SEC Filing | Hertz Global Holdings, Inc.

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htzz-20230331

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, 2023
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

April 20, 2023

Hertz Global Holdings, Inc.

Common Stock,

par value $0.01 per share

315,239,847

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	33
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	51
ITEM 4.	Controls and Procedures	51
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	53
ITEM 1A.	Risk Factors	53
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
ITEM 3.	Defaults Upon Senior Securities	54
ITEM 5.	Other Information	54
ITEM 6.	Exhibits	54
EXHIBIT INDEX		55
SIGNATURE		56

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, 2023 and December 31, 2022		2
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022		4
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended March 31, 2023 and 2022		5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022		6
The Hertz Corporation and Subsidiaries
Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022		8
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022		9
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022		10
Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022		11
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022		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	15
Note 6	Leases	19

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	Financial Instruments	24
Note 11	Fair Value Measurements	25
Note 12	Contingencies and Off-Balance Sheet Commitments	27

Note 13	Segment Information	29

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)



	March 31, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	728	$	943
Restricted cash and cash equivalents:
Vehicle	216		180
Non-vehicle	298		295
Total restricted cash and cash equivalents	514		475
Total cash and cash equivalents and restricted cash and cash equivalents	1,242		1,418
Receivables:
Vehicle	136		111
Non-vehicle, net of allowance of $42 and $45, respectively	898		863
Total receivables, net	1,034		974
Prepaid expenses and other assets	980		1,155
Revenue earning vehicles:
Vehicles	15,746		14,281
Less: accumulated depreciation	(1,888)		(1,786)
Total revenue earning vehicles, net	13,858		12,495
Property and equipment, net	642		637
Operating lease right-of-use assets	2,067		1,887
Intangible assets, net	2,882		2,887
Goodwill	1,044		1,044

Total assets(1)	$	23,749	$	22,497
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Vehicle	$	167	$	79
Non-vehicle	553		578
Total accounts payable	720		657
Accrued liabilities	926		911
Accrued taxes, net	173		170
Debt:
Vehicle	11,789		10,886
Non-vehicle	2,975		2,977
Total debt	14,764		13,863
Public Warrants	735		617
Operating lease liabilities	1,977		1,802
Self-insured liabilities	457		472
Deferred income taxes, net	1,223		1,360

Total liabilities(1)	20,975		19,852
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstanding	—		—
Common stock, $0.01 par value, 479,114,852 and 478,914,062 shares issued, respectively, and 317,948,320 and 323,483,178 shares outstanding, respectively	5		5
Treasury stock, at cost, 161,166,532 and 155,430,884 common shares, respectively	(3,237)		(3,136)
Additional paid-in capital	6,346		6,326
Retained earnings (Accumulated deficit)	(60)		(256)
Accumulated other comprehensive income (loss)	(280)		(294)


Total stockholders' equity	2,774		2,645
Total liabilities and stockholders' equity	$	23,749	$	22,497

(1) Hertz Global Holdings, Inc.'s consolidated total assets as of March 31, 2023 and December 31, 2022 include total assets of variable interest entities (“VIEs”) of $1.4 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of VIEs of $1.4 billion and $1.3 billion, 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,
	2023		2022



Revenues	$	2,047	$	1,810
Expenses:
Direct vehicle and operating	1,221		1,053
Depreciation of revenue earning vehicles and lease charges, net	381		(59)
Non-vehicle depreciation and amortization	35		33
Selling, general and administrative	221		235
Interest expense, net:
Vehicle	111		5
Non-vehicle	51		39
Interest expense, net	162		44

Other (income) expense, net	9		(2)
(Gain) on sale of non-vehicle capital assets	(162)		—
Change in fair value of Public Warrants	118		(50)
Total expenses	1,985		1,254
Income (loss) before income taxes	62		556
Income tax (provision) benefit	134		(130)
Net income (loss)	$	196	$	426



Weighted-average common shares outstanding:
Basic	321		432
Diluted	323		461
Earnings (loss) per common share:
Basic	$	0.61	$	0.99
Diluted	$	0.61	$	0.82

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,
	2023		2022
Net income (loss)	$	196	$	426
Other comprehensive income (loss):
Foreign currency translation adjustments	14		(7)







Total other comprehensive income (loss)	14		(7)
Total comprehensive income (loss)	$	210	$	419

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		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	—	—		—	—		4		—		—		—	—		4
Shares repurchases	—	—		(35)	—		—		—		—		35	(722)		(722)
March 31, 2022	—	$	—	415	$	5	$	6,237	$	(1,889)	$	(221)	62	$	(1,430)	$	2,702



	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, 2022	—	$	—	323	$	5	$	6,326	$	(256)	$	(294)	155	$	(3,136)	$	2,645
Net income (loss)	—	—		—	—		—		196		—		—	—		196
Other comprehensive income (loss)	—	—		—	—		—		—		14		—	—		14
Net settlement on vesting of restricted stock	—	—		—	—		(1)		—		—		—	—		(1)
Stock-based compensation charges	—	—		—	—		21		—		—		—	—		21

Share repurchases(1)	—	—		(5)	—		—		—		—		6	(101)		(101)

March 31, 2023	—	$	—	318	$	5	$	6,346	$	(60)	$	(280)	161	$	(3,237)	$	2,774

(1) The amounts presented herein may be rounded to agree to amounts in the unaudited condensed consolidated balance sheet. Also 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,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	196	$	426
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net	466		(20)
Depreciation and amortization, non-vehicle	35		33
Amortization of deferred financing costs and debt discount (premium)	14		11

Stock-based compensation charges	21		28
Provision for receivables allowance	20		13
Deferred income taxes, net	(135)		103



(Gain) loss on sale of non-vehicle capital assets	(162)		(2)
Change in fair value of Public Warrants	118		(50)
Changes in financial instruments	108		(44)

Other	—		1
Changes in assets and liabilities:
Non-vehicle receivables	(50)		(43)
Prepaid expenses and other assets	(48)		(40)
Operating lease right-of-use assets	78		72
Non-vehicle accounts payable	(27)		51
Accrued liabilities	29		124
Accrued taxes, net	1		30
Operating lease liabilities	(84)		(80)
Self-insured liabilities	(18)		8
Net cash provided by (used in) operating activities	562		621
Cash flows from investing activities:
Revenue earning vehicles expenditures	(2,824)		(2,985)
Proceeds from disposal of revenue earning vehicles	1,206		1,471
Non-vehicle capital asset expenditures	(45)		(30)
Proceeds from non-vehicle capital assets disposed of or to be disposed of	175		1


Collateral returned in exchange for letters of credit	—		17
Return of (investment in) equity investments	—		(15)


Net cash provided by (used in) investing activities	(1,488)		(1,541)
Cash flows from financing activities:
Proceeds from issuance of vehicle debt	2,061		4,680
Repayments of vehicle debt	(1,190)		(3,492)
Proceeds from issuance of non-vehicle debt	425		—
Repayments of non-vehicle debt	(430)		(5)
Payment of financing costs	(8)		(24)




Proceeds from exercises of Public Warrants	—		3

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,
	2023		2022
Share repurchases	(118)		(766)


Other	(1)		(4)
Net cash provided by (used in) financing activities	739		392
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	11		(1)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period	(176)		(529)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	1,418		2,651
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	1,242	$	2,122

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized:
Vehicle	$	96	$	39
Non-vehicle	36		17
Income taxes, net of refunds	11		6

Supplemental disclosures of non-cash information:
Purchases of revenue earning vehicles included in accounts payable, net of incentives	$	148	$	82
Sales of revenue earning vehicles included in vehicle receivables	117		65

Purchases of non-vehicle capital assets included in accounts payable	—		23

Revenue earning vehicles and non-vehicle capital assets acquired through finance lease	12		5

Public Warrant exercises	—		2


Accrual for purchases of treasury shares	4		10

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, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	728	$	943
Restricted cash and cash equivalents:
Vehicle	216		180
Non-vehicle	298		295
Total restricted cash and cash equivalents	514		475
Total cash and cash equivalents and restricted cash and cash equivalents	1,242		1,418
Receivables:
Vehicle	136		111
Non-vehicle, net of allowance of $42 and $45, respectively	898		863
Total receivables, net	1,034		974

Prepaid expenses and other assets	979		1,154
Revenue earning vehicles:
Vehicles	15,746		14,281
Less: accumulated depreciation	(1,888)		(1,786)
Total revenue earning vehicles, net	13,858		12,495
Property and equipment, net	642		637
Operating lease right-of-use assets	2,067		1,887
Intangible assets, net	2,882		2,887
Goodwill	1,044		1,044

Total assets(1)	$	23,748	$	22,496
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable:
Vehicle	$	167	$	79
Non-vehicle	553		578
Total accounts payable	720		657
Accrued liabilities	922		890
Accrued taxes, net	172		170
Debt:
Vehicle	11,789		10,886
Non-vehicle	2,975		2,977
Total debt	14,764		13,863
Operating lease liabilities	1,977		1,802
Self-insured liabilities	457		472
Deferred income taxes, net	1,226		1,363



Total liabilities(1)	20,238		19,217
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	4,747		4,844

Retained earnings (Accumulated deficit)	(957)		(1,271)
Accumulated other comprehensive income (loss)	(280)		(294)


Total stockholder's equity	3,510		3,279
Total liabilities and stockholder's equity	$	23,748	$	22,496

(1) The Hertz Corporation's consolidated total assets as of March 31, 2023 and December 31, 2022 include total assets of VIEs of $1.4 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of VIEs of $1.4 billion and $1.3 billion, 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,
	2023		2022



Revenues	$	2,047	$	1,810
Expenses:
Direct vehicle and operating	1,221		1,053
Depreciation of revenue earning vehicles and lease charges, net	381		(59)
Non-vehicle depreciation and amortization	35		33
Selling, general and administrative	221		235
Interest expense, net:
Vehicle	111		5
Non-vehicle	51		39
Interest expense, net	162		44

Other (income) expense, net	9		(2)
(Gain) on sale of non-vehicle capital assets	(162)		—
Total expenses	1,867		1,304
Income (loss) before income taxes	180		506
Income tax (provision) benefit	134		(130)
Net income (loss)	$	314	$	376

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,
	2023		2022
Net income (loss)	$	314	$	376
Other comprehensive income (loss):
Foreign currency translation adjustments	14		(7)







Total other comprehensive income (loss)	14		(7)
Total comprehensive income (loss)	$	328	$	369

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)		Total Stockholder's Equity (Deficit)
Balance as of:
December 31, 2021	100	$	—	$	7,190	$	(2,626)	$	(214)	$	4,350
Net income (loss)	—	—		—		376		—		376
Other comprehensive income (loss)	—	—		—		—		(7)		(7)
Stock-based compensation charges	—	—		28		—		—		28
Dividends paid to Hertz Holdings	—	—		(767)		—		—		(767)

March 31, 2022	100	$	—	$	6,451	$	(2,250)	$	(221)	$	3,980


	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholder's Equity (Deficit)
Balance as of:
December 31, 2022	100	$	—	$	4,844	$	(1,271)	$	(294)	$	3,279
Net income (loss)	—	—		—		314		—		314
Other comprehensive income (loss)	—	—		—		—		14		14
Stock-based compensation charges	—	—		21		—		—		21
Dividends paid to Hertz Holdings(1)	—	—		(118)		—		—		(118)
March 31, 2023	100	$	—	$	4,747	$	(957)	$	(280)	$	3,510

(1) See "Share Repurchase Programs for Common Stock" in Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," for additional information.

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

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	314	$	376
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net	466		(20)
Depreciation and amortization, non-vehicle	35		33
Amortization of deferred financing costs and debt discount (premium)	14		11

Stock-based compensation charges	21		28
Provision for receivables allowance	20		13
Deferred income taxes, net	(135)		103




(Gain) loss on sale of non-vehicle capital assets	(162)		(2)