HERTZ REPORTS FIRST QUARTER 2023 RESULTS: REVENUE OF $2.0 BILLION, NET INCOME OF $196 MILLION AND ADJUSTED CORPORATE EBITDA OF $237 MILLION

Apr 27, 2023

PDF Version

"Hertz posted strong results in the first quarter, reflecting continued growth in demand across all customer segments and sustained pricing both in the U.S. and abroad," said Stephen Scherr, Hertz chair and chief executive officer. "Our continued investments in the business, particularly in the areas of technology and electrification, are improving our operational cadence, extending our reach in rideshare, and enabling the revitalization of our value brands, all with a view toward delivering sustainable returns for our shareholders. We look forward to serving our customers with excellence during the upcoming summer season."

ESTERO, Fla., April 27, 2023 /PRNewswire/ -- Hertz Global Holdings, Inc. (NASDAQ: HTZ) ("Hertz", "Hertz Global" or the "Company") today reported results for its first quarter 2023.

HIGHLIGHTS 

  • Total revenues of $2.0 billion
  • GAAP net income of $196 million, or $0.61 per diluted share
  • Adjusted Net Income of $126 million, or $0.39 per adjusted diluted share
  • Adjusted Corporate EBITDA of $237 million, a 12% margin
  • Operating cash flow of $562 million, adjusted operating cash flow of $104 million
  • Adjusted free cash outflow of $83 million
  • Corporate liquidity of $2.2 billion at March 31, including $728 million in unrestricted cash
  • Company utilized $100 million to repurchase 5.7 million common shares during the quarter

FIRST QUARTER RESULTS

First quarter revenue was $2.0 billion, up 13% year over year, characterized by continued strength in leisure and corporate demand. Transaction days increased 10% year over year while average fleet was up 5%. Monthly revenue per unit in the quarter of $1,409, was up 7% year over year and benefited from a 280-basis point improvement in utilization and pricing strength.

Adjusted Corporate EBITDA was $237 million in the quarter. Fleet depreciation was $381 million, or $252 per unit per month. Fleet depreciation in the first quarter of 2022 reflected outsized gains on sale of vehicles. Adjusted Corporate EBITDA in the quarter included $88 million of gains from the monetization of interest rate caps associated with the Company's HVFIII U.S. ABS facility.

Adjusted free cash outflow of $83 million in the quarter reflected an investment to grow the fleet to meet spring and summer demand. 

During the first quarter of 2023, the Company repurchased 5.7 million shares of its common stock for $100 million. As of April 20, 2023, the Company had approximately $1.0 billion remaining under its share repurchase authorization. 

The Company's liquidity position was $2.2 billion at March 31, 2023, of which $728 million was unrestricted cash.

SUMMARY RESULTS

Three Months Ended

March 31,

Percent Inc/
(Dec)

2023 vs 2022

($ in millions, except earnings per share or where noted)

2023

2022

Hertz Global - Consolidated




Total revenues

$          2,047

$          1,810

13 %

Adjusted net income (loss)(a)

$             126

$             403

(69) %

Adjusted diluted earnings (loss) per share(a)

$            0.39

$            0.87

(55) %

Adjusted Corporate EBITDA(a)

$             237

$             614

(61) %

Adjusted Corporate EBITDA Margin(a)

12 %

34 %







Average Vehicles (in whole units)

504,528

481,211

5 %

Average Rentable Vehicles (in whole units)

483,288

455,517

6 %

Vehicle Utilization

77 %

75 %

Transaction Days (in thousands)

33,787

30,621

10 %

Total RPD (in dollars)(b)

$          60.48

$          58.54

3 %

Total RPU Per Month (in whole dollars)(b)

$          1,409

$          1,312

7 %

Depreciation Per Unit Per Month (in whole dollars)(b)

$             252

$             (42)

NM






Americas RAC Segment




Total revenues

$          1,730

$          1,558

11 %

Adjusted EBITDA

$             261

$             641

(59) %

Adjusted EBITDA Margin

15 %

41 %







Average Vehicles (in whole units)

412,983

397,620

4 %

Average Rentable Vehicles (in whole units)

393,512

373,153

5 %

Vehicle Utilization

79 %

76 %

Transaction Days (in thousands)

27,879

25,579

9 %

Total RPD (in dollars)(b)

$          62.03

$          60.81

2 %

Total RPU Per Month (in whole dollars)(b)

$          1,465

$          1,390

5 %

Depreciation Per Unit Per Month (in whole dollars)(b)

$             282

$             (78)

NM






International RAC Segment




Total revenues

$             317

$             252

25 %

Adjusted EBITDA

$               53

$               27

97 %

Adjusted EBITDA Margin

17 %

11 %







Average Vehicles (in whole units)

91,545

83,591

10 %

Average Rentable Vehicles (in whole units)

89,776

82,364

9 %

Vehicle Utilization

72 %

68 %

Transaction Days (in thousands)

5,908

5,042

17 %

Total RPD (in dollars)(b)

$          53.18

$          47.00

13 %

Total RPU Per Month (in whole dollars)(b)

$          1,167

$             959

22 %

Depreciation Per Unit Per Month (in whole dollars)(b)

$             115

$             129

(11) %

NM - Not meaningful

(a)   Represents a non-GAAP measure. See the accompanying reconciliations included in Supplemental Schedule II.

(b)   Based on December 31, 2022 foreign exchange rates.

 

EARNINGS WEBCAST INFORMATION

Hertz Global's live webcast and conference call to discuss its first quarter 2023 results will be held on April 27, 2023, at 8:30 a.m. Eastern Time. The conference call will be broadcast live in listen-only mode on the Company's investor relations website at IR.Hertz.com. If you would like to access the call by phone and ask a question, please go to https://register.vevent.com/register/BI62d702e50f4c42c0b23858ca0440e2e4, and you will be provided with dial in details. Investors are encouraged to dial-in approximately 15 minutes prior to the call. A web replay will remain available on the website for approximately one year. The earnings release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on the Hertz website, IR.Hertz.com.

UNAUDITED FINANCIAL DATA, SUPPLEMENTAL SCHEDULES, NON-GAAP MEASURES AND DEFINITIONS

Following is selected financial data of Hertz Global. Also included are Supplemental Schedules, which are provided to present segment results, and reconciliations of non-GAAP measures to their most comparable GAAP measure. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout the earnings release and its view of the usefulness of non-GAAP measures to investors and management.

ABOUT HERTZ

The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Additionally, The Hertz Corporation owns and operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit www.hertz.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 

Certain statements contained or incorporated by reference in this release, and in related comments by the Company's management, include "forward-looking statements." Forward-looking statements include information concerning the Company's liquidity and its possible or assumed future results of operations, including descriptions of its business strategies. These statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts," "guidance" 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 that 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 Form 10-K, 10-Q and 8-K filed or furnished to the SEC.

Important factors that could affect the Company's actual results and cause them to differ materially from those expressed in forward-looking statements include, among other things:

  • the Company's ability to purchase adequate supplies of competitively priced vehicles at a reasonable cost in order to efficiently service rental demand, including as a result of disruptions in the global supply chain;
  • the Company's ability to attract and retain effective frontline employees and senior management and other key employees;
  • levels of travel demand, particularly business and leisure travel in the U.S. and in global markets;
  • significant changes in the competitive environment and the effect of competition in the Company's markets on rental volume and pricing;
  • occurrences that disrupt rental activity during the Company's peak periods particularly in critical geographies;
  • the Company's ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in its rental operations accordingly;
  • the Company's ability to implement its business strategy or strategic transactions, including its ability to implement plans to support a large-scale electric vehicle fleet, execute its rideshare strategy and to play a central role in the modern mobility ecosystem;
  • the Company's ability to adequately respond to changes in technology impacting the mobility industry;
  • the mix of vehicles in the Company's fleet, including but not limited to program and non-program vehicles, which can lead to increased exposure to residual risk upon disposition;
  • increases in vehicle holding periods, which may result in additional maintenance costs and lower customer satisfaction;
  • financial instability of the manufacturers of the Company's vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs;
  • increases in the level of recall activity by the manufacturers of the Company's vehicles, which may increase the Company's costs and can disrupt its rental activity due to safety recalls by the manufacturers of its vehicles;
  • the Company's access to third-party distribution channels and related prices, commission structures and transaction volumes associated with those channels;
  • the Company's ability to offer an excellent customer experience, retain and increase customer loyalty and increase market share;
  • the Company's ability to maintain its network of leases and vehicle rental concessions at airports and other key locations in the U.S. and internationally;
  • the Company's ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy;
  • the Company's ability to effectively manage its union relations and labor agreement negotiations;
  • the Company's ability, and that of its key third-party partners, to prevent the misuse or theft of information the Company possesses, including as a result of cyber security breaches and other security threats, as well as to comply with privacy regulations across the globe;
  • a major disruption in the Company's communication or centralized information networks or a failure to maintain, upgrade and consolidate its information technology systems;
  • risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anti-corruption or anti-bribery laws and the Company's ability to repatriate cash from non-U.S. affiliates without adverse tax consequences;
  • risks relating to tax laws, including those that affect the Company's ability to offset future tax on fleet dispositions, as well as any adverse determinations or rulings by tax authorities;
  • the Company's ability to utilize its net operating loss carryforwards;
  • the Company's exposure to uninsured liabilities relating to personal injury, death and property damage, or otherwise;
  • changes in laws, regulations, policies or other activities of governments, agencies and similar organizations, including those related to accounting principles, that affect the Company's operations, its costs or applicable tax rates;
  • the recoverability of the Company's goodwill and indefinite-lived intangible assets when performing impairment analysis;
  • costs and risks associated with potential litigation and investigations, compliance with and changes in laws and regulations and potential exposures under environmental laws and regulations;
  • the Company's ability to comply with ESG regulations, meet increasing ESG expectations of stakeholders, and otherwise achieve ESG goals;
  • the availability of additional or continued sources of financing at acceptable rates for the Company's revenue earning vehicles and to refinance its existing indebtedness;
  • volatility in the Company's stock price and certain provisions of its charter documents which could negatively affect the market price of the Company's common stock;
  • the Company's ability to effectively maintain effective internal controls over financial reporting; and
  • the Company's ability to implement an effective business continuity plan to protect the business in exigent circumstances.

Additional information concerning these and other factors can be found in the Company's filings with the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date of this release, and, except as required by law, 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.

 

UNAUDITED FINANCIAL INFORMATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS


Three Months Ended

March 31,

(In millions, except per share data)

2023

2022

Revenues

$                      2,047

$                     1,810

Expenses:


Direct vehicle and operating

1,221

1,053

Depreciation of revenue earning vehicles and lease charges, net

381

(59)

Depreciation and amortization of non-vehicle assets

35

33

Selling, general and administrative

221

235

Interest expense, net:


Vehicle

111

5

Non-vehicle

51

39

Total interest expense, net

162

44

Other (income) expense, net

9

(2)

(Gain) on sale of non-vehicle capital assets

(162)

—

Change in fair value of Public Warrants

118

(50)

Total expenses

1,985

1,254

Income (loss) before income taxes

62

556

Income tax (provision) benefit

134

(130)

Net income (loss)

$                         196

$                        426




Weighted average number of shares outstanding:


Basic

321

432

Diluted

323

461

Earnings (loss) per share:


Basic

$                        0.61

$                       0.99

Diluted

$                        0.61

$                       0.82

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In millions, except par value and share data)

March 31, 2023

December 31,
2022

ASSETS


Cash and cash equivalents

$                  728

$                  943

Restricted cash and cash equivalents:


Vehicle

216

180

Non-vehicle

298

295

Total restricted cash and cash equivalents

514

475

Total cash and cash equivalents and restricted cash and cash equivalents

1,242

1,418

Receivables:


Vehicle

136

111

Non-vehicle, net of allowance of $42 and $45, respectively

898

863

Total receivables, net

1,034

974

Prepaid expenses and other assets

980

1,155

Revenue earning vehicles:


Vehicles

15,746

14,281

Less: accumulated depreciation

(1,888)

(1,786)

Total revenue earning vehicles, net

13,858

12,495

Property and equipment, net

642

637

Operating lease right-of-use assets

2,067

1,887

Intangible assets, net

2,882

2,887

Goodwill

1,044

1,044

Total assets

$             23,749

$             22,497

LIABILITIES AND STOCKHOLDERS' EQUITY


Accounts payable:


Vehicle

$                  167

$                    79

Non-vehicle

553

578

Total accounts payable

720

657

Accrued liabilities

926

911

Accrued taxes, net

173

170

Debt:


Vehicle

11,789

10,886

Non-vehicle

2,975

2,977

Total debt

14,764

13,863

Public Warrants

735

617

Operating lease liabilities

1,977

1,802

Self-insured liabilities

457

472

Deferred income taxes, net

1,223

1,360

Total liabilities

20,975

19,852

Commitments and contingencies


Stockholders' equity:


Preferred stock, $0.01 par value, no shares issued and outstanding

—

—

Common stock, $0.01 par value, 479,114,852 and 478,914,062 shares issued, respectively, and
317,948,320 and 323,483,178 shares outstanding, respectively

5

5

Treasury stock, at cost, 161,166,532 and 155,430,884 common shares, respectively

(3,237)

(3,136)

Additional paid-in capital

6,346

6,326

Retained earnings (Accumulated deficit)

(60)

(256)

Accumulated other comprehensive income (loss)

(280)

(294)

Total stockholders' equity

2,774

2,645

Total liabilities and stockholders' equity

$             23,749

$             22,497

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


Three Months Ended

March 31,

(In millions)

2023

2022

Cash flows from operating activities:


Net income (loss)

$                          196

$                         426

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
     activities:


Depreciation and reserves for revenue earning vehicles

466

(20)

Depreciation and amortization, non-vehicle

35

33

Amortization of deferred financing costs and debt discount (premium)

14

11

Stock-based compensation charges

21

28

Provision for receivables allowance

20

13

Deferred income taxes, net

(135)

103

(Gain) loss on sale of non-vehicle capital assets

(162)

(2)

Change in fair value of Public Warrants

118

(50)

Changes in financial instruments

108

(44)

Other

—

1

Changes in assets and liabilities:


Non-vehicle receivables

(50)

(43)

Prepaid expenses and other assets

(48)

(40)

Operating lease right-of-use assets

78

72

Non-vehicle accounts payable

(27)

51

Accrued liabilities

29

124

Accrued taxes, net

1

30

Operating lease liabilities

(84)

(80)

Self-insured liabilities

(18)

8

Net cash provided by (used in) operating activities

562

621

Cash flows from investing activities:


Revenue earning vehicles expenditures

(2,824)

(2,985)

Proceeds from disposal of revenue earning vehicles

1,206

1,471

Non-vehicle capital asset expenditures

(45)

(30)

Proceeds from non-vehicle capital assets disposed of or to be disposed of

175

1

Collateral returned in exchange for letters of credit

—

17

Return of (investment in) equity investments

—

(15)

Net cash provided by (used in) investing activities

(1,488)

(1,541)

Cash flows from financing activities:


Proceeds from issuance of vehicle debt

2,061

4,680

Repayments of vehicle debt

(1,190)

(3,492)

Proceeds from issuance of non-vehicle debt

425

—

Repayments of non-vehicle debt

(430)

(5)

Payment of financing costs

(8)

(24)

Proceeds from exercises of Public Warrants

—

3

Share repurchases

(118)

(766)

Other

(1)

(4)

Net cash provided by (used in) financing activities

739

392

Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted
   cash and cash equivalents

11

(1)

Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents
   during the period

(176)

(529)

Cash and cash equivalents and restricted cash and cash equivalents at beginning of period

1,418

2,651

Cash and cash equivalents and restricted cash and cash equivalents at end of period

$                       1,242

$                      2,122

 

Supplemental Schedule I

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited


Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

(In millions)

Americas
RAC

International
RAC

Corporate

Hertz
Global

Americas
RAC

International
RAC

Corporate

Hertz
Global

Revenues

$       1,730

$             317

$            —

$      2,047

$       1,558

$             252

$           —

$      1,810

Expenses:














Direct vehicle and operating

1,039

182

—

1,221

903

151

(1)

1,053

Depreciation of revenue earning vehicles and lease charges, net

349

32

—

381

(93)

34

—

(59)

Depreciation and amortization of non-vehicle assets

28

2

5

35

26

3

4

33

Selling, general and administrative

105

37

79

221

86

42

107

235

Interest expense, net:














Vehicle

93

18

—

111

2

3

—

5

Non-vehicle

(18)

(2)

71

51

(8)

—

47

39

Total interest expense, net

75

16

71

162

(6)

3

47

44

Other (income) expense, net

(1)

6

4

9

(1)

(3)

2

(2)

(Gain) on sale of non-vehicle capital assets

(162)

—

—

(162)

—

—

—

—

Change in fair value of Public Warrants

—

—

118

118

—

—

(50)

(50)

Total expenses

1,433

275

277

1,985

915

230

109

1,254

Income (loss) before income taxes

$          297

$               42

$        (277)

62

$         643

$               22

$        (109)

556

Income tax (provision) benefit





134






(130)

Net income (loss)





$         196






$         426

 

Supplemental Schedule II

HERTZ GLOBAL HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED NET INCOME (LOSS), ADJUSTED DILUTED
EARNINGS (LOSS) PER SHARE AND ADJUSTED
CORPORATE EBITDA 
Unaudited


Three Months Ended

March 31,

(In millions, except per share data)

2023

2022

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share:


Net income (loss)

$                         196

$                         426

Adjustments:


Income tax provision (benefit)

(134)

130

Vehicle and non-vehicle debt-related charges(a)(k)

14

12

Restructuring and restructuring related charges(b)

3

6

Acquisition accounting-related depreciation and amortization(c)

—

1

Unrealized (gains) losses on financial instruments(d)

108

(44)

(Gain) on sale of non-vehicle capital assets(e)

(162)

—

Change in fair value of Public Warrants

118

(50)

Other items(f)(l)

14

56

Adjusted pre-tax income (loss)(g)

157

537

Income tax (provision) benefit on adjusted pre-tax income (loss)(h)

(31)

(134)

Adjusted Net Income (Loss)

$                         126

$                         403

Weighted-average number of diluted shares outstanding

323

461

Adjusted Diluted Earnings (Loss) Per Share(i)

$                        0.39

$                        0.87

Adjusted Corporate EBITDA:


Net income (loss)

$                         196

$                         426

Adjustments:


Income tax provision (benefit)

(134)

130

Non-vehicle depreciation and amortization(j)

35

33

Non-vehicle debt interest, net of interest income 

51

39

Vehicle debt-related charges(a)(k)

10

7

Restructuring and restructuring related charges(b)

3

6

Unrealized (gains) losses on financial instruments(d)

108

(44)

(Gain) on sale of non-vehicle capital assets(e)

(162)

—

Change in fair value of Public Warrants

118

(50)

Other items(f)(m)

12

67

Adjusted Corporate EBITDA

$                         237

$                         614

 

Supplemental Schedule II (continued)

(a)

Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.

(b)

Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. For the three months ended March 31, 2023 and 2022, respectively, charges incurred related primarily to International RAC.

(c)

Represents incremental expense associated with the amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.

(d)

Represents unrealized gains (losses) on derivative financial instruments, primarily associated with Americas RAC. In 2023, also includes the realization of $88 million of previously unrealized gains resulting from the unwind of certain interest rate caps in Americas RAC.

(e)

Represents gain on the sale of certain non-vehicle capital assets sold in March 2023 in Americas RAC.

(f)

Represents miscellaneous items. For 2023, primarily includes certain IT related charges primarily in Corporate. For 2022, primarily includes bankruptcy claims, certain professional fees and charges related to the settlement of bankruptcy claims.

(g)

Adjustments by caption on a pre-tax basis were as follows:


Increase (decrease) to expenses

Three Months Ended March 31,

(In millions)

2023

2022

Direct vehicle and operating

$                     —

$                     (2)

Depreciation of revenue earning vehicles and lease charges, net     

2

—

Selling, general and administrative

(14)

(5)

Interest expense, net:


Vehicle

(119)

36

Non-vehicle

(8)

(5)

Total interest expense, net

(127)

31

Other income (expense), net

—

(55)

Gain on sale non-vehicle capital assets

162

—

Change in fair value of Public Warrants

(118)

50

Total adjustments

$                   (95)

$                    19


(h)

Derived utilizing a combined statutory rate of 20% and 25% for the three months ended March 31, 2023 and 2022, respectively, applied to the respective Adjusted Pre-tax Income (Loss). The decrease in rate is primarily resulting from EV-related tax credits anticipated to be used to decrease the Company's U.S. federal tax provision throughout 2023 based on the Company's expected purchases of electric vehicles.

(i)

Adjustments used to reconcile diluted earnings (loss) per share on a GAAP basis to Adjusted Diluted Earnings (Loss) Per Share are comprised of the same adjustments, inclusive of the tax impact, used to reconcile net income (loss) to Adjusted Net Income (Loss) divided by the weighted-average diluted shares outstanding during the period.

(j)

Non-vehicle depreciation and amortization expense for Americas RAC, International RAC and Corporate for the three months ended March 31, 2023 was $28 million, $2 million and $5 million, respectively. For the three months ended March 31, 2022 was $26 million, $3 million, and $4 million for Americas RAC, International RAC and Corporate, respectively.

(k)

Vehicle debt-related charges for Americas RAC and International RAC for the three months ended March 31, 2023 were $8 million and $1 million, respectively, and were $6 million and $1 million, respectively, for the three months ended March 31, 2022.

(l)

Also includes letter of credit fees recorded primarily in Corporate.

(m)

In 2022, also includes an adjustment for certain non-cash stock-based compensation charges recorded in Corporate.

 

Supplemental Schedule III

HERTZ GLOBAL HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED OPERATING CASH FLOW

AND ADJUSTED FREE CASH FLOW

Unaudited


Three Months Ended

March 31,

(In millions)

2023

2022

ADJUSTED OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW:     


Net cash provided by (used in) operating activities

$                  562

$                    621

Depreciation and reserves for revenue earning vehicles

(466)

20

Bankruptcy related payments (post emergence) and other payments

8

36

Adjusted operating cash flow

104

677

Non-vehicle capital asset proceeds (expenditures), net

130

(29)

Adjusted operating cash flow before vehicle investment

234

648

Net fleet growth after financing

(317)

(569)

Adjusted free cash flow

$                 (83)

$                      79




CALCULATION OF NET FLEET GROWTH AFTER FINANCING:

Revenue earning vehicles expenditures

$              (2,824)

$                (2,985)

Proceeds from disposal of revenue earning vehicles

1,206

1,471

Revenue earning vehicles capital expenditures, net

(1,618)

(1,514)

Depreciation and reserves for revenue earning vehicles

466

(20)

Financing activity related to vehicles:


Borrowings

2,061

$                 4,680

Payments

(1,190)

$                (3,492)

Restricted cash changes, vehicle

(36)

$                   (223)

Net financing activity related to vehicles

835

965

Net fleet growth after financing

$                 (317)

$                   (569)

 

Supplemental Schedule IV

HERTZ GLOBAL HOLDINGS, INC.

NET DEBT CALCULATION

Unaudited


As of March 31, 2023

As of December 31, 2022

(In millions)

Vehicle

Non-Vehicle

Total

Vehicle

Non-Vehicle

Total

Term loans

$                    —

$               1,522

$               1,522

$                    —

$               1,526

$               1,526

Senior notes

—

1,500

1,500

—

1,500

1,500

U.S. vehicle financing (HVF III)

10,283

—

10,283

9,406

—

9,406

International vehicle financing (Various)

1,490

—

1,490

1,466

—

1,466

Other debt

78

8

86

76

9

85

Debt issue costs, discounts and premiums

(62)

(55)

(117)

(62)

(58)

(120)

Debt as reported in the balance sheet

11,789

2,975

14,764

10,886

2,977

13,863

Add:










Debt issue costs, discounts and premiums

62

55

117

62

58

120

Less:










Cash and cash equivalents

—

728

728

—

943

943

Restricted cash

216

—

216

180

—

180

Restricted cash and restricted cash equivalents
     associated with Term C Loan 

—

245

245

—

245

245

Net Debt

$             11,635

$               2,057

$             13,692

$             10,768

$               1,847

$             12,615












Corporate leverage ratio(a)

1.1x




0.8x


(a)   Corporate leverage ratio is calculated as non-vehicle net debt divided by LTM Adjusted Corporate EBITDA.

 

Supplemental Schedule V

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited

Global RAC


Three Months Ended

March 31,

Percent Inc/
(Dec)

($ in millions, except where noted)

2023

2022

Total RPD




Revenues

$               2,047

$               1,810

Foreign currency adjustment(a)

(3)

(18)

Total Revenues - adjusted for foreign currency

$               2,044

$               1,792

Transaction Days (in thousands)

33,787

30,621

Total RPD (in dollars)

$               60.48

$               58.54

3 %






Total Revenue Per Unit Per Month




Total Revenues - adjusted for foreign currency

$               2,044

$               1,792

Average Rentable Vehicles (in whole units)

483,288

455,517

Total revenue per unit (in whole dollars)

$               4,228

$               3,935

Number of months in period (in whole units)

3

3

Total RPU Per Month (in whole dollars)

$               1,409

$               1,312

7 %






Vehicle Utilization




Transaction Days (in thousands)

33,787

30,621

Average Rentable Vehicles (in whole units)

483,288

455,517

Number of days in period (in whole units)

90

90

Available Car Days (in thousands)

43,609

40,999

Vehicle Utilization(b)

77 %

75 %







Depreciation Per Unit Per Month




Depreciation of revenue earning vehicles and lease charges, net

$                  381

$                 (59)

Foreign currency adjustment(a) 

—

(2)

Adjusted depreciation of revenue earning vehicles and lease charges

$                  381

$                 (61)

Average Vehicles (in whole units)

504,528

481,211

Adjusted depreciation of revenue earning vehicles and lease charges divided by      
    Average Vehicles (in whole dollars)

$                  756

$               (127)

Number of months in period (in whole units)

3

3

Depreciation Per Unit Per Month (in whole dollars)

$                  252

$                 (42)

NM

Note: Global RAC represents Americas RAC and International RAC segment information on a combined basis and excludes Corporate

NM - Not meaningful

(a)  Based on December 31, 2022 foreign exchange rates.

(b)  Calculated as Transaction Days divided by Available Car Days.

 

Supplemental Schedule V (continued)

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited

Americas RAC


Three Months Ended March 31,

Percent Inc/
(Dec)

($ in millions, except where noted)

2023

2022

Total RPD




Revenues

$               1,730

$               1,558

Foreign currency adjustment(a)

(1)

(2)

Total Revenues - adjusted for foreign currency

$               1,729

$               1,556

Transaction Days (in thousands)

27,879

25,579

Total RPD (in dollars)

$               62.03

$               60.81

2 %






Total Revenue Per Unit Per Month




Total Revenues - adjusted for foreign currency

$               1,729

$               1,556

Average Rentable Vehicles (in whole units)

393,512

373,153

Total revenue per unit (in whole dollars)

$               4,395

$               4,169

Number of months in period (in whole units)

3

3

Total RPU Per Month (in whole dollars)

$               1,465

$               1,390

5 %






Vehicle Utilization




Transaction Days (in thousands)

27,879

25,579

Average Rentable Vehicles (in whole units)

393,512

373,153

Number of days in period (in whole units)

90

90

Available Car Days (in thousands)

35,420

33,584

Vehicle Utilization(b)

79 %

76 %







Depreciation Per Unit Per Month




Depreciation of revenue earning vehicles and lease charges, net

$                  349

$                 (93)

Foreign currency adjustment(a) 

1

—

Adjusted depreciation of revenue earning vehicles and lease charges

$                  350

$                 (93)

Average Vehicles (in whole units)

412,983

397,620

Adjusted depreciation of revenue earning vehicles and lease charges divided by      
    Average Vehicles (in whole dollars)

$                  847

$               (235)

Number of months in period (in whole units)

3

3

Depreciation Per Unit Per Month (in whole dollars)

$                  282

$                 (78)

NM

NM - Not meaningful

(a)  Based on December 31, 2022 foreign exchange rates.

(b)  Calculated as Transaction Days divided by Available Car Days.

 

Supplemental Schedule V (continued)

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited

International RAC


Three Months Ended March 31,

Percent Inc/
(Dec)

($ in millions, except where noted)

2023

2022

Total RPD




Revenues

$                  317

$                 252

Foreign currency adjustment(a)

(3)

(15)

Total Revenues - adjusted for foreign currency

$                  314

$                 237

Transaction Days (in thousands)

5,908

5,042

Total RPD (in dollars)

$               53.18

$              47.00

13 %






Total Revenue Per Unit Per Month




Total Revenues - adjusted for foreign currency

$                  314

$                 237

Average Rentable Vehicles (in whole units)

89,776

82,364

Total revenue per unit (in whole dollars)

$               3,500

$              2,877

Number of months in period (in whole units)

3

3

Total RPU Per Month (in whole dollars)

$               1,167

$                 959

22 %






Vehicle Utilization




Transaction Days (in thousands)

5,908

5,042

Average Rentable Vehicles (in whole units)

89,776

82,364

Number of days in period (in whole units)

90

90

Available Car Days (in thousands)

8,191

7,415

Vehicle Utilization (b)

72 %

68 %







Depreciation Per Unit Per Month




Depreciation of revenue earning vehicles and lease charges, net

$                    32

$                   34

Foreign currency adjustment(a) 

(1)

(2)

Adjusted depreciation of revenue earning vehicles and lease charges

$                    31

$                   32

Average Vehicles (in whole units)

91,545

83,591

Adjusted depreciation of revenue earning vehicles and lease charges divided by     
    Average Vehicles (in whole dollars)

$                  344

$                 386

Number of months in period (in whole units)

3

3

Depreciation Per Unit Per Month (in whole dollars)

$                  115

$                 129

(11) %

(a)  Based on December 31, 2022 foreign exchange rates.

(b)  Calculated as Transaction Days divided by Available Car Days.

 

NON-GAAP MEASURES AND KEY METRICS

The term "GAAP" refers to accounting principles generally accepted in the United States. Adjusted EBITDA is the Company's segment measure of profitability and complies with GAAP when used in that context.

NON-GAAP MEASURES

Non-GAAP measures are not recognized measurements under GAAP. When evaluating the Company's operating performance or liquidity, investors should not consider non-GAAP measures in isolation of, superior to, or as a substitute for measures of the Company's financial performance as determined in accordance with GAAP.

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share ("Adjusted EPS")

Adjusted Net Income (Loss) represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax; vehicle and non-vehicle debt-related charges; restructuring and restructuring related charges; acquisition accounting-related depreciation and amortization; change in fair value of Public Warrants; unrealized (gains) losses on financial instruments, gain on sale of non-vehicle capital assets and certain other miscellaneous items on a pre-tax basis. Adjusted Net Income (Loss) includes a provision (benefit) for income taxes derived utilizing a combined statutory rate. The combined statutory rate is management's estimate of the Company's long-term tax rate. Its most comparable GAAP measure is net income (loss) attributable to the Company.

Adjusted EPS represents Adjusted Net Income (Loss) on a per diluted share basis using the weighted-average number of diluted shares outstanding for the period. Its most comparable GAAP measure is diluted earnings (loss) per share.

Adjusted Net Income (Loss) and Adjusted EPS are important operating metrics because they allow management and investors to assess operational performance of the Company's business, exclusive of the items mentioned above that are not operational in nature or comparable to those of the Company's competitors.

Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin

Adjusted Corporate EBITDA represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax; non-vehicle depreciation and amortization; non-vehicle debt interest, net; vehicle debt-related charges; restructuring and restructuring related charges; change in fair value of Public Warrants; unrealized (gains) losses on financial instruments; gain on sale of non-vehicle capital assets and certain other miscellaneous items.

Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues.

Management uses these measures as operating performance metrics for internal monitoring and planning purposes, including the preparation of the Company's annual operating budget and monthly operating reviews, and analysis of investment decisions, profitability and performance trends. These measures enable management and investors to isolate the effects on profitability of operating metrics most meaningful to the business of renting and leasing vehicles. They also allow management and investors to assess the performance of the entire business on the same basis as its reportable segments. Adjusted Corporate EBITDA is also utilized in the determination of certain executive compensation. Its most comparable GAAP measure is net income (loss) attributable to the Company.

Adjusted operating cash flow and adjusted free cash flow

Adjusted operating cash flow represents net cash provided by operating activities net of the non-cash add back for vehicle depreciation and reserves, and exclusive of bankruptcy related payments made post emergence. Adjusted operating cash flow is important to management and investors as it provides useful information about the amount of cash generated from operations when fully burdened by fleet costs.

Adjusted free cash flow represents adjusted operating cash flow plus the impact of net non-vehicle capital expenditures and net fleet growth after financing. Adjusted free cash flow is important to management and investors as it provides useful information about the amount of cash available for, but not limited to, the reduction of non-vehicle debt, share repurchase and acquisition.

The most comparable GAAP measure for adjusted operating cash flow and adjusted free cash flow is net cash provided by (used in) operating activities.

KEY METRICS

Available Rental Car Days

Available Rental Car Days represents Average Rentable Vehicles multiplied by the number of days in a given period.

Average Vehicles ("Fleet Capacity" or "Capacity")

Average Vehicles is determined using a simple average of the number of vehicles in the fleet whether owned or leased by the Company at the beginning and end of a given period.

Average Rentable Vehicles

Average Rentable Vehicles reflects Average Vehicles excluding vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels.

Depreciation Per Unit Per Month ("Depreciation Per Unit" or "DPU")

Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges per vehicle per month, exclusive of the impacts of foreign currency exchange rates so as not to affect the comparability of underlying trends. This metric is important to management and investors as it reflects how effectively the Company is managing the costs of its vehicles and facilitates comparisons with other participants in the vehicle rental industry.

Total Revenue Per Transaction Day ("Total RPD"or "RPD"; also referred to as "pricing")

Total RPD represents revenue generated per transaction day, excluding the impact of foreign currency exchange rates so as not to affect the comparability of underlying trends. This metric is important to management and investors as it represents a measure of changes in the underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.

Total Revenue Per Unit Per Month ("Total RPU" or "Total RPU Per Month")

Total RPU Per Month represents the amount of revenue generated per vehicle in the rental fleet each month, excluding the impact of foreign currency exchange rates so as not to affect the comparability of underlying trends. This metric is important to management and investors as it provides a measure of revenue productivity relative to the number of vehicles in our rental fleet whether owned or leased, or asset efficiency.

Transaction Days ("Days"; also referred to as "volume")

Transaction Days represents the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. This metric is important to management and investors as it represents the number of revenue-generating days.

Vehicle Utilization ("Utilization")

Vehicle Utilization represents the ratio of Transaction Days to Available Rental Car Days. This metric is important to management and investors as it is the measurement of the proportion of vehicles that are being used to generate revenues relative to rentable fleet capacity.

Cision View original content:https://www.prnewswire.com/news-releases/hertz-reports-first-quarter-2023-results-revenue-of-2-0-billion-net-income-of-196-million-and-adjusted-corporate-ebitda-of-237-million-301808883.html

SOURCE Hertz Global Holdings, Inc.

Hertz Investor Relations: investorrelations@hertz.com, Hertz Media Relations: mediarelations@hertz.com