HTZ Q4 2021 Earnings

Call Details

• Call Title: Hertz Q4 2021 Earnings Call
• Date: February 23, 2022 at 10:00 PM UTC
• Management Team:
  • Johann Rawlinson (Vice President of Investor Relations)
  • Mark Fields (Interim Chief Executive Officer)
  • Kenny Cheung (Chief Financial Officer)

Call Summary

Financial Performance

• The company reported a record fiscal year adjusted corporate EBITDA of $2.1B and an adjusted EPS of $4.39 for the year.
• In Q4 the company recorded $0.91 in adjusted diluted EPS, $620M in adjusted corporate EBITDA, an EBITDA margin of 32%, and adjusted free cash flow of $509M.
• Monthly revenue per unit rose 31% versus Q4 2019 and revenue per day increased 35% versus Q4 2019.
• Q4 monthly depreciation per unit was $57, which was slightly better than the prior guidance range of $60 to $70.
• The company booked $224M of growth depreciation expense and $146M of net gain on sale in Q4, producing a net $78M impact recorded on the income statement.
• Liquidity at December 31 was $3.2B, or $4.3B excluding capital structure activities, comprised of $2.3B of unrestricted cash and $925M available under the first lien RCF.

Guidance

• Q1 2022 depreciation is expected to be a gain in the range of negative $40 to negative $50 per vehicle per month based on current residual strength.
• The company expects Q1 revenue to decline from Q4 by an amount towards the favorable end of the historical 10% to 15% seasonal drop.
• The ratio of liquidity to adjusted corporate EBITDA was 91% at quarter end and the company expects that ratio to be around 90% going forward.
• The company now expects a majority of its U.S. fleet to be connected with telematics before the end of the summer of 2022.
• The company expects monthly depreciation per unit to increase sequentially through 2022 and normalize toward year-end as more expensive cars enter the fleet and fully depreciated vehicles decline in proportion.
• The company expects the $300M of cost reductions to be permanent and to continue to contribute to improved margins.