SEC Filing | Hertz Global Holdings, Inc.

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htzz-20220630

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		June 30, 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

July 21, 2022

Hertz Global Holdings, Inc.

Common Stock,

par value $0.01 per share

360,326,081

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	36
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	61
ITEM 4.	Controls and Procedures	61
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	62
ITEM 1A.	Risk Factors	62
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
ITEM 3.	Defaults Upon Senior Securities	63
ITEM 5.	Other Information	63
ITEM 6.	Exhibits	63
SIGNATURE		64
EXHIBIT INDEX		65

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 June 30, 2022 and December 31, 2021		2
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021		4
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2022 and 2021		5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021		6
The Hertz Corporation and Subsidiaries
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021		9
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021		10
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021		11
Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three and Six Months Ended June 30, 2022 and 2021		12
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021		13
Notes to the Condensed Consolidated Financial Statements
Note 1	Background	15
Note 2	Basis of Presentation	15


Note 3	Divestitures	16
Note 4	Revenue Earning Vehicles	16

Note 5	Debt	17
Note 6	Leases	22

Note 7	Income Tax (Provision) Benefit	22
Note 8	Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global	23


Note 9	Stock-Based Compensation	25
Note 10	Financial Instruments	26
Note 11	Fair Value Measurements	27
Note 12	Contingencies and Off-Balance Sheet Commitments	29
Note 13	Related Party Transactions	31
Note 14	Segment Information	31


Note 15	Reorganization Items, Net	34

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)



	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	1,041	$	2,258
Restricted cash and cash equivalents:
Vehicle	221		77
Non-vehicle	301		316
Total restricted cash and cash equivalents	522		393
Total cash and cash equivalents and restricted cash and cash equivalents	1,563		2,651
Receivables:
Vehicle	136		62
Non-vehicle, net of allowance of $42 and $48, respectively	839		696
Total receivables, net	975		758
Prepaid expenses and other assets	1,094		1,017
Revenue earning vehicles:
Vehicles	13,962		10,836
Less: accumulated depreciation	(1,632)		(1,610)
Total revenue earning vehicles, net	12,330		9,226
Property and equipment, net	605		608
Operating lease right-of-use assets	1,562		1,566
Intangible assets, net	2,893		2,912
Goodwill	1,044		1,045

Total assets(1)	$	22,066	$	19,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Vehicle	$	182	$	56
Non-vehicle	477		516
Total accounts payable	659		572
Accrued liabilities	1,048		863
Accrued taxes, net	206		157
Debt:
Vehicle	10,411		7,921
Non-vehicle	2,981		2,986
Total debt	13,392		10,907
Public Warrants	811		1,324
Operating lease liabilities	1,493		1,510
Self-insured liabilities	470		463
Deferred income taxes, net	1,258		1,010



Total liabilities(1)	19,337		16,806
Commitments and contingencies



Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstanding	—		—
Common stock, $0.01 par value, 477,722,177 and 477,233,278 shares issued, respectively, and 368,386,372 and 449,782,424 shares outstanding, respectively	5		5
Treasury stock, at cost, 109,335,805 and 27,450,854 common shares, respectively	(2,321)		(708)
Additional paid-in capital	6,274		6,209
Retained earnings (Accumulated deficit)	(949)		(2,315)
Accumulated other comprehensive income (loss)	(280)		(214)


Total stockholders' equity	2,729		2,977
Total liabilities and stockholders' equity	$	22,066	$	19,783

(1) Hertz Global Holdings, Inc.'s consolidated total assets as of June 30, 2022 and December 31, 2021 include total assets of variable interest entities (“VIEs”) of $838 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 June 30, 2022 and December 31, 2021 include total liabilities of VIEs of $837 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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021



Revenues	$	2,344	$	1,873	$	4,154	$	3,161
Expenses:
Direct vehicle and operating	1,199		946		2,252		1,724
Depreciation of revenue earning vehicles and lease charges, net	106		116		47		359
Non-vehicle depreciation and amortization	36		50		69		104
Selling, general and administrative	257		172		492		321
Interest expense, net:
Vehicle	45		98		50		202
Non-vehicle	41		91		80		135
Total interest expense, net	86		189		130		337

Other (income) expense, net	2		(10)		—		(13)
Reorganization items, net	—		633		—		677
(Gain) from the sale of a business	—		(8)		—		(400)
Change in fair value of Public Warrants	(461)		—		(511)		—
Total expenses	1,225		2,088		2,479		3,109
Income (loss) before income taxes	1,119		(215)		1,675		52
Income tax (provision) benefit	(179)		46		(309)		(33)
Net income (loss)	940		(169)		1,366		19
Net (income) loss attributable to noncontrolling interests	—		1		—		2
Net income (loss) attributable to Hertz Global	$	940	$	(168)	$	1,366	$	21



Weighted-average common shares outstanding:
Basic	398		160		415		158
Diluted	424		160		443		158
Earnings (loss) per common share:
Basic	$	2.36	$	(1.05)	$	3.29	$	0.13
Diluted	$	1.13	$	(1.05)	$	1.93	$	0.13

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	940	$	(169)	$	1,366	$	19
Other comprehensive income (loss):
Foreign currency translation adjustments	(59)		(7)		(66)		10







Total other comprehensive income (loss)	(59)		(7)		(66)		10
Total comprehensive income (loss)	881		(176)		1,300		29
Comprehensive (income) loss attributable to noncontrolling interests	—		1		—		2
Comprehensive income (loss) attributable to Hertz Global	$	881	$	(175)	$	1,300	$	31

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(1)		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Shares	Treasury Stock Amount		Stockholders' Equity Attributable to Hertz Global		Non- controlling Interests(2)		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
Net income (loss)	—	—		—	—		—		(168)		—		—	—		(168)		(1)		(169)
Other comprehensive income (loss)	—	—		—	—		—		—		(7)		—	—		(7)		—		(7)

Cancellation of common and treasury shares in exchange for new common shares	—	—		(142)	(2)		(98)		—		—		(2)	100		—		—		—
Cancellation of stock-based awards	—	—		—	—		(10)		—		—		—	—		(10)		—		(10)
Distributions to common stockholders	—	—		—	—		(239)		—		—		—	—		(239)		—		(239)
Contribution from Plan Sponsors	—	—		277	3		2,778		—		—		—	—		2,781		—		2,781
Rights Offering, net	—	—		180	2		1,796		—		—		—	—		1,798		—		1,798
Public Warrants issuance	—	—		—	—		(800)		—		—		—	—		(800)		—		(800)
Preferred stock issuance, net	2	1,433		—	—		—		—		—		—	—		—		—		—
Distributions to noncontrolling interests, net	—			—	—		—		—		—		—	—		—		(5)		(5)
June 30, 2021	2	$	1,433	471	$	5	$	6,476	$	(2,659)	$	(202)	—	$	—	$	3,620	$	19	$	3,639

(1) Net income (loss) is computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet.

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

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		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, net of tax	—	—		—	—		28		—		—		—	—		28
Public Warrant exercises(1)	—	—		—	—		4		—		—		—	—		4
Share repurchases	—	—		(35)	—		—		—		—		35	(722)		(722)

March 31, 2022	—	—		415	5		6,237		(1,889)		(221)		62	(1,430)		2,702
Net income (loss)	—	—		—	—		—		940		—		—	—		940
Other comprehensive income (loss)	—	—		—	—		—		—		(59)		—	—		(59)
Stock-based compensation charges, net of tax	—	—		—	—		36		—		—		—	—		36
Public Warrant exercises(1)	—	—		—	—		1		—		—		—	—		1
Share repurchases	—	—		(47)	—		—		—		—		47	(891)		(891)
June 30, 2022	—	$	—	368	$	5	$	6,274	$	(949)	$	(280)	109	$	(2,321)	$	2,729

(1) 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)


	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	1,366	$	19
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net	145		420
Depreciation and amortization, non-vehicle	69		104
Amortization of deferred financing costs and debt discount (premium)	25		98
Loss on extinguishment of debt	—		8
Stock-based compensation charges	64		2
Provision for receivables allowance	23		64
Deferred income taxes, net	249		(16)


Reorganization items, net	—		314
(Gain) loss from the sale of a business	—		(400)

Change in fair value of Public Warrants	(511)		—
(Gain) loss on financial instruments	(65)		2

Other	(3)		(10)
Changes in assets and liabilities:
Non-vehicle receivables	(200)		(214)
Prepaid expenses and other assets	(87)		(67)
Operating lease right-of-use assets	79		154
Non-vehicle accounts payable	(32)		94
Accrued liabilities	233		(11)
Accrued taxes, net	52		91
Operating lease liabilities	(93)		(160)
Self-insured liabilities	15		(27)
Net cash provided by (used in) operating activities	1,329		465
Cash flows from investing activities:
Revenue earning vehicles expenditures	(6,089)		(4,136)
Proceeds from disposal of revenue earning vehicles	2,887		1,199
Non-vehicle capital asset expenditures	(59)		(17)
Proceeds from non-vehicle capital assets disposed of or to be disposed of	6		10

Collateral payments	—		(303)
Collateral returned in exchange for letters of credit	19		114
Return of (investment in) equity investments	(15)		—
Proceeds from the sale of a business, net of cash sold	—		818
Other	—		(1)
Net cash provided by (used in) investing activities	(3,251)		(2,316)

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)


	Six Months Ended June 30,
	2022	2021
Cash flows from financing activities:
Proceeds from issuance of vehicle debt	7,379	8,939
Repayments of vehicle debt	(4,824)	(8,120)
Proceeds from issuance of non-vehicle debt	—	3,139
Repayments of non-vehicle debt	(10)	(