HERTZ REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS

Feb 6, 2024

"Our business benefitted from solid demand and a stable rate environment in the fourth quarter," said Stephen Scherr, Hertz chair and chief executive officer. "Nevertheless, we continued to face headwinds related to our electric vehicle fleet and other costs throughout the quarter. We have taken steps to address those challenges and heading into 2024, we are confident that our planned reduction in EVs and cost base, along with the ongoing execution of our enhanced profitability plan, will enable us to regain our operational cadence and improve our financial performance with increasing effect into 2025."

ESTERO, Fla., Feb. 6, 2024 /PRNewswire/ -- Hertz Global Holdings, Inc. (NASDAQ: HTZ) ("Hertz", "Hertz Global" or the "Company") today reported results for its fourth quarter and full year 2023.

OVERVIEW 

 Q4 2023

  • Revenue of $2.2 billion
  • GAAP net loss of $348 million, a negative 16% margin, or $1.14 loss per diluted share
  • Adjusted net loss of $418 million, or $1.36 loss per diluted share
  • Adjusted Corporate EBITDA of negative $382 million, a negative 17% margin, including recognition of $245 million of net depreciation expense related to the previously announced sale of electric vehicles ("EV")
  • GAAP operating cash flow of $564 million
  • Adjusted operating cash outflow of $366 million and adjusted free cash outflow of $128 million

FY 2023

  • Revenue of $9.4 billion
  • GAAP net income of $616 million, a 7% margin, or $1.39 per diluted share
  • Adjusted net income of $172 million, or $0.53 per diluted share
  • Adjusted Corporate EBITDA of $561 million, a 6% margin, including recognition of $245 million of net depreciation expense related to the previously announced sale of EVs
  • GAAP operating cash flow of $2.5 billion
  • Adjusted operating cash flow of $44 million and adjusted free cash outflow of $321 million
  • Corporate liquidity of $2.0 billion at December 31st, including $764 million in unrestricted cash
  • Company repurchased 19.4 million shares of common stock for $291 million

FOURTH QUARTER RESULTS

Fourth quarter 2023 revenue was $2.2 billion, up 7% from the fourth quarter of 2022 driven by increased volume across leisure, corporate and rideshare customer channels. Strong fourth quarter 2023 RPD of $58.09 reflected continued price discipline and a moderating trend relative to prior quarterly comparisons. The Company prioritized rate over utilization, purposely forgoing lower margin business. 

Depreciation per unit per month of $498 reflected the impact of the write down of EVs held for sale to their fair value and a decline in residual values, as well as a modestly higher than expected fleet.

Fleet interest expense increased to $91 per unit per month in the fourth quarter, up from $55 per unit per month in Q4 of 2022. The increase year over year was largely a reflection of the rising interest rate environment.

Direct operating expense on a per transaction day basis, exclusive of litigation settlements in the fourth quarter of 2022, increased year over year, largely due to elevated net collision and damage expenses.

Adjusted Corporate EBITDA was negative $382 million in the quarter, a negative 17% margin, which includes $245 million of incremental net depreciation expense related to the EVs held for sale.

SUMMARY RESULTS


Three Months Ended

December 31,

Percent
Inc/(Dec)

2023 vs 2022

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

2023


2022


Hertz Global - Consolidated






Total revenues

$         2,184


$         2,035


7 %

Net income (loss)

$           (348)


$            116


NM

Net income (loss) margin

(16) %


6 %



Adjusted net income (loss)(a)

$           (418)


$            173


NM

Adjusted diluted earnings (loss) per share(a)

$          (1.36)


$           0.50


NM

Adjusted Corporate EBITDA(a)

$           (382)


$            309


NM

Adjusted Corporate EBITDA Margin(a)

(17) %


15 %









Average Vehicles (in whole units)

553,545


496,926


11 %

Average Rentable Vehicles (in whole units)

527,267


465,943


13 %

Vehicle Utilization

78 %


79 %



Transaction Days (in thousands)

37,602


33,673


12 %

Total RPD (in dollars)(b)

$         58.09


$         60.82


(4) %

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

$         1,381


$         1,485


(7) %

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

$            498


$            242


NM







Americas RAC Segment






Total revenues

$         1,805


$         1,707


6 %

Adjusted EBITDA

$           (309)


$            318


NM

Adjusted EBITDA Margin

(17) %


19 %









Average Vehicles (in whole units)

446,573


398,860


12 %

Average Rentable Vehicles (in whole units)

422,155


370,723


14 %

Vehicle Utilization

79 %


80 %



Transaction Days (in thousands)

30,589


27,367


12 %

Total RPD (in dollars)(b)

$         59.01


$         62.38


(5) %

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

$         1,425


$         1,535


(7) %

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

$            552


$            278


99 %







International RAC Segment






Total revenues

$            379


$            328


15 %

Adjusted EBITDA

$              44


$              81


(46) %

Adjusted EBITDA Margin

12 %


25 %









Average Vehicles (in whole units)

106,972


98,065


9 %

Average Rentable Vehicles (in whole units)

105,112


95,221


10 %

Vehicle Utilization

73 %


72 %



Transaction Days (in thousands)

7,013


6,305


11 %

Total RPD (in dollars)(b)

$         54.06


$         54.02


— %

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

$         1,202


$         1,280


(6) %

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

$            271


$               97


NM


NM - Not meaningful

(a)

Represents a non-GAAP measure. See the accompanying reconciliations included in Supplemental Schedule II for 2023 and 2022.

(b)

Based on December 31, 2022 foreign exchange rates.

EARNINGS WEBCAST INFORMATION

Hertz Global's live webcast and conference call to discuss its fourth quarter and full year 2023 results will be held on February 6, 2024, 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/BI57914e10506d4929890ab9400e6c2d1e, 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 declines, including sudden or unexpected declines, in the residual values associated with non-program vehicles in the Company's fleet;
  • 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 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 the Company's business strategy or strategic transactions, including the Company's 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;
  • 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 the Company's 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 the Company's 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 possess, including as a result of cyber attacks and other security threats;
  • the Company's ability to maintain, upgrade and consolidate the Company's 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 our 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 the Company's 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 ESG regulations or expectations of stakeholders, and otherwise achieve the Company's ESG 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;
  • the extent to which the Company's consolidated assets secure the Company's outstanding indebtedness;
  • volatility in the Company's share price, the Company's ownership structure and certain provisions of the Company's charter documents could negatively affect the market price of our 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 controls 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

December 31,


Twelve Months Ended
December 31,

(In millions, except per share data)

2023


2022


2023


2022

Revenues

$           2,184


$           2,035


$           9,371


$           8,685

Expenses:








Direct vehicle and operating

1,388


1,274


5,455


4,808

Depreciation of revenue earning vehicles and lease charges, net

828


360


2,039


701

Depreciation and amortization of non-vehicle assets

49


37


149


142

Selling, general and administrative

247


221


962


959

Interest expense, net:








  Vehicle

150


82


555


159

  Non-vehicle

68


46


238


169

 Total interest expense, net

218


128


793


328

Other (income) expense, net


8


12


2

(Gain) on sale of non-vehicle capital assets



(162)


Change in fair value of Public Warrants

(53)


(120)


(163)


(704)

 Total expenses

2,677


1,908


9,085


6,236

Income (loss) before income taxes

(493)


127


286


2,449

Income tax (provision) benefit

145


(11)


330


(390)

Net income (loss)

$            (348)


$              116


$              616


$           2,059

Weighted average number of shares outstanding:








  Basic

306


332


313


379

  Diluted

306


347


326


403

Earnings (loss) per share:








  Basic

$           (1.14)


$             0.35


$             1.97


$             5.43

  Diluted

$           (1.14)


$           (0.01)


$             1.39


$             3.36

 

UNAUDITED CONSOLIDATED BALANCE SHEETS


(In millions, except par value and share data)

December 31,
2023


December 31,
2022

ASSETS




Cash and cash equivalents

$                  764


$                  943

Restricted cash and cash equivalents:




Vehicle

152


180

Non-vehicle

290


295

Total restricted cash and cash equivalents

442


475

Total cash and cash equivalents and restricted cash and cash equivalents

1,206


1,418

Receivables:




Vehicle

211


111

Non-vehicle, net of allowance of $47 and $45, respectively

980


863

Total receivables, net

1,191


974

Prepaid expenses and other assets

726


1,155

Revenue earning vehicles:




Vehicles

16,806


14,281

Less: accumulated depreciation

(2,155)


(1,786)

Total revenue earning vehicles, net

14,651


12,495

Property and equipment, net

671


637

Operating lease right-of-use assets

2,253


1,887

Intangible assets, net

2,863


2,887

Goodwill

1,044


1,044

Total assets

$             24,605


$             22,497

LIABILITIES AND STOCKHOLDERS' EQUITY




Accounts payable:




Vehicle

$                  191


$                    79

Non-vehicle

510


578

Total accounts payable

701


657

Accrued liabilities

860


911

Accrued taxes, net

157


170

Debt:




Vehicle

12,242


10,886

Non-vehicle

3,449


2,977

Total debt

15,691


13,863

Public Warrants

453


617

Operating lease liabilities

2,142


1,802

Self-insured liabilities

471


472

Deferred income taxes, net

1,038


1,360

Total liabilities

21,513


19,852

Commitments and contingencies




Stockholders' equity:




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


 Common stock, $0.01 par value, 479,990,286 and 478,914,062 shares issued, respectively, and

   305,178,242 and 323,483,178 shares outstanding, respectively

5


5

Treasury stock, at cost, 174,812,044 and 155,430,884 common shares, respectively

(3,430)


(3,136)

Additional paid-in capital

6,405


6,326

Retained earnings (Accumulated deficit)

360


(256)

Accumulated other comprehensive income (loss)

(248)


(294)

Total stockholders' equity

3,092


2,645

Total liabilities and stockholders' equity

$             24,605


$             22,497

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended
December 31,


Twelve Months Ended
December 31,

(In millions)

2023


2022


2023


2022

Cash flows from operating activities:








Net income (loss)

$            (348)


$             116


$             616


$          2,059

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








Depreciation and reserves for revenue earning vehicles, net

932


298


2,422


809

Depreciation and amortization, non-vehicle

49


37


149


142

Amortization of deferred financing costs and debt discount (premium)

17


15


61


53

Stock-based compensation charges

22


34


87


130

Provision for receivables allowance

26


15


93


57

Deferred income taxes, net

(144)



(380)


301

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

3



(162)


(5)

Change in fair value of Public Warrants

(53)


(120)


(163)


(704)

Changes in financial instruments

10


9


117


(111)

Other

(4)


8


5


11

Changes in assets and liabilities:








Non-vehicle receivables

167


(30)


(216)


(264)

Prepaid expenses and other assets

56


(46)


(39)


(126)

Operating lease right-of-use assets

112


78


365


280

Non-vehicle accounts payable

(75)


50


(48)


43

Accrued liabilities

(42)


(103)


(39)


80

Accrued taxes, net

(42)


21


3


73

Operating lease liabilities

(116)


(86)


(391)


(309)

Self-insured liabilities

(6)


(19)


(6)


19

Net cash provided by (used in) operating activities

564


277


2,474


2,538

Cash flows from investing activities:








Revenue earning vehicles expenditures

(1,202)


(2,743)


(9,514)


(10,596)

Proceeds from disposal of revenue earning vehicles

1,320


2,028


5,498


6,498

Non-vehicle capital asset expenditures

(37)


(46)


(188)


(150)

Proceeds from non-vehicle capital assets disposed of

3


2


181


12

Collateral returned in exchange for letters of credit




19

Return of (investment in) equity investments


(1)


(1)


(16)

Net cash provided by (used in) investing activities

84


(760)


(4,024)


(4,233)

Cash flows from financing activities:








Proceeds from issuance of vehicle debt

302


1,390


6,043


9,672

Repayments of vehicle debt

(1,098)


(685)


(4,837)


(6,639)

Proceeds from issuance of non-vehicle debt

840



2,490


Repayments of non-vehicle debt

(505)


(6)


(2,018)


(20)

Payment of financing costs

(10)


(6)


(41)


(48)

Proceeds from exercises of Public Warrants




3

Share repurchases

(43)


(309)


(315)


(2,461)

Other

(6)


(16)


(9)


(20)

Net cash provided by (used in) financing activities

(520)


368


1,313


487

Effect of foreign currency exchange rate changes on cash and cash

  equivalents and restricted cash and cash equivalents

22


25


25


(25)

Net increase (decrease) in cash and cash equivalents and restricted cash

  and cash equivalents during the period

150


(90)


(212)


(1,233)

Cash and cash equivalents and restricted cash and cash equivalents at

  beginning of period

1,056


1,508


1,418


2,651

Cash and cash equivalents and restricted cash and cash equivalents at

  end of period

$          1,206


$          1,418


$          1,206


$          1,418

 

Supplemental Schedule I

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Three Months Ended December 31, 2023


Three Months Ended December 31, 2022

(In millions)

Americas
RAC


International
RAC


Corporate


Hertz
Global


Americas
RAC


International
RAC


Corporate


Hertz
Global

Revenues

$        1,805


$            379


$              —


$        2,184


$        1,707


$            328


$              —


$        2,035

Expenses:
















Direct vehicle and operating

1,163


229


(4)


1,388


1,098


174


2


1,274

Depreciation of revenue earning vehicles and lease charges, net

740


88



828


333


27



360

Depreciation and amortization of non-vehicle assets

43


3


3


49


29


3


5


37

Selling, general and administrative

134


105


8


247


81


38


102


221

Interest expense, net:
















  Vehicle

118


32



150


72


10



82

  Non-vehicle

4


(3)


67


68


(36)


(1)


83


46

 Total interest expense, net

122


29


67


218


36


9


83


128

Other (income) expense, net

2


1


(3)



(3)


6


5


8

Change in fair value of Public Warrants



(53)


(53)




(120)


(120)

 Total expenses

2,204


455


18


2,677


1,574


257


77


1,908

Income (loss) before income taxes

$          (399)


$             (76)


$            (18)


(493)


$           133


$              71


$            (77)


127

Income tax (provision) benefit







145








(11)

Net income (loss)







$          (348)








$           116

 

Supplemental Schedule I (continued)

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Twelve Months Ended December 31, 2023


Twelve Months Ended December 31, 2022

(In millions)

Americas
RAC


International
RAC


Corporate


Hertz
Global


Americas
RAC


International
RAC


Corporate


Hertz
Global

Revenues

$       7,722


$           1,649


$            —


$       9,371


$       7,280


$           1,405


$            —


$       8,685

Expenses:
















Direct vehicle and operating

4,582


880


(7)


5,455


4,080


728



4,808

Depreciation of revenue earning vehicles and lease charges, net

1,775


264



2,039


553


148



701

Depreciation and amortization of non-vehicle assets

125


11


13


149


114


13


15


142

Selling, general and administrative

501


227


234


962


351


180


428


959

Interest expense, net:
















  Vehicle

456


99



555


140


19



159

  Non-vehicle

(22)


(10)


270


238


(80)



249


169

 Total interest expense, net

434


89


270


793


60


19


249


328

Other (income) expense, net

2


3


7


12


(6)


3


5


2

(Gain) on sale of non-vehicle capital assets

(162)




(162)





Change in fair value of Public Warrants



(163)


(163)




(704)


(704)

 Total expenses

7,257


1,474


354


9,085


5,152


1,091


(7)


6,236

Income (loss) before income taxes

$          465


$              175


$        (354)


286


$       2,128


$              314


$              7


2,449

Income tax (provision) benefit







330








(390)

Net income (loss)







$          616








$       2,059

 

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)

2023


2022


2023


2022

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








Net income (loss)(a)

$           (348)


$             116


$             616


$          2,059

Adjustments:








  Income tax provision (benefit)

(145)


11


(330)


390

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

17


14


62


53

  Restructuring and restructuring related charges(c)

7


16


17


45

  Acquisition accounting-related depreciation and amortization(d)

1


1


2


3

  Unrealized (gains) losses on financial instruments(e)

10


9


117


(111)

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



(162)


  Change in fair value of Public Warrants

(53)


(120)


(163)


(704)

  Litigation settlements(o)


168



168

  Other items(g)(m)

19


16


43


105

Adjusted pre-tax income (loss)(h)

(492)


231


202


2,008

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

74


(58)


(30)


(502)

Adjusted Net Income (Loss)

$           (418)


$             173


$             172


$          1,506

Weighted-average number of diluted shares outstanding

306


347


326


403

Adjusted Diluted Earnings (Loss) Per Share(j)

$          (1.36)


$            0.50


$            0.53


$            3.74

Adjusted Corporate EBITDA:








Net income (loss)

$           (348)


$             116


$             616


$          2,059

Adjustments:








  Income tax provision (benefit)

(145)


11


(330)


390

  Non-vehicle depreciation and amortization(k)

49


37


149


142

  Non-vehicle debt interest, net of interest income 

68


46


238


169

  Vehicle debt-related charges(b)(l)

11


10


42


35

  Restructuring and restructuring related charges(c)

7


16


17


45

  Unrealized (gains) losses on financial instruments(e)

10


9


117


(111)

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



(162)


  Change in fair value of Public Warrants

(53)


(120)


(163)


(704)

  Litigation settlements(o)


168



168

  Other items(g)(n)

19


16


37


112

Adjusted Corporate EBITDA

$           (382)


$             309


$             561


$          2,305

Adjusted Corporate EBITDA margin

(17) %


15 %


6 %


27 %



(a)

Net income (loss) margin for the three months ended December 31, 2023 and 2022 was (16)% and 6%, respectively, and for the twelve months ended December 31, 2023 and 2022 was 7% and 24%, respectively.

(b)

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

(c)

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. Charges incurred in International RAC, Americas RAC and Corporate for the twelve months ended December 31, 2023 were $9 million, $5 million and $3 million, respectively. For 2022, charges incurred related primarily to International RAC.

(d)

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

(e)

Represents unrealized gains (losses) on derivative financial instruments, primarily associated with Americas RAC. In the twelve months ended December 31, 2023, also includes the realization of $88 million of previously unrealized gains resulting from the unwind of certain interest rate caps in Americas RAC during the first quarter of 2023.

(f)

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

(g)

Represents miscellaneous items. For 2023, primarily includes certain IT-related costs primarily in Corporate, charges for certain storm-related vehicle damages in Americas RAC and certain professional fees and charges related to the settlement of bankruptcy claims, partially offset by a loss recovery settlement in Americas RAC. For 2022, primarily includes bankruptcy claims, certain professional fees and charges related to the settlement of bankruptcy claims.

(h)

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)

2023


2022


2023


2022

Direct vehicle and operating

$                     (6)


$                 (178)


$                     (6)


$                 (232)

Depreciation of revenue earning vehicles and lease charges, net



5


Selling, general and administrative

(13)


(17)


(38)


(79)

Interest expense, net:








Vehicle

(24)


(16)


(163)


76

Non-vehicle

(9)


(8)


(34)


(28)

 Total interest expense, net

(33)


(24)


(197)


48

Other income (expense), net

(2)


(5)


(5)


Gain on sale non-vehicle capital assets



162



Change in fair value of Public Warrants

53


120


163


704

Total adjustments

$                      (1)


$                 (104)


$                    84


$                  441



(i)

Derived utilizing a combined statutory rate of 15% and 25% for the periods ended December 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 purchases of electric vehicles.

(j)

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.

(k)

Non-vehicle depreciation and amortization expense for Americas RAC, International RAC and Corporate for the three months ended December 31, 2023 was $43 million, $3 million and $3 million, respectively. For the three months ended December 31, 2022 was $29 million, $5 million and $3 million for Americas RAC, Corporate and International RAC, respectively. Non-vehicle depreciation and amortization for Americas RAC, International RAC and Corporate for the twelve months ended December 31, 2023 was $125 million, $13 million and $11 million, respectively. For the twelve months ended December 31, 2022 was $114 million, $15 million and $13 million for Americas RAC, Corporate and International RAC, respectively.

(l)

Vehicle debt-related charges for Americas RAC and International RAC for the three months ended December 31, 2023 were $10 million and $2 million, respectively. For the three months ended December 31, 2022 vehicle debt-related charges for Americas RAC and International RAC were $8 million and $2 million, respectively. Vehicle debt-related charges for Americas RAC and International RAC for the twelve months ended December 31, 2023 were $36 million and $7 million, respectively. For the twelve months ended December 31, 2022 vehicle debt-related charges were $25 million and $10 million for Americas RAC and International RAC, respectively.

(m)

Also includes letter of credit fees recorded primarily in Corporate.

(n)

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

(o)

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

 

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)

2023


2022


2023


2022

ADJUSTED OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW:



Net cash provided by (used in) operating activities

$                  564


$                  277


$               2,474


$               2,538

Depreciation and reserves for revenue earning vehicles, net

(932)


(298)


(2,422)


(809)

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

2


177


(8)


261

Adjusted operating cash flow

(366)


156


44


1,990

Non-vehicle capital asset proceeds (expenditures), net

(34)


(44)


(7)


(138)

Adjusted operating cash flow before vehicle investment

(400)


112


37


1,852

Net fleet growth after financing

272


312


(358)


(360)

Adjusted free cash flow

$                 (128)


$                  424


$                 (321)


$               1,492









CALCULATION OF NET FLEET GROWTH AFTER FINANCING:



Revenue earning vehicles expenditures

$              (1,202)


$              (2,743)


$              (9,514)


$            (10,596)

Proceeds from disposal of revenue earning vehicles

1,320


2,028


5,498


6,498

Revenue earning vehicles capital expenditures, net

118


(715)


(4,016)


(4,098)

Depreciation and reserves for revenue earning vehicles, net

932


298


2,422


809

Financing activity related to vehicles:








Borrowings

302


1,390


6,043


9,672

Payments

(1,098)


(685)


(4,837)


(6,639)

Restricted cash changes, vehicle

18


24


30


(104)

Net financing activity related to vehicles

(778)


729


1,236


2,929

Net fleet growth after financing

$                  272


$                  312


$                 (358)


$                 (360)



(a)

In 2022, also includes payments made for the settlement of certain claims related to alleged false arrests in our Americas RAC segment.

 

Supplemental Schedule IV

HERTZ GLOBAL HOLDINGS, INC.

NET DEBT AND NET CORPORATE LEVERAGE CALCULATIONS

Unaudited


(In millions)

As of December 31, 2023


As of December 31, 2022

Vehicle


Non-Vehicle


Total


Vehicle


Non-Vehicle


Total

Term loans

$                  —


$             2,013


$             2,013


$                  —


$             1,526


$             1,526

Senior notes


1,500


1,500



1,500


1,500

U.S. vehicle financing (HVF III)

10,203



10,203


9,406



9,406

International vehicle financing (Various)

2,001



2,001


1,417



1,417

Other debt

110


2


112


125


9


134

Debt issue costs, discounts and premiums

(72)


(66)


(138)


(62)


(58)


(120)

Debt as reported in the balance sheet

12,242


3,449


15,691


10,886


2,977


13,863

Add:












Debt issue costs, discounts and premiums

72


66


138


62


58


120

Less:












Cash and cash equivalents


764


764



943


943

Restricted cash

152



152


180



180

Restricted cash and restricted cash equivalents

  associated with Term C Loan


245


245



245


245

Net Debt

$           12,162


$             2,506


$           14,668


$           10,768


$             1,847


$           12,615













LTM Adjusted Corporate EBITDA



561






2,305















Net Corporate Leverage



4.5x






0.8x



 

Supplemental Schedule V

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited


Global RAC



Three Months Ended

December 31,


Percent
Inc/(Dec)


Twelve Months Ended
December 31,


Percent
Inc/(Dec)

($ in millions, except where noted)

2023


2022



2023


2022


Total RPD












Revenues

$     2,184


$     2,035




$     9,371


$     8,685



Foreign currency adjustment(a)


13




(24)


(8)



Total Revenues - adjusted for foreign currency

$     2,184


$     2,048




$     9,347


$     8,677



Transaction Days (in thousands)

37,602


33,673




154,189


136,860



Total RPD (in dollars)

$     58.09


$     60.82


(4) %


$     60.62


$     63.40


(4) %













Total Revenue Per Unit Per Month












Total Revenues - adjusted for foreign currency

$     2,184


$     2,076




$     9,347


$     8,677



Average Rentable Vehicles (in whole units)

527,267


465,943




526,659


478,798



Total revenue per unit (in whole dollars)

$     4,143


$     4,456




$   17,748


$   18,123



Number of months in period (in whole units)

3


3




12


12



Total RPU Per Month (in whole dollars)

$     1,381


$     1,485


(7) %


$     1,479


$     1,510


(2) %













Vehicle Utilization












Transaction Days (in thousands)

37,602


33,673




154,189


136,860



Average Rentable Vehicles (in whole units)

527,267


465,943




526,659


478,798



Number of days in period (in whole units)

92


92




365


365



Available Car Days (in thousands)

48,511


42,870




192,334


174,826



Vehicle Utilization(b)

78 %


79 %




80 %


78 %















Depreciation Per Unit Per Month












Depreciation of revenue earning vehicles and lease charges, net

$        828


$        360




$     2,039


$        701



Foreign currency adjustment(a) 

(1)


1




(4)


1



Adjusted depreciation of revenue earning vehicles and lease charges

$        827


$        361