HERTZ REPORTS THIRD QUARTER 2024 RESULTS
"In the third quarter, we continued executing on our efforts to implement our transformation, focusing on our back-to-basics strategy to deliver sustainable, long-term returns for shareholders," said Gil West, Hertz CEO. "Our team's commitment to both our customers and our strategic objectives were evident throughout the summer. This dedication is reflective of our ongoing endeavors to improve operational performance and reposition the Company to achieve against its value proposition. There is still work to be done, but I am confident that the enhancements achieved over the course of this quarter demonstrate that we are on the right track."
ESTERO, Fla., Nov. 12, 2024 /PRNewswire/ -- Hertz Global Holdings, Inc. (NASDAQ:HTZ) ("Hertz", "Hertz Global" or the "Company") today reported results for its third quarter 2024.
OVERVIEW
Revenue of $2.6 billion
GAAP net loss of $1.3 billion, a negative 52% margin, or $4.34 loss per diluted share. Results include a non-cash asset impairment charge of $1.0 billion
Adjusted net loss of $208 million, or $0.68 loss per diluted share
Adjusted Corporate EBITDA of negative $157 million, a negative 6% margin, due mainly to an increase in vehicle depreciation of $436 million
GAAP operating cash flow of $894 million; Adjusted operating cash outflow of $132 million and adjusted free cash outflow of $154 million
Corporate liquidity of $1.6 billion at September 30, 2024
THIRD QUARTER RESULTS
The Company recorded a $1.0 billion non-cash asset impairment charge during the third quarter of 2024. The size of the impairment charge was largely due to the decline in fleet residual values over the last year or so. The timing of the impairment was driven by the cash flow generation of the business over the remaining hold period, which was primarily impacted by our recent accelerated fleet rotation initiative.
Third quarter revenue was $2.6 billion in 2024. Revenue per day was relatively flat year over year supported by execution of the Company's commercial strategy aimed at maximizing RPU. This strategy resulted in volume declines in lower yielding channels as the Company remained disciplined on capacity and favored premium RPD business.
Vehicle depreciation of $937 million increased significantly compared to the prior year period. DPU for the third quarter of 2024 was $537. The Company expects to substantially complete the fleet rotation by the end of 2025, at which time it expects that DPU could normalize to under $300.
Direct vehicle and operating expense decreased primarily due to lower volume, partially offset by insurance and vehicle licensing and tax headwinds. DOE on a per transaction day basis in the third quarter of 2024 increased by 2% year over year and decreased 2% quarter over quarter. Structural operational efficiencies that the Company is executing on are expected to continue to drive ongoing improvements in per day unit costs.
Adjusted Corporate EBITDA was negative $157 million in the quarter compared with positive Adjusted Corporate EBITDA in the prior year quarter. The decrease was due mainly to increased vehicle depreciation.
The Company's operational transformation is ongoing and is expected to be substantially completed by the end of 2025.
SUMMARY RESULTS
Three Months Ended
September 30,
Percent Inc/(Dec)
2024 vs 2023
($ in millions, except earnings per share or where noted)
2024
2023
Hertz Global - Consolidated
Total revenues
$ 2,576
$ 2,703
(5) %
Net income (loss)
$ (1,332)
$ 629
NM
Net income (loss) margin
(52) %
23 %
Adjusted net income (loss)(a)
$ (208)
$ 230
NM
Adjusted diluted earnings (loss) per share(a)
$ (0.68)
$ 0.70
NM
Adjusted Corporate EBITDA(a)
$ (157)
$ 359
NM
Adjusted Corporate EBITDA Margin(a)
(6) %
13 %
Average Vehicles (in whole units)
583,516
590,489
(1) %
Average Rentable Vehicles (in whole units)
550,074
562,267
(2) %
Vehicle Utilization
82 %
83 %
Transaction Days (in thousands)
41,298
43,095
(4) %
Total RPD (in dollars)(b)
$ 62.63
$ 63.04
(1) %
Total RPU Per Month (in whole dollars)(b)
$ 1,567
$ 1,610
(3) %
Depreciation Per Unit Per Month (in whole dollars)(b)
$ 537
$ 284
89 %
Americas RAC Segment
Total revenues
$ 2,062
$ 2,172
(5) %
Adjusted EBITDA
$ (169)
$ 302
NM
Adjusted EBITDA Margin
(8) %
14 %
Average Vehicles (in whole units)
463,467
467,916
(1) %
Average Rentable Vehicles (in whole units)
432,608
442,353
(2) %
Vehicle Utilization
82 %
84 %
Transaction Days (in thousands)
32,693
34,278
(5) %
Total RPD (in dollars)(b)
$ 63.20
$ 63.45
— %
Total RPU Per Month (in whole dollars)(b)
$ 1,592
$ 1,638
(3) %
Depreciation Per Unit Per Month (in whole dollars)(b)
$ 592
$ 295
100 %
International RAC Segment
Total revenues
$ 514
$ 531
(3) %
Adjusted EBITDA
$ 63
$ 109
(42) %
Adjusted EBITDA Margin
12 %
21 %
Average Vehicles (in whole units)
120,049
122,572
(2) %
Average Rentable Vehicles (in whole units)
117,466
119,914
(2) %
Vehicle Utilization
80 %
80 %
Transaction Days (in thousands)
8,605
8,817
(2) %
Total RPD (in dollars)(b)
$ 60.45
$ 61.47
(2) %
Total RPU Per Month (in whole dollars)(b)
$ 1,476
$ 1,507
(2) %
Depreciation Per Unit Per Month (in whole dollars)(b)
$ 324
$ 240
35 %
NM - Not meaningful
(a)
Represents a non-GAAP measure. See the accompanying reconciliations included in Supplemental Schedule II for 2024 and 2023.
(b)
Based on December 31, 2023 foreign exchange rates.
EARNINGS WEBCAST INFORMATION
Hertz Global's live webcast and conference call to discuss its third quarter 2024 results will be held on November 12, 2024, at 9:00 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 Hertz Q3 2024 earnings participant call link, 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
In this earnings release, we include select unaudited financial data of Hertz Global, Supplemental Schedules, which are provided to present segment results, and reconciliations of non-GAAP measures to their most comparable GAAP measures. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout the earnings release and its rationale on the importance and usefulness of non-GAAP measures for 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 are identified by words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts," "guidance" or similar expressions, and include information concerning our liquidity, our results of operations, our business strategies, the business environment and other information. These forward-looking 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. The Company believes these judgments are reasonable, but you should understand that these forward-looking statements are not guarantees of future 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, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 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:
mix of program and non-program vehicles in the Company's fleet, which can lead to increased exposure to residual value risk upon disposition;
the potential for residual values associated with non-program vehicles in the Company's fleet to decline, including suddenly or unexpectedly, or fail to follow historical seasonal patterns;
the Company's ability to purchase adequate supplies of competitively priced vehicles at a reasonable cost in order to efficiently service rental demand, including upon any disruptions in the global supply chain;
the Company's ability to effectively dispose of vehicles, at the times and through the channels, that maximize the Company's returns;
the timing of the Company's fleet rotation, the performance of its long-lived assets and changes in market conditions, which could result in future impairments of its long-lived assets;
the age of the Company's fleet, and its impact on vehicle carrying costs, customer service scores, as well as on the Company's ability to sell vehicles at acceptable prices and times;
whether a manufacturer of the Company's program vehicle fulfills its repurchase obligations;
the frequency or extent of manufacturer safety recalls;
levels of travel demand, particularly business and leisure travel in the U.S. and in global markets;
seasonality and other 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, location and mix of vehicles used in the Company's rental operations accordingly;
the Company's ability to implement its business strategy or strategic transactions, including the Company's ability to implement plans to support an electric vehicle fleet and to play a central role in the modern mobility ecosystem;
the Company's ability to achieve cost savings and normalized depreciation levels, as well as revenue enhancements from its profitability initiatives and other operational programs;
the Company's ability to adequately respond to changes in technology impacting the mobility industry;
significant changes in the competitive environment and the effect of competition in the Company's markets on rental volume and pricing;
the Company's reliance on third-party distribution channels and related prices, commission structures and transaction volumes;
the Company's ability to offer services for a favorable customer experience, and to retain and develop 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 attract and retain effective frontline employees, senior management and other key employees;
the Company's ability to effectively manage its union relations and labor agreement negotiations;
the Company's ability to manage and respond to cybersecurity threats and cyber attacks on the Company's information technology systems, or those of the Company's third-party providers;
the Company's ability, and that of the Company's key third-party partners, to prevent the misuse or theft of information the Company possesses, including as a result of cyber attacks and other security threats;
the Company's ability to maintain, upgrade and consolidate its information technology systems;
the Company's ability to comply with current and future laws and regulations in the U.S. and internationally regarding data protection, data security and privacy risks;
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, including material litigation;
the potential for adverse changes in laws, regulations, policies or other activities of governments, agencies and similar organizations, including those related to environmental matters, optional insurance products or policies, franchising and licensing matters, the ability to pass-through rental car related expenses, or taxes, among others, that affect the Company's operations, the Company's costs or applicable tax rates;
the Company's ability to recover its goodwill and indefinite-lived intangible assets when performing impairment analysis;
the potential for changes in management's best estimates and assessments;
the Company's ability to maintain an effective compliance program;
the availability of earnings and funds from the Company's subsidiaries;
the Company's ability to comply, and the cost and burden of complying, with environmental, social and governance, or ESG, regulations or expectations of stakeholders, and otherwise achieve the Company's corporate responsibility goals;
the availability of additional or continued sources of financing at acceptable rates for the Company's revenue earning vehicles and to refinance the Company's existing indebtedness, and the Company's ability to comply with the covenants in the agreements governing its indebtedness;
the extent to which the Company's consolidated assets secure its outstanding indebtedness;
volatility in the Company's share price, the Company's ownership structure and certain provisions of the Company's charter documents, which could negatively affect the market price of the Company's common stock;
the Company's ability to implement an effective business continuity plan to protect the business in exigent circumstances;
the Company's ability to effectively maintain effective internal control over financial reporting; and
the Company's ability to execute strategic transactions.
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
September 30,
Nine Months Ended
September 30,
(In millions, except per share data)
2024
2023
2024
2023
Revenues
$ 2,576
$ 2,703
$ 7,009
$ 7,187
Expenses:
Direct vehicle and operating
1,470
1,499
4,276
4,067
Depreciation of revenue earning vehicles and lease charges, net
937
501
2,941
1,211
Depreciation and amortization of non-vehicle assets
34
33
107
100
Selling, general and administrative
189
209
594
715
Interest expense, net:
Vehicle
157
162
447
405
Non-vehicle
89
63
252
170
Total interest expense, net
246
225
699
575
Other (income) expense, net
5
5
2
12
(Gain) on sale of non-vehicle capital assets
—
—
—
(162)
Bankruptcy-related litigation reserve
288
—
288
—
Long-Lived Assets impairment
1,048
—
1,048
—
Change in fair value of Public Warrants
(21)
(328)
(272)
(110)
Total expenses
4,196
2,144
9,683
6,408
Income (loss) before income taxes
(1,620)
559
(2,674)
779
Income tax (provision) benefit
288
70
291
185
Net income (loss)
$ (1,332)
$ 629
$ (2,383)
$ 964
Weighted average number of shares outstanding:
Basic
307
311
306
315
Diluted
307
327
306
332
Earnings (loss) per share:
Basic
$ (4.34)
$ 2.02
$ (7.79)
$ 3.06
Diluted
$ (4.34)
$ 0.92
$ (7.79)
$ 2.57
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In millions, except par value and share data)
September 30, 2024
December 31, 2023
ASSETS
Cash and cash equivalents
$ 501
$ 764
Restricted cash and cash equivalents:
Vehicle
116
152
Non-vehicle
288
290
Total restricted cash and cash equivalents
404
442
Total cash and cash equivalents and restricted cash and cash equivalents
905
1,206
Receivables:
Vehicle
406
211
Non-vehicle, net of allowance of $54 and $47, respectively
934
980
Total receivables, net
1,340
1,191
Prepaid expenses and other assets
927
726
Revenue earning vehicles:
Vehicles
13,543
16,806
Less: accumulated depreciation
(308)
(2,155)
Total revenue earning vehicles, net
13,235
14,651
Property and equipment, net
639
671
Operating lease right-of-use assets
2,033
2,253
Intangible assets, net
2,856
2,863
Goodwill
1,044
1,044
Total assets
$ 22,979
$ 24,605
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Vehicle
$ 131
$ 191
Non-vehicle
493
510
Total accounts payable
624
701
Accrued liabilities
1,176
860
Accrued taxes, net
222
157
Debt:
Vehicle
12,303
12,242
Non-vehicle
4,653
3,449
Total debt
16,956
15,691
Public Warrants
181
453
Operating lease liabilities
2,021
2,142
Self-insured liabilities
559
471
Deferred income taxes, net
559
1,038
Total liabilities
22,298
21,513
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstanding
—
—
Common stock, $0.01 par value, 481,324,312 and 479,990,286 shares issued, respectively, and 306,512,268 and 305,178,242 shares outstanding, respectively
5
5
Treasury stock, at cost, 174,812,044 and 174,812,044 common shares, respectively
(3,430)
(3,430)
Additional paid-in capital
6,380
6,405
Retained earnings (Accumulated deficit)
(2,023)
360
Accumulated other comprehensive income (loss)
(251)
(248)
Total stockholders' equity
681
3,092
Total liabilities and stockholders' equity
$ 22,979
$ 24,605
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In millions)
2024
2023
2024
2023
Cash flows from operating activities:
Net income (loss)
$ (1,332)
$ 629
$ (2,383)
$ 964
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net
1,025
606
3,219
1,490
Depreciation and amortization, non-vehicle
34
33
107
100
Amortization of deferred financing costs and debt discount (premium)
21
15
54
44
Stock-based compensation charges
16
22
48
65
Stock-based compensation forfeitures
—
—
(68)
—
Provision for receivables allowance
31
27
94
67
Deferred income taxes, net
(314)
(73)
(379)
(236)
Long-Lived Assets impairment
1,048
—
1,048
—
(Gain) loss on sale of non-vehicle capital assets
1
—
4
(165)
Change in fair value of Public Warrants
(21)
(328)
(272)
(110)
Changes in financial instruments
(16)
1
(8)
107
Other
(1)
4
(5)
9
Changes in assets and liabilities:
Non-vehicle receivables
156
(49)
(45)
(383)
Prepaid expenses and other assets
39
3
(20)
(95)
Operating lease right-of-use assets
91
88
281
253
Non-vehicle accounts payable
(81)
21
(18)
27
Accrued liabilities
239
(65)
310
3
Accrued taxes, net
12
(11)
64
45
Operating lease liabilities
(108)
(97)
(308)
(275)
Self-insured liabilities
54
25
87
—
Net cash provided by (used in) operating activities
894
851
1,810
1,910
Cash flows from investing activities:
Revenue earning vehicles expenditures
(2,231)
(1,769)
(7,858)
(8,312)
Proceeds from disposal of revenue earning vehicles
1,754
1,412
4,656
4,178
Non-vehicle capital asset expenditures
(22)
(28)
(81)
(151)
Proceeds from non-vehicle capital assets disposed of
12
2
19
178
Return of (investment in) equity investments
—
—
(3)
(1)
Net cash provided by (used in) investing activities
(487)
(383)
(3,267)
(4,108)
Cash flows from financing activities:
Proceeds from issuance of vehicle debt
1,576
1,720
3,259
5,741
Repayments of vehicle debt
(2,159)
(1,867)
(3,280)
(3,739)
Proceeds from issuance of non-vehicle debt
585
400
3,470
1,650
Repayments of non-vehicle debt
(499)
(754)
(2,234)
(1,513)
Payment of financing costs
(13)
(14)
(55)
(31)
Share repurchases
—
(50)
—
(272)
Other
(1)
(3)
(4)
(3)
Net cash provided by (used in) financing activities
(511)
(568)
1,156
1,833
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents
15
(10)
—
3
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period
(89)
(110)
(301)
(362)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period
994
1,166
1,206
1,418
Cash and cash equivalents and restricted cash and cash equivalents at end of period
$ 905
$ 1,056
$ 905
$ 1,056
Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
Three Months Ended September 30, 2024
Three Months Ended September 30, 2023
(In millions)
Americas RAC
InternationalRAC
Corporate
Hertz Global
Americas RAC
InternationalRAC
Corporate
Hertz Global
Revenues
$ 2,062
$ 514
$ ,
$ 2,576
$ 2,172
$ 531
$ ,
$ 2,703
Expenses:
Direct vehicle and operating
1,202
271
(3)
1,470
1,241
258
—
1,499
Depreciation of revenue earning vehicles and lease charges, net
822
115
—
937
414
87
—
501
Depreciation and amortization of non-vehicle assets
28
3
3
34
27
3
3
33
Selling, general and administrative
113
57
19
189
114
40
55
209
Interest expense, net:
Vehicle
124
33
—
157
132
30
—
162
Non-vehicle
(1)
(4)
94
