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) November 9, 2018 (November 8, 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, or jurisdiction 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 November 8, 2018, Hertz Global Holdings, Inc. and The Hertz Corporation (collectively, “Hertz” or the “Company”) issued a press release with respect to the Company’s third 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 November 9, 2018, the Company will conduct an earnings webcast relating to the Company's financial results for the third 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 November 8, 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 November 8, 2018.
Exhibit 99.2 - Set of slides that will accompany the November 9, 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/ JAMERE JACKSON
 
Name:
Jamere Jackson
 
Title:
Executive Vice President and Chief Financial Officer
Date:  November 9, 2018



Exhibit
Exhibit 99.1



Hertz Global Holdings Reports
Third Quarter 2018 Financial Results




ESTERO, Fla, November 8, 2018 - Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported results for its third quarter 2018.


Third Quarter 2018 Compared to Third Quarter 2017:

Total revenues increased 7%; U.S. RAC total revenues up 10%
Net income attributable to Hertz Global improved 52% to $141 million
Adjusted Corporate EBITDA improved 9% to $351 million
U.S. RAC Total RPD up 3%
U.S. RAC Net Depreciation Per Unit Per Month decreased 15%


“Our operational turnaround continues to move forward as reflected by our fourth consecutive quarter of year-over-year revenue and adjusted earnings growth,” said Kathryn V. Marinello, President and Chief Executive Officer of Hertz Global.  “We are balancing our priorities of targeting a higher-quality revenue mix, while making investments in our operations, brands and technologies to optimally position the Company for long-term, sustainable growth.”
 

For the third quarter 2018, total revenues were $2.8 billion, a 7% increase versus the third quarter 2017. Income before income taxes for the third quarter 2018 was $181 million versus $143 million in the same period last year. Third quarter 2018 net income attributable to Hertz Global was $141 million, or $1.68 per diluted share, compared to $93 million, or $1.12 per diluted share, during the third quarter 2017. The Company reported Adjusted Net Income for the third quarter 2018 of $180 million, or $2.14 Adjusted Diluted EPS, compared to $118 million, or $1.42 Adjusted Diluted EPS, for the same period last year. Adjusted Corporate EBITDA for the third quarter 2018 was $351 million, compared to $321 million in the same period last year.




1


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

U.S. RAC(1)
Three Months Ended
September 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
Total revenues
$
1,852

 
$
1,685

 
10
 %
 
Depreciation of revenue earning vehicles and lease charges, net
$
414

 
$
455

 
(9
)%
 
Direct vehicle operating ("DOE") and selling, general & administrative ("SG&A") expenses
$
1,196

 
$
1,064

 
12
 %
 
DOE and SG&A as a percentage of total revenues
65
%
 
63
%
 
140

bps
Income (loss) before income taxes
$
203

 
$
131

 
55
 %
 
 
 
 
 
 
 
 
Adjusted Pre-tax Income (Loss)
$
222

 
$
158

 
41
 %
 
Adjusted Pre-tax Margin
12
%
 
9
%
 
260

bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
208

 
$
166

 
25
 %
 
Adjusted Corporate EBITDA Margin
11
%
 
10
%
 
140

bps
 
 
 
 
 
 
 
Average Vehicles (in whole units)
527,900

 
495,000

 
7
 %
 
Vehicle Utilization
81
%
 
81
%
 
30

bps
Transaction Days (in thousands)
39,478

 
36,879

 
7
 %
 
Total RPD (in whole dollars)
$
46.23

 
$
45.04

 
3
 %
 
Total RPU Per Month (in whole dollars)
$
1,152

 
$
1,119

 
3
 %
 
Net Depreciation Per Unit Per Month (in whole dollars)
$
261

 
$
306

 
(15
)%
 

Total U.S. RAC revenues increased 10% versus the prior-year quarter as a result of volume and pricing both on and off airport. Volume increased 7% and Total RPD increased 3%. The Company achieved a 5% increase in Time and Mileage pricing and a 30 basis point improvement in Utilization. Excluding rentals to transportation network company drivers ("TNC"), revenues increased 8%; comprised of a 4% volume increase and a 3% increase in Total RPD.

Net Depreciation Per Unit Per Month decreased 15% to $261 resulting from favorable vehicle acquisition prices and stronger residual values in the third quarter of 2018.

Adjusted Corporate EBITDA improved by 25% and Adjusted Corporate EBITDA Margin expanded 140 basis points versus the prior-year quarter driven by strong revenue growth coupled with improved monthly depreciation per unit. Strong revenue results and lower vehicle holding costs were partially offset by elevated expenses associated with the Company’s operating turnaround initiatives and increased vehicle interest expense.



2


INTERNATIONAL RENTAL CAR ("INTERNATIONAL RAC") SUMMARY

International RAC(1)
Three Months Ended
September 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
Total revenues
$
732

 
$
728

 
1
 %
 
Depreciation of revenue earning vehicles and lease charges, net
$
128

 
$
126

 
2
 %
 
Direct vehicle operating ("DOE") and selling, general & administrative ("SG&A") expenses
$
449

 
$
435

 
3
 %
 
DOE and SG&A as a percentage of total revenues
61
%
 
60
%
 
160

bps
Income (loss) before income taxes
$
131

 
$
152

 
(14
)%
 
 
 
 
 
 
 
 
Adjusted Pre-tax Income (Loss)
$
133

 
$
147

 
(10
)%
 
Adjusted Pre-tax Margin
18
%
 
20
%
 
(200
)
bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
140

 
$
158

 
(11
)%
 
Adjusted Corporate EBITDA Margin
19
%
 
22
%
 
(260
)
bps
 
 
 
 
 


 
Average Vehicles (in whole units)
214,900

 
212,600

 
1
 %
 
Vehicle Utilization
80
%
 
82
%
 
(120
)
bps
Transaction Days (in thousands)
15,876

 
15,947

 
 %
 
Total RPD (in whole dollars)
$
47.37

 
$
46.03

 
3
 %
 
Total RPU Per Month (in whole dollars)
$
1,166

 
$
1,151

 
1
 %
 
Net Depreciation Per Unit Per Month (in whole dollars)
$
205

 
$
199

 
3
 %
 

The Company’s International RAC segment revenues increased 1%, and increased 3% when excluding the impact of foreign currency. Total RPD increased 3%, and excluding the impact of Brazil, Total RPD increased 1%. Volume was flat versus the prior-year quarter and increased 2% excluding Brazil. The results excluding Brazil were driven by solid growth in our Asia/Pacific region, along with moderate leisure growth in Europe.

Net Depreciation Per Unit Per Month increased 3%, or 1% excluding Brazil.

Adjusted Corporate EBITDA for International RAC decreased 11% compared with a year ago driven by increased direct vehicle operating expenses and vehicle depreciation.

3


ALL OTHER OPERATIONS

All Other Operations(1)
Three Months Ended
September 30,
 
Percent Inc/(Dec)
 
($ in millions)
2018
 
2017
 
 
Total revenues
$
174

 
$
159

 
9
 %
 
Depreciation of revenue earning vehicles and lease charges, net
$
130

 
$
119

 
9
 %
 
Direct vehicle operating ("DOE") and selling, general & administrative ("SG&A") expenses
$
18

 
$
17

 
6
 %
 
DOE and SG&A as a percentage of total revenues
10
%
 
11
%
 
(40
)
bps
Income (loss) before income taxes
$
19

 
$
17

 
12
 %
 
 
 
 
 
 
 
 
Adjusted Pre-tax Income (Loss)
$
22

 
$
20

 
10
 %
 
Adjusted Pre-tax Margin
13
%
 
13
%
 
10

bps
 
 
 
 
 
 
 
Adjusted Corporate EBITDA
$
19

 
$
18

 
6
 %
 
Adjusted Corporate EBITDA Margin
11
%
 
11
%
 
(40
)
bps
 
 
 
 
 
 
 
Average Vehicles - Donlen
185,300

 
205,600

 
(10
)%
 

All Other Operations is primarily comprised of the Company's Donlen leasing operations. Revenue was up 9% driven by a strong increase in units under lease, partially offset by 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 third quarter 2018 live webcast discussion will be held on November 9, 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) 230-1059 and providing passcode 454980. 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 454980.

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 globally. 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 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.


4



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 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.


5



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
September 30,
 
As a Percentage of Total Revenues
 
Nine Months Ended
September 30,
 
As a Percentage of Total Revenues
(In millions, except per share data)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Total revenues
$
2,758

 
$
2,572

 
100
 %
 
100
 %
 
$
7,209

 
$
6,713

 
100
 %
 
100
 %
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
1,459

 
1,348

 
53
 %
 
52
 %
 
4,043

 
3,735

 
56
 %
 
56
 %
Depreciation of revenue earning vehicles and lease charges, net
672

 
700

 
24
 %
 
27
 %
 
2,020

 
2,144

 
28
 %
 
32
 %
Selling, general and administrative
265

 
217

 
10
 %
 
8
 %
 
765

 
661

 
11
 %
 
10
 %
Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
115

 
90

 
4
 %
 
3
 %
 
336

 
242

 
5
 %
 
4
 %
Non-vehicle
73

 
86

 
3
 %
 
3
 %
 
218

 
223

 
3
 %
 
3
 %
Total interest expense, net
188

 
176

 
7
 %
 
7
 %
 
554

 
465

 
8
 %
 
7
 %
Intangible asset impairments

 

 
 %
 
 %
 

 
86

 
 %
 
1
 %
Other (income) expense, net
(7
)
 
(12
)
 
 %
 
 %
 
(36
)
 
19

 
 %
 
 %
Total expenses
2,577

 
2,429

 
93
 %
 
94
 %
 
7,346

 
7,110

 
102
 %
 
106
 %
Income (loss) before income taxes
181

 
143

 
7
 %
 
6
 %
 
(137
)
 
(397
)
 
(2
)%
 
(6
)%
Income tax (provision) benefit
(41
)
 
(50
)
 
(1
)%
 
(2
)%
 
12

 
108

 
 %
 
2
 %
Net Income (loss)
$
140

 
$
93

 
5
 %
 
4
 %
 
(125
)
 
(289
)
 
(2
)%
 
(4
)%
Net (income) loss attributable to noncontrolling interests
1

 

 
 %
 
 %
 
1

 

 
 %
 
 %
Net income (loss) attributable to Hertz Global
141

 
93

 
5
 %
 
4
 %
 
(124
)
 
(289
)
 
(2
)%
 
(4
)%
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
$
1.68

 
$
1.12

 
 
 
 
 
$
(1.49
)
 
$
(3.48
)
 
 
 
 
Diluted earnings (loss) per share
$
1.68

 
$
1.12

 
 
 
 
 
$
(1.49
)
 
$
(3.48
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Pre-tax Income (Loss)(a)
$
240

 
$
188

 


 


 
$
44

 
$
(107
)
 


 


Adjusted Net Income (Loss)(a)
$
180

 
$
118

 


 


 
$
33

 
$
(67
)
 


 


Adjusted Diluted Earnings (Loss) Per Share(a)
$
2.14

 
$
1.42

 


 


 
$
0.40

 
$
(0.81
)
 


 


Adjusted Corporate EBITDA(a)
$
351

 
$
321

 


 


 
$
384

 
$
246

 


 


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

7



SELECTED UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In millions)
September 30, 2018
 
December 31, 2017
Cash and cash equivalents
$
761

 
$
1,072

Total restricted cash
265

 
432

Revenue earning vehicles, net:
 
 
 
U.S. Rental Car
9,189

 
7,761

International Rental Car
2,929

 
2,153

All Other Operations
1,459

 
1,422

Total revenue earning vehicles, net
13,577

 
11,336

Total assets
22,460

 
20,058

Total debt
17,158

 
14,865

Net Vehicle Debt(a)
12,544

 
10,079

Net Non-vehicle Debt(a)
3,693

 
3,402

Total stockholders' equity
1,227

 
1,520

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


SELECTED UNAUDITED CONSOLIDATED CASH FLOW DATA
 
Nine Months Ended September 30,
(In millions)
2018
 
2017
Cash flows provided by (used in):
 
 
 
Operating activities
$
2,017

 
$
1,977

Investing activities
(4,799
)
 
(3,405
)
Financing activities
2,308

 
2,085

Effect of exchange rate changes
(4
)
 
26

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents(a)
$
(478
)
 
$
683

 
 
 
 
Fleet Growth(b)
$
(252
)
 
$
(200
)
Adjusted Free Cash Flow(b)
$
(259
)
 
$
(418
)
(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 nine months ended September 30, 2017, the net change in cash, cash equivalents, restricted cash and restricted cash equivalents increased by $751 million compared to the amount previously reported.
(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
September 30,
 
Percent Inc/(Dec)
 
 
Nine Months Ended
September 30,
 
Percent Inc/(Dec)
 
 
2018
 
2017
 
 
 
2018
 
2017
 
 
U.S. RAC
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction Days (in thousands) 
39,478

 
36,879

 
7
 %
 
 
112,427

 
105,424

 
7
 %
 
Total RPD(a)
$
46.23

 
$
45.04

 
3
 %
 
 
$
42.93

 
$
42.56

 
1
 %
 
Total RPU Per Month(a)
$
1,152

 
$
1,119

 
3
 %
 
 
$
1,052

 
$
1,019

 
3
 %
 
Average Vehicles (in whole units)
527,900

 
495,000

 
7
 %
 
 
509,800

 
489,300

 
4
 %
 
Vehicle Utilization(a)
81
%
 
81
%
 
30

bps
 
81
%
 
79
%
 
190

bps
Net Depreciation Per Unit Per Month(a)
$
261

 
$
306

 
(15
)%
 
 
$
282

 
$
336

 
(16
)%
 
Percentage of program vehicles at period end
12
%
 
9
%
 
290

bps
 
12
%
 
9
%
 
290

bps
Adjusted Pre-tax Income (Loss) (in millions)(b)
$
222

 
$
158

 
41
 %
 
 
$
200

 
$
5

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International RAC
 
 
 
 


 
 
 
 
 
 
 
 
Transaction Days (in thousands) 
15,876

 
15,947

 
 %
 
 
39,075

 
39,366

 
(1
)%
 
Total RPD(a)
$
47.37

 
$
46.03

 
3
 %
 
 
$
46.01

 
$
44.56

 
3
 %
 
Total RPU Per Month(a)
$
1,166

 
$
1,151

 
1
 %
 
 
$
1,088

 
$
1,064

 
2
 %
 
Average Vehicles (in whole units)
214,900

 
212,600

 
1
 %
 
 
183,600

 
183,100

 
 %
 
Vehicle Utilization(a)
80
%
 
82
%
 
(120
)
bps
 
78
%
 
79
%
 
(80
)
bps
Net Depreciation Per Unit Per Month(a)
$
205

 
$
199

 
3
 %
 
 
$
208

 
$
197

 
6
 %
 
Percentage of program vehicles at period end
45
%
 
45
%
 
20

bps
 
45
%
 
45
%
 
20

bps
Adjusted Pre-tax Income (Loss) (in millions)(b)
$
133

 
$
147

 
(10
)%
 
 
$
201

 
$
200

 
1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
All Other Operations
 
 
 
 


 
 
 
 
 
 
 
 
Average Vehicles — Donlen
185,300

 
205,600

 
(10
)%
 
 
188,200

 
206,500

 
(9
)%
 
Adjusted Pre-tax Income (Loss) (in millions)(b)
$
22

 
$
20

 
10
 %
 
 
$
68

 
$
59

 
15
 %
 
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 September 30, 2018
 
Three Months Ended September 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:
$
1,852

 
$
732

 
$
174

 
$

 
$
2,758

 
$
1,685

 
$
728

 
$
159

 
$

 
$
2,572

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
1,068

 
384

 
8

 
(1
)
 
1,459

 
970

 
372

 
9

 
(3
)
 
1,348

Depreciation of revenue earning vehicles and lease charges, net
414

 
128

 
130

 

 
672

 
455

 
126

 
119

 

 
700

Selling, general and administrative
128

 
65

 
10

 
62

 
265

 
94

 
63

 
8

 
52

 
217

Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
79

 
25

 
11

 

 
115

 
61

 
20

 
9

 

 
90

Non-vehicle
(40
)
 

 
(4
)
 
117

 
73

 
(26
)
 
4

 
(3
)
 
111

 
86

Total interest expense, net
39

 
25

 
7

 
117

 
188

 
35

 
24

 
6

 
111

 
176

Other (income) expense, net

 
(1
)
 

 
(6
)
 
(7
)
 

 
(9
)
 

 
(3
)
 
(12
)
Total expenses
1,649

 
601

 
155

 
172

 
2,577

 
1,554

 
576

 
142

 
157

 
2,429

Income (loss) before income taxes
$
203

 
$
131

 
$
19

 
$
(172
)
 
181

 
$
131

 
$
152

 
$
17

 
$
(157
)
 
143

Income tax (provision) benefit
 
 
 
 
 
 
 
 
(41
)
 
 
 
 
 
 
 
 
 
(50
)
Net income (loss)
 
 
 
 
 
 
 
 
140

 
 
 
 
 
 
 
 
 
93

Net (income) loss attributable to noncontrolling interests
 
 
 
 
 
 
 
 
1

 
 
 
 
 
 
 
 
 

Net income (loss) attributable to Hertz Global
 
 
 
 
 
 
 
 
$
141

 
 
 
 
 
 
 
 
 
$
93



10



Supplemental Schedule I (continued)
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 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:
$
4,905

 
$
1,789

 
$
515

 
$

 
$
7,209

 
$
4,557

 
$
1,683

 
$
473

 
$

 
$
6,713

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct vehicle and operating
3,016

 
1,006

 
25

 
(4
)
 
4,043

 
2,750

 
962

 
28

 
(5
)
 
3,735

Depreciation of revenue earning vehicles and lease charges, net
1,295

 
342

 
383

 

 
2,020

 
1,478

 
311

 
355

 

 
2,144

Selling, general and administrative
345

 
186

 
28

 
206

 
765

 
290

 
170

 
25

 
176

 
661

Interest expense, net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle
216

 
88

 
32

 

 
336

 
166

 
55

 
21

 

 
242

Non-vehicle
(105
)
 

 
(12
)
 
335

 
218

 
(66
)
 
4

 
(7
)
 
292

 
223

Total interest expense, net
111

 
88

 
20

 
335

 
554

 
100

 
59

 
14

 
292

 
465

Intangible asset impairments

 

 

 

 

 
86

 

 

 

 
86

Other (income) expense, net
(7
)
 
(2
)
 

 
(27
)
 
(36
)
 

 
(8
)
 

 
27

 
19

Total expenses
4,760

 
1,620

 
456

 
510

 
7,346

 
4,704

 
1,494

 
422

 
490

 
7,110

Income (loss) before income taxes
$
145

 
$
169

 
$
59

 
$
(510
)
 
(137
)
 
$
(147
)
 
$
189

 
$
51

 
$
(490
)
 
(397
)
Income tax (provision) benefit
 
 
 
 
 
 
 
 
12

 
 
 
 
 
 
 
 
 
108

Net income (loss)
 
 
 
 
 
 
 
 
(125
)
 
 
 
 
 
 
 
 
 
(289
)
Net (income) loss attributable to noncontrolling interests
 
 
 
 
 
 
 
 
1

 
 
 
 
 
 
 
 
 

Net income (loss) attributable to Hertz Global
 
 
 
 
 
 
 
 
$
(124
)
 
 
 
 
 
 
 
 
 
$
(289
)


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 September 30, 2018
 
Three Months Ended September 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)
 
 
 
 
 
 
 
 
$
140

 
 
 
 
 
 
 
 
 
$
93

Income tax provision (benefit)
 
 
 
 
 
 
 
 
41

 
 
 
 
 
 
 
 
 
50

Income (loss) before income taxes
$
203

 
$
131

 
$
19

 
$
(172
)
 
181

 
$
131

 
$
152

 
$
17

 
$
(157
)
 
143

Depreciation and amortization
452

 
136

 
132

 
4

 
724

 
501

 
134

 
122

 
5

 
762

Interest, net of interest income
39

 
25

 
7

 
117

 
188

 
35

 
24

 
6

 
111

 
176

Gross EBITDA
$
694

 
$
292

 
$
158

 
$
(51
)
 
$
1,093

 
$
667

 
$
310

 
$
145

 
$
(41
)
 
$
1,081

Revenue earning vehicle depreciation and lease charges, net
(414
)
 
(128
)
 
(130
)
 

 
(672
)
 
(455
)
 
(126
)
 
(119
)
 

 
(700
)
Vehicle debt interest
(79
)
 
(25
)
 
(11
)
 

 
(115
)
 
(61
)
 
(20
)
 
(9
)
 

 
(90
)
Vehicle debt-related charges(a)
5

 
1

 
1

 

 
7

 
5

 
2

 
1

 

 
8

Corporate EBITDA
$
206

 
$
140

 
$
18

 
$
(51
)
 
$
313

 
$
156

 
$
166

 
$
18

 
$
(41
)
 
$
299

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

 

 

 
3

 
3

 

 

 

 
4

 
4

Restructuring and restructuring related charges(d)(e)

 

 

 
12

 
12

 
1

 

 

 
1

 
2

Information technology and finance transformation costs(g)

 

 

 
24

 
24

 

 

 

 
15

 
15

Other items(h)
2

 

 
1

 
(4
)
 
(1
)
 
9

 
(8
)
 

 

 
1

Adjusted Corporate EBITDA
$
208

 
$
140

 
$
19

 
$
(16
)
 
$
351

 
$
166

 
$
158

 
$
18

 
$
(21
)
 
$
321

Non-vehicle depreciation and amortization
(38
)
 
(8
)
 
(2
)
 
(4
)
 
(52
)
 
(46
)
 
(8
)
 
(3
)
 
(5
)
 
(62
)
Non-vehicle debt interest, net of interest income
40

 

 
4

 
(117
)
 
(73
)
 
26

 
(4
)
 
3

 
(111
)
 
(86
)
Non-vehicle debt-related charges(a)

 

 

 
4

 
4

 

 

 

 
4

 
4

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

 

 

 
(3
)
 
(3
)
 

 

 

 
(4
)
 
(4
)
Acquisition accounting(i)
12

 
1

 
1

 
1

 
15

 
12

 
1

 
2

 

 
15

Other(j)

 

 

 
(2
)
 
(2
)
 

 

 

 

 

Adjusted Pre-tax Income (Loss)(k)
$
222

 
$
133

 
$
22

 
$
(137
)
 
$
240

 
$
158

 
$
147

 
$
20

 
$
(137
)
 
$
188

Income tax (provision) benefit on adjusted pre-tax income (loss)(l)
 
 
 
 
 
 
 
 
(60
)
 
 
 
 
 
 
 
 
 
(70
)
Adjusted Net Income (Loss)
 
 
 
 
 
 
 
 
$
180

 
 
 
 
 
 
 
 
 
$
118

Weighted average number of diluted shares outstanding
 
 
 
 
 
 
 
 
84

 
 
 
 
 
 
 
 
 
83

Adjusted Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
$
2.14

 
 
 
 
 
 
 
 
 
$
1.42


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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 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)
 
 
 
 
 
 
 
 
$
(125
)
 
 
 
 
 
 
 
 
 
$
(289
)
Income tax provision (benefit)
 
 
 
 
 
 
 
 
(12
)
 
 
 
 
 
 
 
 
 
(108
)
Income (loss) before income taxes
$
145

 
$
169

 
$
59

 
$
(510
)
 
$
(137
)
 
$
(147
)
 
$
189

 
$
51

 
$
(490
)
 
$
(397
)
Depreciation and amortization
1,416

 
367

 
390

 
13

 
2,186

 
1,616

 
336

 
364

 
10

 
2,326

Interest, net of interest income
111

 
88

 
20

 
335

 
554

 
100

 
59

 
14

 
292

 
465

Gross EBITDA
$
1,672

 
$
624

 
$
469

 
$
(162
)
 
$
2,603

 
$
1,569

 
$
584

 
$
429

 
$
(188
)
 
$
2,394

Revenue earning vehicle depreciation and lease charges, net
(1,295
)
 
(342
)
 
(383
)
 

 
(2,020
)
 
(1,478
)
 
(311
)
 
(355
)
 

 
(2,144
)
Vehicle debt interest
(216
)
 
(88
)
 
(32
)
 

 
(336
)
 
(166
)
 
(55
)
 
(21
)
 

 
(242
)
Vehicle debt-related charges(a)
17

 
5

 
3

 

 
25

 
13

 
6

 
3

 

 
22

Loss on extinguishment of vehicle related debt(b)
2

 
20

 

 

 
22

 

 

 

 

 

Corporate EBITDA
$
180

 
$
219

 
$
57

 
$
(162
)
 
$
294

 
$
(62
)
 
$
224

 
$
56

 
$
(188
)
 
$
30

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

 

 

 
10

 
10

 

 

 

 
16

 
16

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

 
3

 

 
21

 
26

 
1

 
2

 

 
9

 
12

Impairment charges and asset write-downs(f)

 

 

 

 

 
86

 

 

 
30

 
116

Finance and information technology transformation costs(g)

 

 

 
75

 
75

 

 

 

 
55

 
55

Other items(h)
(3
)
 

 
2

 
(20
)
 
(21
)
 
15

 
(2
)
 

 
4

 
17

Adjusted Corporate EBITDA
$
179

 
$
222

 
$
59

 
$
(76
)
 
$
384

 
$
40

 
$
224

 
$
56

 
$
(74
)
 
$
246

Non-vehicle depreciation and amortization
(121
)
 
(25
)
 
(7
)
 
(13
)
 
(166
)
 
(138
)
 
(25
)
 
(9
)
 
(10
)
 
(182
)
Non-vehicle debt interest, net of interest income
105

 

 
12

 
(335
)
 
(218
)
 
66

 
(4
)
 
7

 
(292
)
 
(223
)
Non-vehicle debt-related charges(a)

 

 

 
11

 
11

 

 

 

 
11

 
11

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

 

 

 

 

 

 

 

 
8

 
8

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

 

 

 
(10
)
 
(10
)
 

 

 

 
(16
)
 
(16
)
Acquisition accounting(i)
37

 
4

 
4

 
1

 
46

 
37

 
5

 
5

 

 
47

Other(j)

 

 

 
(3
)
 
(3
)
 

 

 

 
2

 
2

Adjusted Pre-tax Income (Loss)(e)(k)
$
200

 
$
201

 
$
68

 
$
(425
)
 
$
44

 
$
5

 
$
200

 
$
59

 
$
(371
)
 
$
(107
)
Income tax (provision) benefit on adjusted pre-tax income (loss)(l)
 
 
 
 
 
 
 
 
(11
)
 
 
 
 
 
 
 
 
 
40

Adjusted Net Income (Loss)
 
 
 
 
 
 
 
 
$
33

 
 
 
 
 
 
 
 
 
$
(67
)
Weighted average number of diluted shares outstanding
 
 
 
 
 
 
 
 
83

 
 
 
 
 
 
 
 
 
83

Adjusted Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
$
0.40

 
 
 
 
 
 
 
 
 
$
(0.81
)
(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 incurred during the second quarter.
(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, the loss contingency, which totals $13.6 million for the nine months of 2018, and other expenses related to the previously disclosed accounting review and investigation.
(e)
For the nine months ended September 30, 2017, excludes $2 million of stock-based compensation expenditures included in restructuring and restructuring related charges.
(f)
In 2017, represents a second quarter $86 million impairment 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 net loss attributable to noncontrolling interests, a $4 million and $21 million pre-tax gain on marketable securities during the third quarter and nine months, respectively, 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 net expenses of $13 million resulting from hurricanes, partially offset by a $6 million pre-tax gain on the sale of the Company's Brazil Operations in the third quarter. Also, includes 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
September 30,
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
 
2018
 
2017
Direct vehicle and operating
$
(15
)
 
$
(28
)
 
$
(48
)
 
$
(65
)
Selling, general and administrative
(36
)
 
(14
)
 
(99
)
 
(76
)
Interest expense, net:
 
 
 
 
 
 
 
Vehicle
(7
)
 
(8
)
 
(47
)
 
(22
)
Non-vehicle
(4
)
 
(4
)
 
(11
)
 
(19
)
Total interest expense, net
(11
)
 
(12
)
 
(58
)
 
(41
)
Intangible asset impairments

 

 

 
(86
)
Other income (expense), net
4

 
9

 
25

 
(22
)
Noncontrolling interests
(1
)
 

 
(1
)
 

Total adjustments
$
(59
)
 
$
(45
)
 
$
(181
)
 
$
(290
)

(l)
Derived utilizing a combined statutory rate of 25% and 37% for the periods ending September 30, 2018 and 2017, respectively, applied to the respective Adjusted Pre-tax Income (Loss).





14



Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - FLEET GROWTH
Unaudited
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 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
$
(6,644
)
 
$
(2,876
)
 
$
(556
)
 
$
(10,076
)
 
$
(5,416
)
 
$
(2,771
)
 
$
(496
)
 
$
(8,683
)
Proceeds from disposal of revenue earning vehicles
3,568

 
1,675

 
135

 
5,378

 
3,668

 
1,477

 
140

 
5,285

Net revenue earning vehicles capital expenditures
(3,076
)
 
(1,201
)
 
(421
)
 
(4,698
)
 
(1,748
)
 
(1,294
)
 
(356
)
 
(3,398
)
Depreciation of revenue earning vehicles, net
1,295

 
275

 
382

 
1,952

 
1,478

 
256

 
355

 
2,089

Financing activity related to vehicles:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings
8,503

 
2,554

 
814

 
11,871

 
4,807

 
1,276

 
824

 
6,907

Payments
(6,993
)
 
(1,794
)
 
(738
)
 
(9,525
)
 
(4,256
)
 
(815
)
 
(816
)
 
(5,887
)
Restricted cash changes
138

 
24

 
(14
)
 
148

 
19

 
74

 
(4
)
 
89

Net financing activity related to vehicles
1,648

 
784

 
62

 
2,494

 
570

 
535

 
4

 
1,109

Fleet Growth
$
(133
)
 
$
(142
)
 
$
23

 
$
(252
)
 
$
300

 
$
(503
)
 
$
3

 
$
(200
)





15



Supplemental Schedule IV
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED FREE CASH FLOW
Unaudited
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
Net cash provided by operating activities
$
2,017

 
$
1,977

Net change in restricted cash and cash equivalents, vehicle(a)
148

 
89

Revenue earning vehicles expenditures
(10,076
)
 
(8,683
)
Proceeds from disposal of revenue earning vehicles
5,378

 
5,285

Capital asset expenditures, non-vehicle
(119
)
 
(124
)
Proceeds from disposal of property and other equipment
47

 
18

Proceeds from issuance of vehicle debt
11,871

 
6,907

Repayments of vehicle debt
(9,525
)
 
(5,887
)
Adjusted Free Cash Flow
$
(259
)
 
$
(418
)
(a)
Amounts presented for the nine months ended September 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 September 30, 2018
 
As of December 31, 2017
(In millions)
Vehicle
 
Non-Vehicle
 
Total
 
Vehicle
 
Non-Vehicle
 
Total
Debt as reported in the balance sheet
$
12,737

 
$
4,421

 
$
17,158

 
$
10,431

 
$
4,434

 
$
14,865

Add:
 
 
 
 
 
 
 
 
 
 
 
     Debt issue costs deducted from debt obligations
43

 
33

 
76

 
34

 
40

 
74

Less:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 
761

 
761

 

 
1,072

 
1,072

Restricted cash
236

 

 
236

 
386

 

 
386

Net Debt
$
12,544

 
$
3,693

 
$
16,237

 
$
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
September 30,
 
Percent Inc/(Dec)
 
 
Nine Months Ended
September 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
 
2018
 
2017
 
 
Total RPD
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,852

 
$
1,685

 
 
 
 
$
4,905

 
$
4,557

 
 
 
Ancillary retail vehicle sales revenue
(27
)
 
(24
)
 
 
 
 
(78
)
 
(70
)
 
 
 
Total Rental Revenue
$
1,825

 
$
1,661

 
 
 
 
$
4,827

 
$
4,487

 
 
 
Transaction Days (in thousands)
39,478

 
36,879

 
 
 
 
112,427

 
105,424

 
 
 
Total RPD (in whole dollars)
$
46.23

 
$
45.04

 
3
 %
 
 
$
42.93

 
$
42.56

 
1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Rental Revenue
$
1,825

 
$
1,661

 
 
 
 
$
4,827

 
$
4,487

 
 
 
Average Vehicles (in whole units)
527,900

 
495,000

 
 
 
 
509,800

 
489,300

 
 
 
Total revenue per unit (in whole dollars)
$
3,457

 
$
3,356

 
 
 
 
$
9,468

 
$
9,170

 
 
 
Number of months in period
3

 
3

 
 
 
 
9

 
9

 
 
 
Total RPU Per Month (in whole dollars)
$
1,152

 
$
1,119

 
3
 %
 
 
$
1,052

 
$
1,019

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction Days (in thousands)
39,478

 
36,879

 
 
 
 
112,427

 
105,424

 
 
 
     Average Vehicles (in whole units)
527,900

 
495,000

 
 
 
 
509,800

 
489,300

 
 
 
     Number of days in period
92

 
92

 
 
 
 
273

 
273

 
 
 
Available Car Days (in thousands)
48,567

 
45,540

 
 
 
 
139,175

 
133,579

 
 
 
Vehicle Utilization(a)
81
%
 
81
%
 
30

bps
 
81
%
 
79
%
 
190

bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
414

 
$
455

 
 
 
 
$
1,295

 
$
1,478

 
 
 
Average Vehicles (in whole units)
527,900

 
495,000

 
 
 
 
509,800

 
489,300

 
 
 
Depreciation of revenue earning vehicles and lease charges, net divided by Average Vehicles (in whole dollars)
$
784

 
$
919

 
 
 
 
$
2,540

 
$
3,021

 
 
 
Number of months in period
3

 
3

 
 
 
 
9

 
9

 
 
 
Net Depreciation Per Unit Per Month (in whole dollars)
$
261

 
$
306

 
(15
)%
 
 
$
282

 
$
336

 
(16
)%
 
(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
September 30,
 
Percent Inc/(Dec)
 
 
Nine Months Ended
September 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
 
2018
 
2017
 
 
Total RPD
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
732

 
$
728

 
 
 
 
$
1,789

 
$
1,683

 
 
 
Foreign currency adjustment(a)
20

 
6

 
 
 
 
9

 
71

 
 
 
Total Rental Revenue
$
752

 
$
734

 
 
 
 
$
1,798

 
$
1,754

 
 
 
Transaction Days (in thousands)
15,876

 
15,947

 
 
 
 
39,075

 
39,366

 
 
 
Total RPD (in whole dollars)
$
47.37

 
$
46.03

 
3
%
 
 
$
46.01

 
$
44.56


3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Rental Revenue
$
752

 
$
734

 
 
 
 
$
1,798

 
$
1,754

 
 
 
Average Vehicles (in whole units)
214,900

 
212,600

 
 
 
 
183,600

 
183,100

 
 
 
Total revenue per unit (in whole dollars)
$
3,499

 
$
3,452

 
 
 
 
$
9,793

 
$
9,579

 
 
 
Number of months in period
3

 
3

 
 
 
 
9

 
9

 
 
 
Total RPU Per Month (in whole dollars)
$
1,166

 
$
1,151

 
1
%
 
 
$
1,088

 
$
1,064

 
2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction Days (in thousands)
15,876

 
15,947

 
 
 
 
39,075

 
39,366

 
 
 
     Average Vehicles (in whole units)
214,900

 
212,600

 
 
 
 
183,600

 
183,100

 
 
 
     Number of days in period
92

 
92

 
 
 
 
273

 
273

 
 
 
Available Car Days (in thousands)
19,771

 
19,559

 
 
 
 
50,123

 
49,986

 
 
 
Vehicle Utilization(b)
80
%
 
82
%
 
(120
)
bps
 
78
%
 
79
%
 
(80
)
bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
128

 
$
126

 
 
 
 
$
342

 
$
311

 
 
 
Foreign currency adjustment(a) 
4

 
1

 
 
 
 
1

 
14

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net
$
132

 
$
127

 
 
 
 
$
343

 
$
325

 
 
 
Average Vehicles (in whole units)
214,900

 
212,600

 
 
 
 
183,600

 
183,100

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by Average Vehicles (in whole dollars)
$
614

 
$
597

 
 
 
 
$
1,868

 
$
1,775

 
 
 
Number of months in period
3

 
3

 
 
 
 
9

 
9

 
 
 
Net Depreciation Per Unit Per Month (in whole dollars)
$
205

 
$
199

 
3
%
 
 
$
208

 
$
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
September 30,
 
Percent Inc/(Dec)
 
 
Nine Months Ended
September 30,
 
Percent Inc/(Dec)
 
($ in millions, except where noted)
2018
 
2017
 
 
 
2018
 
2017
 
 
Total RPD
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,584

 
$
2,413

 
 
 
 
$
6,694

 
$
6,240

 
 
 
Ancillary retail vehicle sales revenue
(27
)
 
(24
)
 
 
 
 
(78
)
 
(70
)
 
 
 
Foreign currency adjustment(a)
20

 
6

 
 
 
 
9

 
71

 
 
 
Total Rental Revenue
$
2,577

 
$
2,395

 
 
 
 
$
6,625

 
$
6,241

 
 
 
Transaction Days (in thousands)
55,354

 
52,826

 
 
 
 
151,502

 
144,790

 
 
 
Total RPD (in whole dollars)
$
46.55

 
$
45.34

 
3
 %
 
 
$
43.73

 
$
43.10


1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Rental Revenue
$
2,577

 
$
2,395

 
 
 
 
$
6,625

 
$
6,241

 
 
 
Average Vehicles (in whole units)
742,800

 
707,600

 
 
 
 
693,400

 
672,400

 
 
 
Total revenue per unit (in whole dollars)
$
3,469

 
$
3,385

 
 
 
 
$
9,554

 
$
9,282

 
 
 
Number of months in period
3

 
3

 
 
 
 
9

 
9

 
 
 
Total RPU Per Month (in whole dollars)
$
1,156

 
$
1,128

 
2
 %
 
 
$
1,062

 
$
1,031

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vehicle Utilization
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction Days (in thousands)
55,354

 
52,826

 
 
 
 
151,502

 
144,790

 
 
 
     Average Vehicles (in whole units)
742,800

 
707,600

 
 
 
 
693,400

 
672,400

 
 
 
     Number of days in period
92

 
92

 
 
 
 
273

 
273

 
 
 
Available Car Days (in thousands)
68,338

 
65,099

 
 
 
 
189,298

 
183,565

 
 
 
Vehicle Utilization(b)
81
%
 
81
%
 
(20
)
bps
 
80
%
 
79
%
 
120

bps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Depreciation Per Unit Per Month
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation of revenue earning vehicles and lease charges, net
$
542

 
$
581

 
 
 
 
$
1,637

 
$
1,789

 
 
 
Foreign currency adjustment(a) 
4

 
1

 
 
 
 
1

 
14

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net
$
546

 
$
582

 
 
 
 
$
1,638

 
$
1,803

 
 
 
Average Vehicles (in whole units)
742,800

 
707,600

 
 
 
 
693,400

 
672,400

 
 
 
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by Average Vehicles (in whole dollars)
$
735

 
$
822

 
 
 
 
$
2,362

 
$
2,681

 
 
 
Number of months in period
3

 
3

 
 
 
 
9

 
9

 
 
 
Net Depreciation Per Unit Per Month (in whole dollars)
$
245

 
$
274

 
(11
)%
 
 
$
262

 
$
298


(12
)%
 
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, net income or loss attributable to noncontrolling interests 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, net income or loss attributable to noncontrolling interests 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, income or loss attributable to noncontrolling interests 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 income or loss attributable to noncontrolling interests and 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 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 ("Fleet Capacity" or "Capacity")

Average Vehicles 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 ("Time and Mileage pricing" or "T&M rate")

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.


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Total Revenue Per Transaction Day ("Total RPD"or "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" or "Total RPU Per Month")

Total RPU Per Month 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 ("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 ("Utilization")

Vehicle Utilization is calculated by dividing 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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finalq32018earningsprese
HERTZ GLOBAL HOLDINGS, INC. 3Q 2018 Earnings Call November 9, 2018 8:30 am ET


 
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 November 9, 2018 and Hertz 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 third quarter 2018 results issued on November 8, 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 third quarter 2018 Quarterly Report on Form 10-Q filed on November 8, 2018. Copies of these filings are available from the SEC, the Hertz website, or the Company’s Investor Relations Department. 1


 
Non-GAAP Measures and Key Metrics THE FOLLOWING NON-GAAP MEASURES1 AND KEY METRICS WILL BE USED IN THE PRESENTATION: Adjusted Corporate EBITDA Total RPD Adjusted Corporate EBITDA Margin Total RPU Adjusted Pre-tax Income (Loss) T&M rate Adjusted Net Income (Loss) Net Depreciation Per Unit Per Month Adjusted Diluted Earnings (Loss) Per Share Average Vehicles (Adjusted Diluted EPS) Vehicle Utilization Adjusted Free Cash Flow Transaction Days 1Definitions and reconciliations of non-GAAP measures are provided in the Company’s third quarter 2018 press release issued on November 8, 2018 and as an exhibit to the Company’s Form 8-K filed on November 9, 2018. 2


 
Agenda Kathryn Marinello BUSINESS President & Chief Executive Officer OVERVIEW Hertz Global Holdings, Inc. FINANCIAL RESULTS Jamere Jackson OVERVIEW Chief Financial Officer Hertz Global Holdings, Inc. 3


 
U.S. Operational Turnaround: Gaining Traction Executing Strategically • Managing fleet mix based on the highest rental and residual returns • Planning fleet capacity at the local level using advanced demand-forecasting tools • Driving service and operational excellence through training and process improvements • Returning excitement to our value proposition and brands • Leading through systems innovation Hertz. We’re here to get you there. 4


 
QUARTERLY OVERVIEW Jamere Jackson CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc.


 
3Q:18 Consolidated Results $ in millions, except per share data 3Q:18 3Q:17 YoY GAAP Results Results Inc/(Dec) Total revenues $2,758 $2,572 7% Income before income taxes $181 $143 27% Net income attributable to Hertz Global $141 $93 52% Diluted earnings per share $1.68 $1.12 50% Weighted average shares outstanding: diluted 84M 83M Non-GAAP Adjusted Corporate EBITDA $351 $321 9% Adjusted Corporate EBITDA Margin 13% 12% 30 bps Adjusted Pre-tax Income $240 $188 28% Adjusted Net Income $180 $118 53% Adjusted Diluted EPS $2.14 $1.42 51% 6


 
3Q:18 U.S. RAC U.S. RAC (YoY quarterly results) Performance Overview Revenue1 Transaction Days Total RPD • Revenue +10%, +8% ex-TNC2 ◦ Days +7%, +4% ex-TNC ◦ RPD +3%, +3% ex-TNC ◦ T&M rate +5% • Growth initiatives are delivering T&M rate Total RPU ◦ Disciplined fleet management ◦ Exceptional service ◦ Differentiated brands • Balanced growth across the portfolio ◦ All brands delivering growth ◦ On-Airport, Off-Airport strong • Adjusted Corporate EBITDA $208M, +25% • Adjusted Corporate EBITDA Margin 11%, +140 bps 1Revenue as shown for U.S. RAC represents total revenue excluding ancillary retail vehicle sales revenue. 2TNC means transportation network companies that provide ride-hailing services. 7


 
3Q:18 U.S. RAC Fleet U.S. RAC (YoY quarterly results) Continued Focus on Optimizing Fleet Vehicle Utilization (bps) Capacity1 • Capacity increased + 7%, + 4% ex-TNC ◦ Solid market growth ◦ Supporting our growth initiatives • 81% Utilization, +30 basis points ◦ Rigorous local demand forecasting ◦ Disciplined fleet management 1Capacity equals Average Vehicles 8


 
3Q:18 U.S. RAC Net Depreciation Per Unit Per Month +1% (6)% (13)% (19)% (15)% Year-Over-Year Trend Continues to Improve • Solid execution and disciplined fleet acquisitions • Residual value market strength continued into the 3rd Quarter • Increased unit sales through high-return retail channel • Opportunistic fleet rotations continue to drive strong results 9


 
3Q:18 U.S. RAC Fleet Sales Initiative Non-Program Vehicle Disposition Channel Mix Focused on Driving More Sales Through Alternative Channels +15% 64.6K • Strong residual market 56.0K • Units sold through retail channel grew 7.5% YoY 37% • World-class sales-team and capability Retail 40% • Top ten used vehicle retailer • Upgraded website is live www.hertzcarsales.com 39% Dealer Direct 41% 24% Auction 19% 3Q:17 3Q:18 10


 
3Q:18 International RAC International RAC (YoY quarterly results)1 Performance Overview1 Revenue Transaction Days Total RPD • Revenue +2%, +4% ex-Brazil ◦ Brazil operations divested August 2017 ◦ Results ex-Brazil - Days +2% T&M rate Total RPU - RPD +1% ◦ Softer leisure demand in Europe ◦ APAC growth solid • Depreciation per unit per month +3% • Adjusted Corporate EBITDA $140M, (11)% • Adjusted Corporate EBITDA Margin 19%, (260) bps 1Results shown are in constant currency. Constant currency for 2018 periods are based on December 31, 2017 foreign currency exchange rates. Constant currency for 2017 periods are based on December 31, 2016 foreign currency exchange rates. 11


 
DEBT, LIQUIDITY AND CASH FLOW OVERVIEW Jamere Jackson CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc.


 
3Q:18 Debt and Liquidity September 30, 2018 Hertz Global Non-vehicle Debt Maturity Profile1 $14 • No material non-vehicle debt maturities until October 2020 ◦ Will be opportunistic on go-to-market timing $1,167 $1,250 • Liquidity of $1.3B, YTD Adjusted Free Cash Flow +$159M YoY $14 $14 ◦ Continued improvement as we de-fleet in Q4:18 $800 $700 $618 $500 $500 $14 2019 2020 2021 2022 2023 2024 • Executed €1.0B European ABS facility in October 2018 Senior RCF and Stand Alone L/C Facility ◦ Provides additional capacity and flexibility Term Loan Senior Second Priority Secured Notes Senior Notes 1Excludes $27M of promissory notes due 2028 and $2M of other non-vehicle debt. 13


 
Key Areas of Focus • Sustain top line momentum…growth initiatives ◦ Disciplined fleet management ◦ Service excellence ◦ Innovation ◦ Brand-building marketing • Execute technology transformation • Drive productivity Revenue Growth .... Asset Efficiency .... Productivity .... Innovation 14


 
Q&A