicle sales revenue
(38)
(33)
(70)
(62)
Foreign currency adjustment(a)
4
—
12
(4)
Total Rental Revenues
$
634
$
2,311
$
2,358
$
4,230
Transaction Days (in thousands)
17,220
54,298
57,648
100,006
Total RPD (in whole dollars)
$
36.78
$
42.58
(14)
%
$
40.90
$
42.30
(3)
%
Total Revenue Per Unit Per Month
Total Rental Revenues
$
634
$
2,311
$
2,358
$
4,230
Average Vehicles (in whole units)
632,378
741,675
649,473
698,095
Total revenue per unit (in whole dollars)
$
1,003
$
3,116
$
3,631
$
6,059
Number of months in period (in whole units)
3
3
6
6
Total RPU Per Month (in whole dollars)
$
334
$
1,039
(68)
%
$
605
$
1,010
(40)
%
Vehicle Utilization
Transaction Days (in thousands)
17,220
54,298
57,648
100,006
Average Vehicles (in whole units)
632,378
741,675
649,473
698,095
Number of days in period (in whole units)
91
91
182
181
Available Car Days (in thousands)
57,546
67,492
118,204
126,355
Vehicle Utilization(b)
30
%
80
%
49
%
79
%
Depreciation Per Unit Per Month
Depreciation of revenue earning vehicles and lease charges
$
489
$
517
$
1,041
$
1,000
Foreign currency adjustment(a)
3
—
4
(1)
Adjusted depreciation of revenue earning vehicles and lease charges
$
492
$
517
$
1,045
$
999
Average Vehicles (in whole units)
632,378
741,675
649,473
698,095
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
$
778
$
697
$
1,609
$
1,431
Number of months in period (in whole units)
3
3
6
6
Depreciation Per Unit Per Month (in whole dollars)
$
259
$
232
12
%
$
268
$
238
13
%
Note: Worldwide Rental Car represents U.S. Rental Car and International Rental Car segment information on a combined basis and excludes the All Other Operations segment, which is primarily comprised of the Company’s Donlen leasing operations, and Corporate.
(a) Based on December 31, 2019 foreign exchange rates.
(b) Calculated as Transaction Days divided by Available Car Days.
NON-GAAP MEASURES AND KEY METRICS _______________________________________________________________________________________________________
Hertz Global is the top-level holding company that indirectly wholly owns The Hertz Corporation (together, the "Company"). The term "GAAP" refers to accounting principles generally accepted in the United States of America. Adjusted EBITDA is the Company’s segment measure of profitability and complies with GAAP when used in that context.
NON-GAAP MEASURES
Non-GAAP measures are not recognized measurements under GAAP. When evaluating the Company’s operating performance or liquidity, investors should not consider non-GAAP measures in isolation of, superior to, or as a substitute for measures of the Company’s financial performance as determined in accordance with GAAP.
Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share ("Adjusted Diluted EPS")
Adjusted Net Income (Loss) represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax, debt-related charges and losses, restructuring and restructuring related charges, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs, non-cash acquisition accounting charges, reorganization items, pre-reorganization and non-debtor financing charges and certain other miscellaneous items on a pre-tax basis. Adjusted Net Income (Loss) includes a provision (benefit) for income taxes derived utilizing a combined statutory rate. The combined statutory rate is management’s estimate of the Company’s long-term tax rate. Its most comparable GAAP measure is net income (loss) attributable to the Company.
Adjusted Diluted EPS represents Adjusted Net Income (Loss) on a per diluted share basis using the weighted-average number of diluted shares outstanding for the period. Its most comparable GAAP measure is diluted earnings (loss) per share.
Adjusted Net Income (Loss) and Adjusted Diluted EPS are important to management because they allow management to assess operational performance of the Company’s business, exclusive of the items mentioned above that are not operational in nature or comparable to those of the Company’s competitors.
Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin
Adjusted Corporate EBITDA represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax, non-vehicle depreciation and amortization, net non-vehicle debt interest, vehicle debt-related charges and losses, restructuring and restructuring related charges, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs, reorganization items, pre-reorganization and non-debtor financing charges and certain other miscellaneous items. Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues.
Management uses these measures as operating performance metrics for internal monitoring and planning purposes, including the preparation of the Company’s annual operating budget and monthly operating reviews, and to facilitate analysis of investment decisions, profitability and performance trends. These measures enable management and investors to isolate the effects on profitability of operating metrics most meaningful to the business of renting and leasing vehicles. They also allow management to assess the performance of the entire business on the same basis as its reportable segments. Its most comparable GAAP measure is net income (loss) attributable to the Company.
KEY METRICS
Available Car Days
Available Car Days represents Average Vehicles multiplied by the number of days in a period.
Average Vehicles ("Fleet Capacity" or "Capacity")
Average Vehicles is determined using a simple average of the number of vehicles in the fleet whether owned or leased by the Company at the beginning and end of a given period.
Depreciation Per Unit Per Month
Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges per vehicle per month, exclusive of the impacts of foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to management and investors as it is reflective of how the Company is managing the costs of its vehicles and facilitates in comparison with other participants in the vehicle rental industry.
Total Rental Revenues
Total Rental Revenues represents total revenues less ancillary retail vehicle sales revenues, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to management and investors as it represents a measurement that excludes the impact of revenues generated from non-vehicle rental activity, such as ancillary revenues resulting from vehicle sales and facilitates in comparisons with other participants in the vehicle rental industry.
Total Revenue Per Transaction Day ("Total RPD"or "RPD"; also referred to as "pricing")
Total RPD represents the ratio of Total Rental Revenues to Transaction Days. This metric is important to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
Total Revenue Per Unit Per Month ("Total RPU" or "Total RPU Per Month")
Total RPU Per Month represents the amount of average Total Rental Revenues per vehicle per month. This metric is important to management and investors as it provides a measure of revenue productivity relative to fleet capacity, or asset efficiency.
Transaction Days ("Days"; also referred to as "volume")
Transaction Days, also known as volume, represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. This metric is important to management and investors as it represents the number of revenue generating days.
Vehicle Utilization ("Utilization")
Vehicle Utilization represents the ratio of Transaction Days to Available Car Days. This metric is important to management and investors as it is the measurement of the proportion of vehicles that are being used to generate revenues relative to fleet capacity.
As an Essential Business, Hertz and Subsidiaries Around the World Remain Open with Same Award-Winning Service for Customers
All Customer and Loyalty Programs Expected to Continue as Usual
$1 Billion in Cash on Hand to Support Continuing Operations
ESTERO, Fla., May 22, 2020 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz" or the "Company") today announced it and certain of its U.S. and Canadian subsidiaries have filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware.
The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the Company’s revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity. However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today’s action. The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the Company for the future as it navigates what could be a prolonged travel and overall global economic recovery.
Hertz’s principal international operating regions including Europe, Australia and New Zealand are not included in today’s U.S. Chapter 11 proceedings. In addition, Hertz’s franchised locations, which are not owned by the Company, also are not included in the Chapter 11 proceedings.
All Hertz Businesses Remain Open and Serving Customers
All of Hertz’s businesses globally, including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers. All reservations, promotional offers, vouchers, and customer and loyalty programs, including rewards points, are expected to continue as usual. Customers can count on the same high level of service and reliability, including new initiatives such as "Hertz Gold Standard Clean" sanitization protocols to provide additional safety in response to the COVID-19 pandemic.
"Hertz has over a century of industry leadership and we entered 2020 with strong revenue and earnings momentum," said Hertz President and CEO Paul Stone. "With the severity of the COVID-19 impact on our business, and the uncertainty of when travel and the economy will rebound, we need to take further steps to weather a potentially prolonged recovery. Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future. Our loyal customers have made us one of the world’s most iconic brands, and we look forward to serving them now and on their future journeys."
First Day Motions
As part of the reorganization process, the Company will file customary "First Day" motions, which should allow it to maintain operations in the ordinary course. Hertz intends to continue to provide the same vehicle quality and selection; to pay vendors and suppliers under customary terms for goods and services received on or after the filing date; to pay its employees in the usual manner and to continue without disruption their primary benefits; and to continue the Company’s customer loyalty programs.
Sufficient Cash to Support Operations
As of the filing date, the Company had more than $1 billion in cash on hand to support its ongoing operations. Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the Company may seek access to additional cash, including through new borrowings, as the reorganization progresses.
Strong Upward Trajectory
Hertz was on a strong upward financial trajectory prior to the COVID-19 pandemic, including ten consecutive quarters of year-over-year revenue growth and nine quarters of year-over-year adjusted corporate EBITDA improvement. In January and February 2020, the Company increased global revenue 6% and 8% year over year, respectively, driven by higher U.S. car rental revenue. In addition, the Company was recognized as No. #1 in customer satisfaction by J.D. Power and as one of the World’s Most Ethical Companies by Ethisphere.
Taking Actions in Response to COVID-19
When the effects of the crisis began to manifest in March, causing an increase in car rental cancellations and a decline in forward bookings, the Company moved quickly to adjust. Hertz took action to align expenses with significantly lower demand levels by closely managing overhead and operating costs, including:
reducing planned fleet levels through vehicle sales and by canceling fleet orders,
consolidating off-airport rental locations,
deferring capital expenditures and cutting marketing spend, and
implementing furloughs and layoffs of 20,000 employees, or approximately 50% of its global workforce.
The Company actively engaged with many of its largest creditors to temporarily reduce the required payments under the Company’s vehicle operating lease. Although Hertz negotiated short-term relief with such creditors, it was unable to secure longer-term agreements. Additionally, the Company sought assistance from the U.S. government, but access to funding for the rental car industry did not become available.
Additional Information
White & Case LLP is serving as legal advisor, Moelis & Co. is serving as investment banker, and FTI Consulting is serving as financial advisor.
Additional information for customers regarding Hertz’s restructuring is available www.hertz.com/drivingforward. Court filings and information about the claims process for suppliers and vendors are available at https://restructuring.primeclerk.com/hertz, by calling the Company’s claims agent at (877) 428-4661 (toll-free in the U.S.) or (929) 955-3421 (for parties outside the U.S.) or emailing hertzinfo@primeclerk.com.
ABOUT HERTZ The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit: www.hertz.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This press release contains "forward-looking statements" within the meaning of federal securities laws. Words such as "expect" and "intend" and similar expressions identify forward-looking statements, which include but are not limited to statements related to our liquidity, the expected effects on our business, financial condition and results of operations due to the spread of the COVID-19 virus, the bankruptcy process, the Company’s ability to obtain approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court throughout the course of the Chapter 11 cases, the effects of the Chapter 11 cases, including increased professional costs, on the Company’s liquidity, results of operations and business, the Company’s ability to comply with the continued listing criteria of the New York Stock Exchange (the "NYSE") and risks arising from the potential suspension of trading of the Company’s common stock on, or delisting from, the NYSE, the effects of Chapter 11 on the interests of various constituents and the ability to negotiate, develop, confirm and consummate a plan of reorganization. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including those in our risk factors that we identify in our most recent annual report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 25, 2020, and quarterly reports on Form 10-Q filed subsequent thereto. We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this filing, and we undertake no obligation to update this information.
ESTERO, Fla., May 18, 2020 /PRNewswire/ — Hertz Global Holdings, Inc., (NYSE: HTZ) today announced that its Board of Directors has named Paul Stone President and Chief Executive Officer, effective immediately. Stone, most recently Hertz’s Executive Vice President and Chief Retail Operations Officer, North America, also has been elected to the Hertz Board of Directors. Stone succeeds Kathryn V. Marinello, who plans to continue with the Company in a consulting position for up to one year to support a smooth transition.
"After an ongoing succession planning process, the Board elected Paul to lead Hertz’s next chapter," said Henry R. Keizer, Hertz’s Chairman. "Paul brings a customer-centered approach to growing the business that is driven by process excellence and employee engagement. Having successfully run our largest business segment for the last two years, Paul helped strengthen our brands by elevating service standards across the North American car rental operations." Keizer continued, "We also want to thank Kathy for her contributions as an exceptional business leader. Since joining the company in January 2017, she oversaw a successful operational turnaround, transformed Hertz’s culture, and built a best-in-class leadership team. The Board wishes her all the best."
"The hardest part about stepping down is leaving the amazing employees that have earned my respect over the last three-and-a-half years. It was an honor to serve them," said Marinello. "I am confident that under Paul’s leadership, Hertz will prosper long into the future."
"It is a tremendous honor to have the opportunity to lead Hertz," Stone said. "I thank Kathy and look forward to working with my colleagues to do what Hertz people do best – anticipate where transportation, mobility and technology are going and innovate to best serve our customers, stakeholders and communities."
Stone, 50, began his 28-year career with Sam’s Club/ Walmart as a store manager and was quickly elevated through the ranks to Western US divisional senior vice president. He led operations for upwards of 200 locations with more than 30,000 employees. Prior to Hertz, he served as senior vice president and chief retail officer at Cabela’s, one of the leading outdoor outfitter retail companies. Over the course of his career, he has delivered strategy, service, people development and full-scale retail operations leadership. Stone joined Hertz in March 2018 to lead the Company’s North American car rental operations, which encompassed approximately 4,500 locations and 27,000 employees. He simplified operations, re-energized and developed talent, and elevated service standards, resulting in Hertz winning the JD Power award for the first time in 16 years. In addition to car rental, the scope of his responsibilities included Hertz’s Transportation Network Companies and Car Sales businesses.
About Hertz
Hertz, one of the most recognized brands in the world and currently ranked #1 in Customer Satisfaction by J.D. Power, has a long-standing legacy of providing a fast and easy experience designed to make every journey special. It starts with top-rated vehicles to fit every traveler’s needs, delivered with a caring touch and personalized services including its award-winning Hertz Gold Plus Rewards loyalty program, Ultimate Choice, Hertz Fast Lane powered by CLEAR, Mobile Wi-Fi, and more. Beyond car rental, Hertz is one of the top 10 sellers of pre-owned vehicles in the U.S. with more than 80 Hertz Car Sales retail locations nationwide. Wherever and whenever you need to go, at Hertz, we’re here to get you there. To learn more or reserve a vehicle, visit Hertz.com.
Hertz pioneered the car rental industry more than 100 years ago and today is owned by Hertz Global Holdings, Inc. which includes Dollar and Thrifty vehicle rental brands and fleet management leader Donlen Corporation.
ESTERO, Fla., May 11, 2020 /PRNewswire/ –Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported results for its first quarter 2020.
Financial results significantly impacted by COVID-19 pandemic
Consolidated revenue of $1.9 billion, U.S. RAC revenue of $1.4 billion
Hertz Global net loss of $356 million, Adjusted Corporate EBITDA of negative $243 million
Approximately $1.0 billion of unrestricted cash and cash equivalents at March 31, 2020
"We started the year with positive momentum, extending the strong growth trajectory of the past three years, reflecting consistent increases in both price and volume, productivity improvements and best-in-class fleet management," said CEO and President, Kathryn V. Marinello. "Yet in just two months, the outbreak of the coronavirus created a major business disruption as global travel demand dropped to almost zero and the U.S. used-car market effectively shut down. We immediately shifted our business priorities to focus on employee and customer safety, expense mitigation and preserving liquidity."
The Company began implementing stringent measures in line with U.S. CDC guidelines to safeguard personnel and customers. In addition to following social distancing best practices at its locations, every vehicle now is being sealed and certified ‘Hertz Gold Standard Clean’ after undergoing a 15-point cleaning and sanitization process that follows U.S. CDC guidelines and uses EPA-approved products.
While ensuring the safety of its people, the Company aggressively managed costs and liquidity by right-sizing its staffing and operations to reflect the current market realities, significantly reducing capital spending, canceling new fleet orders and disposing of excess fleet through multiple disposition channels before the shut down of the used-car market. The Company believes these actions will result in approximately $2.5 billion in annualized cost savings.
"As a responsible management team, we have to be pragmatic about the timing of an economic recovery, so we are doing absolutely everything we can to preserve liquidity. At the same time, from an operating perspective, we are continuing to service customers at the highest levels, with a safe fleet, in the manner they’ve come to trust from our iconic brand."
U.S. RENTAL CAR ("U.S. RAC") SUMMARY
_________________________________________
U.S. RAC
Three Months Ended March 31,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total revenues
$
1,381
$
1,520
(9)
%
Adjusted EBITDA
$
(199)
$
7
NM
Adjusted EBITDA Margin
(14)
%
—
%
Average Vehicles (in whole units)
518,580
501,767
3
%
Vehicle Utilization
67
%
79
%
Transaction Days (in thousands)
31,564
35,582
(11)
%
Total RPD (in whole dollars)
$
42.74
$
41.90
2
%
Total RPU Per Month (in whole dollars)
$
867
$
990
(12)
%
Depreciation Per Unit Per Month (in whole dollars)
$
298
$
256
16
%
NM – Not meaningful
Year-to-date February 2020 revenue for the segment was up 8% from the same period in 2019 on both higher price and volume. Travel bans and shelter-in-place orders throughout the country severely impacted volume in March which drove an 11% decline in transaction days for the quarter. All three brands contributed to a 2% increase in Total RPD in the first quarter, which partially offset the volume impact to revenue.
Depreciation Per Unit Per Month was impacted by residual values on certain vehicle models and lower year over year retail sales volume as a result of the COVID-19 shut-down of retail lots.
Adjusted EBITDA was negative $199 million as the timing of the sharp decline in revenue outpaced the Company’s ability to reduce costs during the quarter.
INTERNATIONAL RENTAL CAR ("INTERNATIONAL RAC") SUMMARY
________________________________________________________________
International RAC
Three Months Ended March 31,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total revenues
$
368
$
433
(15)
%
Adjusted EBITDA
$
(45)
$
(13)
NM
Adjusted EBITDA Margin
(12)
%
(3)
%
Average Vehicles (in whole units)
147,987
152,747
(3)
%
Vehicle Utilization
66
%
74
%
Transaction Days (in thousands)
8,863
10,127
(12)
%
Total RPD (in whole dollars)
$
42.35
$
42.25
—
%
Total RPU Per Month (in whole dollars)
$
846
$
934
(9)
%
Depreciation Per Unit Per Month (in whole dollars)
$
204
$
209
(2)
%
NM – Not meaningful
Year-to-date February 2020 revenue for the segment was up 1% on a constant currency basis from the same period in 2019 on both higher price and volume. Travel bans and shelter-in-place orders severely impacted March volume. As a result, first quarter International RAC revenue decreased 12% year-over-year on a constant currency basis.
The timing of the sharp decline in revenue outpaced the Company’s ability to reduce costs during the quarter resulting in Adjusted EBITDA of negative $45 million.
ALL OTHER OPERATIONS SUMMARY ______________________________________
All Other Operations
Three Months Ended March 31,
Percent Inc/ (Dec)
($ in millions, except where noted)
2020
2019
Total revenues
$
174
$
154
13
%
Adjusted EBITDA
$
24
$
22
14
%
Adjusted EBITDA Margin
14
%
14
%
Average Vehicles (in whole units) – Donlen
201,364
192,799
4
%
All Other Operations primarily is comprised of the Company’s Donlen leasing operations. Higher leasing volume drove double-digit growth in revenue and Adjusted EBITDA for the quarter.
LIQUIDITY CONSIDERATIONS RELATED TO COVID-19 ___________________________________________________
During the quarter the Company drew down $595 million from its Senior Revolving Credit Facility and ended the quarter with approximately $1.0 billion of liquidity, substantially in the form of unrestricted cash and cash equivalents. To mitigate the impact of the COVID-19 shutdowns on its operations, the Company took measures to adjust fleet levels, reduce staffing levels, reduce discretionary spending, renegotiate key contracts and commitments, and slash capital expenditures. At this time, neither the duration nor magnitude of the market disruption of COVID-19 can be predicted, therefore, the Company is unable to reasonably estimate the ultimate impact to the business. As such, in addition to the above measures to preserve liquidity, in April the Company did not make certain operating lease payments for its U.S. rental car fleet. In May, the Company entered into forbearance and limited waivers with certain of its corporate lenders and holders of its asset-backed vehicle debt. These provide the Company with additional time through May 22, 2020 to engage in discussions with its key stakeholders to develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic and considers the Company’s ongoing operating and financing requirements.
As more fully disclosed in its First Quarter 2020 Quarterly Report on Form 10-Q filed on May 11, 2020, the Company is reviewing all available options to preserve liquidity, however, there can be no assurance that the Company will be able to successfully negotiate any relief past May 22, 2020.
EARNINGS WEBCAST INFORMATION _____________________________________
Hertz will host a webcast and conference call on May 12, 2020 at 8:30 a.m. Eastern Time. Management will present prepared remarks. There will not be a question and answer session. This webcast and conference call can be accessed through a link on the Investor Relations section of the Hertz website, IR.Hertz.com, or by dialing (877) 692-8955 and providing passcode 4386207. Investors are encouraged to dial-in approximately 10 minutes prior to the call. A web replay will remain available for approximately one year. A telephone replay will be available one hour following the conclusion of the call for one year at (866) 207-1041 with pass code 4740780.
An accompanying presentation, the earnings release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on the Hertz website, IR.Hertz.com.
RIGHTS OFFERING _________________________________
In June 2019, the Company distributed transferable subscription rights to its shareholders to purchase up to an aggregate of 57,915,055 new shares (the "Rights Offering"). The Rights Offering, which was fully subscribed, was consummated in July 2019. As a result of the timing of the subscription period, the rights generated a dilutive impact to the Company’s 2019 basic and diluted earnings per share. The three month period ended March 31, 2019 has been adjusted to reflect the impact of the Rights Offering.
RESULTS OF THE HERTZ CORPORATION ________________________________________________________________
The GAAP and non-GAAP profitability metrics for Hertz Global’s operating subsidiary, The Hertz Corporation ("Hertz"), are materially the same as those for Hertz Global.
SELECTED FINANCIAL DATA, SUPPLEMENTAL SCHEDULES, NON-GAAP MEASURES AND DEFINITIONS ______________________________________________________________________________
Following are tables that present selected financial data of Hertz Global. Also included are Supplemental Schedules, which are provided to present segment results, and reconciliations of non-GAAP measures to their most comparable GAAP measure. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout this earnings release and provides the usefulness of non-GAAP measures to investors and additional purposes for which management uses such measures.
ABOUT HERTZ ___________________________
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit: www.hertz.com.
Certain statements contained or incorporated by reference in this release, and in related comments by the Company’s management, include "forward-looking statements." Forward-looking statements include information concerning the Company’s liquidity and its possible or assumed future results of operations, including descriptions of its business strategies. These statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate in these circumstances. The Company believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and the Company’s actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on Forms 10-K, 10-Q and 8-K filed or furnished to the Securities and Exchange Commission ("SEC"). Among other items, such factors could include: levels of travel demand, particularly with respect to business and leisure travel in the United States and in global markets; the length and severity of the COVID-19 pandemic and the impact on the Company’s vehicle rental business as a result of travel restrictions and business closures or disruptions; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic factors; general economic uncertainty and the pace of economic recovery, including in key global markets, when the COVID-19 pandemic subsides; the Company’s ability to successfully restructure the Company’s substantial indebtedness, obtain further waivers or forbearance or raise additional capital; the recoverability of the Company’s goodwill and indefinite-lived intangible assets when performing impairment analysis; the Company’s ability to dispose of vehicles in the used-vehicle market, use the proceeds of such sales to acquire new vehicles and to reduce exposure to residual risk; actions creditors may take with respect to the vehicles used in the rental car operations; significant changes in the competitive environment and the effect of competition in the Company’s markets on rental volume and pricing, including on the Company’s pricing policies or use of incentives; occurrences that disrupt rental activity during the Company’s peak periods; the Company’s ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in the Company’s rental operations accordingly; increased vehicle costs due to declining value of the Company’s non-program vehicles; the Company’s ability to maintain sufficient liquidity and the availability to it of additional or continued sources of financing for the Company’s revenue earning vehicles and to refinance its existing indebtedness; risks related to the Company’s indebtedness, including its substantial amount of debt, its ability to incur substantially more debt, the fact that substantially all of the Company’s consolidated assets secure certain of its outstanding indebtedness and increases in interest rates or in its borrowing margins; the Company’s ability to meet the financial and other covenants contained in its senior credit facilities and letter of credit facilities, its outstanding unsecured senior notes, its outstanding senior second priority secured notes and certain asset-backed and asset-based arrangements; the Company’s ability to access financial markets, including the financing of its vehicle fleet through the issuance of asset-backed securities; fluctuations in interest rates, foreign currency exchange rates and commodity prices; the Company’s ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); the Company’s ability to prevent the misuse or theft of information it possesses, including as a result of cyber security breaches and other security threats; the Company’s ability to adequately respond to changes in technology, customer demands and market competition; the Company’s ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles it purchases; the Company’s recognition of previously deferred tax gains on the disposition of revenue earning vehicles; financial instability of the manufacturers of the Company’s vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs; an increase in the Company’s vehicle costs or disruption to the Company’s rental activity, particularly during peak periods, due to safety recalls by the manufacturers of the Company’s vehicles; the Company’s ability to execute a business continuity plan; the Company’s access to third-party distribution channels and related prices, commission structures and transaction volumes; the Company’s ability to retain customer loyalty and market share; risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws, the Company’s ability to repatriate cash from non-U.S. affiliates without adverse tax consequences, the Company’s exposure to fluctuations in foreign currency exchange rates and the Company’s ability to effectively manage its international operations after the United Kingdom’s withdrawal from the European Union; a major disruption in the Company’s communication or centralized information networks; a failure to maintain, upgrade and consolidate the Company’s information technology systems; costs and risks associated with litigation and investigations or any failure or inability to comply with laws and regulations or any changes in the legal and regulatory environment, including laws and regulations relating to environmental matters and consumer privacy and data security; the Company’s ability to maintain its network of leases and vehicle rental concessions at airports in the U.S. and internationally; the Company’s ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy; the Company’s ability to maintain an effective employee retention and talent management strategy and resulting changes in personnel and employee relations; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, where such actions may affect the Company’s operations, the cost thereof or applicable tax rates; risks relating to the Company’s deferred tax assets, including the risk of an "ownership change" under the Internal Revenue Code of 1986, as amended; the Company’s exposure to uninsured claims in excess of historical levels; risks relating to the Company’s participation in multiemployer pension plans; shortages of fuel and increases or volatility in fuel costs; changes in accounting principles, or their application or interpretation, and the Company’s ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results and other risks and uncertainties described from time to time in periodic and current reports that the Company files with the SEC.
Additional information concerning these and other factors can be found in the Company’s filings with the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
______________________
FINANCIAL INFORMATION AND OPERATING DATA _________________________________________________
SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA
Three Months Ended March 31,
As a Percentage of Total Revenues
(In millions, except per share data)
2020
2019
2020
2019
Total revenues
$
1,923
$
2,107
100
%
100
%
Expenses:
Direct vehicle and operating
1,241
1,266
65
%
60
%
Depreciation of revenue earning vehicles and lease charges
677
592
35
%
28
%
Selling, general and administrative
208
234
11
%
11
%
Interest expense, net:
Vehicle
118
112
6
%
5
%
Non-vehicle
57
71
3
%
3
%
Total interest expense, net
175
183
9
%
9
%
Other (income) expense, net
(17)
(19)
(1)
%
(1)
%
Total expenses
2,284
2,256
119
%
107
%
Income (loss) before income taxes
(361)
(149)
(19)
%
(7)
%
Income tax (provision) benefit
4
1
—
%
—
%
Net income (loss)
(357)
(148)
(19)
%
(7)
%
Net (income) loss attributable to noncontrolling interests
1
1
—
%
—
%
Net income (loss) attributable to Hertz Global
$
(356)
$
(147)
(19)
%
(7)
%
Weighted-average number of shares outstanding(a):
Basic
142
96
Diluted
142
96
Earnings (loss) per share:
Basic
$
(2.50)
$
(1.54)
Diluted
$
(2.50)
$
(1.54)
Adjusted Net Income (Loss)(b)
$
(253)
$
(83)
Adjusted Diluted Earnings (Loss) Per Share(b)
$
(1.78)
$
(0.87)
Adjusted Corporate EBITDA(b)
$
(243)
$
(4)
(a)
Basic weighted-average shares and weighted-average shares used to calculate diluted earnings (loss) per share for the three months ended March 31, 2019 have been adjusted to give effect to the Rights Offering.
(b)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule II.
SELECTED UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In millions)
As of March 31, 2020
As of December 31, 2019
Cash and cash equivalents
$
1,017
$
865
Total restricted cash and cash equivalents
392
495
Revenue earning vehicles, net:
U.S. Rental Car
10,529
9,820
International Rental Car
2,116
2,319
All Other Operations
1,664
1,650
Total revenue earning vehicles, net
14,309
13,789
Total assets
25,842
24,627
Total debt
18,754
17,089
Net Vehicle Debt(a)
14,153
12,949
Net Non-vehicle Debt(a)
3,332
2,890
Total stockholders’ equity
1,491
1,888
(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule V.
SELECTED UNAUDITED CONSOLIDATED CASH FLOW DATA
Three Months Ended March 31,
(In millions)
2020
2019
Cash flows provided by (used in):
Operating activities
$
449
$
514
Investing activities
(2,097)
(1,855)
Financing activities
1,701
939
Effect of exchange rate changes
(4)
(2)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
$
49
$
(404)
Fleet Growth(a)
$
(180)
$
(413)
Adjusted Free Cash Flow(a)
$
(502)
$
(553)
(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedules III and IV.
Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
Three Months Ended March 31, 2020
Three Months Ended March 31, 2019
(In millions)
U.S. Rental Car
Int’l Rental Car
All Other Operations
Corporate
Hertz Global
U.S. Rental Car
Int’l Rental Car
All Other Operations
Corporate
Hertz Global
Total revenues:
$
1,381
$
368
$
174
$
—
$
1,923
$
1,520
$
433
$
154
$
—
$
2,107
Expenses:
Direct vehicle and operating
969
265
7
—
1,241
976
284
6
—
1,266
Depreciation of revenue earning vehicles and lease charges
463
89
125
—
677
386
97
109
—
592
Selling, general and administrative
115
48
(4)
49
208
121
54
7
52
234
Interest expense, net:
Vehicle
86
21
11
—
118
77
23
12
—
112
Non-vehicle
(47)
(1)
(5)
110
57
(45)
(1)
(4)
121
71
Total interest expense, net
39
20
6
110
175
32
22
8
121
183
Other (income) expense, net
(20)
3
—
—
(17)
(9)
—
—
(10)
(19)
Total expenses
1,566
425
134
159
2,284
1,506
457
130
163
2,256
Income (loss) before income taxes
$
(185)
$
(57)
$
40
$
(159)
$
(361)
$
14
$
(24)
$
24
$
(163)
$
(149)
Income tax (provision) benefit
4
1
Net income (loss)
$
(357)
$
(148)
Net (income) loss attributable to noncontrolling interests
1
1
Net income (loss) attributable to Hertz Global
$
(356)
$
(147)
Supplemental Schedule II
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE – ADJUSTED NET INCOME (LOSS), ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE AND ADJUSTED CORPORATE EBITDA
Unaudited
Three Months Ended March 31,
(In millions, except per share data)
2020
2019
Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share:
Net income (loss) attributable to Hertz Global
$
(356)
$
(147)
Adjustments:
Income tax provision (benefit)
(4)
(1)
Vehicle and non-vehicle debt-related charges(a)
12
14
Restructuring and restructuring related charges(b)
7
7
Information technology and finance transformation costs(c)
17
23
Acquisition accounting-related depreciation and amortization(d)
14
14
Other items(e)
(27)
(21)
Adjusted pre-tax income (loss)(f)
(337)
(111)
Income tax (provision) benefit on adjusted pre-tax income (loss)(g)
84
28
Adjusted Net Income (Loss)
$
(253)
$
(83)
Weighted-average number of diluted shares outstanding
142
96
Adjusted Diluted Earnings (Loss) Per Share(h)
$
(1.78)
$
(0.87)
Adjusted Corporate EBITDA:
Net income (loss) attributable to Hertz Global
(356)
(147)
Adjustments:
Income tax provision (benefit)
(4)
(1)
Non-vehicle depreciation and amortization(i)
53
49
Non-vehicle debt interest, net of interest income
57
71
Vehicle debt-related charges(a),(j)
9
10
Restructuring and restructuring related charges(b)
7
7
Information technology and finance transformation costs(c)
17
23
Other items(e),(k)
(26)
(16)
Adjusted Corporate EBITDA
$
(243)
$
(4)
Supplemental Schedule II (continued)
(a)
Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
(b)
Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.
(c)
Represents costs associated with the Company’s information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes. These costs relate primarily to the Company’s corporate operations ("Corporate").
(d)
Represents incremental expense associated with the amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
(e)
Represents miscellaneous items. In 2020, includes a $20 million gain on the sale of non-vehicle capital assets in U.S. RAC and $13 million in unrealized gains on derivative financial instruments in All Other Operations. In 2019, includes an $11 million gain on marketable securities and an $8 million gain on the sale of non-vehicle capital assets.
(f)
Adjustments by caption on a pre-tax basis are as follows:
Increase (decrease) to expenses
Three Months Ended March 31,
(In millions)
2020
2019
Direct vehicle and operating
$
(16)
$
(13)
Selling, general and administrative
(8)
(29)
Interest expense, net:
Vehicle
(9)
(10)
Non-vehicle
(3)
(4)
Total interest expense, net
(12)
(14)
Other income (expense), net
13
19
Noncontrolling interests
(1)
(1)
Total adjustments
$
(24)
$
(38)
(g)
Derived utilizing a combined statutory rate of 25% for the periods ending March 31, 2020 and 2019 applied to the respective Adjusted Pre-tax Income (Loss).
(h)
Adjustments used to reconcile diluted earnings (loss) per share on a GAAP basis to Adjusted Diluted Earnings (Loss) Per Share are comprised of the same adjustments, inclusive of the tax impact, used to reconcile net income (loss) to Adjusted Net Income (Loss) divided by the weighted-average diluted shares outstanding during the period.
(i)
Non-vehicle depreciation and amortization expense for U.S. RAC, International RAC, All Other Operations and Corporate for the three months ended March 31, 2020 are $41 million, $5 million, $2 million and $5 million, respectively, and for the three months ended March 31, 2019 are $38 million, $6 million, $2 million and $3 million, respectively.
(j)
Vehicle debt-related charges for U.S. RAC, International RAC and All Other Operations for the three months ended March 31, 2020 are $6 million, $2 million and $1 million, respectively, and for the three months ended March 31, 2019 are $5 million, $3 million, and $2 million, respectively.
(k)
Also includes an adjustment for non-cash stock-based compensation charges in Corporate.
Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE – FLEET GROWTH
Unaudited
Three Months Ended March 31, 2020
Three Months Ended March 31, 2019
(In millions)
U.S. Rental Car
Int’l Rental Car
All Other Operations
Hertz Global
U.S. Rental Car
Int’l Rental Car
All Other Operations
Hertz Global
Revenue earning vehicles expenditures
$
(3,667)
$
(450)
$
(229)
$
(4,346)
$
(3,078)
$
(631)
$
(264)
$
(3,973)
Proceeds from disposal of revenue earning vehicles
1,616
529
67
2,212
1,382
689
82
2,153
Net revenue earning vehicles capital expenditures
(2,051)
79
(162)
(2,134)
(1,696)
58
(182)
(1,820)
Depreciation and reserves for revenue earning vehicles
524
84
125
733
451
84
109
644
Financing activity related to vehicles:
Borrowings
3,086
406
169
3,661
2,925
580
162
3,667
Payments
(1,647)
(703)
(188)
(2,538)
(2,061)
(562)
(113)
(2,736)
Restricted cash changes
23
37
38
98
(51)
(123)
6
(168)
Net financing activity related to vehicles
1,462
(260)
19
1,221
813
(105)
55
763
Fleet Growth
$
(65)
$
(97)
$
(18)
$
(180)
$
(432)
$
37
$
(18)
$
(413)
Supplemental Schedule IV
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE – ADJUSTED FREE CASH FLOW
Unaudited
Three Months Ended March 31,
(In millions)
2020
2019
Net cash provided by operating activities
$
449
$
514
Net change in restricted cash and cash equivalents, vehicle
98
(168)
Revenue earning vehicles expenditures
(4,346)
(3,973)
Proceeds from disposal of revenue earning vehicles
2,212
2,153
Non-vehicle capital asset expenditures
(59)
(54)
Proceeds from non-vehicle capital assets disposed of or to be disposed of
23
19
Proceeds from issuance of vehicle debt
3,661
3,667
Repayments of vehicle debt
(2,538)
(2,736)
Noncontrolling interests
(2)
25
Adjusted Free Cash Flow(a)
$
(502)
$
(553)
(a)
During the third quarter 2019, the Company changed its definition of Adjusted Free Cash Flow and revised its reconciliation for the three months ended March 31, 2019 accordingly.
Supplemental Schedule V
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE – NET DEBT
Unaudited
As of March 31, 2020
As of December 31, 2019
(In millions)
Vehicle
Non- Vehicle
Total
Vehicle
Non- Vehicle
Total
Debt as reported in the balance sheet
$
14,438
$
4,316
$
18,754
$
13,368
$
3,721
$
17,089
Add:
Debt issue costs, discounts and premiums
83
33
116
47
34
81
Less:
Cash and cash equivalents
—
1,017
1,017
—
865
865
Restricted cash
368
—
368
466
—
466
Net Debt
$
14,153
$
3,332
$
17,485
$
12,949
$
2,890
$
15,839
Supplemental Schedule VI
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF KEY METRICS
REVENUE, UTILIZATION AND DEPRECIATION
Unaudited
U.S. Rental Car
Three Months Ended March 31,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total RPD
Total revenues
$
1,381
$
1,520
Ancillary retail vehicle sales revenue
(32)
(29)
Total Rental Revenues
$
1,349
$
1,491
Transaction Days (in thousands)
31,564
35,582
Total RPD (in whole dollars)
$
42.74
$
41.90
2
%
Total Revenue Per Unit Per Month
Total Rental Revenues
$
1,349
$
1,491
Average Vehicles (in whole units)
518,580
501,767
Total revenue per unit (in whole dollars)
$
2,601
$
2,971
Number of months in period (in whole units)
3
3
Total RPU Per Month (in whole dollars)
$
867
$
990
(12)
%
Vehicle Utilization
Transaction Days (in thousands)
31,564
35,582
Average Vehicles (in whole units)
518,580
501,767
Number of days in period (in whole units)
91
90
Available Car Days (in thousands)
47,191
45,159
Vehicle Utilization(a)
67
%
79
%
Depreciation Per Unit Per Month
Depreciation of revenue earning vehicles and lease charges
$
463
$
386
Average Vehicles (in whole units)
518,580
501,767
Depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
$
893
$
769
Number of months in period (in whole units)
3
3
Depreciation Per Unit Per Month (in whole dollars)
$
298
$
256
16
%
(a)
Calculated as Transaction Days divided by Available Car Days.
Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF KEY METRICS
REVENUE, UTILIZATION AND DEPRECIATION
Unaudited
International Rental Car
Three Months Ended March 31,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total RPD
Total revenues
$
368
$
433
Foreign currency adjustment(a)
7
(5)
Total Rental Revenues
$
375
$
428
Transaction Days (in thousands)
8,863
10,127
Total RPD (in whole dollars)
$
42.35
$
42.25
—
%
Total Revenue Per Unit Per Month
Total Rental Revenues
$
375
$
428
Average Vehicles (in whole units)
147,987
152,747
Total revenue per unit (in whole dollars)
$
2,534
$
2,802
Number of months in period (in whole units)
3
3
Total RPU Per Month (in whole dollars)
$
846
$
934
(9)
%
Vehicle Utilization
Transaction Days (in thousands)
8,863
10,127
Average Vehicles (in whole units)
147,987
152,747
Number of days in period (in whole units)
91
90
Available Car Days (in thousands)
13,467
13,747
Vehicle Utilization(b)
66
%
74
%
Depreciation Per Unit Per Month
Depreciation of revenue earning vehicles and lease charges
$
89
$
97
Foreign currency adjustment(a)
2
(1)
Adjusted depreciation of revenue earning vehicles and lease charges
$
91
$
96
Average Vehicles (in whole units)
147,987
152,747
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
$
615
$
628
Number of months in period (in whole units)
3
3
Depreciation Per Unit Per Month (in whole dollars)
$
204
$
209
(2)
%
(a)
Based on December 31, 2019 foreign exchange rates.
(b)
Calculated as Transaction Days divided by Available Car Days.
Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF KEY METRICS
REVENUE, UTILIZATION AND DEPRECIATION
Unaudited
Worldwide Rental Car
Three Months Ended March 31,
Percent Inc/(Dec)
($ in millions, except where noted)
2020
2019
Total RPD
Total revenues
$
1,749
$
1,953
Ancillary retail vehicle sales revenue
(32)
(29)
Foreign currency adjustment(a)
7
(5)
Total Rental Revenues
$
1,724
$
1,919
Transaction Days (in thousands)
40,427
45,709
Total RPD (in whole dollars)
$
42.66
$
41.96
2
%
Total Revenue Per Unit Per Month
Total Rental Revenues
$
1,724
$
1,919
Average Vehicles (in whole units)
666,567
654,514
Total revenue per unit (in whole dollars)
$
2,586
$
2,932
Number of months in period (in whole units)
3
3
Total RPU Per Month (in whole dollars)
$
862
$
977
(12)
%
Vehicle Utilization
Transaction Days (in thousands)
40,427
45,709
Average Vehicles (in whole units)
666,567
654,514
Number of days in period (in whole units)
91
90
Available Car Days (in thousands)
60,658
58,906
Vehicle Utilization(b)
67
%
78
%
Depreciation Per Unit Per Month
Depreciation of revenue earning vehicles and lease charges
$
552
$
483
Foreign currency adjustment(a)
2
(1)
Adjusted depreciation of revenue earning vehicles and lease charges
$
554
$
482
Average Vehicles (in whole units)
666,567
654,514
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
$
831
$
736
Number of months in period (in whole units)
3
3
Depreciation Per Unit Per Month (in whole dollars)
$
277
$
246
13
%
Note: Worldwide Rental Car represents U.S. Rental Car and International Rental Car segment information on a combined basis and excludes the All Other Operations segment, which is primarily comprised of the Company’s Donlen leasing operations, and Corporate.
(a)
Based on December 31, 2019 foreign exchange rates.
(b)
Calculated as Transaction Days divided by Available Car Days.
NON-GAAP MEASURES AND KEY METRICS _______________________________________________________________
Hertz Global is the top-level holding company that indirectly wholly owns The Hertz Corporation (together, the "Company"). The term "GAAP" refers to accounting principles generally accepted in the United States of America. Adjusted EBITDA is the Company’s segment measure of profitability and complies with GAAP when used in that context.
NON-GAAP MEASURES
Non-GAAP measures are not recognized measurements under GAAP. When evaluating the Company’s operating performance or liquidity, investors should not consider non-GAAP measures in isolation of, superior to, or as a substitute for measures of the Company’s financial performance as determined in accordance with GAAP.
Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share ("Adjusted Diluted EPS")
Adjusted Net Income (Loss) represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax, debt-related charges and losses, restructuring and restructuring related charges, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs, non-cash acquisition accounting charges and certain other miscellaneous items on a pre-tax basis. Adjusted Net Income (Loss) includes a provision (benefit) for income taxes derived utilizing a combined statutory rate. The combined statutory rate is management’s estimate of the Company’s long-term tax rate. Its most comparable GAAP measure is net income (loss) attributable to the Company.
Adjusted Diluted EPS represents Adjusted Net Income (Loss) on a per diluted share basis using the weighted-average number of diluted shares outstanding for the period. Its most comparable GAAP measure is diluted earnings (loss) per share.
Adjusted Net Income (Loss) and Adjusted Diluted EPS are important to management because they allow management to assess operational performance of the Company’s business, exclusive of the items mentioned above that are not operational in nature or comparable to those of the Company’s competitors.
Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin
Adjusted Corporate EBITDA represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax, non-vehicle depreciation and amortization, net non-vehicle debt interest, vehicle debt-related charges and losses, restructuring and restructuring related charges, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs and certain other miscellaneous items. Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues.
Management uses these measures as operating performance metrics for internal monitoring and planning purposes, including the preparation of the Company’s annual operating budget and monthly operating reviews, and to facilitate analysis of investment decisions, profitability and performance trends. These measures enable management and investors to isolate the effects on profitability of operating metrics most meaningful to the business of renting and leasing vehicles. They also allow management to assess the performance of the entire business on the same basis as its reportable segments. Its most comparable GAAP measure is net income (loss) attributable to the Company.
Adjusted Free Cash Flow
Adjusted Free Cash Flow represents net cash provided by operating activities, including the change in restricted cash and cash equivalents related to vehicles, net revenue earning vehicle and capital asset expenditures and the net impact of vehicle financing activities. During the third quarter 2019, the Company changed its definition of Adjusted Free Cash Flow to exclude the impact of noncontrolling interests which primarily eliminates proceeds from vehicle sales upon consolidation of the Company, but not the associated repayment of vehicle debt.
Adjusted Free Cash Flow is important to management and investors as it provides useful information about the amount of cash available for acquisitions and the reduction of non-vehicle debt.
Fleet Growth
Fleet Growth represents revenue earning vehicles expenditures, net of proceeds from disposals, plus vehicle depreciation and net vehicle financing which includes borrowings, repayments and the change in restricted cash associated with vehicles. Fleet Growth is important to management as it allows the Company to assess the cash flow required to support its investment in revenue earning vehicles.
Net Non-vehicle Debt, Net Vehicle Debt and Total Net Debt
Net Non-vehicle Debt represents non-vehicle debt as reported on the Company’s balance sheet, excluding the impact of unamortized debt issue costs, discounts and premiums associated with non-vehicle debt, less cash and cash equivalents. This measure is important to management and investors as it helps measure the Company’s net corporate leverage. It also assists in the evaluation of the Company’s ability to service its non-vehicle debt without reference to the expense associated with the vehicle debt, which is collateralized by assets not available to lenders under the non-vehicle debt facilities.
Net Vehicle Debt represents vehicle debt as reported on the Company’s balance sheet, excluding the impact of unamortized debt issue costs, discounts and premiums associated with vehicle debt, less restricted cash associated with vehicles. Restricted cash associated with vehicle debt is restricted for the purchase of revenue earning vehicles and other specified uses under the Company’s vehicle debt facilities and its vehicle rental like-kind exchange program. Net Vehicle Debt is important to management, investors and ratings agencies as it helps measure the Company’s leverage with respect to its vehicle assets.
Total Net Debt is the sum of Net Non-vehicle Debt and Net Vehicle debt and is important to management, investors and ratings agencies as it helps measure the Company’s gross leverage.
KEY METRICS
Available Car Days
Available Car Days represents Average Vehicles multiplied by the number of days in a period.
Average Vehicles ("Fleet Capacity" or "Capacity")
Average Vehicles is determined using a simple average of the number of vehicles in the fleet whether owned or leased by the Company at the beginning and end of a given period.
Depreciation Per Unit Per Month
Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges per vehicle per month, exclusive of the impacts of foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to management and investors as it is reflective of how the Company is managing the costs of its vehicles and facilitates in comparison with other participants in the vehicle rental industry.
Total Rental Revenues
Total Rental Revenues represents total revenues less ancillary retail vehicle sales revenues, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to management and investors as it represents a measurement that excludes the impact of revenues generated from non-vehicle rental activity, such as ancillary revenues resulting from vehicle sales and facilitates in comparisons with other participants in the vehicle rental industry.
Total Revenue Per Transaction Day ("Total RPD"or "RPD"; also referred to as "pricing")
Total RPD represents the ratio of Total Rental Revenues to Transaction Days. This metric is important to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
Total Revenue Per Unit Per Month ("Total RPU" or "Total RPU Per Month")
Total RPU Per Month represents the amount of average Total Rental Revenues per vehicle per month. This metric is important to management and investors as it provides a measure of revenue productivity relative to fleet capacity, or asset efficiency.
Transaction Days ("Days"; also referred to as "volume")
Transaction Days, also known as volume, represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. This metric is important to management and investors as it represents the number of revenue generating days.
Vehicle Utilization ("Utilization")
Vehicle Utilization represents the ratio of Transaction Days to Available Car Days. This metric is important to management and investors as it is the measurement of the proportion of vehicles that are being used to generate revenues relative to fleet capacity.
