HERTZ REPORTS THIRD QUARTER 2023 RESULTS: REVENUE OF $2.7 BILLION, NET INCOME OF $629 MILLION AND ADJUSTED CORPORATE EBITDA OF $359 MILLION

Oct 26, 2023

"Hertz produced record revenue in the quarter, reflecting ongoing strength in demand and stability in pricing. Our premium Hertz brand performed well, and we saw further growth in our rideshare business and progress in reinvigorating our value brands," said Stephen Scherr, Chair and CEO of Hertz. "We nonetheless remain focused on the cost side to improve margins," Scherr continued. "Our ongoing investments will give rise to better operating fundamentals, and with the growth opportunities ahead of us, I am confident in the trajectory of our business and the forward for Hertz. Across these efforts, we remain committed to delivering excellent service to our customers while shaping the future of mobility."

ESTERO, Fla., Oct. 26, 2023 /PRNewswire/ -- Hertz Global Holdings, Inc. (NASDAQ: HTZ) ("Hertz", "Hertz Global" or the "Company") today reported results for its third quarter 2023.

HIGHLIGHTS 

  • Total revenues of $2.7 billion
  • GAAP net income of $629 million, a 23% margin, or $0.92 per diluted share
  • Adjusted Net Income of $230 million, or $0.70 per adjusted diluted share
  • Adjusted Corporate EBITDA of $359 million, a 13% margin
  • Operating cash flow of $851 million, adjusted operating cash flow of $215 million
  • Adjusted free cash flow of $313 million
  • Corporate liquidity of $1.7 billion at September 30, including $594 million in unrestricted cash
  • Company utilized $50 million to repurchase 3.0 million common shares during the quarter

THIRD QUARTER RESULTS

Third quarter revenue of $2.7 billion was a quarterly record for the Company and was characterized by continued strength in demand, particularly in leisure and rideshare channels, coupled with pricing that was well above pre-pandemic levels.  Volume increased 16% year over year while average fleet was up 11%, reflecting continued fleet management optimization. Monthly revenue per unit in the quarter of $1,596 benefited from utilization of 83%, an increase of 320 basis points relative to the prior year quarter.

Monthly fleet depreciation per unit was $282, reflecting a year over year increase of 52%, attributable to a reduction in net vehicle disposition gains which were at elevated levels in 2022.

Direct operating expense (DOE) increased 17% compared to the third quarter of 2022, largely in line with the increase in volume. On a per transaction day basis, meaningful benefits from the company's productivity initiatives in areas such as personnel, maintenance, refueling and facilities, were offset in part by higher year-over-year gross collision and damage. SG&A expense was down 15% year over year, driven by a reduction in incentive compensation compared to the third quarter of 2022, as well as benefits from the company's ongoing productivity initiatives. 

Adjusted Corporate EBITDA was $359 million in the quarter, reflecting a margin of 13%.

Adjusted free cash flow of $313 million reflected strength in demand and a reduction in fleet levels from the summer peak.

SUMMARY RESULTS


Three Months Ended

September 30,


Percent Inc/

(Dec)

2023 vs 2022

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

2023


2022


Hertz Global - Consolidated






Total revenues

$          2,703


$          2,496


8 %

Net income (loss) 

$             629


$             577


9 %

Net income (loss) margin

23 %


23 %



Adjusted net income (loss)(a)

$             230


$             410


(44) %

Adjusted diluted earnings (loss) per share(a)

$            0.70


$            1.08


(35) %

Adjusted Corporate EBITDA(a)

$             359


$             618


(42) %

Adjusted Corporate EBITDA Margin(a)

13 %


25 %









Average Vehicles (in whole units)

590,489


532,740


11 %

Average Rentable Vehicles (in whole units)

562,267


503,508


12 %

Vehicle Utilization

83 %


80 %



Transaction Days (in thousands)

43,095


37,123


16 %

Total RPD (in dollars)(b)

$          62.46


$          67.48


(7) %

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

$          1,596


$          1,658


(4) %

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

$             282


$             185


52 %







Americas RAC Segment






Total revenues

$          2,172


$          2,042


6 %

Adjusted EBITDA

$             302


$             564


(46) %

Adjusted EBITDA Margin

14 %


28 %









Average Vehicles (in whole units)

467,916


425,596


10 %

Average Rentable Vehicles (in whole units)

442,353


397,488


11 %

Vehicle Utilization

84 %


81 %



Transaction Days (in thousands)

34,278


29,653


16 %

Total RPD (in dollars)(b)

$          63.33


$          68.67


(8) %

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

$          1,636


$          1,708


(4) %

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

$             295


$             198


49 %







International RAC Segment






Total revenues

$             531


$             454


17 %

Adjusted EBITDA

$             109


$             150


(27) %

Adjusted EBITDA Margin

21 %


33 %









Average Vehicles (in whole units)

122,572


107,144


14 %

Average Rentable Vehicles (in whole units)

119,914


106,020


13 %

Vehicle Utilization

80 %


77 %



Transaction Days (in thousands)

8,817


7,470


18 %

Total RPD (in dollars)(b)

$          59.09


$          62.73


(6) %

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

$          1,448


$          1,473


(2) %

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

$             229


$             135


69 %



(a)

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

(b)

Based on  December 31, 2022 foreign exchange rates.

 

EARNINGS WEBCAST INFORMATION

Hertz Global's live webcast and conference call to discuss its third quarter 2023 results will be held on October 26, 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/BIeff7f2e4cb054eaa937d5ae0c379782c, 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 measures. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout the earnings release and its view of the usefulness of non-GAAP measures to investors and management.

ABOUT HERTZ

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS   

Certain statements contained or incorporated by reference in this release, and in related comments by the Company's management, include "forward-looking statements." Forward-looking statements include information concerning the Company's liquidity and its possible or assumed future results of operations, including descriptions of its business strategies. These statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts," "guidance" or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate in these circumstances. The Company believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and that the Company's actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on Form 10-K, 10-Q and 8-K filed or furnished to the SEC.

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

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

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

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date of this release, and, except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

UNAUDITED FINANCIAL INFORMATION


UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended

September 30,


Nine Months Ended

September 30,

(In millions, except per share data)

2023


2022


2023


2022

Revenues

$              2,703


$             2,496


$              7,187


$              6,650

Expenses:








Direct vehicle and operating

1,499


1,282


4,067


3,534

Depreciation of revenue earning vehicles and lease charges, net

501


294


1,211


341

Depreciation and amortization of non-vehicle assets

33


36


100


105

Selling, general and administrative

209


246


715


738

Interest expense, net:








Vehicle

162


27


405


77

Non-vehicle

63


43


170


123

Total interest expense, net

225


70


575


200

Other (income) expense, net

5


(6)


12


(6)

(Gain) on sale of non-vehicle capital assets



(162)


Change in fair value of Public Warrants

(328)


(73)


(110)


(584)

Total expenses

2,144


1,849


6,408


4,328

Income (loss) before income taxes

559


647


779


2,322

Income tax (provision) benefit

70


(70)


185


(379)

Net income (loss)

$                 629


$                577


$                964


$              1,943









Weighted average number of shares outstanding:








Basic

311


355


315


395

Diluted

327


379


332


421

Earnings (loss) per share:








Basic

$                2.02


$               1.62


$                3.06


$                4.92

Diluted

$                0.92


$               1.33


$                2.57


$                3.22

 

UNAUDITED CONSOLIDATED BALANCE SHEETS


(In millions, except par value and share data)

September 30, 2023


December 31, 2022

ASSETS




Cash and cash equivalents

$                  594


$                  943

Restricted cash and cash equivalents:




Vehicle

168


180

Non-vehicle

294


295

Total restricted cash and cash equivalents

462


475

Total cash and cash equivalents and restricted cash and cash equivalents

1,056


1,418

Receivables:




Vehicle

267


111

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

1,140


863

Total receivables, net

1,407


974

Prepaid expenses and other assets

835


1,155

Revenue earning vehicles:




Vehicles

17,576


14,281

Less: accumulated depreciation

(2,117)


(1,786)

Total revenue earning vehicles, net

15,459


12,495

Property and equipment, net

672


637

Operating lease right-of-use assets

2,200


1,887

Intangible assets, net

2,881


2,887

Goodwill

1,044


1,044

Total assets

$             25,554


$             22,497

LIABILITIES AND STOCKHOLDERS' EQUITY




Accounts payable:




Vehicle

$                  216


$                    79

Non-vehicle

574


578

Total accounts payable

790


657

Accrued liabilities

896


911

Accrued taxes, net

215


170

Debt:




Vehicle

12,894


10,886

Non-vehicle

3,119


2,977

Total debt

16,013


13,863

Public Warrants

506


617

Operating lease liabilities

2,094


1,802

Self-insured liabilities

472


472

Deferred income taxes, net

1,178


1,360

Total liabilities

22,164


19,852

Commitments and contingencies




Stockholders' equity:




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


Common stock, $0.01 par value, 479,253,617 and 478,914,062 shares issued, respectively, and

308,798,093 and 323,483,178 shares outstanding, respectively

5


5

Treasury stock, at cost, 170,455,524 and 155,430,884 common shares, respectively

(3,389)


(3,136)

Additional paid-in capital

6,389


6,326

Retained earnings (Accumulated deficit)

708


(256)

Accumulated other comprehensive income (loss)

(323)


(294)

Total stockholders' equity

3,390


2,645

Total liabilities and stockholders' equity

$             25,554


$             22,497

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended

September 30,


Nine Months Ended

September 30,

(In millions)

2023


2022


2023


2022

Cash flows from operating activities:








Net income (loss)

$              629


$              577


$              964


$           1,943

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

operating activities:








Depreciation and reserves for revenue earning vehicles, net

606


366


1,490


511

Depreciation and amortization, non-vehicle

33


36


100


105

Amortization of deferred financing costs and debt discount (premium)

15


13


44


38

Stock-based compensation charges

22


32


65


96

Provision for receivables allowance

27


19


67


42

Deferred income taxes, net

(73)


52


(236)


301

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


(2)


(165)


(5)

Change in fair value of Public Warrants

(328)


(73)


(110)


(584)

Changes in financial instruments

1


(55)


107


(120)

Other

4


3


9


3

Changes in assets and liabilities:








Non-vehicle receivables

(49)


(34)


(383)


(234)

Prepaid expenses and other assets

3


7


(95)


(80)

Operating lease right-of-use assets

88


123


253


202

Non-vehicle accounts payable

21


25


27


(7)

Accrued liabilities

(65)


(50)


3


183

Accrued taxes, net

(11)



45


52

Operating lease liabilities

(97)


(130)


(275)


(223)

Self-insured liabilities

25


23



38

Net cash provided by (used in) operating activities

851


932


1,910


2,261

Cash flows from investing activities:








Revenue earning vehicles expenditures

(1,769)


(1,764)


(8,312)


(7,853)

Proceeds from disposal of revenue earning vehicles

1,412


1,583


4,178


4,470

Non-vehicle capital asset expenditures

(28)


(45)


(151)


(104)

Proceeds from non-vehicle capital assets disposed of

2


4


178


10

Collateral returned in exchange for letters of credit




19

Return of (investment in) equity investments



(1)


(15)

Net cash provided by (used in) investing activities

(383)


(222)


(4,108)


(3,473)

Cash flows from financing activities:








Proceeds from issuance of vehicle debt

1,720


903


5,741


8,282

Repayments of vehicle debt

(1,867)


(1,130)


(3,739)


(5,954)

Proceeds from issuance of non-vehicle debt

400



1,650


Repayments of non-vehicle debt

(754)


(4)


(1,513)


(14)

Payment of financing costs

(14)


(4)


(31)


(42)

Proceeds from exercises of Public Warrants




3

Share repurchases

(50)


(505)


(272)


(2,152)

Other

(3)



(3)


(4)

Net cash provided by (used in) financing activities

(568)


(740)


1,833


119

Effect of foreign currency exchange rate changes on cash and cash

   equivalents and restricted cash and cash equivalents

(10)


(25)


3


(50)

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

   cash equivalents during the period

(110)


(55)


(362)


(1,143)

Cash and cash equivalents and restricted cash and cash equivalents at

   beginning of period

1,166


1,563


1,418


2,651

Cash and cash equivalents and restricted cash and cash equivalents at end

   of period

$           1,056


$           1,508


$           1,056


$           1,508

 

Supplemental Schedule I

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Three Months Ended September 30, 2023


Three Months Ended September 30, 2022

(In millions)

Americas

RAC


International
RAC


Corporate


Hertz

Global


Americas

RAC


International
RAC


Corporate


Hertz

Global

Revenues

$       2,172


$             531


$            —


$       2,703


$       2,042


$             454


$            —


$       2,496

Expenses:
















Direct vehicle and operating

1,241


258



1,499


1,077


206


(1)


1,282

Depreciation of revenue earning vehicles and lease charges, net

414


87



501


252


42



294

Depreciation and amortization of non-vehicle assets

27


3


3


33


29


3


4


36

Selling, general and administrative

114


40


55


209


85


53


108


246

Interest expense, net:
















Vehicle

132


30



162


31


(4)



27

Non-vehicle

(4)



67


63


(23)


1


65


43

Total interest expense, net

128


30


67


225


8


(3)


65


70

Other (income) expense, net

1



4


5


(1)


4


(9)


(6)

Change in fair value of Public Warrants



(328)


(328)




(73)


(73)

Total expenses

1,925


418


(199)


2,144


1,450


305


94


1,849

Income (loss) before income taxes

$          247


$             113


$          199


559


$         592


$             149


$          (94)


647

Income tax (provision) benefit







70








(70)

Net income (loss)







$          629








$          577

 

Supplemental Schedule I (continued)

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Nine Months Ended September 30, 2023


Nine Months Ended September 30, 2022

(In millions)

Americas

RAC


International
RAC


Corporate


Hertz

Global


Americas

RAC


International
RAC


Corporate


Hertz

Global

Revenues

$       5,917


$          1,270


$            —


$       7,187


$       5,573


$          1,077


$            —


$       6,650

Expenses:
















Direct vehicle and operating

3,419


651


(3)


4,067


2,982


554


(2)


3,534

Depreciation of revenue earning vehicles and lease charges, net

1,035


176



1,211


220


121



341

Depreciation and amortization of non-vehicle assets

82


8


10


100


85


10


10


105

Selling, general and administrative

367


122


226


715


270


142


326


738

Interest expense, net:
















Vehicle

338


67



405


68


9



77

Non-vehicle

(26)


(7)


203


170


(44)


1


166


123

Total interest expense, net

312


60


203


575


24


10


166


200

Other (income) expense, net


2


10


12


(3)


(3)



(6)

(Gain) on sale of non-vehicle capital assets

(162)




(162)





Change in fair value of Public Warrants



(110)


(110)




(584)


(584)

Total expenses

5,053


1,019


336


6,408


3,578


834


(84)


4,328

Income (loss) before income taxes

$          864


$             251


$        (336)


779


$       1,995


$             243


$            84


2,322

Income tax (provision) benefit







185








(379)

Net income (loss)







$          964








$       1,943

 

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

September 30,


Nine Months Ended

September 30,

(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)

$                629


$                577


$                964


$             1,943

Adjustments:








Income tax provision (benefit)

(70)


70


(185)


379

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

16


13


45


39

Restructuring and restructuring related charges(c)

2


8


10


29

Acquisition accounting-related depreciation and amortization(d)


1


1


2

Unrealized (gains) losses on financial instruments(e)

1


(55)


107


(120)

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



(162)


Change in fair value of Public Warrants

(328)


(73)


(110)


(584)

Other items(g)(m)

20


6


24


89

Adjusted pre-tax income (loss)(h)

270


547


694


1,777

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

(40)


(137)


(104)


(444)

Adjusted Net Income (Loss)

$                230


$                410


$                590


$             1,333

Weighted-average number of diluted shares outstanding

327


379


332


421

Adjusted Diluted Earnings (Loss) Per Share(j)

$               0.70


$               1.08


$               1.78


$               3.16

Adjusted Corporate EBITDA:








Net income (loss)

$                629


$                577


$                964


$             1,943

Adjustments:








Income tax provision (benefit)

(70)


70


(185)


379

Non-vehicle depreciation and amortization(k)

33


36


100


105

Non-vehicle debt interest, net of interest income 

63


43


170


123

Vehicle debt-related charges(b)(l)

11


9


31


25

Restructuring and restructuring related charges(c)

2


8


10


29

Unrealized (gains) losses on financial instruments(e)

1


(55)


107


(120)

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



(162)


Change in fair value of Public Warrants

(328)


(73)


(110)


(584)

Other items(g)(n)

18


3


18


96

Adjusted Corporate EBITDA

$                359


$                618


$                943


$             1,996

Adjusted Corporate EBITDA margin

13 %


25 %


13 %


30 %



(a)

Net income (loss) margin for the three months ended September 30, 2023 and 2022 was 23% and for the nine months ended September 30, 2023 and 2022 was 13% and 29%, 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, Corporate and Americas RAC for the nine months ended September 30, 2023 were $5 million, $3 million and $2 million. 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 nine months ended September 30, 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

September 30,


Nine Months Ended

September 30,

(In millions)

2023


2022


2023


2022

Direct vehicle and operating

$                   (17)


$                      1


$                     —


$                   (49)

Depreciation of revenue earning vehicles and

   lease charges, net

3



5


Selling, general and administrative

2


(13)


(25)


(63)

Interest expense, net:








Vehicle

(19)


42


(141)


93

Non-vehicle

(8)


(5)


(25)


(21)

Total interest expense, net

(27)


37


(166)


72

Other income (expense), net


2


(1)


1

Gain on sale non-vehicle capital assets



162


Change in fair value of Public Warrants

328


73


110


584

Total adjustments

$                  289


$                  100


$                    85


$                  545



(i)

Derived utilizing a combined statutory rate of 15% for the three and nine months ended September 30, 2023 and 25% for the three and nine months ended September 30, 2022 applied to the respective Adjusted Pre-tax Income (Loss). The decrease in rate is primarily resulting from EV-related tax credits anticipated to be used to decrease the Company's U.S. federal tax provision throughout 2023 based on the Company's expected purchases of electric vehicles.

(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 September 30, 2023 was $27 million, $3 million and $3 million, respectively. For the three months ended September 30, 2022 was $29 million, $3 million, and $4 million for Americas RAC, International RAC and Corporate, respectively. Non-vehicle depreciation and amortization expense for Americas RAC, International RAC and Corporate for the nine months ended September 30, 2023 was $82 million, $8 million and $10 million, respectively. For the nine months ended September 30, 2022 was $85 million, $10 million and $10 million for Americas RAC, International RAC and Corporate, respectively

(l)

Vehicle debt-related charges for Americas RAC and International RAC for the three months ended September 30, 2023 were $9 million and $2 million, respectively, and were $8 million and $1 million, respectively, for the three months ended September 30, 2022. Vehicle debt-related charges for Americas RAC and International RAC for the nine months ended September 30, 2023 were $26 million and $5 million, respectively, and were $17 million and $8 million, respectively, for the nine months ended September 30, 2022.

(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.

 

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

September 30,


Nine Months Ended

September 30,

(In millions)

2023


2022


2023


2022

ADJUSTED OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW:



Net cash provided by (used in) operating activities

$             851


$             932


$         1,910


$          2,261

Depreciation and reserves for revenue earning vehicles, net

(606)


(366)


(1,490)


(511)

Bankruptcy related payments (post emergence) and other payments

(30)


6


(10)


84

Adjusted operating cash flow

215


572


410


1,834

Non-vehicle capital asset proceeds (expenditures), net

(26)


(41)


27


(94)

Adjusted operating cash flow before vehicle investment

189


531


437


1,740

Net fleet growth after financing

124


(26)


(630)


(672)

Adjusted free cash flow

$             313


$             505


$           (193)


$          1,068









CALCULATION OF NET FLEET GROWTH AFTER FINANCING:



Revenue earning vehicles expenditures

$         (1,769)


$         (1,764)


$        (8,312)


$         (7,853)

Proceeds from disposal of revenue earning vehicles

1,412


1,583


4,178


4,470

Revenue earning vehicles capital expenditures, net

(357)


(181)


(4,134)


(3,383)

Depreciation and reserves for revenue earning vehicles, net

606


366


1,490


511

Financing activity related to vehicles:








Borrowings

1,720


903


5,741


8,282

Payments

(1,867)


(1,130)


(3,739)


(5,954)

Restricted cash changes, vehicle

22


16


12


(128)

Net financing activity related to vehicles

(125)


(211)


2,014


2,200

Net fleet growth after financing

$             124


$             (26)


$           (630)


$           (672)

 

Supplemental Schedule IV

HERTZ GLOBAL HOLDINGS, INC.

NET DEBT CALCULATION

Unaudited



As of September 30, 2023


As of December 31, 2022

(In millions)

Vehicle


Non-Vehicle


Total


Vehicle


Non-Vehicle


Total

Term loans

$                    —


$               1,516


$               1,516


$                    —


$               1,526


$               1,526

First Lien RCF


150


150




Senior notes


1,500


1,500



1,500


1,500

U.S. vehicle financing (HVF III)

10,785



10,785


9,406



9,406

International vehicle financing (Various)

2,105



2,105


1,466



1,466

Other debt

83


4


87


76


9


85

Debt issue costs, discounts and premiums

(79)


(51)


(130)


(62)


(58)


(120)

Debt as reported in the balance sheet

12,894


3,119


16,013


10,886


2,977


13,863

Add:












Debt issue costs, discounts and premiums

79


51


130


62


58


120

Less:












Cash and cash equivalents


594


594



943


943

Restricted cash

168



168


180



180

Restricted cash and restricted cash equivalents associated with Term C Loan


245


245



245


245

Net Debt

$             12,805


$               2,331


$             15,136


$             10,768


$               1,847


$             12,615













LTM Adjusted Corporate EBITDA(a)



1,252






2,305















Net Corporate Leverage 



1.9x






0.8x





(a)

Reconciliation of LTM Adjusted Corporate EBITDA for the nine months ended September 30, 2023 is as follows:



 

LTM Adjusted Corporate EBITDA:

Net income (loss) three months ended:


December 31, 2022

$          116

March 31, 2023

196

June 30, 2023

139

September 30, 2023

629

LTM net income (loss)

1,080

Adjustments:


Income tax provision (benefit)

(174)

Non-vehicle depreciation and amortization

137

Non-vehicle debt interest, net of interest income

216

Vehicle debt-related charges

41

Restructuring and restructuring related charge

26

Unrealized (gains) losses on financial instruments

116

(Gain) on sale of non-vehicle capital assets

(162)

Change in fair value of Public Warrants

(230)

Litigation settlements

168

Other items

34

LTM Adjusted Corporate EBITDA

$       1,252

 

 

Supplemental Schedule V


HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited


Global RAC



Three Months Ended

September 30,


Percent

Inc/(Dec)


Nine Months Ended

September 30,


Percent

Inc/(Dec)

($ in millions, except where noted)

2023


2022



2023


2022


Total RPD












Revenues

$      2,703


$      2,496




$      7,187


$      6,650



Foreign currency adjustment(a)

(11)


9




(24)


(21)



Total Revenues - adjusted for foreign currency

$      2,692


$      2,505




$      7,163


$      6,629



Transaction Days (in thousands)

43,095


37,123




116,588


103,188



Total RPD (in dollars)

$      62.46


$      67.48


-7 %


$      61.44


$      64.25


(4) %













Total Revenue Per Unit Per Month












Total Revenues - adjusted for foreign currency

$      2,692


$      2,505




$      7,163


$      6,629



Average Rentable Vehicles (in whole units)

562,267


503,508




526,456


483,083



Total revenue per unit (in whole dollars)

$      4,788


$      4,975




$    13,606


$    13,723



Number of months in period (in whole units)

3


3




9


9



Total RPU Per Month (in whole dollars)

$      1,596


$      1,658


(4) %


$      1,512


$      1,525


(1) %













Vehicle Utilization












Transaction Days (in thousands)

43,095


37,123




116,588


103,188



Average Rentable Vehicles (in whole units)

562,267


503,508




526,456


483,083



Number of days in period (in whole units)

92


92




273


273



Available Car Days (in thousands)

51,744


46,339




143,823


131,955



Vehicle Utilization(b)

83 %


80 %