• Revenue: $2.6 billion for the third quarter.
• Adjusted Corporate EBITDA: Loss of $157 million.
• Transaction Days: Down 4% year-over-year.
• Revenue Per Day (RPD): Relatively flat compared to Q3 of last year.
• Asset Impairment Charge: Over $1 billion, primarily affecting US and European fleets.
• Depreciation Per Unit (DPU): $537 per unit per month in Q3; expected to be $350 to $375 in Q4.
• Liquidity: Over $1.6 billion, including over $500 million of unrestricted cash and over $1.1 billion of available capacity under the revolving credit facility.
• Debt Maturities: $1 billion of the $2 billion of maturities retired by the end of Q3.

• Warning! GuruFocus has detected 7 Warning Signs with HTZ.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hertz Global Holdings Inc (NASDAQ:HTZ) has solidified a best-in-class senior management team and developed a clear roadmap with actionable plans to return the company to operational excellence.
• The company has implemented a proactive fleet management strategy, aiming to achieve a depreciation per unit (DPU) below $300, supported by favorable acquisition conditions.
• Hertz Global Holdings Inc (NASDAQ:HTZ) is leveraging new digital platforms to optimize fleet efficiency, improve depreciation costs, and enhance customer experience.
• The company is focused on driving demand through a customer-first approach, aiming to improve revenue per day (RPD) and utilization of its fleet.
• Hertz Global Holdings Inc (NASDAQ:HTZ) has a strong liquidity position with over $1.6 billion, providing a cushion for unexpected market volatility.

Negative Points

• Hertz Global Holdings Inc (NASDAQ:HTZ) reported an adjusted corporate EBITDA loss of $157 million for the third quarter.
• The company recorded a non-cash asset impairment charge of over $1 billion, primarily due to a decline in fleet residual values.
• Transaction days were down 4% year-over-year, and revenue per day (RPD) was relatively flat, indicating challenges in maintaining growth.
• The company faces headwinds in areas like insurance and revenue-related expenses, impacting overall cost efficiency.
• Hertz Global Holdings Inc (NASDAQ:HTZ) is still in the process of addressing inefficiencies, with a long journey ahead to achieve sustainable cost improvements.

Q & A Highlights

Q: Can you expand on the expectation that DPU can get below $300 and your level of confidence in achieving this? A: Gil West, CEO: We see a path to sustainable sub-$300 DPU by returning to historic levels. Market conditions have normalized, and our 2025 fleet buy is well advanced. We've fundamentally changed how we manage the fleet, with an end-to-end fleet management team focusing on buying right, optimizing hold periods, and maximizing resale value. Our partnership with Palantir provides a proprietary tool for better fleet management, supporting our confidence in achieving this target.

Q: How do you balance cost-cutting with the scalability of operations, especially regarding fleet size? A: Gil West, CEO: Scale matters, but we aim to operate the fleet inside the demand curve. We're focused on finding the right balance between pricing and transaction days. Sandeep Dube, Chief Commercial Officer, adds that the focus is on driving demand in premium segments and being comfortable letting go of lower-margin, brand-agnostic demand.

Q: Can you discuss the rate trends in October and November and expectations for next year? A: Sandeep Dube, Chief Commercial Officer: Demand remains strong, supported by airline booking data. While there's slightly higher supply at airports affecting rates, overall supply and demand are balanced. Rates are still up significantly compared to 2019, and we feel comfortable with the trends.

Q: What are the key considerations related to the impairment announced? A: Scott Haralson, CFO: The impairment was driven by the gap between book values and current market values of vehicles, affecting about 70% of our fleet. It's a non-cash charge that doesn't affect financing covenants. The impairment doesn't fully align book to market value, so some excess depreciation will continue to be pushed through the P&L.

Q: How does the fleet refresh impact your business model, and what is the progress on this front? A: Gil West, CEO: We're over 40% through the fleet refresh, focusing on optimizing the fleet mix to match customer demand. Scott Haralson, CFO, adds that the fleet rotation is now viewed in terms of model year rather than depreciation levels, with a focus on strategic purchases that align with our business goals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.