ESTERO, Fla., Dec. 22, 2015 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ), or Hertz, filed its initial SEC Form 10 registration statement detailing the planned separation of its equipment rental business as a stand-alone, publicly traded company. No record date has been set, though the company has said it expects the transaction to be completed by the end of the second quarter of 2016. The separation is expected to be a tax-free event for U.S. federal income tax purposes to shareholders.
"We’ve taken a number of actions this year to drive performance and preparing the equipment rental business to operate as a stand-alone company is among the most significant," said John Tague, Hertz president and chief executive officer. "There are fundamental differences in the business models for vehicle versus equipment rental, and we believe the separation will enable more distinct focus on each by the respective separate management teams, as well as provide the equipment rental business with direct access to capital markets.
"Over the course of this year, we’ve put in place a highly capable senior management team that is ready to successfully operate and grow the equipment business, as well as run a publicly-traded company, based on decades of experience. The team has made significant progress, including a year-over-year 14 percent revenue increase in non-oil and gas markets in the third quarter, and we believe they are positioned to succeed in the long term," Tague added.
The leadership team for the Hertz equipment rental business includes:
Larry Silber, president and chief executive officer, whose background includes 30 years with Ingersoll Rand, where he led major business groups including utility equipment, rental and remarketing and the equipment and services businesses. Most recently, Silber was executive advisor at Court Square Capital Partners, LLP.
Barbara Brasier, who joined the business in November 2015 as chief financial officer. Before joining the equipment rental business, Brasier was senior vice president, tax and treasury for Mondelez International, Inc.
Maryann Waryjas, who also joined the business in November 2015 as general counsel. Waryjas previously was senior vice president, chief legal officer and corporate secretary for Great Lakes Dredge & Dock Corporation, one of the largest providers of dredging services in the United States. She has more than 30 years of corporate governance, securities, and mergers and acquisitions experience, including as a partner in major national law firms.
Bruce Dressel, who joined the business as chief operating officer in June 2015. Dressel brings more than 30 years in leadership and senior management roles in the equipment rental industry, including time as president and CEO of Sunbelt Rentals, where the company grew from 24 to 195 locations during his tenure there.
Rich Marani, who joined the business in June 2015 as chief technology officer. Marani has more than 30 years IT experience in industrial products, construction equipment, aerospace and information technology businesses. Recently, Marani served in a senior IT leadership role with Ingersoll Rand, responsible for global IT strategy for a $3 billion sector of the Ingersoll portfolio.
Chris Cunningham, who joined the business in September 2014 as chief human resources officer. Cunningham has significant, senior-level experience in the initial public offering process, talent acquisition, board relations, performance management, governance, and international and field operations. He joined the business from DFC Global Corporation.
"The filing of the Form 10 is a significant milestone on our path toward the separation of the equipment rental business as a stand-alone company," said Larry Silber, president and chief executive officer of Hertz Equipment Rental Corporation. "We are confident that our separation from Hertz Global Holdings will provide us better flexibility and focus to pursue growth opportunities within our core equipment rental markets, which also will enable us to provide better value to our customers, employees, and suppliers."
Hertz’s equipment rental business is one of the largest players in the North American equipment rental industry with more than 50 years of equipment-rental expertise. With approximately 4,500 employees, the business has 280 company-operated branches, of which 270 are in the United States and Canada, and the remaining branches are located in the United Kingdom, China and through joint venture arrangements in Saudi Arabia and Qatar. In addition, the business operates through 14 franchisee owned branches in Greece, Iceland, Portugal, and Corsica in Europe; in Afghanistan in the Middle East; in Panama in Central America; and in Chile in South America.
Hertz Equipment Rental Corporation is a leading, full-line equipment-rental supplier in key markets, including civil infrastructure, industrial and manufacturing, oil and gas, government and municipalities, commercial and residential construction, mining, energy, remediation, emergency response, facilities, entertainment, and ground care.
Hertz also disclosed in the filing that it repurchased 22.2 million of its shares during the fourth quarter of 2015 for $343 million under its share repurchase program.
ABOUT HERTZ GLOBAL Holdings, Inc.
Hertz Global Holdings, Inc. operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings, Inc. is one of the largest worldwide airport general use car rental companies with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global Holdings, Inc. apart from the competition. Additionally, Hertz Global Holdings, Inc. owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global Holdings, Inc., visit: www.hertz.com.
Certain statements contained in this release include "forward-looking statements." Forward-looking statements include information concerning the Hertz Global Holdings’ 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 Hertz Global Holdings 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. Hertz Global Holdings believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and 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. Among other items, such factors could include: the effect of our proposed separation of our equipment rental business and ability to obtain the expected benefits of any related transaction; our ability to complete the proposed separation within the expected timeframe; and changes to our senior management team.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report 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 Hertz Global Holdings 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 Hertz Global Holdings undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Hertz named Best Rental Car Company in the World by readers of top travel industry publications.
ESTERO, Fla., Dec. 8, 2015 /PRNewswire/ — Hertz (NYSE: HTZ), the world’s largest general use car rental brand, was recognized as the Best Car Rental Company in the World by two top travel industry awards – Global Traveler GT Tested Reader Survey Awards and Business Traveler Magazine’s 2015 Best in Business Travel Awards.
"We are extremely honored and appreciative that readers of Global Traveler and Business Traveler — some of our most loyal customers — have chosen to recognize us as the best," said Hertz Executive Vice President and Chief Marketing Officer, Matt Jauchius. "These awards are a testament to the hard work and dedication of our 30,000-plus employees around the world who strive to deliver the Hertz promise of excellence every day."
Global Traveler named Hertz "Best Car Rental Company" in the 12th GT Tested Reader Survey awards, ranked among the most highly regarded awards in the industry, which asks frequent business and luxury travelers to name the best in a variety of travel-related categories. The survey honors airlines, hotels, loyalty programs and travel-related products in more than 80 categories. GT‘s distinguished readers vote for their favorites in the world of travel in an open-ended survey running in the magazine and online from January to August each year.
"Our readers know the best of the best in the business, as they are traveling daily, flying these very airlines and staying at all of these hotels," said Francis X. Gallagher, publisher and CEO, Global Traveler.
Business Traveler Magazine’s 2015 Best in Business Travel Awards named the travel industry’s top providers of services and products. Hertz was named "Best Car Rental Company in the World" and winners were chosen by the magazine’s readers in the 27th Annual Best in Business Travel survey. This year, readers selected the best in 48 different categories, ranging from airlines, hotel companies and car rentals, both by regions and worldwide.
"When business travelers speak, our industry listens," said Dan Booth, editorial director of Business Traveler Magazine. "To be voted the Best in Business Travel by our readers means you have met – and exceeded – the highest expectations of your most experienced and demanding customers."
Hertz is one of the most recognized brands in the world, signifying leadership in quality rental services and products. This past year, Hertz has been honored with more than 20 best-in-class travel industry awards, both in the U.S. and internationally. Hertz knows that customers want speed and convenience at every turn of the rental experience, from pick up to drop off. Hertz is dedicated to maintaining superior quality and customer service in car rental through a variety of innovative service offerings, such as Hertz Gold Plus Rewards, a free loyalty rewards program entitling members to a number of exclusive benefits; exclusive vehicle collections; NeverLost® GPS, the award-winning in-vehicle navigation system that is available to rent along with a Hertz vehicle and offers hands-free calls, a travel guide, access to weather and flight information, live concierge operators and more; Carfimations, Hertz’s mobile email SMS text service that confirms a Gold customer’s reservation and advises them of their car location; and many others.
To learn more about Hertz and the company’s recent recognitions, visit Hertz.com.
About Hertz Global Holdings Hertz Global Holdings, Inc. operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings, Inc. is one of the largest worldwide airport general use car rental companies with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global Holdings, Inc. apart from the competition. Additionally, Hertz Global Holdings, Inc. owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global Holdings, Inc., visit: www.hertz.com.
LONDON, Dec. 1, 2015 /PRNewswire/ — The Hertz Corporation (NYSE:HTZ) announced that David Rowlands has been appointed General Manager for Hertz UK, effective November 16th. Mr. Rowlands reports directly to Rafael Girona, Senior General Manager Region North, Hertz International, replacing Neil Cunningham – who, after 19 successful years in the company, has decided to pursue a new career opportunity.
David Rowlands is responsible for developing and driving Hertz UK’s strategy and business plan as well as leading the country’s vehicle rental operations. He joins Hertz as a senior business leader with extensive operational leadership experience and a strong track record in driving significant profits and growth in both domestic and international environments.
Mr. Rowlands has a multi-channel background in a variety of retail and global corporate sectors as well as a strong expertise in change management, process improvements and business transformation.
"We are very pleased to welcome David to Hertz; his extensive leadership and operational experience are key for his new role as the head of our UK business. As the new General Manager for Hertz UK, David will oversee the country’s performance and teams, bringing a fresh perspective and significant set of skills to the role," said Rafael Girona.
David Rowlands, General Manager, Hertz UK, said: "I am truly honored to start leading the UK business of such a highly prestigious and globally recognized brand. With our fantastic range of cars and vans to suit every customer need, our presence in the accident management industry with CCL Accident Support, and our talented team, Hertz UK has a very strong proposition for leisure and business travellers alike. True to the values of Hertz, my mission is to continue to drive our focus on providing a superior service to our customers and a great place to work for our employees."
David Rowlands has most recently served as Senior Vice President of Global Operations for Antenna International since 2012, where he was responsible for driving significant revenues as well as operational and performance margin improvements. Prior to this role, Mr. Rowland served as Vice President, International Retail Operations at Sony Pictures for four years and as International Retail Development Director at NBC Universal Pictures International for seven years. He previously held leadership positions at Tate & Lyle Europe and Warner Brothers Home Video International. Mr. Rowlands started his career at Asda Stores Limited where he held various head office and store management roles.
ABOUT HERTZ GLOBAL Hertz Global operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global is the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global apart from the competition. Additionally, Hertz Global owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global, visit: www.hertz.com.
Media Contact: Hertz Media Relations
Telephone: (844) 845-2180 (toll free from the U.S.) and (+1) 239-301-6300
Email: mediarelations@hertz.com
Hertz Global Holdings, Inc.’s (Hertz Global) Senior Executive VP & Chief Financial Officer Tom Kennedy to speak at the MKM 2015 Entertainment, Internet and Leisure Conference
Time/Date:
9:20 a.m. (EST) on Thursday, November 19, 2015
Internet Access:
Hertz Global’s presentation will be broadcast live through an audio webcast available from the Investor Relations section of Hertz Global’s website, IR.Hertz.com. The webcast will be available for replay.
ABOUT THE COMPANY Hertz Global operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global is one of the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global apart from the competition. Additionally, Hertz Global owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global, visit: www.hertz.com.
ESTERO, Fla., Nov. 17, 2015 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) ("HGH" or the "company") today laid out plans for the company, excluding its equipment rental business ("Hertz Global"), at its Investor Day discussion to achieve Hertz Global’s full potential as the world’s leading car rental company. The company expects Hertz Global’s Adjusted Corporate EBITDA (earnings before interest, taxes, depreciation and amortization) margins to be between 16 to 18 percent within a three- to five-year timeframe. During a discussion with more than 200 investors and financial analysts in New York, the company’s senior management team detailed plans for investments and initiatives for its core car rental business that will support three pillars: winning with technology, leading in cost and quality, and earning customer preference while delivering revenue growth.
President and Chief Executive Officer John Tague said the 16 to 18 percent Adjusted Corporate EBITDA margin target for Hertz Global is indicative of its opportunity for financial margin expansion during the course of its full potential plan. In 2015, management expects Hertz Global to reach an Adjusted Corporate EBITDA margin of approximately 10 percent, an improvement over its 2014 Adjusted Corporate EBITDA margin of 7 percent.
"2015 has been a transition year for the company," Tague said. "Through our work to date, we are building a track record of enhanced execution. This, together with our 2016 preliminary guidance, is beginning to show in our results and, we believe, will enable us to realize the full potential of our business for our customers, our employees and our investors."
In July 2015, the company completed its financial restatement and is making ongoing remediation to ensure continued compliance. In addition, the company completed the systems integration of Dollar and Thrifty in the third quarter 2015, and completed hiring of a senior management team for its equipment rental business ("HERC") with public company capabilities in preparation for the separation of HERC to a stand-alone business as early as mid-2016. Earlier this month, the company completed its move into a consolidated corporate headquarters in Estero, Florida.
PRELIMINARY GUIDANCE FOR 2016
During the investor discussion, management provided preliminary guidance for 2016, which includes:
Starting in 2016 and continuing through 2018, Hertz Global is targeting $100 million in annual investments to develop new technology platforms and systems, improve customer experience and strengthen the company’s four car rental brands.
Technology investments will create a touchless, personalized customer experience from booking to return. All technology investment will be based on a "mobile first" approach. IT development began in the third quarter 2015 and will occur over the next 36 months in three phases: customer interface and payments; fleet, counter and personalization; and rates and reservations.
The company announced that, in addition to delivering on its previously stated $300 million cost reduction goal by the end of 2016 for Hertz Global, it expects to achieve an additional $250 million of cost savings in 2016. These will be achieved by increasing fleet efficiency and reducing fleet cycle time, improving efficiency through process and automation, and applying more sophisticated staffing modeling in operations.
Investments in customer experience through operational excellence are built around five key drivers of customer satisfaction – clean and safe vehicles, speed of service, courteous and friendly employees, ease of service and effective service recovery.
The company is investing in each of its car rental product brands: Hertz, Dollar, Thrifty and Firefly. In 2016, the company expects to roll out new positions for each of its brands.
The company expects U.S. car rental revenues to grow between 2.5 to 3.5 percent, while it expects the U.S. rental car industry to grow at a rate of approximately 2.7 percent. In addition to growing ancillary revenue through customer options, Hertz Global will strengthen its core revenue through a better revenue management model and a reshaping of its go-to-market approach.
HERTZ GLOBAL HOLDINGS, INC. INVESTOR DAY PRESENTATION AVAILABLE FOR VIEWING
Hertz Global Holdings, Inc. operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings, Inc. is one of the largest worldwide airport general use car rental companies with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global Holdings, Inc. apart from the competition. Additionally, Hertz Global Holdings, Inc. owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global Holdings, Inc., visit: www.hertz.com.
1 Adjusted Corporate EBITDA
Net income before net interest expense, income taxes, depreciation (which includes revenue earning equipment lease charges) and amortization as adjusted for car rental fleet interest, car rental fleet depreciation, car rental debt-related charges, and for certain other charges such as non-cash stock-based employee compensation restructuring and restructuring related costs; equipment rental spin-off costs; impairments and asset write-downs; acquisition costs, integration costs, relocation costs and other extraordinary, unusual or non-recurring items.
Adjusted Corporate EBITDA Margin
The ratio of Adjusted Corporate EBITDA to total revenues.
Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are non-GAAP measures within the meaning of Regulation G. In conformity with Regulation G, information for Hertz Global Holdings on a segment basis required to accompany the disclosures of non-GAAP financial measure, including a reconciliation of the non-GAAP measures discussed in this press release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States, appears within the supplemental schedules that have been filed with the Securities and Exchange Commission and are available on the Company’s website at http://ir.hertz.com/events-presentations.
Because of the forward-looking nature of the Hertz Global Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin forecast, specific quantifications of the amounts that would be required to reconcile a pre-tax income forecast are not available. The Company believes that there is a degree of volatility with respect to certain of the GAAP measures, primarily related to fair value accounting for financial assets (which includes derivative financial instruments), income tax reporting and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude from providing accurate forecast of GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin for Hertz Global would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
Hertz Global Holdings, Inc.’s (Hertz Global) (NYSE: HTZ) President and Chief Executive Officer John Tague to speak at the Barclays 2015 Global Automotive Conference
Time/Date:
8:20 a.m. (EST) on Wednesday, November 18, 2015
Internet Access:
Hertz Global’s presentation will be broadcast live through an audio webcast available from the Investor Relations section of Hertz Global’s website, IR.Hertz.com. The webcast will be available for replay.
ABOUT THE COMPANY Hertz Global operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global is one of the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global apart from the competition. Additionally, Hertz Global owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global, visit: www.hertz.com.
($ in millions, except per share data and where noted)
2015
2014
Total Revenues
$
2,976
$
3,121
(5)%
Net income (loss)
$
237
$
149
59%
Earnings (loss) per diluted share
$
0.52
$
0.32
63%
Net income margin
8%
5%
319
bps
Adjusted net income (loss)
$
226
$
203
11%
Adjusted net income (loss) per diluted share
$
0.49
$
0.44
11%
Adjusted net income margin
8%
7%
109
bps
Adjusted Corporate EBITDA
$
601
$
553
9%
Adjusted Corporate EBITDA margin
20%
18%
247
bps
Worldwide Car Rental average fleet
695,900
712,200
(2)%
Worldwide Car Rental transaction days (in thousands)
52,760
52,596
—%
Worldwide Car Rental Total RPD (in whole dollars)
$
46.82
$
47.27
(1)%
Worldwide Car Rental Fleet Efficiency
82%
80%
191
bps
Worldwide Car Rental revenue per available car day (in whole dollars)
$
38.58
$
38.05
1%
Worldwide Car Rental net depreciation per unit per month (in whole dollars)
$
250
$
252
(1)%
Worldwide Equipment Rental dollar utilization
36%
37%
N/A
Worldwide Equipment Rental time utilization
66%
66%
N/A
Worldwide Equipment Rental same store revenue growth
—%
6%
N/A
Average Fleet – Donlen
160,500
169,700
(5)%
Note: Worldwide Car Rental represents U.S. Car Rental and International Car Rental segment information on a combined basis and excludes our Donlen leasing operations.
Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported net income of $237 million, or $0.52 per diluted share, for the third quarter 2015, compared with net income of $149 million, or $0.32 per diluted share, for the same period last year. The Company also reported that adjusted net income for the third quarter 2015 was $226 million, or $0.49 per diluted share, compared with $203 million, or $0.44 per diluted share, for the same period last year. Total revenues for the third quarter 2015 were $3.0 billion versus $3.1 billion for the same period last year. Adjusted Corporate EBITDA for the third quarter of 2015 was $601 million versus $553 million in the third quarter of 2014.
Foreign currency exchange rates had an unfavorable impact on Hertz Global’s third quarter 2015 results versus the prior year period. The company estimates that the unfavorable year-over-year impact to total revenue was approximately $144 million and that the unfavorable year-over-year impact to adjusted diluted EPS was approximately $24 million, or $0.03 per share.
"Our profit improvement in the third quarter is early evidence of the potential we see in our performance improvement plan," said John Tague, chief executive officer. "Our fleet efficiency, which measures our ability to match capacity with demand, rose to record levels. In addition, we successfully completed the integration of the Dollar Thrifty operations during a quarter in which we increased customer satisfaction across all of our rental car brands around the world. I want to thank our employees for helping to make this a successful quarter.
"Meanwhile, we remained on track to achieve our cost reduction goals and made progress on strategic initiatives, including preparations to separate HERC as a stand-alone company and returning value to shareholders through the initial steps of our share repurchase program."
Unrelated to its third quarter 2015 operating results, Hertz Global today filed a restated Form 10-Q for its second quarter 2015 indicating an increase of $21 million to pre-tax income and $13 million to net income (loss) for the three and six months ended June 30, 2015. The restatement results from a prior period error related to the depreciation of vehicles sold through the company’s retail car sales locations that impacted the financial statements filed in its Form 10-Q for the second quarter 2015. As a result of this error, depreciation expense during the three and six months ended June 30, 2015 was overstated by $21 million and $18 million, respectively. In addition to the depreciation expense error, the company corrected an error in direct operating expenses that resulted in a $3 million overstatement of direct operating expenses for the three and six months ended June 30, 2015. The correction of the errors described above increased diluted earnings per share for the three months ended June 30, 2015, and decreased diluted loss per share for the six months ended June 30, 2015, by $0.03.
KEY HIGHLIGHTS FOR THE THIRD QUARTER 2015
U.S. Car Rental fleet efficiency rose to 83%, an increase of three percentage points from third quarter 2014 due to improvements in out-of-service levels and higher rentable utilization.
Hertz Global has successfully renewed its U.S. Car Rental fleet, while maintaining fleet cost slightly below 2014 levels through the first nine months of 2015. Through Sept. 30, 2015, the company added approximately 335,000 2015 model-year vehicles to its fleet, approximately 50% more than the comparable number of 2014 model-year vehicles through the same period in 2014. More new vehicles contributed to lower out-of-service levels and fleet maintenance costs for the third quarter.
U.S. Car Rental operations sold approximately 228,000 non-program cars in the first nine months of 2015, compared to 123,000 in the first nine months of 2014. Vehicles sold through alternative channels increased 68% in the third quarter versus prior year with approximately 60% of all non-program vehicles sold through these higher yielding channels.
Customer satisfaction across all rental car brands worldwide reached its highest third quarter level in five years, driven by a more than 5 point improvement versus the prior year period.
During the quarter, Hertz Global successfully migrated Dollar Thrifty operations to the company’s common counter and financial systems, completing integration of the Nov. 2012 acquisition of Dollar Thrifty Automotive Group, Inc.
As a result of a 2% improvement in fleet efficiency, worldwide Revenue per Available Car Day (RACD) increased 1% despite a 1% decrease in Total Revenue per Transaction Day (RPD).
International Car Rental Total RPD increased 2%, excluding foreign currency.
U.S. Car Rental net depreciation per unit per month increased 1% year-over-year.
International Car Rental net depreciation per unit per month decreased 6%.
Excluding effects of foreign currency, International Car Rental revenues increased $22 million, or 3%, during the third quarter.
Excluding foreign currency impact and the effect of lower sales from stores in upstream oil and gas markets, HERC revenues in North America increased 14% in the third quarter.
Sale of Hertz Equipment Rental operations in France and Spain closed Oct. 30.
Hertz Global received approximately $100 million in proceeds from the sale of a portion of its holdings in CAR Inc. (China Auto Rental) during the third quarter.
U.S. CAR RENTAL TOTAL REVENUE PER AVAILABLE CAR DAY (RACD) INCREASED 1% YEAR-OVER-YEAR
U.S. Car Rental(1)
Three Months Ended September 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2015
2014
Total Revenues
$
1,739
$
1,768
(2)
%
Adjusted pre-tax income (loss)
$
246
$
209
18
%
Adjusted pre-tax income margin
14
%
12
%
233
bps
Adjusted Corporate EBITDA
$
284
$
247
15
%
Adjusted Corporate EBITDA margin
16
%
14
%
236
bps
Average fleet
497,700
515,300
(3)
%
Transaction days (in thousands)
37,946
37,901
—
%
Total RPD (in whole dollars)
$
45.41
$
46.41
(2)
%
Revenue per available car day (in whole dollars)
$
37.63
$
37.25
1
%
Net depreciation per unit per month (in whole dollars)
$
267
$
265
1
%
Total U.S. Car Rental revenues were $1,739 million in the third quarter of 2015, a decrease of 2% from the third quarter of 2014 due to flat transaction days and a 2% decline in Total Revenue per Transaction Day (RPD). As a result of a 3% improvement in fleet efficiency, Revenue per Available Car Day (RACD) increased 1% despite a 2% decline in Total RPD. Total RPD declined year-over-year primarily due to a higher on-airport competitive published-pricing environment and weaker commercial demand year-over-year. Ancillary revenue per transaction day, excluding fuel-related products, increased by 4% relative to the third quarter of 2014.
U.S. Car Rental adjusted pre-tax income for the third quarter of 2015 was $246 million, an increase of $37 million versus the prior year period. U.S. Car Rental achieved an adjusted pre-tax margin of 14% for the quarter, which was 233 basis points higher than the prior-year period. Adjusted Corporate EBITDA for the U.S. Car Rental segment for the third quarter of 2015 was $284 million versus $247 million in the third quarter of 2014.
INTERNATIONAL CAR RENTAL TOTAL RPD UP 2%, EXCLUDING FOREIGN CURRENCY; INCOME HIGHER ON PROFITABLE REVENUE MIX
International Car Rental(1)
Three Months Ended September 30,
Percent Inc/(Dec)
($ in millions, except where noted)
2015
2014
Total Revenues
$
687
$
795
(14)
%
Adjusted pre-tax income (loss)
$
151
$
136
11
%
Adjusted pre-tax income margin
22
%
17
%
487
bps
Adjusted Corporate EBITDA
$
162
$
147
10
%
Adjusted Corporate EBITDA margin
24
%
18
%
509
bps
Average fleet
198,200
196,900
1
%
Transaction days (in thousands)
14,814
14,695
1
%
Total RPD (in whole dollars)
$
50.43
$
49.47
2
%
Revenue per available car day (in whole dollars)
$
40.97
$
40.13
2
%
Net depreciation per unit per month (in whole dollars)
$
207
$
220
(6)
%
Total International Car Rental revenues were $687 million in the third quarter of 2015, a decrease of 14% from the third quarter of 2014. Excluding foreign currency impact of $130 million, revenues increased $22 million, or 3%. Revenue growth was driven by a 1% increase in transaction days resulting from improved business mix from U.S.-inbound rentals, primarily in our European market. Total RPD for the segment increased 2%, excluding currency effects.
International Car Rental adjusted pre-tax income for the third quarter of 2015 was $151 million, an increase of $15 million versus the prior year period. Adjusted Corporate EBITDA for the International Car Rental segment for the third quarter of 2015 was $162 million, an increase of 10% versus $147 million in the third quarter of 2014.
WORLDWIDE EQUIPMENT RENTAL IMPACTED BY FOREIGN CURRENCY RATES AND WEAKNESS IN STORES SERVING UPSTREAM OIL AND GAS MARKETS
Worldwide Equipment Rental(1)
Three Months Ended September 30,
Percent Inc/(Dec)
($ in millions)
2015
2014
Total Revenues
$
401
$
413
(3)
%
Adjusted pre-tax income (loss)
$
54
$
79
(32)
%
Adjusted pre-tax income margin
13
%
19
%
(566)
bps
Adjusted Corporate EBITDA
$
164
$
178
(8)
%
Adjusted Corporate EBITDA margin
41
%
43
%
(220)
bps
Dollar utilization
36
%
37
%
N/A
Time utilization
66
%
66
%
N/A
Same store revenue growth
—
%
6
%
N/A
N/A Not applicable
Total Worldwide Equipment Rental revenues were $401 million for the third quarter of 2015, a decrease of 3% compared with the prior-year period. Excluding the impact of foreign currency, revenue increased $2 million, or 1%.
Worldwide revenues for the third quarter were favorably impacted by a 3% increase in worldwide equipment rental volumes. The increase in volume was driven by new account growth, which is predominantly derived from small local contractors and specialty segments as HERC diversifies its business. Pricing for the third quarter was flat year-over-year.
Worldwide revenues were negatively affected by continuing weak performance in stores serving upstream oil and gas markets during the quarter. In North America, for example, revenue in these upstream oil and gas markets year-over-year on a constant currency basis decreased 26%, while non-oil and gas markets revenue increased 14%. In response to the continued weakness in oil and gas markets, HERC reduced its equipment fleet in this segment by 16% in the third quarter year-over-year.
Worldwide Equipment Rental adjusted pre-tax income for the third quarter of 2015 was $54 million, a decrease from $79 million in the prior year period. Adjusted Corporate EBITDA for the Worldwide Equipment Rental segment for the third quarter of 2015 was $164 million versus $178 million in the third quarter of 2014.
TOTAL REVENUES AND PRE-TAX NET INCOME HIGHER FOR ALL OTHER OPERATIONS
All Other Operations(1)
Three Months Ended September 30,
Percent Inc/(Dec)
($ in millions)
2015
2014
Total Revenues
$
149
$
145
3
%
Adjusted pre-tax income (loss)
$
18
$
17
6
%
Adjusted pre-tax income margin
12
%
12
%
36
bps
Adjusted Corporate EBITDA
$
18
$
15
20
%
Adjusted Corporate EBITDA margin
12
%
10
%
174
bps
Average Fleet – Donlen
160,500
169,700
(5)
%
All Other Operations segment revenues were $149 million for the third quarter of 2015. All Other Operations adjusted pre-tax income for the third quarter of 2015 was $18 million, an increase of $1 million versus the prior year period. Adjusted Corporate EBITDA for the All Other Operations segment for the third quarter of 2015 was $18 million versus $15 million in the prior-year period.
HERTZ GLOBAL REPURCHASES $262 MILLION OF ITS AUTHORIZED $1 BILLION SHARE REPURCHASE PROGRAM IN THE QUARTER
Hertz Global began buying back HTZ shares in the third quarter as part of its previously announced $1 billion share repurchase program. During the quarter, the company repurchased 14.8 million shares at an average price of $17.69 per share for a total of $262 million. The company funded the share repurchase through cash flow from operations and the sale of a portion of its ownership position in CAR Inc. (China Auto Rental) resulting in proceeds of approximately $100 million. The company will continue to opportunistically buy back shares consistent with its previously announced year-end 2016 leverage targets and will fund the share repurchase through cash from operations and other actions, including its recently completed sale of HERC’s operations in France and Spain to LOXAM Group.
HERTZ GLOBAL GUIDANCE
For the full year 2015, the Company forecasts the following:
* Excludes Advantage sublease and Hertz 24/7 vehicles
For the full year 2015, the company has maintained its expected adjusted corporate EBITDA guidance for Consolidated Hertz Global Holdings and the Worldwide Equipment Rental segment. The company has lowered U.S. RAC net depreciation per unit per month, U.S. RAC fleet capacity growth and Net non-fleet capex guidance for the full year.
RESULTS OF THE HERTZ CORPORATION
Hertz Global’s operating subsidiary, The Hertz Corporation, posted the same revenues and GAAP pre-tax income for the third quarter of 2015 as the Company.
(1) Adjusted pre-tax income, adjusted pre-tax margin, Adjusted Corporate EBITDA, Adjusted Corporate EBITDA margin, adjusted net income, adjusted net income margin, adjusted diluted earnings per share, total revenue per transaction day, revenue per available car day and net depreciation per unit per month are non-GAAP measures. See the accompanying Supplemental Schedules and Definitions for the reconciliations and definitions for each of these non-GAAP measures and the reason the Company’s management believes that these measures provide useful information to investors.
(2) Because of the forward-looking nature of the Company’s Adjusted Corporate EBITDA forecast, specific quantifications of the amounts that would be required to reconcile a pre-tax income forecast are not available. The Company believes that there is a degree of volatility with respect to certain of the Company’s GAAP measures, primarily related to fair value accounting for its financial assets (which includes the Company’s derivative financial instruments), its income tax reporting and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude the Company from providing accurate forecast of GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP Adjusted Corporate EBITDA would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
EARNINGS WEBCAST INFORMATION
Hertz Global’s third quarter 2015 earnings webcast will be held on November 9, 2015, at 8:00 a.m. U.S. Eastern. The press release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on our website, IR.Hertz.com.
SELECTED FINANCIAL AND OPERATING DATA, SUPPLEMENTAL SCHEDULES AND DEFINITIONS
Following are tables that present selected financial and operating 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 press release.
ABOUT HERTZ GLOBAL
Hertz Global operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global is the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global apart from the competition. Additionally, Hertz Global owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global, visit: www.hertz.com.
Certain statements contained 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. Among other items, such factors could include: any claims, investigations or proceedings arising as a result of the restatement of our previously issued financial results; our ability to remediate the material weaknesses in our internal controls over financial reporting; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; the effect of our proposed separation of our equipment rental business and ability to obtain the expected benefits of any related transaction; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives; occurrences that disrupt rental activity during our peak periods; our ability to achieve and maintain cost savings and efficiencies and realize opportunities to increase productivity and profitability; an increase in our fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs; our ability to accurately estimate future levels of rental activity and adjust the size and mix of our fleet accordingly; our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning equipment and to refinance our existing indebtedness; our ability to integrate the car rental operations of Dollar Thrifty and realize operational efficiencies from the acquisition; our ability to maintain access to third-party distribution channels, including current or favorable prices, commission structures and transaction volumes; the operational and profitability impact of the divestitures that we agreed to undertake in order to secure regulatory approval for the acquisition of Dollar Thrifty; an increase in our fleet costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles and equipment; a major disruption in our communication or centralized information networks; financial instability of the manufacturers of our vehicles and equipment, which could impact their ability to perform under agreements with us and/or their willingness or ability to make cars available to us or the car rental industry on commercially reasonable terms; any impact on us from the actions of our franchisees, dealers and independent contractors; our ability to maintain profitability during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); shortages of fuel and increases or volatility in fuel costs; our ability to successfully integrate acquisitions and complete dispositions; our ability to maintain favorable brand recognition; costs and risks associated with litigation and investigations; risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt and increases in interest rates or in our borrowing margins; our ability to meet the financial and other covenants contained in our Senior Credit Facilities, our outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements; changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on earnings; 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 our operations, the cost thereof or applicable tax rates; changes to our senior management team; the effect of tangible and intangible asset impairment charges; our exposure to uninsured claims in excess of historical levels; fluctuations in interest rates and commodity prices; and our exposure to fluctuations in foreign exchange rates.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report 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 September 30,
Nine Months Ended September 30,
(In millions, except per share data)
2015
2014
2015
2014
Total revenues
$
2,976
$
3,121
$
8,122
$
8,487
Expenses:
Direct operating
1,564
1,702
4,475
4,738
Depreciation of revenue earning equipment and lease charges, net
717
746
2,102
2,180
Selling, general and administrative
259
303
821
845
Interest expense, net
158
164
467
484
Other (income) expense, net
(29)
3
(34)
(21)
Total expenses
2,669
2,918
7,831
8,226
Income (loss) before income taxes
307
203
291
261
(Provision) benefit for taxes on income (loss)
(70)
(54)
(88)
(109)
Net income (loss)
$
237
$
149
$
203
$
152
Weighted average number of shares outstanding:
Basic
454
459
457
453
Diluted
457
464
460
465
Earnings (loss) per share:
Basic
$
0.52
$
0.32
$
0.44
$
0.34
Diluted
$
0.52
$
0.32
$
0.44
$
0.33
Adjusted Corporate EBITDA (a)
$
601
$
553
$
1,228
$
1,254
Adjusted pre-tax Income (loss) (a)
359
322
537
562
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule III.
SELECTED UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In millions)
September 30, 2015
December 31, 2014
Cash and cash equivalents
$
509
$
490
Restricted cash
280
571
Revenue earning equipment:
U.S. Car Rental
8,324
8,070
International Car Rental
2,542
1,904
Worldwide Equipment Rental
2,476
2,442
All Other Operations
1,284
1,237
Total revenue earning equipment, net
14,626
13,653
Total assets
24,569
23,985
Total debt
16,609
15,993
Net Fleet debt (a)
10,068
9,047
Net Corporate debt (a) (b)
5,752
5,885
Total equity
2,338
2,464
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule VI.
(b) Fleet related to Hertz Equipment Rental Corporation is funded via Net Corporate Debt.
SELECTED UNAUDITED CONSOLIDATED CASH FLOW DATA
Nine Months Ended September 30,
(In millions)
2015
2014
Cash provided by (used in):
Operating activities
$
2,683
$
2,729
Investing activities
(3,114)
(3,283)
Financing activities
471
790
Effect of exchange rate changes
(21)
(18)
Net change in cash and cash equivalents
$
19
$
218
Fleet growth (a)
$
(41)
$
(381)
Free cash flow (a)
414
78
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedules IV and V.
SELECTED UNAUDITED OPERATING DATA BY SEGMENT
Three Months Ended September 30,
Nine Months Ended September 30,
2015
2014
2015
2014
U.S. Car Rental
Transaction days (in thousands)
37,946
37,901
104,960
106,111
Total RPD (a)
$
45.41
$
46.41
$
46.04
$
46.80
Revenue per available car day (in whole dollars)
$
37.63
$
37.25
$
35.43
$
36.62
Average fleet
497,700
515,300
499,600
503,300
Fleet efficiency(a)
83
%
80
%
77
%
78
%
Net depreciation per unit per month(a)
$
267
$
265
$
267
$
270
Program cars as a percentage of total average fleet at period end
28
%
15
%
28
%
15
%
Adjusted pre-tax income (loss)(in millions) (a)
$
246
$
209
$
509
$
515
International Car Rental
Transaction days (in thousands)
14,814
14,695
37,112
36,186
Total RPD (a)(b)
$
50.43
$
49.47
$
48.53
$
48.03
Revenue per available car day (in whole dollars)(b)
$
40.97
$
40.13
$
38.38
$
37.38
Average Fleet
198,200
196,900
171,900
170,300
Fleet efficiency(a)
81
%
81
%
79
%
78
%
Net depreciation per unit per month(a)(b)
$
207
$
220
$
214
$
224
Program cars as a percentage of total average fleet at period end
44
%
40
%
44
%
40
%
Adjusted pre-tax income (loss)(in millions) (a)
$
151
$
136
$
203
$
154
Worldwide Equipment Rental
Dollar utilization
36
%
37
%
35
%
36
%
Time utilization
66
%
66
%
63
%
64
%
Rental and rental related revenue (in millions) (a)(b)
$
380
$
374
$
1,069
$
1,049
Same store revenue growth, including growth initiatives (b)
—
%
6
%
—
%
6
%
Adjusted pre-tax income (loss) (in millions) (a)
$
54
$
79
$
130
$
197
All Other Operations
Average fleet — Donlen
160,500
169,700
164,900
174,800
Adjusted pre-tax income (loss) (in millions) (a)
$
18
$
17
$
52
$
47
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedules III and VI.
(b) Based on December 31, 2014 foreign exchange rates.
Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
Three Months Ended September 30, 2015
Three Months Ended September 30, 2014
(In millions)
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Corporate
Consolidated HGH
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Corporate
Consolidated HGH
Total revenues:
$
1,739
$
687
$
401
$
149
$
—
$
2,976
$
1,768
$
795
$
413
$
145
$
—
$
3,121
Expenses:
Direct operating
988
351
221
6
(2)
1,564
1,041
427
221
6
7
1,702
Depreciation of revenue earning equipment and lease charges, net
399
114
86
118
—
717
409
143
78
116
—
746
Selling, general and administrative
92
57
44
8
58
259
116
68
47
7
65
303
Interest expense, net
43
20
14
3
78
158
44
27
12
3
78
164
Other (income) expense, net
5
24
(1)
—
(57)
(29)
(2)
—
(1)
—
6
3
Total expenses
1,527
566
364
135
77
2,669
1,608
665
357
132
156
2,918
Income (loss)before income taxes
$
212
$
121
$
37
$
14
$
(77)
307
$
160
$
130
$
56
$
13
$
(156)
203
(Provision) benefit for taxes on income (loss)
(70)
(54)
Net income (loss)
$
237
$
149
Supplemental Schedule I (continued)
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
Nine Months Ended September 30, 2015
Nine Months Ended September 30, 2014
(In millions)
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Corporate
Consolidated HGH
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Corporate
Consolidated HGH
Total revenues:
$
4,873
$
1,679
$
1,131
$
439
$
—
$
8,122
$
4,989
$
1,918
$
1,155
$
425
$
—
$
8,487
Expenses:
Direct operating
2,856
950
643
17
9
4,475
2,939
1,150
631
18
—
4,738
Depreciation of revenue earning equipment and lease charges, net
1,200
310
243
349
—
2,102
1,224
381
235
340
—
2,180
Selling, general and administrative
289
182
136
23
191
821
310
195
114
23
203
845
Interest expense, net
124
54
44
8
237
467
125
73
38
10
238
484
Other (income) expense, net
5
24
(4)
—
(59)
(34)
(31)
2
(3)
—
11
(21)
Total expenses
4,474
1,520
1,062
397
378
7,831
4,567
1,801
1,015
391
452
8,226
Income (loss) before income taxes
$
399
$
159
$
69
$
42
$
(378)
291
$
422
$
117
$
140
$
34
$
(452)
261
(Provision) benefit for taxes on income (loss)
(88)
(109)
Net income (loss)
$
203
$
152
Supplemental Schedule II
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TO ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended September 30, 2015
Three Months Ended September 30, 2014
(In millions, except per share data)
GAAP
Adjustments
Adjusted
(Non-GAAP)
GAAP
Adjustments
Adjusted (Non-GAAP)
Total revenues
$
2,976
$
—
$
2,976
$
3,121
$
—
$
3,121
Expenses:
Direct operating
1,564
(34)
(a)
1,530
1,702
(61)
(a)
1,641
Depreciation of revenue earning equipment and lease charges, net
717
—
717
746
—
746
Selling, general and administrative
259
(24)
(c)
235
303
(43)
(c)
260
Interest expense, net
158
(15)
(d)
143
164
(13)
(d)
151
Other (income) expense, net
(29)
21
(e)
(8)
3
(2)
(e)
1
Total expenses
2,669
(52)
2,617
2,918
(119)
2,799
Income (loss) before income taxes
307
52
359
203
119
322
(Provision) benefit for taxes on income (loss)
(70)
(63)
(f)
(133)
(f)
(54)
(65)
(f)
(119)
(f)
Net income (loss)
$
237
$
(11)
$
226
$
149
$
54
$
203
Weighted average number of diluted shares outstanding
457
457
457
464
464
464
Diluted earnings (loss) per share
$
0.52
$
(0.02)
$
0.49
$
0.32
$
0.12
$
0.44
Nine Months Ended September 30, 2015
Nine Months Ended September 30, 2014
(In millions, except per share data)
GAAP
Adjustments
Adjusted (Non-GAAP)
GAAP
Adjustments
Adjusted (Non-GAAP)
Total revenues
$
8,122
$
—
$
8,122
$
8,487
$
—
$
8,487
Expenses:
Direct operating
4,475
(117)
(a)
4,358
4,738
(165)
(a)
4,573
Depreciation of revenue earning equipment and lease charges, net
2,102
—
2,102
2,180
(2)
(b)
2,178
Selling, general and administrative
821
(106)
(c)
715
845
(116)
(c)
729
Interest expense, net
467
(47)
(d)
420
484
(39)
(d)
445
Other (income) expense, net
(34)
24
(e)
(10)
(21)
21
(e)
—
Total expenses
7,831
(246)
7,585
8,226
(301)
7,925
Income (loss) before income taxes
291
246
537
261
301
562
(Provision) benefit for taxes on income (loss)
(88)
(111)
(f)
(199)
(f)
(109)
(99)
(f)
(208)
(f)
Net income (loss)
$
203
$
135
$
338
$
152
$
202
$
354
Weighted average number of diluted shares outstanding
460
460
460
465
465
465
Diluted earnings (loss) per share
$
0.44
$
0.29
$
0.73
$
0.33
(g)
$
0.43
$
0.76
(g)
a.
Represents the increase in amortization of other intangible assets, depreciation of property and equipment and accretion of certain revalued liabilities relating to purchase accounting. Also includes restructuring and restructuring related charges, impairments and asset write-downs.
b.
In 2014, represents the increase in depreciation of equipment rental revenue earning equipment based upon its revaluation relating to purchase accounting.
c.
In 2014 and 2015, primarily comprised of restructuring and restructuring related charges and impairment charges, expenses associated with the anticipated HERC spin-off transaction announced in March 2014, consulting costs and legal fees related to the accounting review and investigation, expenses associated with acquisitions, integration charges and relocation expenses associated with the Company’s relocation of its headquarters to Estero, Florida. In 2015, also includes costs associated with the separation of certain executives.
d.
Represents debt-related charges relating to the amortization of deferred debt financing costs and debt discounts.
e.
Includes miscellaneous non-recurring or non-cash items. For 2015, primarily represents the gain on the sale of common stock of CAR Inc, offset by a legal reserve in the International Rental Car segment. For 2014, primarily represents a litigation settlement received in relation to a class action lawsuit filed against an original equipment manufacturer stemming from recalls of their vehicles in previous years.
f.
Represents a (provision) benefit for income taxes derived utilizing a combined statutory rate of 37% for all periods shown. The combined statutory rate is applied to the adjusted income (loss) before income taxes to arrive at the adjusted (provision) benefit for taxes. The (provision) benefit for taxes related to the adjustments is calculated as the difference between the adjusted (provision) benefit for taxes and the GAAP (provision) benefit for taxes. Previously, we applied the combined statutory rate to our adjustments. Management believes the current approach results in a better indicator of our core earnings.
g.
GAAP net income (loss) and adjusted net income (loss) used in GAAP diluted earnings per share and adjusted diluted earnings per share calculations, respectively, includes interest income on convertible senior notes, net of tax of $1 million for the nine months ended September 30, 2014.
Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES
TO GROSS EBITDA, CORPORATE EBITDA, ADJUSTED CORPORATE EBITDA AND ADJUSTED PRE-TAX INCOME (LOSS) BY SEGMENT
Unaudited
Three Months Ended September 30, 2015
Three Months Ended September 30, 2014
(In millions)
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Corporate
Consolidated HGH
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Corporate
Consolidated HGH
Income (loss) before income taxes
$
212
$
121
$
37
$
14
$
(77)
$
307
$
160
$
130
$
56
$
13
$
(156)
$
203
Depreciation and amortization
458
123
106
121
4
812
465
152
97
118
5
837
Interest, net of interest income
43
20
14
3
78
158
44
27
12
3
78
164
Gross EBITDA
$
713
$
264
$
157
$
138
$
5
$
1,277
$
669
$
309
$
165
$
134
$
(73)
$
1,204
Car rental fleet depreciation and lease charges, net
Represents non-cash charges relating to the amortization of deferred debt financing costs and debt discounts and premiums.
(b)
Represents expenses incurred under restructuring actions as defined in U.S. GAAP. For further information on restructuring costs, see Note 8, "Restructuring." Also represents incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes, consulting costs and legal fees related to the accounting review and investigation and costs associated with the separation of certain executives.
(c)
Represents expense associated with the anticipated HERC spin-off transaction announced in March 2014.
(d)
In 2015, primarily represents first quarter impairments of the former Dollar Thrifty headquarters and a corporate asset and a third quarter impairment of a building in the U.S. Car Rental segment. In 2014, primarily represents a second quarter write-down of assets associated with a terminated business relationship.
(e)
Primarily represents Dollar Thrifty integration related expenses.
(f)
Represents non-recurring costs incurred in connection with the relocation of the Company’s corporate headquarters to Estero, Florida that were not included in restructuring expenses. Such expenses primarily include duplicate facility rent, certain moving expenses, and other costs that are direct and incremental due to the relocation.
(g)
Includes miscellaneous non-recurring or non-cash items. For 2015, primarily represents the gain on the sale of common stock of CAR Inc, offset by a legal reserve in the International Rental Car segment. For 2014, primarily represents a litigation settlement received in relation to a class action lawsuit filed against an original equipment manufacturer stemming from recalls of their vehicles in previous years.
(h)
Amounts related to the Worldwide Equipment Rental segment include depreciation of revenue earning equipment.
(i)
Represents the increase in amortization of other intangible assets, depreciation of property and equipment and accretion of revalued liabilities relating to purchase accounting.
Supplemental Schedule IV
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE – FLEET GROWTH
Unaudited
Nine Months Ended September 30, 2015
Nine Months Ended September 30, 2014
(In millions)
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Consolidated HGH
U.S. Car Rental
Int’l Car Rental
Worldwide Equipment Rental
All Other Operations
Consolidated HGH
Revenue earning equipment expenditures
$
(5,966)
$
(2,499)
$
(532)
$
(1,013)
$
(10,010)
$
(4,128)
$
(2,694)
$
(470)
$
(1,150)
$
(8,442)
Proceeds from disposal of revenue earning equipment
4,576
1,504
122
586
6,788
3,019
1,456
130
711
5,316
Net revenue earning equipment capital expenditures
(1,390)
(995)
(410)
(427)
(3,222)
(1,109)
(1,238)
(340)
(439)
(3,126)
Depreciation of revenue earning equipment, net
1,200
255
244
348
2,047
1,222
321
235
340
2,118
Financing activity related to car rental fleet:
Borrowings
4,186
1,291
—
592
6,069
1,021
1,287
—
438
2,746
Payments
(3,824)
(850)
—
(549)
(5,223)
(1,085)
(745)
—
(350)
(2,180)
Restricted cash changes
262
24
—
2
288
85
(26)
—
2
61
Net financing activity related to car rental fleet
624
465
—
45
1,134
21
516
—
90
627
Fleet growth
$
434
$
(275)
$
(166)
$
(34)
$
(41)
$
134
$
(401)
$
(105)
$
(9)
$
(381)
Supplemental Schedule V
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE – FREE CASH FLOW
Unaudited
Nine Months Ended September 30,
(In millions)
2015
2014
Income (loss) before income taxes
$
291
$
261
Depreciation and amortization, non-fleet, net
265
272
Amortization of debt discount and related charges
43
35
Cash paid for income taxes
(31)
(47)
Changes in assets and liabilities, net of effects of acquisitions, and other
68
89
Net cash provided by operating activities excluding depreciation of revenue earning equipment
636
610
U.S. car rental fleet growth
434
134
International car rental fleet growth
(275)
(401)
Equipment rental fleet growth
(166)
(105)
All other operations rental fleet growth
(34)
(9)
Property and equipment expenditures, net of disposals
(181)
(151)
Net investment activity
(222)
(532)
Free cash flow
$
414
$
78
Supplemental Schedule VI
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES – DEBT, REVENUE,
DEPRECIATION AND KEY METRICS
Unaudited
NET CORPORATE DEBT, NET FLEET DEBT AND TOTAL NET DEBT
As of September 30, 2015
As of December 31, 2014
(In millions)
Fleet……..
Corporate
Total……..
Fleet……..
Corporate
Total……..
Debt
$
10,291
$
6,318
$
16,609
$
9,562
$
6,431
$
15,993
Less:
Cash and cash equivalents
—
509
509
—
490
490
Restricted cash
223
57
280
515
56
571
Net debt
$
10,068
$
5,752
$
15,820
$
9,047
$
5,885
$
14,932
Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES – DEBT, REVENUE,
DEPRECIATION AND KEY METRICS
Unaudited
TOTAL RPD, FLEET EFFICIENCY, REVENUE PER AVAILABLE CAR DAY AND NET DEPRECIATION PER UNIT PER MONTH
U.S. Car Rental Segment
Three Months Ended September 30,
Nine Months Ended September 30,
($In millions, except as noted)
2015
2014
2015
2014
Total RPD
Revenues
$
1,739
$
1,768
$
4,873
$
4,989
Ancillary retail car sales revenue
$
(16)
$
(9)
$
(41)
$
(23)
Total rental revenue
$
1,723
$
1,759
$
4,832
$
4,966
Transaction days (in thousands)
37,946
37,901
104,960
106,111
Total RPD (in whole dollars)
$
45.41
$
46.41
$
46.04
$
46.80
Fleet Efficiency
Transaction days (in thousands)
37,946
37,901
104,960
106,111
Average Fleet
497,700
515,300
499,600
503,300
Advantage sublease vehicles
—
(1,000)
—
(5,500)
Hertz 24/7 vehicles
—
(1,000)
—
(1,000)
Average Fleet used to calculate fleet efficiency
497,700
513,300
499,600
496,800
Number of days in period
92
92
273
273
Available car days (in thousands)
45,788
47,224
136,391
135,626
Fleet efficiency (a)
83
%
80
%
77
%
78
%
Revenue Per Available Car Day
Total rental revenue
$
1,723
$
1,759
$
4,832
$
4,966
Available car days (in thousands)
45,788
47,224
136,391
135,626
Revenue per available car day (in whole dollars)
$
37.63
$
37.25
$
35.43
$
36.62
Net Depreciation Per Unit Per Month
Depreciation of revenue earning equipment and lease charges, net
$
399
$
409
$
1,200
$
1,224
Average fleet
497,700
515,300
499,600
503,300
Depreciation of revenue earning equipment and lease charges, net divided by average fleet (in whole dollars)
$
802
$
794
$
2,402
$
2,432
Number of months in period
3
3
9
9
Net depreciation per unit per month (in whole dollars)
$
267
$
265
$
267
$
270
(a) Calculated as transaction days divided by available car days.
Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES – DEBT, REVENUE,
DEPRECIATION AND KEY METRICS
Unaudited
TOTAL RPD, FLEET EFFICIENCY, REVENUE PER AVAILABLE CAR DAY AND NET DEPRECIATION PER UNIT PER MONTH (continued)
International Car Rental
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions, except as noted)
2015
2014
2015
2014
Total RPD
Revenues
$
687
$
795
$
1,679
$
1,918
Foreign currency adjustment (a)
60
(68)
122
(180)
Total rental revenue
$
747
$
727
$
1,801
$
1,738
Transaction days (in thousands)
14,814
14,695
37,112
36,186
Total RPD (in whole dollars)
$
50.43
$
49.47
$
48.53
$
48.03
Fleet Efficiency
Transaction days (in thousands)
14,814
14,695
37,112
36,186
Average Fleet
198,200
196,900
171,900
170,300
Number of days in period
92
92
273
273
Available car days (in thousands)
18,234
18,115
46,929
46,492
Fleet efficiency (b)
81
%
81
%
79
%
78
%
Revenue Per Available Car Day
Total rental revenue
$
747
$
727
$
1,801
$
1,738
Available car days (in thousands)
18,234
18,115
46,929
46,492
Revenue per available car day (in whole dollars)
$
40.97
$
40.13
$
38.38
$
37.38
Net Depreciation Per Unit Per Month
Depreciation of revenue earning equipment and lease charges, net
$
114
$
143
$
310
$
381
Foreign currency adjustment (a)
9
(13)
21
(37)
Adjusted depreciation of revenue earning equipment and lease charges, net
$
123
$
130
$
331
$
344
Average fleet
198,200
196,900
171,900
170,300
Adjusted depreciation of revenue earning equipment and lease charges, net divided by average fleet (in whole dollars)
$
621
$
660
$
1,926
$
2,020
Number of months in period
3
3
9
$
9
Net depreciation per unit per month (in whole dollars)
$
207
$
220
$
214
$
224
(a) Based on December 31, 2014 foreign exchange rates.
(b) Calculated as transaction days divided by available car days.
TOTAL RPD, FLEET EFFICIENCY, REVENUE PER AVAILABLE CAR DAY AND NET DEPRECIATION PER UNIT PER MONTH (continued)
Worldwide Car Rental
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions, except as noted)
2015
2014
2015
2014
Total RPD
Revenues
$
2,426
$
2,563
$
6,552
$
6,907
Ancillary retail car sales revenue
(16)
(9)
(41)
(23)
Foreign currency adjustment (a)
60
(68)
122
(180)
Total rental revenue
$
2,470
$
2,486
$
6,633
$
6,704
Transaction days (in thousands)
52,760
52,596
142,072
142,297
Total RPD (in whole dollars)
$
46.82
$
47.27
$
46.69
$
47.11
Fleet Efficiency
Transaction days (in thousands)
52,760
52,596
142,072
142,297
Average Fleet
695,900
712,200
671,500
673,600
Advantage sublease vehicles
—
(1,000)
—
(5,500)
Hertz 24/7 vehicles
—
(1,000)
—
(1,000)
Average Fleet used to calculate fleet efficiency
695,900
710,200
671,500
667,100
Number of days in period
92
92
273
273
Available car days (in thousands)
64,023
65,338
183,320
182,118
Fleet efficiency (b)
82
%
80
%
77
%
78
%
Revenue Per Available Car Day
Total rental revenue
$
2,470
$
2,486
$
6,633
$
6,704
Available car days (in thousands)
64,023
65,338
183,320
182,118
Revenue per available car day (in whole dollars)
$
38.58
$
38.05
$
36.18
$
36.81
Net Depreciation Per Unit Per Month
Depreciation of revenue earning equipment and lease charges, net
$
513
$
552
$
1,510
$
1,605
Foreign currency adjustment (a)
9
(13)
21
(37)
Adjusted depreciation of revenue earning equipment and lease charges, net
$
522
$
539
$
1,531
$
1,568
Average fleet
695,900
712,200
671,500
673,600
Adjusted depreciation of revenue earning equipment and lease charges, net divided by average fleet (in whole dollars)
$
750
$
757
$
2,280
$
2,328
Number of months in period
3
3
9
$
9
Net depreciation per unit per month (in whole dollars)
$
250
$
252
$
253
$
259
Note: Worldwide Car Rental represents U.S. Car Rental and International Car Rental segment information on a combined basis and excludes our Donlen leasing operations.
(a) Based on December 31, 2014 foreign exchange rates.
(b) Calculated as transaction days divided by available car days.
WORLDWIDE EQUIPMENT RENTAL AND RENTAL RELATED REVENUE
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)
2015
2014
2015
2014
Worldwide equipment rental segment revenues
$
401
$
413
$
1,131
$
1,155
Worldwide equipment sales and other revenue
(28)
(33)
(79)
(87)
Rental and rental related revenue at actual rates
373
380
1,052
1,068
Foreign currency adjustment (a)
7
(6)
17
(19)
Rental and rental related revenue
$
380
$
374
$
1,069
$
1,049
(a) Based on December 31, 2014 foreign exchange rates.
NON-GAAP MEASURES AND KEY METRICS – DEFINITIONS AND USE
Hertz Global is the top-level holding company and The Hertz Corporation is Hertz Global’s primary operating company (together, the Company). The term "GAAP" refers to accounting principles generally accepted in the United States of America.
Definitions of non-GAAP measures are set forth below. Also set forth below is a summary of the reasons why management of the Company believes that the presentation of the non-GAAP financial measures included in the Press Release provide useful information regarding the Company’s financial condition and results of operations and additional purposes, if any, for which management of the Company utilizes the non-GAAP measures.
Adjusted Pre-Tax Income (Loss) and Adjusted Pre-tax Margin
Adjusted pre-tax income is calculated as income before income taxes plus certain non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess the operational performance of the Company on the same basis that management uses internally. Adjusted pre-tax margin is adjusted pre-tax income divided by total revenues.
Adjusted Net Income and Adjusted Net Income Margin
Adjusted net income is calculated as adjusted pre-tax income less a provision for income taxes derived utilizing a combined statutory rate of 37%. The combined statutory rate is management’s estimate of our long-term tax rate. Adjusted net income is important to management and investors because it represents our operational performance exclusive of the effects of purchase accounting, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of our competitors. Adjusted net income margin is adjusted net income divided by total revenues.
Adjusted Net Income Per Diluted Share
Adjusted net income per diluted share is calculated as adjusted net income divided by the weighted average number of diluted shares outstanding for the period. Adjusted net income per diluted share is important to management and investors because it represents a measure of our operational performance exclusive of the effects of purchase accounting adjustments, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of our competitors.
Available Car Days
Available Car Days is calculated as average fleet multiplied by the number of days in a period. Average fleet used to calculate available car days in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days.
Average Fleet
Average Fleet is determined using a simple average of the number of vehicles owned by the company at the beginning and end of a given period. Among other things, average fleet is used to calculate our fleet efficiency which represents the portion of the Company’s fleet that is being utilized to generate revenue.
Corporate Restricted Cash (used in the calculation of Net Corporate Debt)
Total restricted cash includes cash and cash equivalents that are not readily available for our normal disbursements. Total restricted cash and equivalents are restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities, our like-kind exchange programs and to satisfy certain of our self-insurance regulatory reserve requirements. Corporate restricted cash is calculated as total restricted cash less restricted cash associated with fleet debt.
Dollar Utilization
Dollar utilization means revenue derived from the rental of equipment divided by the original cost of the equipment including additional capitalized refurbishment costs (with the basis of refurbished assets at the refurbishment date).
Earnings Before Interest, Taxes, Depreciation and Amortization ("Gross EBITDA"), Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin
Gross EBITDA is defined as net income before net interest expense, income taxes and depreciation (which includes revenue earning equipment lease charges) and amortization. Corporate EBITDA, as presented herein, represents Gross EBITDA as adjusted for car rental fleet interest, car rental fleet depreciation and car rental debt-related charges. Adjusted Corporate EBITDA, as presented herein, represents Corporate EBITDA as adjusted for certain other items, as described in more detail in the accompanying schedules.
Management uses Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA as operating performance and liquidity metrics for internal monitoring and planning purposes, including the preparation of our annual operating budget and monthly operating reviews, as well as to facilitate analysis of investment decisions, profitability and performance trends. Further, Gross EBITDA enables management and investors to isolate the effects on profitability of operating metrics such as revenue, operating expenses and selling, general and administrative expenses, which enables management and investors to evaluate our business segments that are financed differently and have different depreciation characteristics and compare our performance against companies with different capital structures and depreciation policies. We also present Adjusted Corporate EBITDA as a supplemental measure because such information is utilized in the calculation of financial covenants under the Company’s senior credit facilities and in the determination of certain executive compensation.
Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues and is used by the Compensation Committee to determine certain executive compensation, primarily in the form of PSUs.
Gross EBITDA, Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are not recognized measurements under U.S. GAAP. When evaluating our operating performance or liquidity, investors should not consider Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities.
Equipment Rental and Rental Related Revenue
Equipment rental and rental related revenue consists of all revenue, net of discounts, associated with the rental of equipment including charges for delivery, loss damage waivers and fueling, but excluding revenue arising from the sale of equipment, parts and supplies and certain other ancillary revenue. Rental and rental related revenue is adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management and to investors as it reflects time and mileage and ancillary charges for equipment on rent and is comparable with the reporting of other industry participants.
Fleet Efficiency
Fleet efficiency is calculated by dividing total transaction days by the available car days. Average fleet used to calculate fleet efficiency in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days.
Fleet Growth
U.S. and International car rental fleet growth is defined as car rental fleet capital expenditures, net of proceeds from disposals, plus car rental fleet depreciation and net car rental fleet financing which includes borrowings, repayments and the change in fleet restricted cash. Worldwide equipment rental fleet growth is defined as worldwide equipment rental fleet expenditures, net of proceeds from disposals, plus depreciation.
Free Cash Flow
Free cash flow is calculated as net cash provided by operating activities, excluding depreciation of revenue earning equipment, net of car rental and equipment rental fleet growth and property and equipment net expenditures. Free cash flow is important to management and investors as it represents the cash available for acquisitions and the reduction of corporate debt.
Net Corporate Debt
Net corporate debt is calculated as total debt excluding fleet debt less cash and equivalents and corporate restricted cash. Corporate debt consists of our Senior Term Facility; Senior ABL Facility; Senior Notes; Promissory Notes; Convertible Senior Notes; and certain other indebtedness of our domestic and foreign subsidiaries.
Net Corporate Debt is important to management and investors as it helps measure our leverage. Net Corporate Debt also assists in the evaluation of our ability to service our non-fleet-related debt without reference to the expense associated with the fleet debt, which is collateralized by assets not available to lenders under the non-fleet debt facilities.
Net Depreciation Per Unit Per Month
Net depreciation per unit per month is calculated by dividing depreciation of revenue earning equipment and lease charges, net by the average fleet in each period and then dividing by the number of months in the period reported with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is useful in analyzing underlying trends. Average fleet used to calculate net depreciation per unit per month in our U.S. Car Rental segment includes Advantage sublease and Hertz 24/7 vehicles as these vehicles have associated lease charges. Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month.
Restricted Cash Associated with Fleet Debt (used in the calculation of Net Fleet Debt and Corporate Restricted Cash)
Restricted cash associated with fleet debt is restricted for the purchase of revenue earning, vehicles and other specified uses under our Fleet Debt facilities and our car rental like-kind exchange program.
Revenue Per Available Car Day ("RACD")
Revenue per available car day is calculated as total revenues less revenue from fleet subleases and ancillary revenue associated with retail car sales divided by available car days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management and investors as it represents a measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control and provides a measure of revenue production relative to overall capacity.
Same Store Revenue Growth/Decline
Same store revenue growth is calculated as the year-over-year change in revenue for locations that are open at the end of the period reported and have been operating under our direction for more than twelve months. The same-store revenue amounts are adjusted in all periods to eliminate the effect of fluctuations in foreign currency.
Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends.
Time Utilization
Time utilization means the percentage of time an equipment unit is on-rent during a given period.
Total Net Debt
Total net debt is calculated as total debt less total cash and cash equivalents and total restricted cash. This measure is important to management, investors and ratings agencies as it helps measure our gross leverage.
Total RPD
Total RPD is calculated as total revenue less ancillary revenue associated with retail car sales, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management and investors as it represents a measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control.
Transaction Days
Transaction days 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. Late in the third quarter of 2015 the Company fully integrated the Dollar Thrifty and Hertz counter systems and as a result aligned the transaction day calculation in the Hertz system. As a result of this alignment, Hertz determined that there was an impact to the calculation. The impact to the third quarter of 2015 is negligible, however Hertz expects that transaction days for the US RAC segment will increase by approximately 1% prospectively relative to the historic calculation.
ESTERO, Fla., Nov. 2, 2015 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) will host a live webcast discussion of its 2015 third quarter financial results on Monday, Nov. 9, beginning at 8:00 a.m. U.S. Eastern. This webcast can be accessed through a link on the Investor Relations section of the Hertz website, IR.Hertz.com, and will remain available for replay for approximately one year.
Prior to the webcast, the company will issue a press release detailing the company’s financial results and will file its SEC Form 10-Q for the period later in the day.
ABOUT THE COMPANY
Hertz Global Holdings operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,300 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings is the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,300 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global Holdings apart from the competition. Additionally, Hertz Global Holdings owns the vehicle leasing and fleet management leader Donlen Corporation and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global Holdings, visit: www.hertz.com.
ESTERO, Fla., Oct. 15, 2015 /PRNewswire/ — Henry R. Keizer, formerly deputy chairman and chief operating officer of KPMG, was elected as a new member of the Hertz Global Holdings, Inc. (NYSE: HTZ) Board of Directors during the company’s annual meeting of stockholders, which was held today in Bonita Springs, Florida. In addition to Mr. Keizer, Ms. Linda Fayne Levinson, chair of the Board of Directors since September 2014, and Messrs. Carl T. Berquist, Michael F. Koehler and Chief Executive Officer John P. Tague were re-elected as directors.
Henry R. Keizer, formerly deputy chairman and chief operating officer of KPMG, was elected to the Hertz Global Holdings, Inc. Board of Directors.
Mr. Keizer, 58, retired from KPMG in 2012 following a 35-year career with the professional services organization and has extensive knowledge and understanding of financial accounting, reporting and auditing standards. His leadership experience at KPMG provides the Board with additional expertise in risk management and oversight for the company’s domestic and international operations.
Mr. Keizer will serve on the Board of Directors’ Audit Committee.
In addition to the election of directors, stockholders also approved three other company proposals at today’s meeting, including the selection of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for the year. A shareholder proposal concerning accelerated vesting of stock options did not receive the required votes to pass.
About Hertz Global
Hertz Global operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,300 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global is the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,300 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global apart from the competition. Additionally, Hertz Global owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global, visit: www.hertz.com.
ESTERO, Fla., Oct. 14, 2015 /PRNewswire/ — Matthew (Matt) Jauchius is joining Hertz Global Holdings, Inc. (NYSE:HTZ) as executive vice president and chief marketing officer later this month. Jauchius will lead marketing strategy for the Hertz, Dollar, Thrifty and Firefly brands, including customer experience, e-commerce, loyalty program, customer relationship management, social media and ancillary revenue generation efforts worldwide. Jauchius has nearly 20 years of marketing experience in senior and executive roles at Nationwide Mutual Insurance Company and McKinsey & Company.
Matthew Jauchius, Hertz Executive Vice President and Chief Marketing Officer
"Matt brings to Hertz significant expertise across many marketing disciplines with a strong track record of leading successful integrated brand strategies," said Jeff Foland, senior executive vice president and chief revenue officer. "He is an ideal fit to lead our continued brand architecture work and reinvigorate activity around our loyalty programs and customer experience offerings. We will be leaning heavily on his leadership and experience in these areas as we bolster our brands and develop a strong, differentiated customer experience for each of them."
Most recently, Jauchius served as executive vice president and chief marketing officer at Nationwide Mutual Insurance Company, where he directed a substantial integrated marketing program that included brand marketing, media, advertising, digital marketing, social media, research & analytics, public relations, communications and customer advocacy functions. There he also led a rebranding effort, strengthened the company’s business partnership marketing effort and launched Nationwide’s cause-related marketing efforts.
Prior to Nationwide, Jauchius was an associate principal at McKinsey & Company, working with client marketing organizations across a number of business sectors. He developed cross-functional expertise in corporate and business unit strategy and growth, marketing and sales, overall company turnarounds and operational cost improvements.
"I am excited to join Hertz at such an important time in the company’s history. We will be evaluating and cultivating various strategies to ensure our iconic and valued brands capture leading positions in the industry, while building a first-class experience for our customers," said Jauchius. "I look forward to helping with these important efforts."
Jauchius has a Bachelor of Science degree in Business Administration from The Ohio State University and a Master of Business Administration from the University of Michigan.
About Hertz Global Holdings, Inc. Hertz Global Holdings, Inc. operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,300 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings, Inc. is the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,300 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global Holdings, Inc. apart from the competition. Additionally, Hertz Global Holdings, Inc. owns the vehicle leasing and fleet management leader Donlen Corporation and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global Holdings, Inc., visit: www.hertz.com.
