HTZ Q2 2022 Earnings

Call Details

• Call Title: Hertz Q2 2022 Earnings Call
• Date: July 28, 2022 at 12:30 PM UTC
• Management Team:
  • Stephen Scherr (Chief Executive Officer)
  • Kenny Cheung (Chief Financial Officer)
  • Johann Rawlinson (Vice President of Investor Relations)

Call Summary

Financial Performance

• Revenue was $2.3B in Q2, up 25% year-over-year and up 30% quarter-over-quarter.
• Adjusted corporate EBITDA was $764M in Q2, representing a 33% EBITDA margin and a company record for the quarter.
• Adjusted free cash flow for the quarter was $484M with adjusted operating cash flow of $585M that equates to approximately 80% conversion from EBITDA.
• Adjusted EPS was $1.22 for the quarter on a non-GAAP basis.
• Monthly RPU for the quarter was $1,606 and June monthly RPU hit a record of $1,667, with RPD of $67 for the quarter.
• Depreciation per unit per month was $71 in Q2, which was lower than prior estimates and contributed to higher than expected gains on sales.

Guidance

• Net fleet capex guidance for the full year was revised from $1.0-$1.5B to $0.75-$1.0B, which management stated will have a dollar-for-dollar impact on free cash flow.
• Q3 monthly DPU guidance was provided at $145-$165, and full-year monthly DPU guidance was provided at $75-$125.
• Q3 is expected to be seasonally stronger than Q2 with July as the strongest month and early reads indicating higher RPU in July than June.
• Reservations for August and September were described as in line with seasonal expectations and there was no indication of a near-term pullback in forward demand.
• Management expects limited near-term relief from constrained new car supply, which supports continued tight fleet and strong pricing and residuals.
• Telematics rollout for the Americas is expected to reach nearly all connected vehicles by year-end and was described as an operational target tied to cost savings.