SEC Filing | Hertz Global Holdings, Inc.

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htzz-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________________________________________

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended		March 31, 2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number	Exact Name of Registrant as Specified in its Charter, Principal Executive Office Address and Telephone Number					State of Incorporation	I.R.S. Employer Identification No.
001-37665	HERTZ GLOBAL HOLDINGS, INC					Delaware	61-1770902
	8501 Williams Road,		Estero,	Florida	33928
	(239)	301-7000

001-07541	THE HERTZ CORPORATION					Delaware	13-1938568
	8501 Williams Road,		Estero,	Florida	33928
	(239)	301-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which Registered

Hertz Global Holdings, Inc.

Common Stock

Par value $0.01 per share

HTZ

Nasdaq Global Select

Hertz Global Holdings, Inc.

Warrants to purchase common stock

Each exercisable for one share of Hertz Global Holdings, Inc. common stock at an exercise price of $13.80 per share, subject to adjustment

HTZWW

Nasdaq Global Select

The Hertz Corporation

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Hertz Global Holdings, Inc. Yes ☒ No ☐

The Hertz Corporation Yes ☐ No ☒

1(Note: As a voluntary filer, The Hertz Corporation is not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act. The Hertz Corporation has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it was subject to such filing requirements.)

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Hertz Global Holdings, Inc. Yes ☒ No ☐

The Hertz Corporation Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Hertz Global Holdings, Inc.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

The Hertz Corporation

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Hertz Global Holdings, Inc. Yes ☐ No ☒

The Hertz Corporation Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class

Shares Outstanding as of

April 21, 2022

Hertz Global Holdings, Inc.

Common Stock,

par value $0.01 per share

412,111,348

The Hertz Corporation(1)

Common Stock,

par value $0.01 per share

100

(1)(100% owned by

Rental Car Intermediate Holdings, LLC)

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	1
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	55
ITEM 4.	Controls and Procedures	55
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	56
ITEM 1A.	Risk Factors	56
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
ITEM 3.	Defaults Upon Senior Securities	56
ITEM 5.	Other Information	57
ITEM 6.	Exhibits	57
SIGNATURE		58
EXHIBIT INDEX		59

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Index


		Page
Hertz Global Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021		2
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021		4
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended March 31, 2022 and 2021		5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021		6
The Hertz Corporation and Subsidiaries
Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021		8
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021		9
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2022 and 2021		10
Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three Months Ended March 31, 2022 and 2021		11
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021		12
Notes to the Condensed Consolidated Financial Statements
Note 1	Background	14
Note 2	Basis of Presentation	14


Note 3	Divestitures	15
Note 4	Revenue Earning Vehicles	15

Note 5	Debt	16
Note 6	Leases	20

Note 7	Income Tax (Provision) Benefit	20
Note 8	Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global	21


Note 9	Stock-Based Compensation	22
Note 10	F inancial Inst ruments	24
Note 11	Fair Value Measurements	25
Note 12	Contingencies and Off-Balance Sheet Commitments	26
Note 13	Related Party Transactions	29
Note 14	Segment Information	29


Note 15	Reorganization Items, Net	33

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)



	March 31, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	1,521	$	2,258
Restricted cash and cash equivalents:
Vehicle	301		77
Non-vehicle	300		316
Total restricted cash and cash equivalents	601		393
Total cash and cash equivalents and restricted cash and cash equivalents	2,122		2,651
Receivables:
Vehicle	93		62
Non-vehicle, net of allowance of $45 and $48, respectively	707		696
Total receivables, net	800		758
Prepaid expenses and other assets	1,331		1,017
Revenue earning vehicles:
Vehicles	12,118		10,836
Less: accumulated depreciation	(1,554)		(1,610)
Total revenue earning vehicles, net	10,564		9,226
Property and equipment, net	611		608
Operating lease right-of-use assets	1,566		1,566
Intangible assets, net	2,903		2,912
Goodwill	1,044		1,045

Total assets(1)	$	20,941	$	19,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Vehicle	$	109	$	56
Non-vehicle	566		516
Total accounts payable	675		572
Accrued liabilities	939		863
Accrued taxes, net	188		157
Debt:
Vehicle	9,098		7,921
Non-vehicle	2,984		2,986
Total debt	12,082		10,907
Public Warrants	1,272		1,324
Operating lease liabilities	1,502		1,510
Self-insured liabilities	468		463
Deferred income taxes, net	1,113		1,010



Total liabilities(1)	18,239		16,806
Commitments and contingencies



Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstanding	—		—
Common stock, $0.01 par value, 477,673,065 and 477,233,278 shares issued, respectively, and 415,256,346 and 449,782,424 shares outstanding, respectively	5		5
Treasury stock, at cost, 62,416,719 and 27,450,854 common shares, respectively	(1,430)		(708)
Additional paid-in capital	6,237		6,209
Retained earnings (Accumulated deficit)	(1,889)		(2,315)
Accumulated other comprehensive income (loss)	(221)		(214)


Total stockholders' equity	2,702		2,977
Total liabilities and stockholders' equity	$	20,941	$	19,783

(1) Hertz Global Holdings, Inc.'s consolidated total assets as of March 31, 2022 and December 31, 2021 include total assets of variable interest entities (“VIEs”) of $706 million and $734 million, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of March 31, 2022 and December 31, 2021 include total liabilities of VIEs of $706 million and $733 million, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information.

The accompanying notes are an integral part of these financial statements.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In millions, except per share data)



	Three Months Ended March 31,
	2022		2021



Revenues	$	1,810	$	1,289
Expenses:
Direct vehicle and operating	1,053		778
Depreciation of revenue earning vehicles and lease charges, net	(59)		243
Non-vehicle depreciation and amortization	33		54
Selling, general and administrative	235		151
Interest expense, net:
Vehicle	5		104
Non-vehicle (excludes contractual interest of $53 million for the three months ended March 31, 2021)	39		44
Total interest expense, net	44		148

Other (income) expense, net	(2)		(3)
Reorganization items, net	—		42
(Gain) from the sale of a business	—		(392)
Change in fair value of Public Warrants	(50)		—
Total expenses	1,254		1,021
Income (loss) before income taxes	556		268
Income tax (provision) benefit	(130)		(79)
Net income (loss)	426		189
Net (income) loss attributable to noncontrolling interests	—		1
Net income (loss) attributable to Hertz Global	$	426	$	190



Weighted-average common shares outstanding:
Basic	432		156
Diluted	461		157
Earnings (loss) per common share:
Basic	$	0.99	$	1.22
Diluted	$	0.82	$	1.21

The accompanying notes are an integral part of these financial statements.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

(In millions)



	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	426	$	189
Other comprehensive income (loss):
Foreign currency translation adjustments	(7)		17






Total other comprehensive income (loss)	(7)		17
Total comprehensive income (loss)	419		206
Comprehensive (income) loss attributable to noncontrolling interests	—		1
Comprehensive income (loss) attributable to Hertz Global	$	419	$	207

The accompanying notes are an integral part of these financial statements.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Unaudited

(In millions)


	Preferred Stock Shares	Preferred Stock Amount		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Shares	Treasury Stock Amount		Stockholders' Equity Attributable to Hertz Global		Non- controlling Interests(1)		Total Stockholders' Equity
Balance as of:
December 31, 2020	—	$	—	156	$	2	$	3,047	$	(2,681)	$	(212)	2	$	(100)	$	56	$	37	$	93
Net income (loss)	—	—		—	—		—		190		—		—	—		190		(1)		189
Other comprehensive income (loss)	—	—		—	—		—		—		17		—	—		17		—		17

Stock-based compensation charges	—	—		—	—		2		—		—		—	—		2		—		2
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—	—		—		(11)		(11)
March 31, 2021	—	$	—	156	$	2	$	3,049	$	(2,491)	$	(195)	2	$	(100)	$	265	$	25	$	290



	Preferred Stock Shares	Preferred Stock Amount		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Shares	Treasury Stock Amount		Total Stockholders' Equity
Balance as of:
December 31, 2021	—	$	—	450	$	5	$	6,209	$	(2,315)	$	(214)	27	$	(708)	$	2,977
Net income (loss)	—	—		—	—		—		426		—		—	—		426
Other comprehensive income (loss)	—	—		—	—		—		—		(7)		—	—		(7)
Net settlement on vesting of restricted stock	—	—		—	—		(4)		—		—		—	—		(4)
Stock-based compensation charges	—	—		—	—		28		—		—		—	—		28
Public Warrant exercises(2)	—	—		—	—		4		—		—		—	—		4
Share repurchases	—	—		(35)	—		—		—		—		35	(722)		(722)

March 31, 2022	—	$	—	415	$	5	$	6,237	$	(1,889)	$	(221)	62	$	(1,430)	$	2,702

(1) See "767 Auto Leasing LLC" in Note 13, "Related Party Transactions."

(2) See Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global."

The accompanying notes are an integral part of these financial statements.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	426	$	189
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net	(20)		275
Depreciation and amortization, non-vehicle	33		54
Amortization of deferred financing costs and debt discount (premium)	11		34

Stock-based compensation charges	28		2
Provision for receivables allowance	13		29
Deferred income taxes, net	103		62


Reorganization items, net	—		(15)
(Gain) loss from the sale of a business	—		(392)

Change in fair value of Public Warrants	(50)		—
(Gain) loss on financial instruments	(44)		1

Other	(1)		(2)
Changes in assets and liabilities:
Non-vehicle receivables	(43)		(73)
Prepaid expenses and other assets	(40)		(87)
Operating lease right-of-use assets	72		78
Non-vehicle accounts payable	51		40
Accrued liabilities	124		62
Accrued taxes, net	30		36
Operating lease liabilities	(80)		(78)
Self-insured liabilities	8		(15)
Net cash provided by (used in) operating activities	621		200
Cash flows from investing activities:
Revenue earning vehicles expenditures	(2,985)		(1,517)
Proceeds from disposal of revenue earning vehicles	1,471		686
Non-vehicle capital asset expenditures	(30)		(9)
Proceeds from non-vehicle capital assets disposed of or to be disposed of	1		4


Collateral returned in exchange for letters of credit	17		—
Return of (investment in) equity investments	(15)		—
Proceeds from the sale of a business, net of cash sold	—		818

Net cash provided by (used in) investing activities	(1,541)		(18)
Cash flows from financing activities:
Proceeds from issuance of vehicle debt	4,680		1,096
Repayments of vehicle debt	(3,492)		(946)
Proceeds from issuance of non-vehicle debt	—		560
Repayments of non-vehicle debt	(5)		(1)

The accompanying notes are an integral part of these financial statements.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


	Three Months Ended March 31,
	2022		2021
Payment of financing costs	(24)		(7)




Proceeds from exercises of Public Warrants	3		—

Share repurchases	(766)		—


Contributions from (distributions to) noncontrolling interests	—		(10)
Other	(4)		—
Net cash provided by (used in) financing activities	392		692
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	(1)		(12)
Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents during the period	(529)		862
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period(1)	2,651		1,578
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	2,122	$	2,440

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized:
Vehicle	$	39	$	69
Non-vehicle	17		30
Income taxes, net of refunds	6		(4)

Supplemental disclosures of non-cash information:
Purchases of revenue earning vehicles included in accounts payable, net of incentives	$	82	$	103
Sales of revenue earning vehicles included in vehicle receivables	65		119

Purchases of non-vehicle capital assets included in accounts payable	23		6
Purchases of non-vehicle capital assets included in liabilities subject to compromise	—		16
Revenue earning vehicles and non-vehicle capital assets acquired through capital lease	5		21


Public Warrant exercises	2		—
Accrual for purchases of treasury shares	10		—

(1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale at December 31, 2020, prior to the completion of the Donlen Sale in the first quarter of 2021, as disclosed in Note 3, "Divestitures."

The accompanying notes are an integral part of these financial statements.

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)



	March 31, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	1,520	$	2,257
Restricted cash and cash equivalents:
Vehicle	301		77
Non-vehicle	300		316
Total restricted cash and cash equivalents	601		393
Total cash and cash equivalents and restricted cash and cash equivalents	2,121		2,650
Receivables:
Vehicle	93		62
Non-vehicle, net of allowance of $45 and $48, respectively	706		695
Total receivables, net	799		757

Prepaid expenses and other assets	1,332		1,016
Revenue earning vehicles:
Vehicles	12,118		10,836
Less: accumulated depreciation	(1,554)		(1,610)
Total revenue earning vehicles, net	10,564		9,226
Property and equipment, net	611		608
Operating lease right-of-use assets	1,566		1,566
Intangible assets, net	2,903		2,912
Goodwill	1,044		1,045

Total assets(1)	$	20,940	$	19,780
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable:
Vehicle	$	109	$	56
Non-vehicle	566		516
Total accounts payable	675		572
Accrued liabilities	929		809
Accrued taxes, net	188		157
Debt:
Vehicle	9,098		7,921
Non-vehicle	2,984		2,986
Total debt	12,082		10,907
Operating lease liabilities	1,502		1,510
Self-insured liabilities	468		463
Deferred income taxes, net	1,116		1,012



Total liabilities(1)	16,960		15,430
Commitments and contingencies
Stockholder's equity:
Common stock, $0.01 par value, 3,000 shares authorized and 100 shares issued and outstanding	—		—
Additional paid-in capital	6,451		7,190

Retained earnings (Accumulated deficit)	(2,250)		(2,626)
Accumulated other comprehensive income (loss)	(221)		(214)


Total stockholder's equity	3,980		4,350
Total liabilities and stockholder's equity	$	20,940	$	19,780

(1) The Hertz Corporation's consolidated total assets as of March 31, 2022 and December 31, 2021 include total assets of VIEs of $706 million and $734 million, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of March 31, 2022 and December 31, 2021 include total liabilities of VIEs of $706 million and $733 million, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information.

The accompanying notes are an integral part of these financial statements.

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In millions)



	Three Months Ended March 31,
	2022		2021



Revenues	$	1,810	$	1,289
Expenses:
Direct vehicle and operating	1,053		778
Depreciation of revenue earning vehicles and lease charges, net	(59)		243
Non-vehicle depreciation and amortization	33		54
Selling, general and administrative	235		151
Interest expense, net:
Vehicle	5		104
Non-vehicle (excludes contractual interest of $53 million for the three months ended March 31, 2021)	39		44
Total interest expense, net	44		148


Other (income) expense, net	(2)		(3)
Reorganization items, net	—		42
(Gain) from the sale of a business	—		(392)
Total expenses	1,304		1,021
Income (loss) before income taxes	506		268
Income tax (provision) benefit	(130)		(79)
Net income (loss)	376		189
Net (income) loss attributable to noncontrolling interests	—		1
Net income (loss) attributable to Hertz	$	376	$	190

The accompanying notes are an integral part of these financial statements.

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

(In millions)



	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	376	$	189
Other comprehensive income (loss):
Foreign currency translation adjustments	(7)		17






Total other comprehensive income (loss)	(7)		17
Total comprehensive income (loss)	369		206
Comprehensive (income) loss attributable to noncontrolling interests	—		1
Comprehensive income (loss) attributable to Hertz	$	369	$	207

The accompanying notes are an integral part of these financial statements.

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)

Unaudited

(In millions, except share data)


	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)	Stockholder's Equity Attributable to Hertz	Noncontrolling Interests(1)	Total Stockholder's Equity (Deficit)
Balance as of:
December 31, 2020	100	$	—	$	3,953	$	(