Document


 
 
 
 
 
 
 
 
 
 
 
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) August 7, 2018 (August 6, 2018)

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 August 6, 2018, Hertz Global Holdings, Inc. and The Hertz Corporation (collectively, “Hertz” or the “Company”) issued a press release with respect to the Company’s second quarter 2018 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 August 7, 2018, the Company will conduct an earnings webcast relating to the Company's financial results for the second quarter 2018. 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 August 6, 2018 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 REGARDING 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 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; occurrences that disrupt rental activity during our peak periods; increased vehicle costs due to declines in the value of the Company's non-program vehicles; 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 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 and a coordinated and comprehensive branding and portfolio strategy; 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 and the Letter of Credit Facility, its outstanding unsecured Senior Notes, its outstanding Senior Second Priority Secured 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 prevent the misuse or theft of information it possesses, including as a result of cyber security breaches and other security threats; the Company's ability to successfully implement its information technology and finance transformation programs; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, such as the Tax Cuts and Jobs Act, 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 and uncertainties 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 August 6, 2018.
Exhibit 99.2 - Set of slides that will accompany the August 7, 2018 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:  August 7, 2018



Exhibit
Exhibit 99.1



Hertz Global Holdings Reports
Second Quarter 2018 Financial Results


ESTERO, Fla, August 6, 2018 - Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported results for its second quarter 2018.

Second Quarter 2018 Compared to Second Quarter 2017:

Total revenue increased 7%
Net loss improved by 60%
Adjusted Corporate EBITDA improved by $58 million
Highest Q2 U.S. RAC segment revenues since 2014
Improved trend in U.S. RAC per unit fleet costs continue


“In the second quarter, we generated growth across every business segment with higher year-over-year revenue and Adjusted Corporate EBITDA. In the U.S., our turnaround initiatives are bearing fruit as a result of effective strategies, experienced leaders, and critical investments in fleet, marketing and our retail operations,” said Kathryn V. Marinello, president and chief executive officer of Hertz. “At the same time, we’re developing and testing new technology platforms with the future in mind. The successful launch of those systems in the second half of 2019 will further support our strategy to sustainably grow revenue, improve productivity and drive innovation over the long term.”
For the second quarter 2018, total revenues were $2.4 billion, a 7% increase versus the second quarter 2017. Loss before income taxes for the second quarter 2018 was $86 million versus a loss of $245 million in the same period last year. Second quarter 2018 net loss was $63 million, or $0.75 loss per diluted share compared with a net loss of $158 million during the second quarter 2017, or $1.90 loss per diluted share. The Company reported adjusted net loss for the second quarter 2018 of $16 million, or $0.19 per adjusted diluted loss per share, compared with adjusted net loss of $52 million, or $0.63 adjusted diluted loss per share, for the same period last year. Adjusted Corporate EBITDA for the second quarter 2018 was $93 million, compared to $35 million in the same period last year.




1


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

U.S. RAC(1)
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
Total Revenues
$
1,628

 
$
1,519

 
7
 %
 
Depreciation of revenue earning vehicles and lease charges, net
$
447

 
$
524

 
(15
)%
 
Income (loss) before income taxes
$
10

 
$
(146
)
 
NM

 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)
$
24

 
$
(37
)
 
NM

 
Adjusted pre-tax margin
1
%
 
(2
)%
 
NM

 
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
18

 
$
(22
)
 
NM

 
Adjusted Corporate EBITDA margin
1
%
 
(1
)%
 
NM

 
 
 
 
 
 
 
 
Average vehicles
523,000

 
495,000

 
6
 %
 
Vehicle utilization
81
%
 
80
 %
 
100

bps
Transaction days (in thousands)
38,747

 
36,233

 
7
 %
 
Total RPD (in whole dollars)
$
41.37

 
$
41.26

 
 %
 
Total RPU per month (in whole dollars)
$
1,022

 
$
1,007

 
1
 %
 
Net depreciation per unit per month (in whole dollars)
$
285

 
$
353

 
(19
)%
 
NM - Not Meaningful


Total U.S. RAC revenues increased 7% versus the prior year quarter as a result of increased volume both on and off airport. Excluding rentals to transportation network companies ("TNC"), volume increased 5%. Total RPD was flat but time and mileage pricing, which excludes revenue from value-added services, increased 3%.

Vehicle utilization improved by 100 basis points to 81% due to efficient fleet management. Vehicle capacity increased 3%, excluding fleet specifically dedicated to TNC rentals. Monthly net per unit vehicle depreciation expense decreased 19% to $285 driven by favorable residual values and strategic fleet management.

Direct vehicle operating ("DOE") and selling, general and administrative expenses as a percentage of total revenues for U.S. RAC was 70% for the second quarter of 2018 compared to 67% for the second quarter of 2017. Increases in DOE expense primarily reflect the impact of higher rental volume and incremental investments related to the Company’s transformation initiatives.

Revenue growth coupled with a decrease in monthly depreciation per unit expenses supported an improvement in Adjusted Corporate EBITDA for the segment in the second quarter, despite higher expenses associated with the Company’s operating turnaround initiatives and increased vehicle interest expense due to rising interest rates.



2


INTERNATIONAL RENTAL CAR ("INTERNATIONAL RAC") SUMMARY

International RAC(1)
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
Total Revenues
$
589

 
$
543

 
8
 %
 
Depreciation of revenue earning vehicles and lease charges, net
$
112

 
$
100

 
12
 %
 
Income (loss) before income taxes
$
50

 
$
43

 
16
 %
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)
$
74

 
$
56

 
32
 %
 
Adjusted pre-tax margin
13
%
 
10
%
 
230

bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
81

 
$
63

 
29
 %
 
Adjusted Corporate EBITDA margin
14
%
 
12
%
 
220

bps
 
 
 
 
 


 
Average vehicles
187,300

 
186,100

 
1
 %
 
Vehicle utilization
78
%
 
78
%
 
(60
)
bps
Transaction days (in thousands)
13,225

 
13,235

 
 %
 
Total RPD (in whole dollars)
$
44.61

 
$
43.67

 
2
 %
 
Total RPU per month (in whole dollars)
$
1,050

 
$
1,035

 
1
 %
 
Net depreciation per unit per month (in whole dollars)
$
199

 
$
192

 
4
 %
 


The Company’s International RAC segment revenues increased 8%, and increased 2% when excluding the impact of foreign currency. Total RPD increased 2% on volume that was consistent with prior year. Excluding the impact of the Company's operations in Brazil, which was sold in August 2017, Total RPD was flat and transaction days increased 4% due to strength in commercial and multi-month volume.

Monthly net per unit vehicle depreciation expense increased 4%, or 1% excluding Brazil.

DOE and selling, general and administrative expenses as a percentage of total revenues for International RAC was 65% for the second quarter of 2018 compared to 69% for the second quarter of 2017. DOE was flat year over year, but excluding the impact of foreign currency decreased $21 million primarily due to a decrease in insurance liability expenses.

Adjusted Corporate EBITDA for International RAC improved 29% compared with a year ago.






3


ALL OTHER OPERATIONS

All Other Operations(1)
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
($ in millions)
2018
 
2017
 
 
Total Revenues
$
172

 
$
162

 
6
 %
 
Depreciation of revenue earning vehicles and lease charges, net
$
128

 
$
119

 
8
 %
 
Income (loss) before income taxes
$
21

 
$
16

 
31
 %
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)
$
24

 
$
19

 
26
 %
 
Adjusted pre-tax margin
14
%
 
12
%
 
220

bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
21

 
$
17

 
24
 %
 
Adjusted Corporate EBITDA margin
12
%
 
10
%
 
170

bps
 
 
 
 
 
 
 
Average vehicles - Donlen
187,600

 
206,200

 
(9
)%
 


All Other Operations is primarily comprised of the Company's Donlen leasing operations. A 4% growth in units under lease, as well as a richer mix of vehicles, resulted in increased revenues and depreciation expense. Average vehicles decreased as a result of a reduction in non-lease units in Donlen's maintenance management programs.

(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 (loss) per share are non-GAAP measures. Average vehicles, transaction days, Total RPD, Total RPU per month 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 ("Hertz"), are materially the same as those for Hertz Global.

EARNINGS WEBCAST INFORMATION

Hertz Global’s second quarter 2018 live webcast discussion will be held on August 7, 2018, at 8:30 a.m. Eastern Time, and can be accessed through a link on the Investor Relations section of the Hertz website, IR.Hertz.com, or by dialing (800) 288-8961 and providing passcode 452287.  Investors are encouraged to dial-in approximately 10 minutes prior to the call.  A web replay will remain available for approximately one year.  A telephone replay will be available one hour following the conclusion of the call for one year at (800) 475-6701 with pass code 452287.

The earnings release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on the Company's 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, reconciliations of non-GAAP measures to their most comparable GAAP measure and key metrics. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout this earnings release and provides the usefulness of non-GAAP measures and key metrics to investors and additional purposes for which management uses such measures.

ABOUT HERTZ

The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands in approximately 10,200 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 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, Ultimate Choice, 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

4



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.

CAUTIONARY NOTE REGARDING 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 with 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 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; occurrences that disrupt rental activity during the Company's peak periods; increased vehicle costs due to declines in the value of the Company's non-program vehicles; 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 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 and a coordinated and comprehensive branding and portfolio strategy; 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 and the Letter of Credit Facility, its outstanding unsecured Senior Notes, its outstanding Senior Second Priority Secured 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 prevent the misuse or theft of information it possesses, including as a result of cyber security breaches and other security threats; the

5



Company's ability to successfully implement its information technology and finance transformation programs; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, such as the Tax Cuts and Jobs Act, 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 and uncertainties 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.
CONTACTS:
 
 
 
Investor Relations:
Media:
Leslie Hunziker
Hertz Media Relations
(239) 301-6800
(844) 845-2180 (toll free)
investorrelations@hertz.com
mediarelations@hertz.com

6



FINANCIAL INFORMATION AND OPERATING DATA    

SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA
 
Three Months Ended
June 30,
 
As a Percentage of Total Revenues
 
Six Months Ended
June 30,
 
As a Percentage of Total Revenues
(In millions, except per share data)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Total revenues
$
2,389

 
$
2,224

 
100
 %
 
100
 %
 
$
4,452

 
$
4,140

 
100
 %
 
100
 %
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
1,349

 
1,255

 
56
 %
 
56
 %
 
2,585

 
2,387

 
58
 %
 
58
 %
Depreciation of revenue earning vehicles and lease charges, net
687

 
743

 
29
 %
 
33
 %
 
1,348

 
1,444

 
30
 %
 
35
 %
Selling, general and administrative
265

 
223

 
11
 %
 
10
 %
 
498

 
442

 
11
 %
 
11
 %
Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
127

 
82

 
5
 %
 
4
 %
 
221

 
153

 
5
 %
 
4
 %
Non-vehicle
73

 
76

 
3
 %
 
3
 %
 
146

 
136

 
3
 %
 
3
 %
Total interest expense, net
200

 
158

 
8
 %
 
7
 %
 
367

 
289

 
8
 %
 
7
 %
Intangible asset impairments

 
86

 
 %
 
4
 %
 

 
86

 
 %
 
2
 %
Other (income) expense, net
(26
)
 
4

 
(1
)%
 
 %
 
(29
)
 
31

 
(1
)%
 
1
 %
Total expenses
2,475

 
2,469

 
104
 %
 
111
 %
 
4,769

 
4,679

 
107
 %
 
113
 %
Income (loss) before income taxes
(86
)
 
(245
)
 
(4
)%
 
(11
)%
 
(317
)
 
(539
)
 
(7
)%
 
(13
)%
Income tax (provision) benefit
23

 
87

 
1
 %
 
4
 %
 
52

 
158

 
1
 %
 
4
 %
Net Income (loss)
$
(63
)
 
$
(158
)
 
(3
)%
 
(7
)%
 
$
(265
)
 
$
(381
)
 
(6
)%
 
(9
)%
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
84

 
83

 
 
 
 
 
83

 
83

 
 
 
 
Diluted
84

 
83

 
 
 
 
 
83

 
83

 
 
 
 
Earnings (loss) per share - basic and diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
(0.75
)
 
$
(1.90
)
 
 
 
 
 
$
(3.19
)
 
$
(4.59
)
 
 
 
 
Diluted earnings (loss) per share
$
(0.75
)
 
$
(1.90
)
 
 
 
 
 
$
(3.19
)
 
$
(4.59
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted pre-tax income (loss)(a)
$
(21
)
 
$
(82
)
 


 


 
$
(197
)
 
$
(295
)
 


 


Adjusted net income (loss)(a)
$
(16
)
 
$
(52
)
 


 


 
$
(148
)
 
$
(186
)
 


 


Adjusted earnings (loss) per share(a)
$
(0.19
)
 
$
(0.63
)
 


 


 
$
(1.78
)
 
$
(2.24
)
 


 


Adjusted Corporate EBITDA(a)
$
93

 
$
35

 


 


 
$
33

 
$
(75
)
 


 


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

7



SELECTED UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In millions)
June 30, 2018
 
December 31, 2017
Cash and cash equivalents
$
685

 
$
1,072

Total restricted cash
236

 
432

Revenue earning vehicles, net:
 
 
 
U.S. Rental Car
9,797

 
7,761

International Rental Car
3,162

 
2,153

All Other Operations
1,458

 
1,422

Total revenue earning vehicles, net
14,417

 
11,336

Total assets
22,771

 
20,058

Total debt
17,364

 
14,865

Net vehicle debt(a)
12,772

 
10,079

Net non-vehicle debt(a)
3,782

 
3,402

Total stockholders' equity
1,069

 
1,520

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


SELECTED UNAUDITED CONSOLIDATED CASH FLOW DATA
 
Six Months Ended June 30,
(In millions)
2018
 
2017
Cash flows provided by (used in):
 
 
 
Operating activities
$
942

 
$
963

Investing activities
(4,055
)
 
(2,940
)
Financing activities
2,540

 
3,069

Effect of exchange rate changes
(10
)
 
17

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents(a)
$
(583
)
 
$
1,109

 
 
 
 
Fleet growth(b)
$
110

 
$
(46
)
Adjusted free cash flow(b)
$
(326
)
 
$
(566
)
(a)
Under recent accounting guidance issued by the Financial Accounting Standards Board, effective January 1, 2018 and applied retrospectively, the changes in total cash, cash equivalents, restricted cash and restricted cash equivalents are required to be presented in the statement of cash flows. Previously only changes in total cash and cash equivalents were presented in the statement of cash flows. As a result, for the six months ended June 30, 2017, the net change in cash, cash equivalents, restricted cash and restricted cash equivalents increased by $784 million.
(b)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedules III and IV.



8



SELECTED UNAUDITED OPERATING DATA BY SEGMENT
 
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
 
Six Months Ended
June 30,
 
Percent Inc/(Dec)
 
 
2018
 
2017
 
 
 
2018
 
2017
 
 
U.S. RAC
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction days (in thousands) 
38,747

 
36,233

 
7
 %
 
 
72,949

 
68,545

 
6
 %
 
Total RPD(a)
$
41.37

 
$
41.26

 
 %
 
 
$
41.17

 
$
41.23

 
 %
 
Total RPU per month(a)
$
1,022

 
$
1,007

 
1
 %
 
 
$
999

 
$
968

 
3
 %
 
Average vehicles
523,000

 
495,000

 
6
 %
 
 
500,800

 
486,500

 
3
 %
 
Vehicle utilization(a)
81
%
 
80
%
 
100

bps
 
80
%
 
78
%
 
260

bps
Net depreciation per unit per month(a)
$
285

 
$
353

 
(19
)%
 
 
$
293

 
$
351

 
(17
)%
 
Percentage of program vehicles at period end
13
%
 
11
%
 
220

bps
 
13
%
 
11
%
 
220

bps
Adjusted pre-tax income (loss) (in millions)(b)
$
24

 
$
(37
)
 
NM

 
 
$
(24
)
 
$
(152
)
 
(84
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International RAC
 
 
 
 


 
 
 
 
 
 
 
 
Transaction days (in thousands)
13,225

 
13,235

 
 %
 
 
23,199

 
23,419

 
(1
)%
 
Total RPD(a)
$
44.61

 
$
43.67

 
2
 %
 
 
$
45.09

 
$
43.55

 
4
 %
 
Total RPU per month(a)
$
1,050

 
$
1,035

 
1
 %
 
 
$
1,038

 
$
1,010

 
3
 %
 
Average vehicles
187,300

 
186,100

 
1
 %
 
 
168,000

 
168,300

 
 %
 
Vehicle utilization(a)
78
%
 
78
%
 
(60
)
bps
 
76
%
 
77
%
 
(60
)
bps
Net depreciation per unit per month(a)
$
199

 
$
192

 
4
 %
 
 
$
209

 
$
197

 
6
 %
 
Percentage of program vehicles at period end
51
%
 
46
%
 
480

bps
 
51
%
 
46
%
 
480

bps
Adjusted pre-tax income (loss) (in millions)(b)
$
74

 
$
56

 
32
 %
 
 
$
69

 
$
52

 
33
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
All Other Operations
 
 
 
 


 
 
 
 
 
 
 
 
Average vehicles — Donlen
187,600

 
206,200

 
(9
)%
 
 
189,600

 
206,900

 
(8
)%
 
Adjusted pre-tax income (loss) (in millions)(b)
$
24

 
$
19

 
26
 %
 
 
$
47

 
$
39

 
21
 %
 
NM - Not meaningful

(a)
See the accompanying calculations of this key metric in Supplemental Schedule VI.
(b)
Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule II.



9



Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
(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:
$
1,628

 
$
589

 
$
172

 
$

 
$
2,389

 
$
1,519

 
$
543

 
$
162

 
$

 
$
2,224

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
1,021

 
322

 
8

 
(2
)
 
1,349

 
919

 
322

 
14

 

 
1,255

Depreciation of revenue earning vehicles and lease charges, net
447

 
112

 
128

 

 
687

 
524

 
100

 
119

 

 
743

Selling, general and administrative
118

 
62

 
9

 
76

 
265

 
101

 
55

 
8

 
59

 
223

Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
73

 
44

 
10

 

 
127

 
57

 
18

 
7

 

 
82

Non-vehicle
(35
)
 

 
(4
)
 
112

 
73

 
(22
)
 
1

 
(2
)
 
99

 
76

Total interest expense, net
38

 
44

 
6

 
112

 
200

 
35

 
19

 
5

 
99

 
158

Intangible asset impairments

 

 

 

 

 
86

 

 

 

 
86

Other (income) expense, net
(6
)
 
(1
)
 

 
(19
)
 
(26
)
 

 
4

 

 

 
4

Total expenses
1,618

 
539

 
151

 
167

 
2,475

 
1,665

 
500

 
146

 
158

 
2,469

Income (loss) before income taxes
$
10

 
$
50

 
$
21

 
$
(167
)
 
(86
)
 
$
(146
)
 
$
43

 
$
16

 
$
(158
)
 
(245
)
Income tax (provision) benefit
 
 
 
 
 
 
 
 
23

 
 
 
 
 
 
 
 
 
87

Net income (loss)
 
 
 
 
 
 
 
 
$
(63
)
 
 
 
 
 
 
 
 
 
$
(158
)


10



Supplemental Schedule I (continued)
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
(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:
$
3,054

 
$
1,057

 
$
341

 
$

 
$
4,452

 
$
2,872

 
$
955

 
$
313

 
$

 
$
4,140

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
1,947

 
622

 
17

 
(1
)
 
2,585

 
1,780

 
589

 
19

 
(1
)
 
2,387

Depreciation of revenue earning vehicles and lease charges, net
881

 
214

 
253

 

 
1,348

 
1,023

 
185

 
236

 

 
1,444

Selling, general and administrative
220

 
121

 
18

 
139

 
498

 
197

 
108

 
15

 
122

 
442

Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
137

 
64

 
20

 

 
221

 
105

 
34

 
14

 

 
153

Non-vehicle
(66
)
 
(1
)
 
(7
)
 
220

 
146

 
(41
)
 
1

 
(5
)
 
181

 
136

Total interest expense, net
71

 
63

 
13

 
220

 
367

 
64

 
35

 
9

 
181

 
289

Intangible asset impairments

 

 

 

 

 
86

 

 

 

 
86

Other (income) expense, net
(7
)
 
(1
)
 

 
(21
)
 
(29
)
 

 
1

 

 
30

 
31

Total expenses
3,112

 
1,019

 
301

 
337

 
4,769

 
3,150

 
918

 
279

 
332

 
4,679

Income (loss) before income taxes
$
(58
)
 
$
38

 
$
40

 
$
(337
)
 
(317
)
 
$
(278
)
 
$
37

 
$
34

 
$
(332
)
 
(539
)
Income tax (provision) benefit
 
 
 
 
 
 
 
 
52

 
 
 
 
 
 
 
 
 
158

Net income (loss)
 
 
 
 
 
 
 
 
$
(265
)
 
 
 
 
 
 
 
 
 
$
(381
)


11




Supplemental Schedule II
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) AND INCOME (LOSS) BEFORE INCOME TAXES
TO GROSS EBITDA, CORPORATE EBITDA, ADJUSTED CORPORATE EBITDA, ADJUSTED PRE-TAX INCOME (LOSS),
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
Unaudited
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
(In millions, except per share data)
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
Net income (loss)
 
 
 
 
 
 
 
 
$
(63
)
 
 
 
 
 
 
 
 
 
$
(158
)
Income tax provision (benefit)
 
 
 
 
 
 
 
 
(23
)
 
 
 
 
 
 
 
 
 
(87
)
Income (loss) before income taxes
$
10

 
$
50

 
$
21

 
$
(167
)
 
(86
)
 
$
(146
)
 
$
43

 
$
16

 
$
(158
)
 
(245
)
Depreciation and amortization
488

 
120

 
131

 
4

 
743

 
573

 
108

 
121

 
4

 
806

Interest, net of interest income
38

 
44

 
6

 
112

 
200

 
35

 
19

 
5

 
99

 
158

Gross EBITDA
$
536

 
$
214

 
$
158

 
$
(51
)
 
$
857

 
$
462

 
$
170

 
$
142

 
$
(55
)
 
$
719

Revenue earning vehicle depreciation and lease charges, net
(447
)
 
(112
)
 
(128
)
 

 
(687
)
 
(524
)
 
(100
)
 
(119
)
 

 
(743
)
Vehicle debt interest
(73
)
 
(44
)
 
(10
)
 

 
(127
)
 
(57
)
 
(18
)
 
(7
)
 

 
(82
)
Vehicle debt-related charges(a)
5

 
3

 
1

 

 
9

 
4

 
2

 
1

 

 
7

Loss on extinguishment of vehicle related debt(b)

 
20

 

 

 
20

 

 

 

 

 

Corporate EBITDA
$
21

 
$
81

 
$
21

 
$
(51
)
 
$
72

 
$
(115
)
 
$
54

 
$
17

 
$
(55
)
 
$
(99
)
Non-cash stock-based employee compensation charges(c)

 

 

 
3

 
3

 

 

 

 
5

 
5

Restructuring and restructuring related charges(d)(e)
2

 

 

 
8

 
10

 

 

 

 
5

 
5

Impairment charges and asset write-downs(f)

 

 

 

 

 
86

 

 

 

 
86

Information technology and finance transformation costs(g)

 

 

 
29

 
29

 

 

 

 
20

 
20

Other items(h)
(5
)
 

 

 
(16
)
 
(21
)
 
7

 
9

 

 
2

 
18

Adjusted Corporate EBITDA
$
18

 
$
81

 
$
21

 
$
(27
)
 
$
93

 
$
(22
)
 
$
63

 
$
17

 
$
(23
)
 
$
35

Non-vehicle depreciation and amortization
(41
)
 
(8
)
 
(3
)
 
(4
)
 
(56
)
 
(49
)
 
(8
)
 
(2
)
 
(4
)
 
(63
)
Non-vehicle debt interest, net of interest income
35

 

 
4

 
(112
)
 
(73
)
 
22

 
(1
)
 
2

 
(99
)
 
(76
)
Non-vehicle debt-related charges(a)

 

 

 
4

 
4

 

 

 

 
3

 
3

Loss on extinguishment of non-vehicle related debt(b)

 

 

 

 

 

 

 

 
8

 
8

Non-cash stock-based employee compensation charges(c)

 

 

 
(3
)
 
(3
)
 

 

 

 
(5
)
 
(5
)
Acquisition accounting(i)
13

 
1

 
1

 

 
15

 
12

 
2

 
2

 

 
16

Other(j)
(1
)
 

 
1

 
(1
)
 
(1
)
 

 

 

 

 

Adjusted pre-tax income (loss)(k)
$
24

 
$
74

 
$
24

 
$
(143
)
 
$
(21
)
 
$
(37
)
 
$
56

 
$
19

 
$
(120
)
 
$
(82
)
Income tax (provision) benefit on adjusted pre-tax income (loss)(l)
 
 
 
 
 
 
 
 
5

 
 
 
 
 
 
 
 
 
30

Adjusted net income (loss)
 
 
 
 
 
 
 
 
$
(16
)
 
 
 
 
 
 
 
 
 
$
(52
)
Weighted average number of diluted shares outstanding
 
 
 
 
 
 
 
 
84

 
 
 
 
 
 
 
 
 
83

Adjusted diluted earnings (loss) per share
 
 
 
 
 
 
 
 
$
(0.19
)
 
 
 
 
 
 
 
 
 
$
(0.63
)

12



Supplemental Schedule II (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) AND INCOME (LOSS) BEFORE INCOME TAXES
TO GROSS EBITDA, CORPORATE EBITDA, ADJUSTED CORPORATE EBITDA, ADJUSTED PRE-TAX INCOME (LOSS),
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
(In millions, except per share data)
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
Net income (loss)
 
 
 
 
 
 
 
 
$
(265
)
 
 
 
 
 
 
 
 
 
$
(381
)
Income tax provision (benefit)
 
 
 
 
 
 
 
 
(52
)
 
 
 
 
 
 
 
 
 
(158
)
Income (loss) before income taxes
$
(58
)
 
$
38

 
$
40

 
$
(337
)
 
$
(317
)
 
$
(278
)
 
$
37

 
$
34

 
$
(332
)
 
$
(539
)
Depreciation and amortization
965

 
231

 
257

 
8

 
1,461

 
1,115

 
201

 
242

 
6

 
1,564

Interest, net of interest income
71

 
63

 
13

 
220

 
367

 
64

 
35

 
9

 
181

 
289

Gross EBITDA
$
978

 
$
332

 
$
310

 
$
(109
)
 
$
1,511

 
$
901

 
$
273

 
$
285

 
$
(145
)
 
$
1,314

Revenue earning vehicle depreciation and lease charges, net
(881
)
 
(214
)
 
(253
)
 

 
(1,348
)
 
(1,023
)
 
(185
)
 
(236
)
 

 
(1,444
)
Vehicle debt interest
(137
)
 
(64
)
 
(20
)
 

 
(221
)
 
(105
)
 
(34
)
 
(14
)
 

 
(153
)
Vehicle debt-related charges(a)
12

 
5

 
2

 

 
19

 
8

 
4

 
2

 

 
14

Loss on extinguishment of vehicle related debt(b)
2

 
20

 

 

 
22

 

 

 

 

 

Corporate EBITDA
$
(26
)
 
$
79

 
$
39

 
$
(109
)
 
$
(17
)
 
$
(219
)
 
$
58

 
$
37

 
$
(145
)
 
$
(269
)
Non-cash stock-based employee compensation charges(c)

 

 

 
7

 
7

 

 

 

 
12

 
12

Restructuring and restructuring related charges(d)(e)
2

 
3

 

 
8

 
13

 

 
1

 

 
10

 
11

Impairment charges and asset write-downs(f)

 

 

 

 

 
86

 

 

 
30

 
116

Finance and information technology transformation costs(g)

 

 

 
51

 
51

 

 

 

 
39

 
39

Other items(h)
(6
)
 
(1
)
 
2

 
(16
)
 
(21
)
 
7

 
7

 

 
2

 
16

Adjusted Corporate EBITDA
$
(30
)
 
$
81

 
$
41

 
$
(59
)
 
$
33

 
$
(126
)
 
$
66

 
$
37

 
$
(52
)
 
$
(75
)
Non-vehicle depreciation and amortization
(84
)
 
(17
)
 
(4
)
 
(8
)
 
(113
)
 
(92
)
 
(16
)
 
(6
)
 
(6
)
 
(120
)
Non-vehicle debt interest, net of interest income
66

 
1

 
7

 
(220
)
 
(146
)
 
41

 
(1
)
 
5

 
(181
)
 
(136
)
Non-vehicle debt-related charges(a)

 

 

 
7

 
7

 

 

 

 
7

 
7

Loss on extinguishment of non-vehicle related debt(b)

 

 

 

 

 

 

 

 
8

 
8

Non-cash stock-based employee compensation charges(c)

 

 

 
(7
)
 
(7
)
 

 

 

 
(12
)
 
(12
)
Acquisition accounting(i)
24

 
4

 
3

 
(1
)
 
30

 
25

 
3

 
3

 

 
31

Other(j)

 

 

 
(1
)
 
(1
)
 

 

 

 
2

 
2

Adjusted pre-tax income (loss)(e)(k)
$
(24
)
 
$
69

 
$
47

 
$
(289
)
 
$
(197
)
 
$
(152
)
 
$
52

 
$
39

 
$
(234
)
 
$
(295
)
Income tax (provision) benefit on adjusted pre-tax income (loss)(l)
 
 
 
 
 
 
 
 
49

 
 
 
 
 
 
 
 
 
109

Adjusted net income (loss)
 
 
 
 
 
 
 
 
$
(148
)
 
 
 
 
 
 
 
 
 
$
(186
)
Weighted average number of diluted shares outstanding
 
 
 
 
 
 
 
 
83

 
 
 
 
 
 
 
 
 
83

Adjusted diluted earnings (loss) per share
 
 
 
 
 
 
 
 
$
(1.78
)
 
 
 
 
 
 
 
 
 
$
(2.24
)
(a)
Primarily represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.

13



Supplemental Schedule II (continued)

(b)
In 2018, primarily represents $20 million of early redemption premium and write-off of deferred financing costs associated with the full redemption of the 4.375% European Vehicle Senior Notes due January 2019 in April 2018. In 2017, represents $6 million of early redemption premium and write-off of deferred financing costs associated with the redemption of certain notes and a $2 million write-off of deferred financing costs associated with the termination of commitments under the Senior RCF.
(c)
Stock-based compensation expense is an adjustment for purposes of calculating Adjusted Corporate EBITDA but not for calculating adjusted pre-tax income (loss).
(d)
Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs, which are shown separately in the table. Also includes restructuring related 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, legal fees and other expenses related to the previously disclosed accounting review and investigation.
(e)
For the six months ended June 30, 2017, excludes $2 million of stock-based compensation expenditures included in restructuring and restructuring related charges.
(f)
In 2017, represents a second quarter impairment of $86 million of the Dollar Thrifty tradename and a first quarter impairment of $30 million related to an equity method investment.
(g)
Represents costs associated with the Company’s information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes.
(h)
Represents miscellaneous or non-recurring items. In 2018, includes a $17 million gain on marketable securities and a $6 million legal settlement received in the second quarter related to an oil spill in the Gulf of Mexico in 2010. In 2017, includes first and second quarter adjustments, as applicable, to the carrying value of the Company's previous Brazil operations and second quarter charges of $6 million for labor-related matters and $5 million relating to PLPD as a result of a terrorist event.
(i)
Represents incremental expense associated with amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
(j)
Comprised of items that are adjustments for purposes of calculating Adjusted Corporate EBITDA but not for calculating adjusted pre-tax income (loss) and rounding items.
(k)
Adjustments by caption to arrive at adjusted pre-tax income (loss) are as follows:

Increase (decrease) to expenses
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(In millions)
2018
 
2017
 
2018
 
2017
Direct vehicle and operating
$
(16
)
 
$
(21
)
 
$
(32
)
 
$
(37
)
Selling, general and administrative
(38
)
 
(33
)
 
(63
)
 
(62
)
Interest expense, net:
 
 
 
 
 
 
 
Vehicle
(29
)
 
(7
)
 
(41
)
 
(14
)
Non-vehicle
(4
)
 
(11
)
 
(7
)
 
(15
)
Total interest expense, net
(33
)
 
(18
)
 
(48
)
 
(29
)
Intangible asset impairments

 
(86
)
 

 
(86
)
Other income (expense), net
22

 
(5
)
 
23

 
(30
)
Total adjustments
$
(65
)
 
$
(163
)
 
$
(120
)
 
$
(244
)

(l)
Derived utilizing a combined statutory rate of 25% and 37% for the periods ending June 30, 2018 and 2017, respectively, applied to the respective adjusted income (loss) before income taxes.





14



Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - FLEET GROWTH
Unaudited
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
(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
$
(5,321
)
 
$
(1,910
)
 
$
(379
)
 
$
(7,610
)
 
$
(4,520
)
 
$
(1,856
)
 
$
(333
)
 
$
(6,709
)
Proceeds from disposal of revenue earning vehicles
2,353

 
1,205

 
96

 
3,654

 
2,658

 
1,069

 
108

 
3,835

Net revenue earning vehicles capital expenditures
(2,968
)
 
(705
)
 
(283
)
 
(3,956
)
 
(1,862
)
 
(787
)
 
(225
)
 
(2,874
)
Depreciation of revenue earning vehicles, net
881

 
172

 
253

 
1,306

 
1,023

 
151

 
236

 
1,410

Financing activity related to vehicles:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings
6,581

 
2,123

 
710

 
9,414

 
3,214

 
1,060

 
754

 
5,028

Payments
(4,725
)
 
(1,471
)
 
(633
)
 
(6,829
)
 
(2,333
)
 
(607
)
 
(725
)
 
(3,665
)
Restricted cash changes
169

 
22

 
(16
)
 
175

 
33

 
56

 
(34
)
 
55

Net financing activity related to vehicles
2,025

 
674

 
61

 
2,760

 
914

 
509

 
(5
)
 
1,418

Fleet growth
$
(62
)
 
$
141

 
$
31

 
$
110

 
$
75

 
$
(127
)
 
$
6

 
$
(46
)





15



Supplemental Schedule IV
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED FREE CASH FLOW
Unaudited
 
Six Months Ended
June 30,
(In millions)
2018
 
2017
Net cash provided by operating activities(a)
$
942

 
$
963

Net change in restricted cash and cash equivalents, vehicle(b)
175

 
55

Revenue earning vehicles expenditures
(7,610
)
 
(6,709
)
Proceeds from disposal of revenue earning vehicles
3,654

 
3,835

Capital asset expenditures, non-vehicle(a)
(80
)
 
(84
)
Proceeds from disposal of property and other equipment
8

 
11

Proceeds from issuance of vehicle debt
9,414

 
5,028

Repayments of vehicle debt
(6,829
)
 
(3,665
)
Adjusted free cash flow
$
(326
)
 
$
(566
)

(a)
In 2017, includes a $19 million error correction which decreased net cash provided by operating activities and capital asset expenditures, non-vehicle.
(b)
Amounts presented for the six months ended June 30, 2018 and 2017 exclude a $2 million and $3 million non-cash impact of foreign currency exchange rates, respectively.





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

 
As of June 30, 2018
 
As of December 31, 2017
(In millions)
Vehicle
 
Non-Vehicle
 
Total
 
Vehicle
 
Non-Vehicle
 
Total
Debt as reported in the balance sheet
$
12,933

 
$
4,431

 
$
17,364

 
$
10,431

 
$
4,434

 
$
14,865

Add:
 
 
 
 
 
 
 
 
 
 
 
     Debt issue costs deducted from debt obligations
48

 
36

 
84

 
34

 
40

 
74

Less:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 
685

 
685

 

 
1,072

 
1,072

Restricted cash
209

 

 
209

 
386

 

 
386

Net debt
$
12,772

 
$
3,782

 
$
16,554

 
$
10,079

 
$
3,402

 
$
13,481




16



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

 
U.S. Rental Car
 
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
 
Six Months Ended
June 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
 
2018
 
2017
 
 
Total RPD
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,628

 
$
1,519

 
 
 
 
$
3,054

 
$
2,872

 
 
 
Ancillary retail vehicle sales revenue
(25
)
 
(24
)
 
 
 
 
(51
)
 
(46
)
 
 
 
Total rental revenue
$
1,603

 
$
1,495

 
 
 
 
$
3,003

 
$
2,826

 
 
 
Transaction days (in thousands)
38,747

 
36,233

 
 
 
 
72,949

 
68,545

 
 
 
Total RPD (in whole dollars)
$
41.37

 
$
41.26

 
 %
 
 
$
41.17

 
$
41.23

 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Total rental revenue
$
1,603

 
$
1,495

 
 
 
 
$
3,003

 
$
2,826

 
 
 
Average vehicles
523,000

 
495,000

 
 
 
 
500,800

 
486,500

 
 
 
Total revenue per unit (in whole dollars)
$
3,065

 
$
3,020

 
 
 
 
$
5,996

 
$
5,809

 
 
 
Number of months in period
3

 
3

 
 
 
 
6

 
6

 
 
 
Total RPU per month (in whole dollars)
$
1,022

 
$
1,007

 
1
 %
 
 
$
999

 
$
968

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction days (in thousands)
38,747

 
36,233

 
 
 
 
72,949

 
68,545

 
 
 
     Average vehicles
523,000

 
495,000

 
 
 
 
500,800

 
486,500

 
 
 
     Number of days in period
91

 
91

 
 
 
 
181

 
181

 
 
 
Available car days (in thousands)
47,593

 
45,045

 
 
 
 
90,645

 
88,057

 
 
 
Vehicle utilization(a)
81
%
 
80
%
 
100

bps
 
80
%
 
78
%
 
260

bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
447

 
$
524

 
 
 
 
$
881

 
$
1,023

 
 
 
Average vehicles
523,000

 
495,000

 
 
 
 
500,800

 
486,500

 
 
 
Depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
$
855

 
$
1,059

 
 
 
 
$
1,759

 
$
2,103

 
 
 
Number of months in period
3

 
3

 
 
 
 
6

 
6

 
 
 
Net depreciation per unit per month (in whole dollars)
$
285

 
$
353

 
(19
)%
 
 
$
293

 
$
351

 
(17
)%
 
(a)
Calculated as transaction days divided by available car days.


17



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


International Rental Car
 
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
 
Six Months Ended
June 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
 
2018
 
2017
 
 
Total RPD
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
589

 
$
543

 
 
 
 
$
1,057

 
$
955

 
 
 
Foreign currency adjustment(a)
1

 
35

 
 
 
 
(11
)
 
65

 
 
 
Total rental revenue
$
590

 
$
578

 
 
 
 
$
1,046

 
$
1,020

 
 
 
Transaction days (in thousands)
13,225

 
13,235

 
 
 
 
23,199

 
23,419

 
 
 
Total RPD (in whole dollars)
$
44.61

 
$
43.67

 
2
%
 
 
$
45.09

 
$
43.55


4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Total rental revenue
$
590

 
$
578

 
 
 
 
$
1,046

 
$
1,020

 
 
 
Average vehicles
187,300

 
186,100

 
 
 
 
168,000

 
168,300

 
 
 
Total revenue per unit (in whole dollars)
$
3,150

 
$
3,106

 
 
 
 
$
6,226

 
$
6,061

 
 
 
Number of months in period
3

 
3

 
 
 
 
6

 
6

 
 
 
Total RPU per month (in whole dollars)
$
1,050

 
$
1,035

 
1
%
 
 
$
1,038

 
$
1,010

 
3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction days (in thousands)
13,225

 
13,235

 
 
 
 
23,199

 
23,419

 
 
 
     Average vehicles
187,300

 
186,100

 
 
 
 
168,000

 
168,300

 
 
 
     Number of days in period
91

 
91

 
 
 
 
181

 
181

 
 
 
Available car days (in thousands)
17,044

 
16,935

 
 
 
 
30,408

 
30,462

 
 
 
Vehicle utilization(b)
78
%
 
78
%
 
(60
)
bps
 
76
%
 
77
%
 
(60
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
112

 
$
100

 
 
 
 
$
214

 
$
185

 
 
 
Foreign currency adjustment(a) 

 
7

 
 
 
 
(3
)
 
14

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net
$
112

 
$
107

 
 
 
 
$
211

 
$
199

 
 
 
Average vehicles
187,300

 
186,100

 
 
 
 
168,000

 
168,300

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
$
598

 
$
575

 
 
 
 
$
1,256

 
$
1,182

 
 
 
Number of months in period
3

 
3

 
 
 
 
6

 
6

 
 
 
Net depreciation per unit per month (in whole dollars)
$
199

 
$
192

 
4
%
 
 
$
209

 
$
197


6
%
 
(a)
Based on December 31, 2017 foreign exchange rates.
(b)
Calculated as transaction days divided by available car days.


18



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


Worldwide Rental Car
 
Three Months Ended
June 30,
 
Percent Inc/(Dec)
 
 
Six Months Ended
June 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
 
2018
 
2017
 
 
Total RPD
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,217

 
$
2,062

 
 
 
 
$
4,111

 
$
3,827

 
 
 
Ancillary retail vehicle sales revenue
(25
)
 
(24
)
 
 
 
 
(51
)
 
(46
)
 
 
 
Foreign currency adjustment(a)
1

 
35

 
 
 
 
(11
)
 
65

 
 
 
Total rental revenue
$
2,193

 
$
2,073

 
 
 
 
$
4,049

 
$
3,846

 
 
 
Transaction days (in thousands)
51,972

 
49,468

 
 
 
 
96,148

 
91,964

 
 
 
Total RPD (in whole dollars)
$
42.20

 
$
41.91

 
1
 %
 
 
$
42.11

 
$
41.82


1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Total rental revenue
$
2,193

 
$
2,073

 
 
 
 
$
4,049

 
$
3,846

 
 
 
Average vehicles
710,300

 
681,100

 
 
 
 
668,800

 
654,800

 
 
 
Total revenue per unit (in whole dollars)
$
3,087

 
$
3,044

 
 
 
 
$
6,054

 
$
5,874

 
 
 
Number of months in period
3

 
3

 
 
 
 
6

 
6

 
 
 
Total RPU per month (in whole dollars)
$
1,029

 
$
1,015

 
1
 %
 
 
$
1,009

 
$
979

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction days (in thousands)
51,972

 
49,468

 
 
 
 
96,148

 
91,964

 
 
 
     Average vehicles
710,300

 
681,100

 
 
 
 
668,800

 
654,800

 
 
 
     Number of days in period
91

 
91

 
 
 
 
181

 
181

 
 
 
Available car days (in thousands)
64,637

 
61,980

 
 
 
 
121,053

 
118,519

 
 
 
Vehicle utilization(b)
80
%
 
80
%
 
60

bps
 
79
%
 
78
%
 
180

bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
559

 
$
624

 
 
 
 
$
1,095

 
$
1,208

 
 
 
Foreign currency adjustment(a) 

 
7

 
 
 
 
(3
)
 
14

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net
$
559

 
$
631

 
 
 
 
$
1,092

 
$
1,222

 
 
 
Average vehicles
710,300

 
681,100

 
 
 
 
668,800

 
654,800

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
$
787

 
$
926

 
 
 
 
$
1,633

 
$
1,866

 
 
 
Number of months in period
3

 
3

 
 
 
 
6

 
6

 
 
 
Net depreciation per unit per month (in whole dollars)
$
262

 
$
309

 
(15
)%
 
 
$
272

 
$
311


(13
)%
 
Note: Worldwide Rental Car represents U.S. Rental Car and International Rental Car segment information on a combined basis and excludes the All Other Operations segment, which is primarily comprised of the Company's Donlen leasing operations, and Corporate.
(a)
Based on December 31, 2017 foreign exchange rates.
(b)
Calculated as transaction days divided by available car days.


19



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 (together, the "Company"). The term “GAAP” refers to accounting principles generally accepted in the United States of America.
 
Definitions of non-GAAP measures and key metrics 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 for which management of the Company utilizes the non-GAAP measures. Non-GAAP measures should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with GAAP.

NON-GAAP MEASURES

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

Adjusted pre-tax income (loss) is calculated as income (loss) 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 and premiums, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs and certain other miscellaneous or non-recurring items. Adjusted pre-tax income (loss) is important to management 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) or income (loss) 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. 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, and certain other miscellaneous or non-recurring items that are not operational in nature or comparable to those of the Company's competitors.

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

Adjusted diluted EPS is calculated as adjusted net income (loss) divided by the weighted average number of diluted shares outstanding for the period. Adjusted diluted EPS 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, and certain other miscellaneous or non-recurring 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, 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.


20



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) 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 miscellaneous or non-recurring 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.

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.

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) or income (loss) before income taxes.

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. Fleet growth is important as it allows the Company to assess the cash flow required to support its investment in revenue earning 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 cash equivalents. Non-vehicle debt consists of the Company's Senior Term Loan, Senior RCF, Senior Notes, Senior Second Priority Secured 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 corporate 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 restricted cash associated with vehicles. 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. Net vehicle debt is important to management, investors and ratings agencies as it helps measure the Company's leverage with respect to its vehicle assets.


21



Total Net Debt

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

KEY METRICS

Available Car Days

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

Average Vehicles

Average Vehicles, also known as "fleet capacity", is determined using a simple average of the number of vehicles in the 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.

Net Depreciation Per Unit Per Month

Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month and is calculated as depreciation of revenue earning vehicles and lease charges, net, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates, divided by the average vehicles in each period and then dividing by the number of months in the period reported. 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 management and investors as it is reflective of how the Company is managing the costs of its vehicles and facilitates in comparison with other participants in the vehicle rental industry.

Time and Mileage Revenue Per Transaction Day ("T&M rate" or "T&M pricing")

Time and mileage pricing is calculated as total rental revenue less revenue from value-added services, such as charges to the customer for the fueling of vehicles, loss damage waivers, insurance products, supplemental equipment and other consumables, divided by the total number of transaction days. This metric is important to management and investors as it represents a measurement of the changes in base rental fees, which comprise the majority of the Company’s Total RPD.

Total Rental Revenue

Total rental revenue is calculated as total revenue less ancillary retail vehicle sales revenue, 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.


22



Total Revenue Per Transaction Day ("Total RPD," also referred to as "pricing")

Total RPD is calculated as total rental revenue divided by the total number of transaction days. This metric is important to 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 RPU is calculated as total rental revenue divided by the average vehicles in each period and then dividing by the number of months in the period reported. This metric is important to management and investors as it provides a measure of revenue productivity relative to fleet capacity, or asset efficiency.

Transaction Days (also referred to as "volume")

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. This metric is important to management and investors as it represents the number of revenue generating days.

Vehicle Utilization

Vehicle utilization is calculated by dividing total transaction days by available car days. This metric is important to management and investors as it is the measurement of the proportion of vehicles that are being used to generate revenues relative to fleet capacity.


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finalq22018earningsprese
2Q 2018 Earnings Call August 7, 2018 8:30 am ET 1


 
Safe Harbor Statement 2Q 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 onlyasofAugust7,2018andHertz Global Holdings, Inc. (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 Second Quarter 2018 results issued on August 6, 2018, and the Risk Factors and Forward- Looking Statements sections of the Company’s 2017 Annual Report on Form 10-K filed on February 27, 2018 and the Company's Second Quarter 2018 Quarterly Report on Form 10-Q filed on August 6, 2018. Copies of these filings are available from the SEC, the Hertz website, or the Company’s Investor Relations Department. 2


 
Key Metrics and Non-GAAP Measures 2Q THE FOLLOWING KEY METRICS AND NON-GAAP1 MEASURES WILL BE USED IN THE PRESENTATION: Adjusted corporate EBITDA Total RPD Adjusted corporate EBITDA margin Total RPU Adjusted pre-tax income (loss) Net depreciation per unit per month Adjusted net income (loss) Vehicle utilization (UTE) Adjusted diluted earnings (loss) per share Transaction days (Adjusted diluted EPS) T&M rate 1Definitions and reconciliations of non-GAAP measures are provided in the Company’s second quarter 2018 press release issued on August 6, 2018 and as an exhibit to the Company’s Form 8-K filed on August 7, 2018. 3


 
Agenda 2Q BUSINESS Kathryn Marinello OVERVIEW President & Chief Executive Officer Hertz Global Holdings, Inc. FINANCIAL RESULTS Tom Kennedy OVERVIEW Chief Financial Officer Hertz Global Holdings, Inc. 4


 
U.S. Operational Turnaround: Gaining Traction 2Q U.S. RAC (YoY quarterly results1) Revenue Total RPU Vehicle Utilization (bps) Net Monthly Depreciation per Unit 1Revenue is defined as total revenue excluding ancillary retail vehicle sales revenue. 5


 
U.S. Operational Turnaround: Creating Value 2Q Bolstering the Foundation for Sustainable Growth and Innovation PRIORITIES Unlocking Driving Leading Leveraging asset value operational growth through technology Hertz's iconic brand The Most Sustainable Path to Creating Value is to Continually Invest in our Capabilities 6


 
2017 Investments: Laying the Foundation 2Q Catalysts to Improving Trends in 2018 and Beyond • Integrated, AI-based demand and fleet forecasting system • Fully rolled-out fleet and pricing optimization system • Car-class mix that customers prefer • Broad roll out of Ultimate Choice • Development of brand segmentation strategy • Customer service training, recruitment, incentive programs • Added field personnel for car cleanliness, service quality oversight • Customer-friendly modifications to value-added services • New leaders in HR, Marketing and Retail Operations Revenue Growth .... Asset Efficiency .... Productivity .... Innovation 7


 
2018 Investments: Investing in the Future 2Q Catalysts to Improving Trends in 2019 and Beyond • Brand marketing campaigns launch • Machine-learnings from pricing and demand & fleet forecasting modules • Stepping up field recruiting and training • Centralizing maintenance to reduce out-of-service fleet, supports higher utilization • Lean Six-Sigma Site Optimization Initiative (SOI), improves and standardizes processes across locations for enhanced service and lower cost • Additional used-car retail lots and updated website for online digital retail selling • New CIO; Enhanced CRM capabilities launched Revenue Growth .... Asset Efficiency .... Productivity .... Innovation 8


 
2019 Investments: Optimizing for Growth 2Q Catalysts to Improving Trends in 2020 and Beyond • Site Optimization Initiative roll out continues • Systems field training • Legacy technology architecture updated • Hertz Digital apps rolled out • Fall 2019 core systems launch ◦ Fleet management and accounting system ◦ Reservation system ◦ Rental system Revenue Growth .... Asset Efficiency .... Productivity .... Innovation 9


 
Our Path Forward: Achieving Growth and Productivity 2Q Performance Objectives – Indicative Trend • Revenue Growth • Improved fleet utilization and depreciation expense management • Productivity • Lower technology spend Adjusted Corporate EBITDA 2017 Revenue Net Dep / Retail Ops Tech Reinvest / 2018 Revenue Net Dep / Retail Ops Tech Reinvest / 2019 Revenue Net Dep / Retail Ops Tech Reinvest / 2020 UTE Productivity Spend Inflation UTE Productivity Spend Inflation UTE Productivity Spend Inflation Improvements in Core Business Performance and Productivity Drive Increased Profitability 10


 
2Q Quarterly Overview Tom Kennedy CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc. NYSE: HTZ 1111


 
2Q:18 Consolidated Results 2Q (in $M USD, except per share data) 2Q:18 2Q:17 YoY GAAP Results Results Inc/(Dec) Total revenues $2,389 $2,224 7% Income (loss) before income taxes $(86) $(245) (65)% Net income (loss) $(63) $(158) (60)% Diluted earnings (loss) per share $(0.75) $(1.90) (61)% Weighted average shares outstanding: diluted 84 83 Non-GAAP1 Adjusted corporate EBITDA $93 $35 166% Adjusted corporate EBITDA margin 4% 2% 230 bps Adjusted pre-tax income (loss) $(21) $(82) (74)% Adjusted net income (loss) $(16) $(52) (69)% Adjusted diluted EPS $(0.19) $(0.63) (70)% 1Definitions and reconciliations of non-GAAP measures are provided in the Company’s second quarter 2018 press release issued on August 6, 2018 and as an exhibit to the Company’s Form 8-K filed on August 7, 2018. 12


 
2Q:18 U.S. RAC Revenue Performance 2Q U.S. RAC (YoY quarterly results1) 2Q:18 Performance Drivers Revenue Days Total RPD • T&M rate increased 3% excluding value-added service revenues ◦ Continuing to focus on improving value-added service sales tactics, product design and digital capabilities to re-energize sales • Transaction days increased 7% YoY as a result of T&M rate Total RPU growth in both airport and off-airport business ◦ Excluding TNC rentals, volume up 5% • Total RPU increased due to strong revenue and improved vehicle utilization 1Revenue is defined as total revenue excluding ancillary retail vehicle sales revenue. 13


 
2Q:18 U.S. RAC Fleet 2Q U.S. RAC (YoY quarterly results1) Continued Focus on Optimizing Fleet Vehicle Utilization (bps) Capacity • Total capacity increased 6% YoY, aligned with improving demand trends leading into peak season ◦ Excluding ride-hailing, capacity increased 3% YoY • Higher vehicle utilization benefited from enhanced demand/fleet forecasting tools 1Capacity equals average fleet. 14


 
2Q:18 U.S. RAC Net Monthly Depreciation Per Unit 2Q +27% +1% (6)% (13)% (19)% Year-Over-Year Trend Continues to Improve • Incremental fleet costs from 2Q:17 re-balancing activity did not reoccur • Stabilizing residual values YoY - expecting tougher comps in 2H:18 • Enhanced process for identifying accretive fleet rotation opportunities • Increased sales through higher yielding disposition channels • Lower model year 2018 purchase prices (like-for-like vs. model year 2017) • Completed transition to a richer, more preferred vehicle mix 15


 
2Q:18 U.S. RAC Fleet Sales Initiative 2Q Non-Program Vehicle Focused on Driving More Sales Disposition Channel Mix Through Alternative Channels • Mix of unit sales through highest-return retail channel grew 900 bps in 2Q:18 • 76% of total units sold through higher yielding alternative channels compared to 60% in 2Q:17 2Q:18 2Q:17 Dealer Direct Retail Auction 16


 
2Q:18 International RAC 2Q Key Metrics1 Performance Overview2 2Q:18 YoY • Revenue increased 2% YoY excluding foreign exchange 2% ◦ Revenue increased 4% YoY excluding Brazil3 and foreign exchange ̶ Total RPD was flat YoY 1% ̶ Transaction days increased 4% YoY • Vehicle utilization decrease primarily driven by lower than expected volume as the World Cup delayed (60) bps leisure travel • Monthly depreciation per unit excluding Brazil3 and foreign exchange increased 1% YoY Total RPD Utilization Total RPU 1 As reported. 2 Based on December 31, 2017, foreign exchange rates. 3 Sale of Brazil operations finalized August 2017. 17


 
2Q LIQUIDITY / BALANCE SHEET OVERVIEW Tom Kennedy CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc. NYSE: HTZ 1818


 
2Q:18 Liquidity Overview and Financing Activities 2Q Corporate Liquidity at June 30, 2018 • Decrease in liquidity from Q1 level to $1.2 billion $ in millions Senior Letter of Credit reflects seasonal upsizing in fleet and working RCF Facility Total capital Commitments$ 865 $ 302 $ 1,167 ◦ Liquidity in 2H:18 expected to improve as we Issued Letters of Credit - 363 302 665 defleet out of peak season Borrowings O/S 1 -- n/a - • Levels of committed corporate bank facilities Borrowing Availability$ 502 $ - $ 502 Unrestricted Cash + 685 unchanged from prior quarter Corporate Liquidity$ 1,187 • Extended tenor of rental car vehicle funding with June issuance of $400 million of term ABS, Reissuance of $302 million of letters of credit from Senior RCF to Letter of Credit equally split between 3- and 5-year maturities Facility was liquidity neutral and created $302 million of incremental debt capacity (must be junior to the Senior RCF). 1 Letter of Credit (L/C) Facility supports issued letters of credit but does not provide committed borrowing capacity for general corporate purposes. 19


 
Corporate Debt Maturity Profile 2Q June 30, 2018 Hertz Global Non-Vehicle Debt Maturity Profile1 Senior Notes Senior Second Priority Secured Notes Term Loan Senior RCF and Stand Alone L/C facility $14 in $M USD $1,167 $14 $14 $7 $14 1 Excludes $27M of promissory notes due 2028 and $11M of other non-vehicle debt. There are no current outstanding borrowings under the Senior RCF facility. 20


 
First Lien Financial Maintenance Covenant 2Q Consolidated First Lien Leverage Ratio as of June 30, 2018 was 1.60x $ in millions Senior RCF Facility and L/C Facility Commitments $1,167 Outstanding Letters of Credit - 665 Term Loan Outstanding + 681 Unrestricted Cash1 - 500 First Lien Secured Net Debt $683 TTM Adjusted Corporate EBITDA2 / $427 First Lien Leverage Ratio3 1.60 x Our Consolidated First Lien Leverage Ratio is tested each quarter and must not exceed 3.0x 1 Actual unrestricted cash on the balance sheet as of 6/30/2018 was $685 million. The credit facility limits netting of unrestricted cash to $500 million. 2 TTM adjusted corporate EBITDA defined as $376 million reported LTM adjusted corporate EBIDTA + $51 million adjustments as per Credit Agreement. 3 First lien leverage ratio must not exceed 3.0x in accordance with the terms of the Credit Agreement. 21


 
3Q:18 U.S. RAC Preliminary Outlook 2Q July revenue grew 11% versus prior year • Total RPD increased 4% YoY • Transaction days increased 7% YoY • Total RPU increased nearly 5% YoY • Excluding TNC, capacity grew approximately 3% with an approximate 70 bps improvement in utilization Early indications suggest positive performance in August September is expected to follow seasonal trends 22


 
2Q Q&A NYSE: HTZ 2323