SEC Filing | Hertz Global Holdings, Inc.

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htzz-20220930

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		September 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 Corporation1 Yes ☐ No ☒

1As 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

October 20, 2022

Hertz Global Holdings, Inc.

Common Stock,

par value $0.01 per share

333,952,167

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	37
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	62
ITEM 4.	Controls and Procedures	62
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	63
ITEM 1A.	Risk Factors	63
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
ITEM 3.	Defaults Upon Senior Securities	64
ITEM 5.	Other Information	64
ITEM 6.	Exhibits	64
SIGNATURE		65
EXHIBIT INDEX		66

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 September 30, 2022 and December 31, 2021		2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2022 and 2021		4
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021		5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021		6
The Hertz Corporation and Subsidiaries
Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021		9
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021		10
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2022 and 2021		11
Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three and Nine Months Ended September 30, 2022 and 2021		12
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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	24


Note 9	Stock-Based Compensation	25
Note 10	Financial Instruments	27
Note 11	Fair Value Measurements	28
Note 12	Contingencies and Off-Balance Sheet Commitments	30
Note 13	Related Party Transactions	32
Note 14	Segment Information	32


Note 15	Reorganization Items, Net	35

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)



	September 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	1,006	$	2,258
Restricted cash and cash equivalents:
Vehicle	203		77
Non-vehicle	299		316
Total restricted cash and cash equivalents	502		393
Total cash and cash equivalents and restricted cash and cash equivalents	1,508		2,651
Receivables:
Vehicle	222		62
Non-vehicle, net of allowance of $46 and $48, respectively	831		696
Total receivables, net	1,053		758
Prepaid expenses and other assets	934		1,017
Revenue earning vehicles:
Vehicles	13,757		10,836
Less: accumulated depreciation	(1,734)		(1,610)
Total revenue earning vehicles, net	12,023		9,226
Property and equipment, net	618		608
Operating lease right-of-use assets	1,632		1,566
Intangible assets, net	2,883		2,912
Goodwill	1,043		1,045

Total assets(1)	$	21,694	$	19,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Vehicle	$	112	$	56
Non-vehicle	502		516
Total accounts payable	614		572
Accrued liabilities	955		863
Accrued taxes, net	205		157
Debt:
Vehicle	10,097		7,921
Non-vehicle	2,979		2,986
Total debt	13,076		10,907
Public Warrants	737		1,324
Operating lease liabilities	1,556		1,510
Self-insured liabilities	484		463
Deferred income taxes, net	1,306		1,010



Total liabilities(1)	18,933		16,806
Commitments and contingencies



Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstanding	—		—
Common stock, $0.01 par value, 477,792,170 and 477,233,278 shares issued, respectively, and 341,223,449 and 449,782,424 shares outstanding, respectively	5		5
Treasury stock, at cost, 136,568,721 and 27,450,854 common shares, respectively	(2,821)		(708)
Additional paid-in capital	6,308		6,209
Retained earnings (Accumulated deficit)	(372)		(2,315)
Accumulated other comprehensive income (loss)	(359)		(214)


Total stockholders' equity	2,761		2,977
Total liabilities and stockholders' equity	$	21,694	$	19,783

(1) Hertz Global Holdings, Inc.'s consolidated total assets as of September 30, 2022 and December 31, 2021 include total assets of variable interest entities (“VIEs”) of $952 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 September 30, 2022 and December 31, 2021 include total liabilities of VIEs of $951 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021



Revenues	$	2,496	$	2,226	$	6,650	$	5,387
Expenses:
Direct vehicle and operating	1,282		1,131		3,534		2,855
Depreciation of revenue earning vehicles and lease charges, net	294		61		341		420
Non-vehicle depreciation and amortization	36		49		105		153
Selling, general and administrative	246		177		738		498
Interest expense, net:
Vehicle	27		41		77		243
Non-vehicle	43		22		123		157
Total interest expense, net	70		63		200		400

Other (income) expense, net	(6)		(7)		(6)		(20)
Reorganization items, net	—		—		—		677
(Gain) from the sale of a business	—		—		—		(400)
Change in fair value of Public Warrants	(73)		(16)		(584)		(16)
Total expenses	1,849		1,458		4,328		4,567
Income (loss) before income taxes	647		768		2,322		820
Income tax (provision) benefit	(70)		(160)		(379)		(193)
Net income (loss)	577		608		1,943		627
Net (income) loss attributable to noncontrolling interests	—		(3)		—		(1)
Net income (loss) attributable to Hertz Global	577		605		1,943		626
Dividends on Series A Preferred Stock	—		(34)		—		(34)
Net income (loss) available to Hertz Global common stockholders	$	577	$	571	$	1,943	$	592

Weighted-average common shares outstanding:
Basic	355		471		395		264
Diluted	379		490		421		270
Earnings (loss) per common share:
Basic	$	1.62	$	1.21	$	4.92	$	2.25
Diluted	$	1.33	$	1.13	$	3.22	$	2.14

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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss)	$	577	$	608	$	1,943	$	627
Other comprehensive income (loss):
Foreign currency translation adjustments	(79)		(24)		(145)		(14)







Total other comprehensive income (loss)	(79)		(24)		(145)		(14)
Total comprehensive income (loss)	498		584		1,798		613
Comprehensive (income) loss attributable to noncontrolling interests	—		(3)		—		(1)
Comprehensive income (loss) attributable to Hertz Global	$	498	$	581	$	1,798	$	612

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
Net income	—	—		—	—		—		604		—		—	—		604		3		607
Other comprehensive income (loss)	—	—		—	—		—		—		(24)		—	—		(24)		—		(24)


Rights Offering, net	—	—		1	—		4		—		—		—	—		4		—		4
Exercise of Public Warrants	—	—		—	—		2		—		—		—	—		2		—		2
Distributions to noncontrolling interests, net	—	—		—	—		—		—		—		—	—		—		(10)		(10)
September 30, 2021	2	$	1,433	472	$	5	$	6,482	$	(2,055)	$	(226)	—	$	—	$	4,206	$	12	$	4,218

(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
Net income (loss)	—	—		—	—		—		577		—		—	—		577
Other comprehensive income (loss)	—	—		—	—		—		—		(79)		—	—		(79)

Stock-based compensation charges, net of tax	—	—		—	—		33		—		—		—	—		33



Public Warrant exercises(1)	—	—		—	—		1		—