HERTZ REPORTS STRONG FOURTH QUARTER AND RECORD FULL YEAR 2022 NET INCOME AND ADJUSTED CORPORATE EBITDA

Feb 7, 2023

"Our strong results in the fourth  quarter and record performance last year reflect a commitment to customers - from leisure and corporate travelers to ride share drivers. With a focus on asset return and risk management, we showed better operating performance, more disciplined fleet management and a commitment to financial returns," said Stephen Scherr, Hertz chair and chief executive officer. "Our team delivered on renewed demand for travel, which is continuing. In 2023, we will build on our progress to grow our business across the Hertz, Dollar, and Thrifty brands.  We look to our investments in electrification and technology to yield increasing operating leverage and improved returns and an even better product to our customers around the world."

ESTERO, Fla., Feb. 7, 2023 /PRNewswire/ -- Hertz Global Holdings, Inc. (NASDAQ: HTZ) ("Hertz", "Hertz Global" or the "Company") today reported results for its fourth quarter and full year 2022.

For the fourth quarter 2022, the Company generated total revenues of $2.0 billion, up 4% from the fourth quarter of 2021, and up 7% on a constant currency basis. RPD and RPU were at fourth quarter record levels and volume was up 3% led by post-pandemic demand recovery. Depreciation continued to normalize during the quarter. Excluding litigation settlements of $168 million in the quarter, direct operating expense per transaction day was $33, down $2 from the third quarter 2022, demonstrating improved operating leverage. Net income was $116 million and Adjusted Corporate EBITDA was $309 million, a 15% margin. For the quarter, loss per share was $0.01 and adjusted earnings per share was $0.50.

Operating cash flow was $277 million for the quarter. Fleet capex of $312 million was a source of cash in the fourth quarter, driven by fleet rejuvenation and seasonal defleeting. As a result, adjusted free cash flow was $424 million, reflecting a 137% conversion from Adjusted Corporate EBITDA. The Company acquired 19 million shares, or 6% of its common stock, during the quarter.

HIGHLIGHTS

Q4 2022

  • Revenue of $2.0 billion
  • GAAP net income of $116 million, or $(0.01) per diluted share
  • Adjusted net income of $173 million, or $0.50 per diluted share
  • Adjusted Corporate EBITDA of $309 million, a 15% margin
  • Operating cash flow of $277 million
  • Adj. operating cash flow of $156 million; adj. free cash flow of $424 million

FY 2022

  • Revenue of $8.7 billion
  • Record GAAP net income of $2.1 billion, or $3.36 per diluted share
  • Record adjusted net income of $1.5 billion, or $3.74 per diluted share
  • Record Adjusted Corporate EBITDA of $2.3 billion, a 27% margin
  • Operating cash flow of $2.5 billion
  • Record adj. operating cash flow of $2.0 billion and adj. free cash flow of $1.5 billion
  • Corporate liquidity of $2.5 billion at December 31st, including $943 million in unrestricted cash
  • Company repurchased 128 million common shares during 2022, a 28.5% reduction of its capital base

SUMMARY RESULTS


Three Months Ended

December 31,

Percent
Inc/(Dec)

2022 vs 2021

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

2022


2021


Hertz Global - Consolidated






Total revenues

$         2,035


$         1,949


4 %

Adjusted net income (loss)(a)

$            173


$            426


(59) %

Adjusted diluted earnings (loss) per share(a)

$           0.50


$           0.91


(45) %

Adjusted Corporate EBITDA(a)

$            309


$            628


(51) %

Adjusted Corporate EBITDA Margin(a)

15 %


32 %









Average Vehicles (in whole units)

496,926


470,900


6 %

Average Rentable Vehicles (in whole units)

465,943


454,000


3 %

Vehicle Utilization

79 %


78 %



Transaction Days (in thousands)

33,673


32,551


3 %

Total RPD (in dollars)(b)

$         61.65


$         59.80


3 %

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

$         1,485


$         1,429


4 %

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

$            244


$               55


NM







Americas RAC Segment






Total revenues

$         1,707


$         1,691


1 %

Adjusted EBITDA

$            318


$            653


(51) %

Adjusted EBITDA Margin

19 %


39 %









Average Vehicles (in whole units)

398,860


384,492


4 %

Average Rentable Vehicles (in whole units)

370,723


368,434


1 %

Vehicle Utilization

80 %


80 %



Transaction Days (in thousands)

27,367


27,215


1 %

Total RPD (in dollars)(b)

$         62.50


$         62.11


1 %

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

$         1,538


$         1,529


1 %

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

$            278


$               26


NM







International RAC Segment






Total revenues

$            328


$            258


27 %

Adjusted EBITDA

$               81


$               21


NM

Adjusted EBITDA Margin

25 %


8 %









Average Vehicles (in whole units)

98,065


86,408


13 %

Average Rentable Vehicles (in whole units)

95,221


85,565


11 %

Vehicle Utilization

72 %


68 %



Transaction Days (in thousands)

6,305


5,335


18 %

Total RPD (in dollars)(b)

$         57.98


$         48.01


21 %

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

$         1,280


$            998


28 %

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

$            104


$            184


(44) %



NM - Not meaningful

(a)

Represents a non-GAAP measure. See the accompanying reconciliations included in Supplemental Schedule II for 2022 and 2021.

(b)

Based on December 31, 2021 foreign exchange rates.

LIQUIDITY AND CAPITAL RESOURCES

In December 2022, the Company amended its European ABS facility to add the fleet in Italy, increase aggregate maximum borrowings to €1.1 billion and extend the maturity from October 2023 to November 2024.

During the fourth quarter 2022, the Company repurchased 19 million shares for $315 million and has over $1.1 billion remaining under the Board's authorization.

The Company's liquidity position was $2.5 billion at December 31, 2022, of which $943 million was unrestricted cash.

EARNINGS WEBCAST INFORMATION

Hertz Global's live webcast and conference call to discuss its fourth quarter and full year 2022 results will be held on February 7, 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/BI78420368890940eab75ec4e147ae0783, 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.

In the first quarter of 2022, the Company began using Average Rentable Vehicles when calculating Available Car Days, Total RPU and Utilization instead of Average Vehicles. Average Rentable Vehicles excludes vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels. Prior periods have been restated to conform with the revisions, as appropriate. The Company has also restated historical quarterly and annual periods beginning with first quarter 2018 to reflect this change and has posted this information to its investor relations website at IR.Hertz.com.

ABOUT HERTZ

The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. 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 including 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 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 program and non-program vehicles in the Company's fleet can lead to increased exposure to residual risk upon disposition;
  • financial instability of the manufacturers of the Company's vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs;
  • an increase in the Company's vehicle costs or disruption to 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;
  • the Company's ability to offer an excellent customer experience, retain and increase customer loyalty and 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 recapture accelerated tax depreciation and expensing, 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 its 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

December 31,


Twelve Months Ended
December 31,

(In millions, except per share data)

2022


2021


2022


2021

Revenues

$              2,035


$              1,949


$              8,685


$              7,336

Expenses:








Direct vehicle and operating

1,274


1,065


4,808


3,920

Depreciation of revenue earning vehicles and lease charges, net

360


78


701


497

Non-vehicle depreciation and amortization

37


43


142


196

Selling, general and administrative

221


188


959


688

Interest expense, net:








Vehicle

82


41


159


284

Non-vehicle

46


28


169


185

Total interest expense, net

128


69


328


469

Other (income) expense, net

8


(1)


2


(21)

Reorganization items, net




677

(Gain) from the sale of a business




(400)

Change in fair value of Public Warrants

(120)


643


(704)


627

Total expenses

1,908


2,085


6,236


6,653

Income (loss) before income taxes

127


(136)


2,449


683

Income tax (provision) benefit

(11)


(125)


(390)


(318)

Net income (loss)

116


(261)


2,059


365

Net (income) loss attributable to noncontrolling interests


1



1

Net income (loss) attributable to Hertz Global

116


(260)


2,059


366

Series A Preferred Stock deemed dividends


(450)



(450)

Net income (loss) available to Hertz Global common stockholders

$                 116


$               (710)


$              2,059


$                 (84)

Weighted average number of shares outstanding:








Basic

332


468


379


315

Diluted

347


468


403


315

Earnings (loss) per share:








Basic

$                0.35


$              (1.52)


$                5.43


$              (0.27)

Diluted

$              (0.01)


$              (1.52)


$                3.36


$              (0.27)

 

UNAUDITED CONSOLIDATED BALANCE SHEETS


(In millions, except par value and share data)

December 31,
2022


December 31,
2021

ASSETS




Cash and cash equivalents

$                  943


$               2,258

Restricted cash and cash equivalents:




Vehicle

180


77

Non-vehicle

295


316

Total restricted cash and cash equivalents

475


393

Total cash and cash equivalents and restricted cash and cash equivalents

1,418


2,651

Receivables:




Vehicle

111


62

Non-vehicle, net of allowance of $45 and $48, respectively

863


696

Total receivables, net

974


758

Prepaid expenses and other assets

1,155


1,017

Revenue earning vehicles:




Vehicles

14,281


10,836

Less: accumulated depreciation

(1,786)


(1,610)

Total revenue earning vehicles, net

12,495


9,226

Property and equipment, net

637


608

Operating lease right-of-use assets

1,887


1,566

Intangible assets, net

2,887


2,912

Goodwill

1,044


1,045

Total assets

$             22,497


$             19,783

LIABILITIES AND STOCKHOLDERS' EQUITY




Accounts payable:




Vehicle

$                    79


$                    56

Non-vehicle

578


516

Total accounts payable

657


572

Accrued liabilities

911


863

Accrued taxes, net

170


157

Debt:




Vehicle

10,886


7,921

Non-vehicle

2,977


2,986

Total debt

13,863


10,907

Public Warrants

617


1,324

Operating lease liabilities

1,802


1,510

Self-insured liabilities

472


463

Deferred income taxes, net

1,360


1,010

Total liabilities

19,852


16,806

Commitments and contingencies




Stockholders' equity:




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


Common stock, $0.01 par value, 478,914,062 and 477,233,278 shares issued, respectively, and 
   323,483,178 and 449,782,424 shares outstanding, respectively

5


5

Treasury stock, at cost, 155,430,884 and 27,450,854 common shares, respectively

(3,136)


(708)

Additional paid-in capital

6,326


6,209

Retained earnings (Accumulated deficit)

(256)


(2,315)

Accumulated other comprehensive income (loss)

(294)


(214)

Total stockholders' equity

2,645


2,977

Total liabilities and stockholders' equity

$             22,497


$             19,783

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended
December 31,


Twelve Months Ended
December 31,

(In millions)

2022


2021


2022


2021

Cash flows from operating activities:








Net income (loss)

$             116


$            (261)


$          2,059


$             365

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








Depreciation and reserves for revenue earning vehicles, net

298


94


809


600

Depreciation and amortization, non-vehicle

37


43


142


196

Amortization of deferred financing costs and debt discount (premium)

15


13


53


122

Loss on extinguishment of debt




8

Stock-based compensation charges

34


7


130


10

Provision for receivables allowance

15


30


57


125

Deferred income taxes, net


145


301


270

Reorganization items, net




314

(Gain) loss from the sale of a business




(400)

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



(5)


(8)

Change in fair value of Public Warrants

(120)


643


(704)


627

(Gain) loss on financial instruments

9


(3)


(111)


(4)

Other

8


6


11


(1)

Changes in assets and liabilities:








Non-vehicle receivables

(30)


13


(264)


(210)

Prepaid expenses and other assets

(46)


33


(126)


(20)

Operating lease right-of-use assets

78


71


280


274

Non-vehicle accounts payable

50


(25)


43


(70)

Accrued liabilities

(103)


(65)


80


(108)

Accrued taxes, net

21


(65)


73


24

Operating lease liabilities

(86)


(77)


(309)


(291)

Self-insured liabilities

(19)


(4)


19


(17)

Net cash provided by (used in) operating activities

277


598


2,538


1,806

Cash flows from investing activities:








Revenue earning vehicles expenditures

(2,743)


(1,958)


(10,596)


(7,154)

Proceeds from disposal of revenue earning vehicles

2,028


873


6,498


2,818

Non-vehicle capital asset expenditures

(46)


(30)


(150)


(71)

Proceeds from disposal of non-vehicle capital assets

2


(1)


12


16

Collateral payments




(303)

Collateral returned in exchange for letters of credit


12


19


280

Return of (investment in) equity investments

(1)



(16)


Proceeds from the sale of a business, net of cash sold




871

Other




(1)

Net cash provided by (used in) investing activities

(760)


(1,104)


(4,233)


(3,544)

Cash flows from financing activities:








Proceeds from issuance of vehicle debt

1,390


3,861


9,672


14,323

Repayments of vehicle debt

(685)


(3,144)


(6,639)


(12,607)

Proceeds from issuance of non-vehicle debt


1,505



4,644

Repayments of non-vehicle debt

(6)


(6)


(20)


(6,352)

Payment of financing costs

(6)


(31)


(48)


(185)

Proceeds from Plan Sponsors




2,781

Early redemption premium payment




(85)

Proceeds from exercises of Public Warrants


77


3


77

Proceeds from the issuance of preferred stock, net




1,433

Repurchase of preferred stock


(1,883)



(1,883)

Distributions to common stockholders




(239)

Contributions from (distributions to) noncontrolling interests


(13)



(38)

Proceeds from 2021 Rights Offering, net




1,639

Share repurchases

(309)


(654)


(2,461)


(654)

Other

(16)


(9)


(20)


(9)

Net cash provided by (used in) financing activities

368


(297)


487


2,845

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

25


(12)


(25)


(34)

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

(90)


(815)


(1,233)


1,073

Cash and cash equivalents and restricted cash and cash equivalents at
   beginning of period(a)

1,508


3,466


2,651


1,578

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

$          1,418


$          2,651


$          1,418


$          2,651



(a)

Amounts include cash and cash equivalents and restricted cash and cash equivalents of Donlen which were held for sale as of December 31, 2020.

 

Supplemental Schedule I


HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Three Months Ended December 31, 2022


Three Months Ended December 31, 2021

(In millions)

Americas
RAC


International
RAC


Corporate


Hertz
Global


Americas
RAC


International
RAC


Corporate


Hertz
Global

Revenues

$        1,707


$            328


$              —


$        2,035


$        1,691


$            258


$              —


$        1,949

Expenses:
















Direct vehicle and operating

1,098


174


2


1,274


908


154


3


1,065

Depreciation of revenue earning vehicles and lease charges

333


27



360


30


48



78

Depreciation and amortization of non-vehicle assets

29


3


5


37


36


4


3


43

Selling, general and administrative

81


38


102


221


90


39


59


188

Interest expense, net:
















Vehicle

72


10



82


31


10



41

Non-vehicle

(36)


(1)


83


46


(6)



34


28

Total interest expense, net

36


9


83


128


25


10


34


69

Other (income) expense, net

(3)


6


5


8


(2)


1



(1)

Change in fair value of Public Warrants



(120)


(120)




643


643

Total expenses

1,574


257


77


1,908


1,087


256


742


2,085

Income (loss) before income taxes

$           133


$              71


$            (77)


127


$           604


$                2


$          (742)


(136)

Income tax (provision) benefit







(11)








(125)

Net income (loss)







116








(261)

Net (income) loss attributable to noncontrolling interests














1

Net income (loss) attributable to Hertz Global







116








(260)

Series A Preferred Stock deemed dividends














(450)

Net income (loss) available to Hertz Global common stockholders







$           116








$          (710)

 

Supplemental Schedule I (continued)


HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Twelve Months Ended December 31, 2022


Twelve Months Ended December 31, 2021

(In millions)

Americas
RAC


International
RAC


Corporate


Hertz
Global


Americas
RAC


International
RAC


All other
operations


Corporate


Hertz
Global

Revenues

$       7,280


$         1,405


$            —


$       8,685


$       6,215


$            985


$           136


$            —


$       7,336

Expenses:


















Direct vehicle and operating

4,080


728



4,808


3,302


606


5


7


3,920

Depreciation of revenue earning vehicles and lease charges

553


148



701


343


154




497

Depreciation and amortization of non-vehicle assets

114


13


15


142


166


16


2


12


196

Selling, general and administrative

351


180


428


959


282


136


10


260


688

Interest expense, net:


















Vehicle

140


19



159


213


59


12



284

Non-vehicle

(80)



249


169


(15)


3


1


196


185

Total interest expense, net

60


19


249


328


198


62


13


196


469

Other (income) expense, net

(6)


3


5


2


(10)


(1)



(10)


(21)

Reorganization items, net





80


12


(1)


586


677

(Gain) from the sale of a business








(400)


(400)

Change in fair value of Public Warrants



(704)


(704)





627


627

Total expenses

5,152


1,091


(7)


6,236


4,361


985


29


1,278


6,653

Income (loss) before income taxes

$       2,128


$            314


$              7


2,449


$       1,854


$              —


$           107


$     (1,278)


683

Income tax (provision) benefit







(390)










(318)

Net income (loss)







2,059










365

Net (income) loss attributable to noncontrolling interests
















1

Net income (loss) attributable to Hertz Global







2,059










366

Series A Preferred Stock deemed dividends
















(450)

Net income (loss) available to Hertz Global common
   stockholders







$       2,059










$          (84)


NOTE: Effective in the second quarter of 2021, as a result of the sale of the Company's Donlen fleet management and leasing business on March 30, 2021, the All Other Operations reportable segment, which consisted primarily of the former Donlen business, was no longer deemed a reportable segment.

 

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
December 31,


Twelve Months Ended
December 31,

(In millions, except per share data)

2022


2021


2022


2021

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








Net income (loss) attributable to Hertz Global

$                116


$              (260)


$             2,059


$                366

Adjustments:








Income tax provision (benefit)

11


125


390


318

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

14


13


53


129

Restructuring and restructuring related charges(b)

16


4


45


76

Acquisition accounting-related depreciation and amortization(c)

1


7


3


43

Reorganization items, net(d)




677

Pre-reorganization and non-debtor financing charges(e)




42

Gain from the Donlen Sale(f)




(400)

Change in fair value of Public Warrants

(120)


643


(704)


627

Unrealized (gains) losses on financial instruments

9


(3)


(111)


(4)

Litigation settlements(g)

168



168


Other items(h)(p)

16


39


105


(29)

Adjusted pre-tax income (loss)(i)

231


568


2,008


1,845

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

(58)


(142)


(502)


(461)

Adjusted Net Income (Loss)

$                173


$                426


$             1,506


$             1,384

Weighted-average number of diluted shares outstanding

347


468


403


315

Adjusted Diluted Earnings (Loss) Per Share(k)

$               0.50


$               0.91


$               3.74


$               4.39

Adjusted Corporate EBITDA:








Net income (loss) attributable to Hertz Global

$                116


$               (260)


$             2,059


$                366

Adjustments:








Income tax provision (benefit)

11


125


390


318

Non-vehicle depreciation and amortization(l)

37


43


142


196

Non-vehicle debt interest, net of interest income(m)

46


28


169


185

Vehicle debt-related charges(a)(n)

10


10


35


72

Restructuring and restructuring related charges(b)

16


4


45


76

Reorganization items, net(d)




677

Pre-reorganization and non-debtor financing charges(e)




42

Gain from the Donlen Sale(f)




(400)

Change in fair value of Public Warrants

(120)


643


(704)


627

Unrealized (gains) losses on financial instruments

9


(3)


(111)


(4)

Litigation settlements(g)

168



168


Other items(h)(o)

16


38


112


(25)

Adjusted Corporate EBITDA

$                309


$                628


$             2,305


$             2,130



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. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. For the year ended December 31, 2021, charges incurred were $36 million, $32 million and $8 million in Corporate, Americas RAC and International RAC, respectively.

(c) 

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

(d) 

Represents charges incurred associated with the Reorganization and emergence from Chapter 11, including professional fees. The charges relate primarily to Corporate.





Twelve Months Ended

December 31,

(In millions)


2021

Professional fees and other bankruptcy related costs


$                                  257

Loss on extinguishment of debt


191

Backstop fee


164

Breakup fee


77

Contract settlements


25

Cancellation of share-based compensation grants


(10)

Net gain on settlement of liabilities subject to compromise


(22)

Other, net


(5)

Reorganization items, net


$                                  677



(e)

Represents charges incurred prior to the filing of the Chapter 11 Cases comprised of preparation charges for the Reorganization, such as professional fees. Also includes, certain non-debtor financing and professional fee charges. For the year ended December 31, 2021, charges incurred were $17 million, $17 million, $6 million and $2 million in Corporate, Americas RAC, International RAC and all other operations, respectively.

(f)

Represents the gain from the sale of the Company's Donlen business on March 30, 2021, primarily associated with Corporate.

(g)

Represents payments made for the settlement of certain claims related to alleged false arrests in our Americas RAC segment.

(h)

Represents miscellaneous items. For 2022, includes certain bankruptcy claims and certain professional fees and charges related to the settlement of bankruptcy claims. For 2021, includes $100 million associated with the suspension of depreciation during the first quarter for the Donlen business while classified as held for sale in all other operations, partially offset by $17 million for certain professional fees primarily associated with Corporate, $14 million of charges related to the settlement of bankruptcy claims primarily associated with Corporate, charges for a multiemployer pension plan withdrawal liability recorded in Corporate, letter of credit fees recorded primarily in Corporate, and $12 million of costs associated with the Company's information technology and finance transformation programs, both of which were multi-year initiatives to upgrade and modernize the Company's systems and processes primarily in Corporate.



Supplemental Schedule II (continued)



(i)

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



Increase (decrease) to expenses

Three Months Ended

December 31,


Twelve Months Ended

December 31,

(In millions)

2022


2021


2022


2021

Direct vehicle and operating

$                 (178)


$                   (12)


$                 (232)


$                    33

Selling, general and administrative

(17)


2


(79)


(90)

Interest expense, net:








Vehicle

(16)


(10)


76


(91)

Non-vehicle

(8)


(3)


(28)


(57)

Total interest expense, net

(24)


(13)


58


(148)

Intangible and other asset impairments




Other income (expense), net

(5)


(37)



(52)

Reorganization items, net




(677)

Gain from the Donlen Sale




400

Change in fair value of Public Warrants

120


(643)


704


(627)

Total adjustments

$                 (104)


$                 (703)


$                  441


$              (1,161)



(j)

Derived utilizing a combined statutory rate of 25% for the periods ended December 31, 2022 and 2021, respectively, applied to the respective Adjusted Pre-tax Income (Loss).

(k)

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

(l)

Non-vehicle depreciation and amortization expense for Americas RAC, International RAC and Corporate for the three months ended December 31, 2022 was $29 million, $3 million and $5 million, respectively. For the three months ended December 31, 2021 was $36 million, $4 million, and $3 million, respectively. Non-vehicle depreciation and amortization for Americas RAC, International RAC, and Corporate for the twelve months ended December 31, 2022 were $114 million, $13 million, and $15 million, respectively. For the twelve months ended December 31, 2021 were $166 million, $16 million, $2 million and $12 million, for Americas RAC, International RAC, all other operations, and Corporate, respectively.

(m)

In 2021, includes $8 million of loss on extinguishment of debt associated with the payoff and termination of non-vehicle debt in Corporate in the second quarter of 2021.

(n)

Vehicle debt-related charges for Americas RAC and International RAC for the three months ended December 31, 2022 were $8 million and $2 million, respectively. For the three months ended December 31, 2021 vehicle debt-related charges for Americas RAC and  International RAC were $6 million and $4 million, respectively. Vehicle debt-related charges for Americas RAC and International RAC for the twelve months ended December 31, 2022 were $25 million and $10 million, respectively. For the twelve months ended December 31, 2021 were $53 million, $16 million and $2 million for Americas RAC, International RAC and all other operations, respectively.

(o)

Also includes an adjustment for certain non-cash stock-based compensation charges in Corporate.

(p)

Also includes letter of credit fees recorded in 2022 and the second half of 2021 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

December 31,


Twelve Months Ended

December 31,

(In millions)

2022


2021


2022


2021

ADJUSTED OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW:








Net cash provided by (used in) operating activities

$                  277


$                  598


$               2,538


$               1,806

Depreciation and reserves for revenue earning vehicles

(298)


(94)


(809)


(600)

Bankruptcy related payments (post emergence) and other payments(a)

177


69


261


257

Adjusted operating cash flow

156


573


1,990


1,463

Non-vehicle capital asset expenditures, net

(44)


(31)


(138)


(55)

Adjusted operating cash flow before vehicle investment

112


542


1,852


1,408

Net fleet growth after financing

312


(32)


(360)


(1,980)

Noncontrolling interests


(1)



(26)

Adjusted free cash flow

$                  424


$                  509


$               1,492


$                 (598)









CALCULATION OF NET FLEET GROWTH AFTER FINANCING:








Revenue earning vehicles expenditures

$              (2,743)


$              (1,958)


$            (10,596)


$              (7,154)

Proceeds from disposal of revenue earning vehicles

2,028


873


6,498


2,818

Revenue earning vehicles capital expenditures, net

(715)


(1,085)


(4,098)


(4,336)

Depreciation and reserves for revenue earning vehicles

298


94


809


600

Financing activity related to vehicles:








Borrowings

1,390


3,861


9,672


14,323

Payments

(685)


(3,144)


(6,639)


(12,607)

Restricted cash changes, vehicle(b)

24


242


(104)


40

Net financing activity related to vehicles

729


959


2,929


1,756

Net fleet growth after financing

$                  312


$                   (32)


$                 (360)


$              (1,980)





(a)

Also includes payments made for the settlement of certain claims related to alleged false arrests in our Americas RAC segment.

(b)

The twelve months ended December 31, 2021 includes a $68 million impact related to restricted cash classified as held for sale as of December 31, 2020.

 

Supplemental Schedule IV


HERTZ GLOBAL HOLDINGS, INC.

NET DEBT CALCULATION

Unaudited


(In millions)

As of December 31, 2022


As of December 31, 2021

Vehicle


Non-Vehicle


Total


Vehicle


Non-Vehicle


Total

Term loans

$                  —


$             1,526


$             1,526


$                  —


$             1,539


$             1,539

Senior notes


1,500


1,500



1,500


1,500

U.S. vehicle financing (HVF III)

9,406



9,406


7,001



7,001

International vehicle financing (Various)

1,466



1,466


860



860

Other debt

76


9


85


93


16


109

Debt issue costs, discounts and premiums