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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 9, 2017 (May 8, 2017)

HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
 
001-37665
 
61-1770902
DELAWARE
 
001-07541
 
13-1938568
(State of incorporation)
 
(Commission File Number)
 
(I.R.S Employer Identification No.)
 
 
 
 
 
 
 
8501 Williams Road
 
 
 
 
Estero, Florida 33928
 
 
 
 
8501 Williams Road
 
 
 
 
Estero, Florida 33928
 
 
 
 
(Address of principal executive offices, including zip code)
 
 
 
 
 
 
 
 
 
(239) 301-7000
 
 
 
 
(239) 301-7000
 
 
 
 
(Registrant’s telephone number, including area code)
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o

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. o
 
 
 
 
 
 
 
 
 
 





ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The information set forth in Item 7.01 is incorporated by reference into this Item 2.02.

ITEM 7.01 REGULATION FD DISCLOSURE

On May 8, 2017, Hertz Global Holdings, Inc. and The Hertz Corporation (collectively, “Hertz” or the “Company”) issued a press release with respect to the Company’s first quarter 2017 financial results. A copy of the press release is attached as Exhibit 99.1 to this current report. The Company utilized certain non-GAAP financial measures in the press release that are detailed in the document attached as Exhibit 99.1 to this current report.

On May 9, 2017, the Company will conduct an earnings webcast relating to the Company's financial results for the first quarter 2017. The earnings webcast will be made available to the public via a link on the Investor Relations section of the Hertz website, IR.Hertz.com, and the slides that will accompany the presentation will be available to the public at the time of the earnings webcast through the Company's website. Certain financial information relating to completed fiscal periods that will be part of the earnings webcast is included in the set of slides that will accompany the earnings webcast, a copy of which is attached hereto as Exhibit 99.2. The earnings webcast will include certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the comparable measures calculated and presented in accordance with GAAP are included in the Company's press release issued May 8, 2017 and attached hereto as part of Exhibit 99.1.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such a filing.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained in this report, 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” 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 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 Forms 10-K, 10-Q and 8-K filed or furnished to the Securities and Exchange Commission ("SEC"). Among other items, such factors could include: any claims, investigations or proceedings arising as a result of the restatement in 2015 of the Company's previously issued financial results; the Company's ability to remediate the material weaknesses in its internal controls over financial reporting; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; the effect of the Company's separation of its vehicle and equipment rental businesses, any failure by Herc Holdings Inc. to comply with the agreements entered into in connection with the separation and the Company's ability to obtain the expected benefits of the separation; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in the Company's markets on rental volume and pricing, including on its pricing policies or use of incentives; increased vehicle costs due to declines in the value of the Company's non-program vehicles; occurrences that disrupt rental activity during the Company's peak periods; the Company's ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles the Company purchases; 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 maintain sufficient liquidity and the availability to it of additional or continued sources of financing for its revenue earning vehicles and to refinance its existing indebtedness; the Company's ability to adequately respond to changes in technology and customer demands; the Company's access to third-party distribution channels and related prices, commission structures and transaction volumes; an increase in the Company's vehicle costs or disruption to its rental activity, particularly during its peak periods, due to safety recalls by the manufacturers of its vehicles; a major disruption in the Company's communication or centralized information networks; financial instability of the manufacturers of the Company's




vehicles; any impact on the Company from the actions of its franchisees, dealers and independent contractors; the Company's ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); shortages of fuel and increases or volatility in fuel costs; the Company's ability to successfully integrate acquisitions and complete dispositions; the Company's ability to maintain favorable brand recognition; costs and risks associated with litigation and investigations; risks related to the Company's indebtedness, including its substantial amount of debt, its ability to incur substantially more debt, the fact that substantially all of its consolidated assets secure certain of its outstanding indebtedness and increases in interest rates or in the Company's borrowing margins; the Company's ability to meet the financial and other covenants contained in its Senior Facilities, its outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements; changes in accounting principles, or their application or interpretation, and the Company's ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results; risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws and the Company's ability to repatriate cash from non-U.S. affiliates without adverse tax consequences; the Company's ability to successfully outsource a significant portion of its information technology services or other activities; the Company's ability to successfully implement its finance and information technology transformation programs;changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the Company's operations, the cost thereof or applicable tax rates; changes to the Company's senior management team and the dependence of its business operations on its senior management team; the effect of tangible and intangible asset impairment charges; the Company's exposure to uninsured claims in excess of historical levels; fluctuations in interest rates and commodity prices; the Company's exposure to fluctuations in foreign currency exchange rates and other risks described from time to time in periodic and current reports that the Company files with the SEC.

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 made, and 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.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit 99.1 Press Release of Hertz Global Holdings, Inc. and The Hertz Corporation dated May 8, 2017.

Exhibit 99.2 Set of slides that will accompany the May 9, 2017 earnings webcast.


Exhibits 99.1 and 99.2 shall not be deemed filed for purposes of Section 18 of the Exchange Act, nor shall they be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in a filing.





 SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
 
(Registrant)
 
 
 
 
 
 
 
By:
/s/ Thomas C. Kennedy
 
Name:
Thomas C. Kennedy
 
Title:
Senior Executive Vice President and
Chief Financial Officer
Date:  May 9, 2017



Exhibit
Exhibit 99.1



Hertz Global Holdings Reports
First Quarter 2017 Financial Results


ESTERO, Fla, May 8, 2017 - Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported a first quarter 2017 net loss from continuing operations of $223 million, or $2.69 per diluted share, including $30 million of impairment charges, compared with net loss from continuing operations of $52 million, or $0.61 per diluted share, during the first quarter of 2016. On an adjusted basis, the Company reported a net loss for the first quarter 2017 of $134 million, or $1.61 per diluted share, compared with an adjusted net loss of $67 million, or $0.79 per diluted share, for the same period last year.

Total revenues for the first quarter 2017 were $1.9 billion, a 3% decline versus the first quarter 2016. Loss from continuing operations before income taxes for first quarter 2017 was $294 million versus $76 million in the same period last year. Adjusted Corporate EBITDA for the first quarter 2017 was a negative $110 million, compared to positive $27 million in the same period last year.

“As previously outlined, we are executing on a turnaround plan that puts our customers at the center of everything we do,” said Kathryn V. Marinello, president and chief executive officer. “Our goal is to strengthen the business to drive predictable, sustainable growth over the long term. While we are mindful of today’s headwinds related to used car residual values, our commitment to investing in the business remains steadfast. In particular, we are placing significant emphasis on fleet quality, the customer experience, brand development and systems transformation. These investments are critical to rebuilding our position as a leader in the global rental car market. While our performance doesn’t yet reflect our investments and may continue to be uneven, we are seeing signs of progress.”

U.S. RENTAL CAR ("U.S. RAC") SUMMARY

U.S. RAC(1)
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2017
 
2016
 
 
Total Revenues
$
1,353

 
$
1,406

 
(4
)%
 
Depreciation of revenue earning vehicles and lease charges, net
$
499

 
$
419

 
19
 %
 
Income (loss) from continuing operations before income taxes
$
(132
)
 
$
(22
)
 
500
 %
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)
$
(116
)
 
$
(4
)
 
NM

 
Adjusted pre-tax margin
(9
)%
 
—
 %
 
(830
)
bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
(104
)
 
$
26

 
NM

 
Adjusted Corporate EBITDA margin
(8
)%
 
2
 %
 
(950
)
bps
 
 
 
 
 
 
 
Average vehicles
478,000

 
460,200

 
4
 %
 
Transaction days (in thousands)
32,312

 
32,742

 
(1
)%
 
Total RPD (in whole dollars)
$
41.19

 
$
42.36

 
(3
)%
 
Total RPU (in whole dollars)
$
928

 
$
1,005

 
(8
)%
 
Net depreciation per unit per month (in whole dollars)
$
348

 
$
303

 
15
 %
 
NM - Not Meaningful

Total U.S. RAC revenues were $1.4 billion in the first quarter 2017, a decrease of 4%, versus the same period last year. Transaction days decreased by 1% year-over-year, primarily driven by one less rental day when you factor in 2016's Leap day. Pricing, as measured by Total RPD, decreased by 3% in the quarter, impacted by an unfavorable customer mix, which the Company is currently addressing as part of its long-term improvement plan. Revenues were also impacted by the shift of the Easter holiday into the second quarter this year.

1


First quarter U.S. RAC net vehicle depreciation per unit per month increased 15% versus the same period last year to $348, primarily driven by seasonally weak residual trends. Despite the lower used-car values, the Company stayed on course with its fleet optimization plan, selling 21% more vehicles year over year and onboarding a richer mix of model year 2017 vehicles. While utilization was lower by 3 percentage points in the quarter, the Company’s fleet realignment is critical to driving customer preference and improving profitability longer term.

First quarter 2017 Adjusted Corporate EBITDA for U.S. RAC was a negative $104 million, a $130 million decline versus the same period last year. In addition to fleet investments and vehicle realignment initiatives,
the reduction was impacted by incremental spending on IT systems, service improvements and brand development.


INTERNATIONAL RENTAL CAR ("INTERNATIONAL RAC") SUMMARY

International RAC(1)
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2017
 
2016
 
 
Total Revenues
$
411

 
$
433

 
(5
)%
 
Depreciation of revenue earning vehicles and lease charges, net
$
85

 
$
86

 
(1
)%
 
Income (loss) from continuing operations before income taxes
$
(5
)
 
$
(1
)
 
400
 %
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)
$
(4
)
 
$
3

 
NM

 
Adjusted pre-tax margin
(1
)%
 
1
%
 
(170
)
bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
3

 
$
11

 
(73
)%
 
Adjusted Corporate EBITDA margin
1
 %
 
3
%
 
(180
)
bps
 
 
 
 
 
 
 
Average vehicles
150,400

 
148,100

 
2
 %
 
Transaction days (in thousands)
10,184

 
10,104

 
1
 %
 
Total RPD (in whole dollars)
$
39.38

 
$
40.97

 
(4
)%
 
Total RPU (in whole dollars)
$
889

 
$
932

 
(5
)%
 
Net depreciation per unit per month (in whole dollars)
$
184

 
$
185

 
(1
)%
 
NM - Not Meaningful


The Company’s International RAC segment revenues were $411 million in first quarter 2017, a decrease of 5% from the first quarter 2016. Excluding a $6 million unfavorable impact of foreign currency exchange rates, revenues decreased 4% driven by a 4% decrease in total RPD, partially offset by a 1% increase in transaction days. The decline in the International RAC revenues reflect a tougher year-over-year comparison due to the additional Leap day in 2016, the Easter shift to second quarter in 2017, as well as the termination of certain contracts in the third quarter of 2016.

First quarter 2017 Adjusted Corporate EBITDA for International RAC was $3 million.

2


ALL OTHER OPERATIONS

All Other Operations(1)
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
($ in millions)
2017
 
2016
 
 
Total Revenues
$
152

 
$
144

 
6
%
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)
$
21

 
$
18

 
17
%
 
Adjusted pre-tax margin
14
%
 
13
%
 
130

bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
20

 
$
17

 
18
%
 
Adjusted Corporate EBITDA margin
13
%
 
12
%
 
140

bps
 
 
 
 
 
 
 
Average vehicles - Donlen
207,500

 
162,300

 
28
%
 

All Other Operations, which is primarily comprised of the Company's Donlen leasing operations, reported a 6% increase in total revenues for the first quarter 2017. Adjusted Corporate EBITDA for the All Other Operations segment was $20 million for the first quarter 2017, which is an increase of 18% versus first quarter last year.

(1) Adjusted pre-tax income (loss), adjusted pre-tax margin, Adjusted Corporate EBITDA, Adjusted Corporate EBITDA margin, adjusted net income (loss) and adjusted diluted earnings per share are non-GAAP measures. Average vehicles, transaction days, Total RPD, Total RPU and net depreciation per unit per month are key metrics. See the accompanying Supplemental Schedules and Definitions for the reconciliations and definitions for each of these non-GAAP measures and key metrics and the reason the Company's management believes that this information is useful to investors.

RESULTS OF THE HERTZ CORPORATION

The GAAP and Non-GAAP profitability metrics for Hertz Global's operating subsidiary, The Hertz Corporation, are materially the same as those for Hertz Global.

EARNINGS WEBCAST INFORMATION

Hertz Global’s first quarter 2017 live webcast discussion will be held on May 9, 2017, at 8:30 a.m. Eastern. The earnings release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on our website, IR.Hertz.com.

SELECTED FINANCIAL AND OPERATING DATA, SUPPLEMENTAL SCHEDULES AND DEFINITIONS

Following are tables that present selected financial and operating 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 measure. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout this press release.

ABOUT HERTZ

The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands in approximately 9,700 corporate and franchisee locations 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 airport general use vehicle rental companies, and the Hertz brand is one of the most recognized in the world. Product and service initiatives such as Hertz Gold Plus Rewards, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, 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.


3


CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS

Certain statements contained 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” 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 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 Forms 10-K, 10-Q and 8-K filed or furnished to the Securities and Exchange Commission ("SEC"). Among other items, such factors could include: any claims, investigations or proceedings arising as a result of the restatement in 2015 of the Company's previously issued financial results; the Company's ability to remediate the material weaknesses in its internal controls over financial reporting; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; the effect of the Company's separation of its vehicle and equipment rental businesses, any failure by Herc Holdings Inc. to comply with the agreements entered into in connection with the separation and the Company's ability to obtain the expected benefits of the separation; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in the Company's markets on rental volume and pricing, including on the Company's pricing policies or use of incentives; increased vehicle costs due to declines in the value of the Company's non-program vehicles; occurrences that disrupt rental activity during the Company's peak periods; the Company's ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles it purchases; 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 maintain sufficient liquidity and the availability to it of additional or continued sources of financing for its revenue earning vehicles and to refinance its existing indebtedness; the Company's ability to adequately respond to changes in technology and customer demands; the Company's ability to maintain access to third-party distribution channels, including current or favorable prices, commission structures and transaction volumes; an increase in the Company's vehicle costs or disruption to its rental activity, particularly during its peak periods, due to safety recalls by the manufacturers of its vehicles; a major disruption in the Company's communication or centralized information networks; financial instability of the manufacturers of the Company's vehicles; any impact on the Company from the actions of its franchisees, dealers and independent contractors; the Company's ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); shortages of fuel and increases or volatility in fuel costs; the Company's ability to successfully integrate acquisitions and complete dispositions; the Company's ability to maintain favorable brand recognition; costs and risks associated with litigation and investigations; risks related to the Company's indebtedness, including its substantial amount of debt, its ability to incur substantially more debt, the fact that substantially all of its consolidated assets secure certain of its outstanding indebtedness and increases in interest rates or in its borrowing margins; the Company's ability to meet the financial and other covenants contained in its Senior Facilities, its outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements; changes in accounting principles, or their application or interpretation, and the Company's ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results; risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws and the Company's ability to repatriate cash from non-U.S. affiliates without adverse tax consequences; the Company's ability to successfully outsource a significant portion of its information technology services or other activities; the Company's ability to successfully implement its finance and information technology transformation programs; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the Company's operations, the cost thereof or applicable tax rates; changes to the Company's senior management team and the dependence of its business operations on its senior management team; the effect of tangible and intangible asset impairment charges; the Company's exposure to uninsured claims in excess of historical levels; fluctuations in interest rates and commodity prices; the Company's exposure to fluctuations in foreign currency exchange rates and other risks described from time to time in periodic and current reports that the Company files with the SEC.

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.

4



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 made, and 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.

CONTACTS:
 
 
 
Investor Relations:
Media:
Leslie Hunziker
Hertz Media Relations
(239) 301-6800
(844) 845-2180 (toll free)
investorrelations@hertz.com
mediarelations@hertz.com

5


FINANCIAL INFORMATION AND OPERATING DATA    

SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA
 
Three Months Ended
March 31,
 
As a Percentage of Total Revenues
(In millions, except per share data)
2017
 
2016
 
2017
 
2016
Total revenues
$
1,916

 
$
1,983

 
100
 %
 
100
 %
Expenses:
 
 
 
 
 
 
 
Direct vehicle and operating
1,132

 
1,158

 
59
 %
 
58
 %
Depreciation of revenue earning vehicles and lease charges, net
701

 
616

 
37
 %
 
31
 %
Selling, general and administrative
220

 
225

 
11
 %
 
11
 %
Interest expense, net:
 
 
 
 
 
 
 
Vehicle
71

 
69

 
4
 %
 
3
 %
Non-vehicle
59

 
81

 
3
 %
 
4
 %
Total interest expense, net
130

 
150

 
7
 %
 
8
 %
Other (income) expense, net
27

 
(90
)
 
1
 %
 
(5
)%
Total expenses
2,210

 
2,059

 
115
 %
 
104
 %
Income (loss) from continuing operations before income taxes
(294
)
 
(76
)
 
(15
)%
 
(4
)%
Income tax (provision) benefit from continuing operations
71

 
24

 
4
 %
 
1
 %
Net income (loss) from continuing operations
(223
)
 
(52
)
 
(12
)%
 
(3
)%
Net income (loss) from discontinued operations
—

 
1

 
—
 %
 
—
 %
Net Income (loss)
$
(223
)
 
$
(51
)
 
(12
)%
 
(3
)%
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
Basic
83

 
85

(b)
 
 
 
Diluted
83

 
85

(b)
 
 
 
Earnings (loss) per share - basic and diluted:
 
 
 
 
 
 
 
Basic earnings (loss) per share from continuing operations
$
(2.69
)
 
$
(0.61
)
 
 
 
 
Basic earnings (loss) per share from discontinued operations
—

 
0.01

 
 
 
 
Basic earnings (loss) per share
$
(2.69
)
 
$
(0.60
)
 
 
 
 
Diluted earnings (loss) per share from continuing operations
$
(2.69
)
 
$
(0.61
)
 
 
 
 
Diluted earnings (loss) per share from discontinued operations
—

 
0.01

 
 
 
 
Diluted earnings (loss) per share
$
(2.69
)
 
$
(0.60
)
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss) (a)
$
(213
)
 
$
(106
)
 


 


Adjusted net income (loss)(a)
$
(134
)
 
$
(67
)
 


 


Adjusted earnings (loss) per share(a)
$
(1.61
)
 
$
(0.79
)
 


 


Adjusted Corporate EBITDA (a)
$
(110
)
 
$
27

 


 


(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule II.
(b)
The weighted average number of basic and diluted shares for the three months ended March 31, 2016 is presented as adjusted for the one-to-five distribution ratio as a result of the June 2016 Spin-Off of the Company's equipment rental business.

6


SELECTED UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In millions)
March 31, 2017
 
December 31, 2016
Cash and cash equivalents
$
785

 
$
816

Total restricted cash
266

 
278

Revenue earning vehicles, net:
 
 
 
U.S. Rental Car
8,346

 
7,716

International Rental Car
2,013

 
1,755

All Other Operations
1,334

 
1,347

Total revenue earning vehicles, net
11,693

 
10,818

Total assets
19,656

 
19,155

Total debt
14,008

 
13,541

Net vehicle debt (a)
9,922

 
9,447

Net non-vehicle debt (a)
3,145

 
3,116

Total equity
918

 
1,075

(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule V.


SELECTED UNAUDITED CONSOLIDATED CASH FLOW DATA
 
Three Months Ended March 31,
(In millions)
2017
 
2016
Cash from continuing operations provided by (used in):
 
 
 
Operating activities
$
498

 
$
461

Investing activities
(926
)
 
(424
)
Financing activities
391

 
323

Effect of exchange rate changes
6

 
12

Net change in cash and cash equivalents
$
(31
)
 
$
372

 
 
 
 
Fleet growth (a)
$
202

 
$
179

Adjusted free cash flow (a)
(31
)
 
12

(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedules III and IV.


7


SELECTED UNAUDITED OPERATING DATA BY SEGMENT

 
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
 
2017
 
2016
 
 
U.S. RAC
 
 
 
 
 
 
Transaction days (in thousands) 
32,312

 
32,742

 
(1
)%
 
Total RPD(b)
$
41.19

 
$
42.36

 
(3
)%
 
Total RPU(b)
$
928

 
$
1,005

 
(8
)%
 
Average vehicles
478,000

 
460,200

 
4
 %
 
Vehicle utilization
75
%
 
78
%
 
(310
)
bps
Net depreciation per unit per month(b)
$
348

 
$
303

 
15
 %
 
Program vehicles as a percentage of total average vehicles at period end
8
%
 
15
%
 
(700
)
bps
Adjusted pre-tax income (loss)(in millions)(a)
$
(116
)
 
$
(4
)
 
NM

 
 
 
 
 
 
 
 
International RAC
 
 
 
 


 
Transaction days (in thousands)
10,184

 
10,104

 
1
 %
 
Total RPD(b)(c)
$
39.38

 
$
40.97

 
(4
)%
 
Total RPU(b)(c)
$
889

 
$
932

 
(5
)%
 
Average vehicles
150,400

 
148,100

 
2
 %
 
Vehicle utilization
75
%
 
75
%
 
30

bps
Net depreciation per unit per month(b)(c)
$
184

 
$
185

 
(1
)%
 
Program vehicles as a percentage of total average vehicles at period end
33
%
 
37
%
 
(400
)
bps
Adjusted pre-tax income (loss)(in millions)(a)
$
(4
)
 
$
3

 
NM

 
 
 
 
 
 
 
 
All Other Operations
 
 
 
 


 
Average vehicles — Donlen
207,500

 
162,300

 
28
 %
 
Adjusted pre-tax income (loss) (in millions)(a)
$
21

 
$
18

 
17
 %
 
NM - Not Meaningful

(a)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule II.
(b)
Represents a key metric, see the accompanying reconciliations included in Supplemental Schedule VI.
(c)
Based on December 31, 2016 foreign exchange rates.


8




Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
(In millions)
U.S. Rental Car
 
Int'l Rental Car
 
All Other Operations
 
Corporate
 
Hertz Global
 
U.S. Rental Car
 
Int'l Rental Car
 
All Other Operations
 
Corporate
 
Hertz Global
Total revenues:
$
1,353

 
$
411

 
$
152

 
$
—

 
$
1,916

 
$
1,406

 
$
433

 
$
144

 
$
—

 
$
1,983

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
861

 
267

 
5

 
(1
)
 
1,132

 
870

 
279

 
5

 
4

 
1,158

Depreciation of revenue earning vehicles and lease charges, net
499

 
85

 
117

 
—

 
701

 
419

 
86

 
111

 
—

 
616

Selling, general and administrative
95

 
52

 
8

 
65

 
220

 
104

 
54

 
10

 
57

 
225

Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
49

 
16

 
6

 
—

 
71

 
51

 
14

 
4

 
—

 
69

Non-vehicle
(19
)
 
—

 
(2
)
 
80

 
59

 
(7
)
 
1

 
(1
)
 
88

 
81

Total interest expense, net
30

 
16

 
4

 
80

 
130

 
44

 
15

 
3

 
88

 
150

Other (income) expense, net
—

 
(4
)
 
—

 
31

 
27

 
(9
)
 
—

 
—

 
(81
)
 
(90
)
Total expenses
1,485

 
416

 
134

 
175

 
2,210

 
1,428

 
434

 
129

 
68

 
2,059

Income (loss) from continuing operations before income taxes
$
(132
)
 
$
(5
)
 
$
18

 
$
(175
)
 
(294
)
 
$
(22
)
 
$
(1
)
 
$
15

 
$
(68
)
 
(76
)
Income tax (provision) benefit from continuing operations
 
 
 
 
 
 
 
 
71

 
 
 
 
 
 
 
 
 
24

Net income (loss) from continuing operations
 
 
 
 
 
 
 
 
(223
)
 
 
 
 
 
 
 
 
 
(52
)
Net income (loss) from discontinued operations
 
 
 
 
 
 
 
 
—

 
 
 
 
 
 
 
 
 
1

Net income (loss)
 
 
 
 
 
 
 
 
$
(223
)
 
 
 
 
 
 
 
 
 
$
(51
)



9


Supplemental Schedule II
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
TO GROSS EBITDA, CORPORATE EBITDA, ADJUSTED CORPORATE EBITDA, ADJUSTED PRE-TAX INCOME (LOSS)
AND ADJUSTED NET INCOME (LOSS)
Unaudited
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
(In millions)
U.S. Rental Car
 
Int'l Rental Car
 
All Other Operations
 
Corporate
 
Hertz Global
 
U.S. Rental Car
 
Int'l Rental Car
 
All Other Operations
 
Corporate
 
Hertz Global
Income (loss) from continuing operations before income taxes
$
(132
)
 
$
(5
)
 
$
18

 
$
(175
)
 
$
(294
)
 
$
(22
)
 
$
(1
)
 
$
15

 
$
(68
)
 
$
(76
)
Depreciation and amortization
542

 
93

 
120

 
4

 
759

 
469

 
95

 
113

 
6

 
683

Interest, net of interest income
30

 
16

 
4

 
80

 
130

 
44

 
15

 
3

 
88

 
150

Gross EBITDA
$
440

 
$
104

 
$
142

 
$
(91
)
 
$
595

 
$
491

 
$
109

 
$
131

 
$
26

 
$
757

Revenue earning vehicle depreciation and lease charges, net
(499
)
 
(85
)
 
(117
)
 
—

 
(701
)
 
(419
)
 
(86
)
 
(111
)
 
—

 
(616
)
Vehicle debt interest
(49
)
 
(16
)
 
(6
)
 
—

 
(71
)
 
(51
)
 
(14
)
 
(4
)
 
—

 
(69
)
Vehicle debt-related charges (a)
4

 
2

 
1

 
—

 
7

 
8

 
1

 
1

 
—

 
10

Corporate EBITDA
$
(104
)
 
$
5

 
$
20

 
$
(91
)
 
$
(170
)
 
$
29

 
$
10

 
$
17

 
$
26

 
$
82

Non-cash stock-based employee compensation charges
—

 
—

 
—

 
7

 
7

 
—

 
—

 
—

 
5

 
5

Restructuring and restructuring related charges (b)(c)
—

 
1

 
—

 
5

 
6

 
1

 
1

 
—

 
10

 
12

Sale of CAR Inc. common stock(d)
—

 
—

 
—

 
(3
)
 
(3
)
 
—

 
—

 
—

 
(75
)
 
(75
)
Impairment charges and asset write-downs(e)
—

 
—

 
—

 
30

 
30

 
—

 
—

 
—

 
—

 
—

Finance and information technology transformation costs(f)
—

 
—

 
—

 
19

 
19

 
5

 
—

 
—

 
3

 
8

Miscellaneous, unusual or non-recurring items(g)
—

 
(3
)
 
—

 
4

 
1

 
(9
)
 
—

 
—

 
4

 
(5
)
Adjusted Corporate EBITDA
$
(104
)
 
$
3

 
$
20

 
$
(29
)
 
$
(110
)
 
$
26

 
$
11

 
$
17

 
$
(27
)
 
$
27

Non-vehicle depreciation and amortization
(43
)
 
(8
)
 
(3
)
 
(4
)
 
(58
)
 
(50
)
 
(9
)
 
(2
)
 
(6
)
 
(67
)
Non-vehicle debt interest, net of interest income
19

 
—

 
2

 
(80
)
 
(59
)
 
7

 
(1
)
 
1

 
(88
)
 
(81
)
Non-vehicle debt-related charges (a)
—

 
—

 
—

 
3

 
3

 
—

 
1

 
—

 
3

 
4

Non-cash stock-based employee compensation charges
—

 
—

 
—

 
(7
)
 
(7
)
 
—

 
—

 
—

 
(5
)
 
(5
)
Acquisition accounting (h)
12

 
1

 
2

 
1

 
16

 
13

 
1

 
2

 
—

 
16

Other(c)
—

 
—

 
—

 
2

 
2

 
—

 
—

 
—

 
—

 
—

Adjusted pre-tax income (loss)(i)
$
(116
)
 
$
(4
)
 
$
21

 
$
(114
)
 
$
(213
)
 
$
(4
)
 
$
3

 
$
18

 
$
(123
)
 
$
(106
)
Income tax (provision) benefit on adjusted pre-tax income (loss)(j)
 
 
 
 
 
 
 
 
79

 
 
 
 
 
 
 
 
 
39

Adjusted net income (loss)
 
 
 
 
 
 
 
 
(134
)
 
 
 
 
 
 
 
 
 
(67
)
Weighted average number of diluted shares outstanding
 
 
 
 
 
 
 
 
83

 
 
 
 
 
 
 
 
 
85

Adjusted diluted earnings (loss) per share
 
 
 
 
 
 
 
 
(1.61
)
 
 
 
 
 
 
 
 
 
(0.79
)

(a)
Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
(b)
Represents expenses incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs, when applicable. Also represents certain other charges such as incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes. Also includes consulting costs and legal fees related to the previously disclosed accounting review and investigation.
(c)
For the first quarter 2017, excludes $2 million of stock-based compensation expenditures included in restructuring and restructuring related charges.
(d)
Represents the pre-tax gain on the sale of CAR Inc. common stock.
(e)
In 2017, represents a $30 million impairment of an equity method investments.
(f)
Represents external costs associated with the Company’s finance and information technology transformation programs, both of which are multi-year initiatives that commenced in 2016 to upgrade and modernize the Company’s systems and processes.

10


(g)
Includes miscellaneous, non-recurring and other non-cash items and, in 2017, includes an adjustment to the carrying value of the Company's Brazil operations in connection with its classification as held for sale. In 2016, also includes a $9 million settlement gain from an eminent domain case related to one of the Company's airport locations.
(h)
Represents incremental expense associated with amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
(i)
Adjustments by caption to arrive at adjusted pre-tax income (loss) are as follows:

Increase (decrease) to expenses
Three Months Ended March 31,
(In millions)
2017
 
2016
Direct vehicle and operating expenses
$
(16
)
 
$
(13
)
Selling, general and administrative expenses
(29
)
 
(27
)
Vehicle interest expense, net
(7
)
 
(10
)
Non-vehicle interest expense, net
(3
)
 
(4
)
Other income (expense), net
(26
)
 
84

Total adjustments
$
(81
)
 
$
30



(j)
Represents an income tax (provision benefit derived utilizing a combined statutory rate of 37% applied to the adjusted income (loss) before income taxes to arrive at the adjusted income tax (provision) benefit.



11


Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - FLEET GROWTH
Unaudited
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
(In millions)
U.S. Rental Car
 
Int'l Rental Car
 
All Other Operations
 
Hertz Global
 
U.S. Rental Car
 
Int'l Rental Car
 
All Other Operations
 
Hertz Global
Revenue earning vehicles expenditures
$
(2,097
)
 
$
(613
)
 
$
(152
)
 
$
(2,862
)
 
$
(2,667
)
 
$
(534
)
 
$
(184
)
 
$
(3,385
)
Proceeds from disposal of revenue earning vehicles
1,291

 
620

 
49

 
1,960

 
2,084

 
609

 
69

 
2,762

Net revenue earning vehicles capital expenditures
(806
)
 
7

 
(103
)
 
(902
)
 
(583
)
 
75

 
(115
)
 
(623
)
Depreciation of revenue earning vehicles, net
499

 
68

 
117

 
684

 
419

 
71

 
111

 
601

Financing activity related to vehicles:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings
1,641

 
410

 
47

 
2,098

 
1,945

 
424

 
80

 
2,449

Payments
(1,179
)
 
(426
)
 
(87
)
 
(1,692
)
 
(1,732
)
 
(412
)
 
(96
)
 
(2,240
)
Restricted cash changes
(1
)
 
22

 
(7
)
 
14

 
(7
)
 
(4
)
 
3

 
(8
)
Net financing activity related to vehicles
461

 
6

 
(47
)
 
420

 
206

 
8

 
(13
)
 
201

Fleet growth
$
154

 
$
81

 
$
(33
)
 
$
202

 
$
42

 
$
154

 
$
(17
)
 
$
179







12


Supplemental Schedule IV
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED FREE CASH FLOW
Unaudited

Reconciliation of Cash Flows From Operating Activities to Adjusted Free Cash Flow
Three Months Ended March 31,
(In millions)
2017
 
2016
Net cash provided by operating activities
$
498

 
$
461

Net change in restricted cash and cash equivalents, vehicle
14

 
(8
)
Revenue earning vehicles expenditures
(2,862
)
 
(3,385
)
Proceeds from disposal of revenue earning vehicles
1,960

 
2,762

Capital asset expenditures, non-vehicle
(54
)
 
(46
)
Proceeds from disposal of property and other equipment
7

 
19

Proceeds from issuance of vehicle debt
2,098

 
2,449

Repayments of vehicle debt
(1,692
)
 
(2,240
)
Adjusted free cash flow
$
(31
)
 
$
12


Supplemental Schedule V
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES - NET DEBT
Unaudited

 
As of March 31, 2017
 
As of December 31, 2016
(In millions)
Vehicle
 
Non-Vehicle
 
Total
 
Vehicle
 
Non-Vehicle
 
Total
Debt as reported in the balance sheet
$
10,113

 
$
3,895

 
$
14,008

 
$
9,646

 
$
3,895

 
$
13,541

Add:
 
 
 
 
 
 
 
 
 
 
 
     Debt issue costs deducted from debt obligations(a)
32

 
35

 
67

 
36

 
37

 
73

Less:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
—

 
785

 
785

 
—

 
816

 
816

Restricted cash
223

 
—

 
223

 
235

 
—

 
235

Net debt
$
9,922

 
$
3,145

 
$
13,067

 
$
9,447

 
$
3,116

 
$
12,563


(a)
Certain debt issue costs are required to be reported as a deduction from the carrying amount of the related debt obligation under GAAP. Management believes that eliminating the effects that these costs have on debt will more accurately reflect the Company's net debt position.

13


Supplemental Schedule VI
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF KEY METRICS
REVENUE, UTILIZATION AND DEPRECIATION
Unaudited

 
U.S. Rental Car
 
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
($In millions, except as noted)
2017
 
2016
 
 
Total RPD
 
 
 
 
 
 
Revenues
$
1,353

 
$
1,406

 
 
 
Ancillary retail vehicle sales revenue
(22
)
 
(19
)
 
 
 
Total rental revenue
$
1,331

 
$
1,387

 
 
 
Transaction days (in thousands)
32,312

 
32,742

 
 
 
Total RPD (in whole dollars)
$
41.19

 
$
42.36

 
(3
)%
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
Total rental revenue
$
1,331

 
$
1,387

 
 
 
Average vehicles
478,000

 
460,200

 
 
 
Total revenue per unit (in whole dollars)
$
2,785

 
$
3,014

 
 
 
Number of months in period
3

 
3

 
 
 
Total RPU (in whole dollars)
$
928

 
$
1,005

 
(8
)%
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
Transaction days (in thousands)
32,312

 
32,742

 
 
 
     Average vehicles
478,000

 
460,200

 
 
 
     Number of days in period
90

 
91

 
 
 
Available car days (in thousands)
43,020

 
41,878

 
 
 
Vehicle utilization(a)
75
%
 
78
%
 
(310
)
bps
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
499

 
$
419

 
 
 
Average vehicles
478,000

 
460,200

 
 
 
Depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
$
1,044

 
$
910

 
 
 
Number of months in period
3

 
3

 
 
 
Net depreciation per unit per month (in whole dollars)
$
348

 
$
303

 
15
 %
 

(a)Calculated as transaction days divided by available car days.


14


Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF KEY METRICS
REVENUE, UTILIZATION AND DEPRECIATION
Unaudited


International Rental Car
 
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
(in millions, except as noted)
2017
 
2016
 
 
Total RPD
 
 
 
 
 
 
Revenues
$
411

 
$
433

 
 
 
Foreign currency adjustment(a)
(10
)
 
(19
)
 
 
 
Total rental revenue
$
401

 
$
414

 
 
 
Transaction days (in thousands)
10,184

 
10,104

 
 
 
Total RPD (in whole dollars)
$
39.38

 
$
40.97

 
(4
)%
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
Total rental revenue
$
401

 
$
414

 
 
 
Average vehicles
150,400

 
148,100

 
 
 
Total revenue per unit (in whole dollars)
$
2,666

 
$
2,795

 
 
 
Number of months in period
3

 
3

 
 
 
Total RPU (in whole dollars)
$
889

 
$
932

 
(5
)%
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
Transaction days (in thousands)
10,184

 
10,104

 
 
 
     Average vehicles
150,400

 
148,100

 
 
 
     Number of days in period
90

 
91

 
 
 
Available car days (in thousands)
13,536

 
13,477

 
 
 
Vehicle utilization(b)
75
%
 
75
%
 
30

bps
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
85

 
$
86

 
 
 
Foreign currency adjustment (a) 
(2
)
 
(4
)
 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net
$
83

 
$
82

 
 
 
Average vehicles
150,400

 
148,100

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
$
552

 
$
554

 
 
 
Number of months in period
3

 
3

 
 
 
Net depreciation per unit per month (in whole dollars)
$
184

 
$
185

 
(1
)%
 

(a)Based on December 31, 2016 foreign exchange rates.
(b)Calculated as transaction days divided by available car days.


15


Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF KEY METRICS
REVENUE, UTILIZATION AND DEPRECIATION
Unaudited


Worldwide Rental Car
 
Three Months Ended
March 31,
 
Percent Inc/(Dec)
 
(in millions, except as noted)
2017
 
2016
 
 
Total RPD
 
 
 
 
 
 
Revenues
$
1,764

 
$
1,839

 
 
 
Ancillary retail vehicle sales revenue
(22
)
 
(19
)
 
 
 
Foreign currency adjustment(a)
(10
)
 
(19
)
 
 
 
Total rental revenue
$
1,732

 
$
1,801

 
 
 
Transaction days (in thousands)
42,496

 
42,846

 
 
 
Total RPD (in whole dollars)
$
40.76

 
$
42.03

 
(3
)%
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
Total rental revenue
1,732

 
1,801

 
 
 
Average vehicles
628,400

 
608,300

 
 
 
Total revenue per unit (in whole dollars)
2,756

 
2,961

 
 
 
Number of months in period
3

 
3

 
 
 
Total RPU (in whole dollars)
919

 
987

 
(7
)%
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
Transaction days (in thousands)
42,496

 
42,846

 
 
 
     Average vehicles
628,400

 
608,300

 
 
 
     Number of days in period
90

 
91

 
 
 
Available car days (in thousands)
56,556

 
55,355

 
 
 
Vehicle utilization(b)
75
%
 
77
%
 
(200
)
bps
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
584

 
$
505

 
 
 
Foreign currency adjustment (a) 
(2
)
 
(4
)
 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net
$
582

 
$
501

 
 
 
Average vehicles
628,400

 
608,300

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
$
926

 
$
824

 
 
 
Number of months in period
3

 
3

 
 
 
Net depreciation per unit per month (in whole dollars)
$
309

 
$
275

 
12
 %
 
Note: Worldwide Rental Car represents U.S. Rental Car and International Rental Car segment information on a combined basis and excludes our All Other Operations segment, which is primarily comprised of our Donlen leasing operations, and Corporate.

(a)Based on December 31, 2016 foreign exchange rates.
(b)Calculated as transaction days divided by available car days.


16


NON-GAAP MEASURES AND KEY METRICS - DEFINITIONS AND USE
 
Hertz Global is the top-level holding company and The Hertz Corporation is Hertz Global's primary operating company. The term “GAAP” refers to accounting principles generally accepted in the United States of America.
 
Definitions of non-GAAP measures are set forth below. Also set forth below is a summary of the reasons why management of the Company believes that the presentation of the non-GAAP financial measures included in the Earnings Release provide useful information regarding the Company's financial condition and results of operations and additional purposes, if any, for which management of the Company utilizes the non-GAAP measures.

Adjusted Pre-Tax Income (Loss) and Adjusted Pre-tax Margin

Adjusted pre-tax income (loss) is calculated as income (loss) from continuing operations before income taxes plus non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts, goodwill, intangible and tangible asset impairments and write-downs and certain one-time charges and non-operational items. Adjusted pre-tax income (loss) is important because it allows management to assess operational performance of the Company's business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes it is important to investors for the same reasons it is important to management and because it allows them to assess the operational performance of the Company on the same basis that management uses internally. When evaluating the Company's operating performance, investors should not consider adjusted pre-tax income (loss) in isolation of, or as a substitute for, measures of the Company's financial performance, such as net income (loss) from continuing operations or income (loss) from continuing operations before income taxes. Adjusted pre-tax margin is adjusted pre-tax income (loss) divided by total revenues.

Adjusted Net Income (Loss)

Adjusted net income (loss) is calculated as adjusted pre-tax income (loss) less a provision for income taxes derived utilizing a combined statutory rate of 37%. The combined statutory rate is management's estimate of the Company's long-term tax rate. Adjusted net income (loss) is important to management and investors because it represents the Company's operational performance exclusive of the effects of purchase accounting, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of the Company's competitors.

Adjusted Earnings (Loss) Per Diluted Share ("Adjusted EPS")

Adjusted earnings (loss) per diluted share is calculated as adjusted net income divided by the weighted average number of diluted shares outstanding for the period. Adjusted earnings (loss) per diluted share is important to management and investors because it represents a measure of the Company's operational performance exclusive of the effects of purchase accounting adjustments, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of the Company's competitors.

Adjusted Free Cash Flow

Adjusted free cash flow is calculated as net cash provided by operating activities from continuing operations, including the change in restricted cash and cash equivalents related to vehicles, net revenue earning vehicle and capital asset expenditures and the net impact of vehicle financing activities. Adjusted free cash flow is important to management and investors as it provides useful information about the amount of cash available for acquisitions and the reduction of non-vehicle debt. When evaluating the Company's liquidity, investors should not consider Adjusted free cash flow in isolation of, or as a substitute for, a measure of the Company's liquidity as determined in accordance with GAAP, such as net cash provided by operating activities.

Available Car Days

Available Car Days is calculated as average vehicles multiplied by the number of days in a period.


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Average Vehicles

Average Vehicles, also known as "fleet capacity", is determined using a simple average of the number of vehicles in our fleet whether owned or leased by the Company at the beginning and end of a given period. Among other things, average vehicles is used to calculate Vehicle Utilization which represents the portion of the Company's vehicles that are being utilized to generate revenue.

Earnings Before Interest, Taxes, Depreciation and Amortization (“Gross EBITDA”), Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin

Gross EBITDA is defined as net income (loss) from continuing operations before net interest expense, income taxes and depreciation (which includes lease charges on revenue earning vehicles) and amortization. Corporate EBITDA, as presented herein, represents Gross EBITDA as adjusted for vehicle debt interest, vehicle depreciation and vehicle debt-related charges. Adjusted Corporate EBITDA, as presented herein, represents Corporate EBITDA as adjusted for certain other items, as described in more detail in the accompanying schedules.

Management uses Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA as operating performance metrics for internal monitoring and planning purposes, including the preparation of the Company's annual operating budget and monthly operating reviews, as well as to facilitate analysis of investment decisions, profitability and performance trends. Further, Gross EBITDA enables management and investors to isolate the effects on profitability of operating metrics such as revenue, direct vehicle and operating expenses and selling, general and administrative expenses, which enables management and investors to evaluate the Company's business segments that are financed differently and have different depreciation characteristics and compare the Company's performance against companies with different capital structures and depreciation policies. We also present Adjusted Corporate EBITDA as a supplemental measure because such information is utilized in the determination of certain executive compensation.

Gross EBITDA, Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are not recognized measurements under U.S. GAAP. When evaluating the Company's operating performance, investors should not consider Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of the Company's financial performance as determined in accordance with GAAP, such as net income (loss) from continuing operations or income (loss) from continuing operations before income taxes.

Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues and is used by the Compensation Committee to determine certain executive compensation, primarily in the form of PSUs.

Fleet Growth

U.S. and International Rental Car segments fleet growth is defined as revenue earning vehicles expenditures, net of proceeds from disposals, plus vehicle depreciation and net vehicle financing which includes borrowings, repayments and the change in restricted cash associated with vehicles.

Net Non-Vehicle Debt

Net non-vehicle debt is calculated as non-vehicle debt as reported on the Company's balance sheet, excluding the impact of unamortized debt issue costs associated with non-vehicle debt, less cash and equivalents. Non-vehicle debt consists of the Company's Senior Term Loan, Senior RCF, Senior Notes, Promissory Notes and certain other non-vehicle indebtedness of its domestic and foreign subsidiaries.

Net non-vehicle debt is important to management and investors as it helps measure the Company's leverage. Net non-vehicle debt also assists in the evaluation of the Company's ability to service its non-vehicle debt without reference to the expense associated with the vehicle debt, which is collateralized by assets not available to lenders under the non-vehicle debt facilities.

Net Vehicle Debt

Net vehicle debt is calculated as vehicle debt as reported on the Company's balance sheet, excluding the impact of unamortized debt issue costs associated with vehicle debt, less cash and equivalents and restricted cash associated with vehicles. This measure is important to management, investors and ratings agencies as it helps measure the Company's leverage with respect to its vehicle debt.

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Net Depreciation Per Unit Per Month

Net depreciation per unit per month is calculated by dividing depreciation of revenue earning vehicles and lease charges, net by the average vehicles in each period and then dividing by the number of months in the period reported with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month.

Restricted Cash Associated with Vehicle Debt (used in the calculation of Net Vehicle Debt)

Restricted cash associated with vehicle debt is restricted for the purchase of revenue earning vehicles and other specified uses under the Company's vehicle debt facilities and its vehicle rental like-kind exchange program.

Total Net Debt

Total net debt is calculated as total debt less total cash and cash equivalents and restricted cash associated with vehicle debt. This measure is important to management, investors and ratings agencies as it helps measure the Company's gross leverage.

Total RPD (also referred to as "pricing")

Total RPD is calculated as total revenue less ancillary revenue associated with retail vehicle sales, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. The Company's management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to the Company's management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.

Total Revenue Per Unit Per Month ("Total RPU")

Total revenue per unit per month is calculated as total revenues less ancillary revenue associated with retail vehicle sales divided by the average vehicles in each period and then dividing by the number of months in the period reported with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to the Company's management and investors as it provides a measure of revenue productivity relative to fleet capacity.

Transaction Days

Transaction days, also known as volume, represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period. 

Vehicle Utilization

Vehicle utilization is calculated by dividing total transaction days by the available car days.


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a1q17slidesfinal2
1 1Q 2017 Earnings Call May 9, 2017 8:30am ET

 
2 Safe Harbor Statement Certain statements made within this presentation contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance and by their nature are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed in this presentation speaks only as of May 8, 2017, and Hertz Global Holdings, Inc (the “Company”). The Company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements is contained in the Company’s press release regarding its First Quarter 2017 results issued on May 8, 2017, and the Risk Factors and Forward- Looking Statements sections of the Company’s 2016 Form 10-K filed on March 6, 2017, and First Quarter 2017 Quarterly Report on Form 10-Q filed on May 8, 2017. Copies of these filings are available from the SEC, the Hertz website or the Company’s Investor Relations Department. 1Q

 
3 Non-GAAP Measures THE FOLLOWING KEY METRICS AND NON-GAAP* MEASURES WILL BE USED IN THE PRESENTATION: Adjusted corporate EBITDA Adjusted corporate EBITDA margin Adjusted pre-tax income (loss) Adjusted net income (loss) Adjusted diluted earnings (loss) per share (Adjusted diluted EPS) Total RPD Total RPU Net depreciation per unit per month Vehicle utilization Rentable Utilization 1Q *Definitions and reconciliations of these key metrics and non-GAAP measures are provided in the Company’s first quarter 2017 press release issued on May 8, 2017 and in the Company’s Form 8-K filed on May 9, 2017.

 
4 Agenda BUSINESS OVERVIEW Kathryn Marinello President & Chief Executive Officer Hertz Global Holdings, Inc. FINANCIAL RESULTS OVERVIEW Tom Kennedy Chief Financial Officer Hertz Global Holdings, Inc. 1Q

 
5 Drivers of US RAC Long-Term Growth 1Q • FLEET………………. Upgrade vehicle mix and optimize capacity • SERVICE…………… Improve processes, restructure incentives, roll out Ultimate Choice platform • MARKETING……….. Enhance digital applications • TECHNOLOGY…….. Update suite of systems for greater flexibility, productivity and capabilities Influencing Brand Preference through Product Quality and Service Excellence 2017 Earnings Impacted by Investment Strategy to Drive Long-term Growth 2018 Positioned to Benefit from Early Returns

 
6 1Q:17 Adjusted Corporate EBITDA Bridge 1Q Transformation Predicated on Optimizing Fleet Mix and Capacity $27 ($110) 60% of 1Q:17 year-over-year adjusted corporate EBITDA decline All Other U.S. RAC Revenue Contribution U.S. RAC Vehicle Carrying Costs Contribution Adjusted Corporate EBITDA $ in millions 1Q 2016 Actuals 1Q 2017 Actuals

 
7 Long-term Outperformance Opportunity: • Hertz brand strength • Industry-leading loyalty programs • Strong partnerships • Ultimate Choice offering • Mature, robust retail car-sales network • Leading-edge systems platform Execution is Key Company is Structurally Capable of Achieving Historic Margins 1Q

 
8 TOM KENNEDY CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc. Quarterly Overview

 
9 1Q:17 Consolidated Results GAAP 1Q:17 Results 1Q:16 Results YoY Change Revenue $1,916M $1,983M (3)% Income (loss) from continuing operations before income taxes $(294)M $(76)M (287)% Net Income (loss) from continuing operations $(223)M $(52)M (329)% Diluted earnings (loss) per share from continuing operations $(2.69) $(0.61) (341)% Weighted Average Shares outstanding: Diluted 83M 85M Non-GAAP* Adjusted corporate EBITDA $(110)M $27M NM Adjusted corporate EBITDA margin (6)% 1% (710 bps) Adjusted pre-tax income (loss) $(213)M $(106)M (101)% Adjusted net income (loss) $(134)M $(67)M (100)% Adjusted diluted EPS $(1.61) $(0.79) (104)% 1Q *Definitions and reconciliations of Non-GAAP measures are provided in the Company’s first quarter 2017 press release issued on May 8, 2017 and in the Company’s Form 8-K filed on May 9, 2017.

 
10 1Q:17 U.S. RAC Revenue Performance Revenue Days Total RPD Vehicle Utilization (bps) Capacity Total RPU (2%)(2%) (8%) 0% 6% 2% 1%1% (8%) (10%) (3%) 660540 (60) (2%) (5%) 2% 0% (2%) (4%) U.S. RAC (YoY quarterly results) Revenue is defined as total revenue excluding ancillary retail car sales. Capacity is average fleet, see calculation in Q1:17 press release. Vehicle utilization is calculated as transaction days divided by capacity. Total RPU is calculated as total revenue divided by average fleet. 1Q:17 Performance Drivers (1%) (100) 3% (3%) 1Q (4%) (1%) (3%) 4% (8%) (310) • Rate • RPD declined 3% YoY, impacted by Easter holiday shift and customer mix • Volume • Volume decreased 1%, due in part to the 2016 leap year • Excluding leap year: • Business volume grew 1%, due to growth of ride-hailing rental demand offset by weakness in corporate contracted volume • Negative impact of mild Winter – lower demand in Insurance Replacement and certain sun/leisure destinations

 
11 1Q:17 U.S. RAC Vehicle Utilization Vehicle Utilization YoY bps Inc/(Dec) Capacity level is timing related 1Q Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 • Rentable utilization 170 basis points lower 1Q:17 vs 1Q:16, as mild weather impacted demand in certain segments such as Insurance Replacement and certain sun destinations • Expect fleet optimization initiatives to be completed by end of 2Q:17 • Should allow for YoY utilization improvements in back half 2017 Vehicle UTE Rentable UTE 660 (310) (170) 380 540 240 (60) (60) (100) (50) * Rentable Vehicle Utilization is calculated by dividing transaction days by available car days, excluding fleet unavailable for rent e.g.: recalled, out of service, and vehicle in onboarding and remarketing channels

 
12 1Q:17 U.S. RAC Monthly Depreciation Per Unit 34% 24% 42% 35% 24% 41% Auction Retail Dealer Direct 1Q:17 1Q:16 Non-Program Vehicle Disposition Channel Mix Monthly Depreciation Per Unit YoY % $303 $278 $304 $321 $287 $248 $267 $269 $303 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Current Year Prior Year $348 +19% +6% +12% +14% 1Q +15% Alternative Sales Channels - Core Competency • 65% of mix 1Q:17 • Absolute sales through highest-return retail channel grew 21% in Q1:17 • 1Q:17 used car prices did not experience historical seasonal lift, prices continue to be under pressure in YoY terms • Aggressively sold Risk cars in 1Q:17 to right size capacity, despite industry residual weakness • Sold 21% more risk vehicles YoY • Outlook for FY17 residual decline adjusted to -3.5% from -3%

 
13 1Q:17 International RAC • 1Q:17 revenue decreased 5%, or 4% YoY when you exclude FX - Transaction days increased 1% despite the impact of leap year, and exiting certain underperforming accounts in the UK in 2H:16 - Total RPD declined 4% due primarily to the impact of the Easter holiday falling in second quarter in 2017 versus the first quarter in 2016 • Total vehicle utilization was 75%, 30 bps higher than the prior-year period • Monthly depreciation per unit decreased 1% YoY • Direct operating and SG&A expenses per transaction day improved 5% YoY • Adjusted corporate EBITDA margin declined 180 bps YoY primarily due to the revenue decline and 80 bps of adverse claims development, partially offset by savings in operating costs 1Q

 
14 LIQUIDITY / BALANCE SHEET OVERVIEW TOM KENNEDY CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc.

 
15 3/31/17 Senior RCF Availability $939M Unrestricted Cash 785M Corporate Liquidity $1,724M Liquidity and Debt Overview • Since our Q4 2016 earnings call, we have: –Added $750M of U.S. RAC incremental VFN capacity committed through at least October 2018 –Completed a $500M Donlen-sponsored term ABS transaction • Non-Vehicle debt maturities through YE’18 limited to $262M Corporate Liquidity at March 31, 2017

 
16 Limited Near-Term Non-Vehicle Debt Maturities 03/31/17 Hertz Global Non-Vehicle Debt Maturity Stack (1) (2) ($ in millions) $250 $450 $700 $500 $500 $800 $5 $7 $7 $7 $7 $7 $655 $1,700 2017 2018 2019 2020 2021 2022 2023 2024 Senior Notes Term Loan Undrawn Senior RCF 1 Excludes $28 million of Promissory Notes due 2028 and $9 million of capital leases. 2 $761 million of letters of credit outstanding under the Senior RCF resulting in approximately $939 million of available borrowing capacity.

 
17 First Lien Financial Maintenance Covenant Consolidated First Lien Leverage Ratio as of 3/31/17 was 2.4x and was calculated as follows: – Unrestricted cash is capped at $500M; cap falls away post once Consolidated Gross Total Corporate Leverage Ratio is equal to or less than 6.0x for two consecutive quarters post 12/31/17 – Restricts ability to undertake share repurchases or pay dividends until net corporate debt leverage ratio is below 4.0x for two consecutive quarters Our Consolidated First Lien Leverage Ratio is tested each quarter and must not exceed the thresholds outlined below: Senior RCF Facility Size $1,700M Outstanding Letters of Credit - 761 Term Loan Outstanding + 695 Unrestricted Cash - 500 First Lien Secured Net Debt 1,134 TTM Adjusted Corporate EBITDA1 / 470 Consolidated First Lien Leverage Ratio 2.4X 1 TTM Adjusted Corporate EBITDA defined as $416M Reported LTM Adjusted Corporate EBIDTA + $54M Other Adjustments as permitted in calculating covenant compliance under the Senior RCF Credit Agreement YE’16 1Q’17-3Q’17 4Q’17+ 3.0X 3.25X 3.0X

 
18 Q&A