HTZ Q1 2024 Earnings

Call Details

• Call Title: Hertz Q1 2024 Earnings Call
• Date: April 25, 2024 at 12:30 PM UTC
• Management Team:
  • Johann Rawlinson (Vice President of Investor Relations)
  • Gil West (Chief Executive Officer)
  • Alex Brooks (Chief Financial Officer)
  • Justin Keppy (Chief Operating Officer)
  • Darren Arrington (Executive Vice President for Revenue Management and Fleet)

Call Summary

Financial Performance

• Revenue for Q1 was $2.1B and was described as slightly up year over year driven by volume increases.
• The company reported a negative adjusted corporate EBITDA of $560M per Justin and an adjusted corporate EBITDA loss of $567M per Alex, both of which are non-GAAP metrics.
• Total depreciation expense for the quarter was $969M, representing a year-over-year increase that Alex quantified as an incremental $588M.
• DPU for the quarter was $592 per unit, of which $119 was attributed to incremental vehicle depreciation expense related to EVs held for sale.
• The company recorded a $195M charge to recognize fair value adjustments and losses on EVs sold during the quarter.
• Adjusted free cash flow for Q1 was an outflow of $729M, and net corporate debt was $3.25B at quarter end.
• Volume for the quarter increased 9% year over year while utilization exited the quarter down approximately 120 basis points year over year.

Guidance

• The company stated it will hold off on providing formal quarterly guidance while executing its transformation initiatives.
• Management provided internal north-star unit targets, including a long-term RPD target in the low $60s, DPU in the low $300s, and DOE per day in the low $30s, which are forward-looking objectives and not formal guidance.
• Management expects the fleet rotation to materially reduce DPU over an 18-to-24-month horizon and indicated that benefits will accrue over that period.
• The company announced an incremental target to generate $500M of recurring adjusted corporate EBITDA improvement, with approximately two-thirds expected to be cost-driven and one-third revenue-driven.
• Management expects the EV disposal program to be completed by year end with a combined reduction of 30,000 vehicles, which is a plan-level commitment.
• Management stated that March RPD trends (March down 3% year over year) were continuing into April and that tightening fleet should support further RPD improvement.