Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - HERTZ GLOBAL HOLDINGS, INC | q12017pressrelease.htm |
| 8-K - 8-K - HERTZ GLOBAL HOLDINGS, INC | q12017earnings8-k.htm |
1
1Q 2017 Earnings Call
May 9, 2017
8:30am ET
2
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 May 8, 2017, and Hertz Global Holdings, Inc (the “Company”). 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 First Quarter 2017 results issued on May 8, 2017, and the Risk Factors and Forward-
Looking Statements sections of the Company’s 2016 Form 10-K filed on March 6, 2017, and First
Quarter 2017 Quarterly Report on Form 10-Q filed on May 8, 2017. Copies of these filings are
available from the SEC, the Hertz website or the Company’s Investor Relations Department.
1Q
3
Non-GAAP Measures
THE FOLLOWING KEY METRICS AND NON-GAAP* MEASURES WILL BE USED IN THE PRESENTATION:
Adjusted corporate EBITDA
Adjusted corporate EBITDA margin
Adjusted pre-tax income (loss)
Adjusted net income (loss)
Adjusted diluted earnings (loss) per share
(Adjusted diluted EPS)
Total RPD
Total RPU
Net depreciation per unit per month
Vehicle utilization
Rentable Utilization
1Q
*Definitions and reconciliations of these key metrics and non-GAAP measures are provided in the
Company’s first quarter 2017 press release issued on May 8, 2017 and in the Company’s Form
8-K filed on May 9, 2017.
4
Agenda
BUSINESS
OVERVIEW
Kathryn Marinello
President & Chief Executive Officer
Hertz Global Holdings, Inc.
FINANCIAL RESULTS
OVERVIEW
Tom Kennedy
Chief Financial Officer
Hertz Global Holdings, Inc.
1Q
5
Drivers of US RAC Long-Term Growth 1Q
• FLEET………………. Upgrade vehicle mix and optimize capacity
• SERVICE…………… Improve processes, restructure incentives, roll out Ultimate Choice platform
• MARKETING……….. Enhance digital applications
• TECHNOLOGY…….. Update suite of systems for greater flexibility, productivity and capabilities
Influencing Brand Preference through Product Quality and Service Excellence
2017 Earnings Impacted by Investment Strategy to Drive Long-term Growth
2018 Positioned to Benefit from Early Returns
6
1Q:17 Adjusted Corporate EBITDA Bridge 1Q
Transformation Predicated on Optimizing Fleet Mix and Capacity
$27
($110)
60% of 1Q:17 year-over-year
adjusted corporate EBITDA
decline
All Other
U.S. RAC
Revenue
Contribution
U.S. RAC
Vehicle Carrying
Costs Contribution
Adjusted Corporate EBITDA
$ in millions
1Q 2016 Actuals 1Q 2017 Actuals
7
Long-term Outperformance Opportunity:
• Hertz brand strength
• Industry-leading loyalty programs
• Strong partnerships
• Ultimate Choice offering
• Mature, robust retail car-sales network
• Leading-edge systems platform
Execution is Key
Company is Structurally Capable of Achieving Historic Margins
1Q
8
TOM KENNEDY
CHIEF FINANCIAL OFFICER
Hertz Global Holdings, Inc.
Quarterly Overview
9
1Q:17 Consolidated Results
GAAP
1Q:17
Results
1Q:16
Results
YoY
Change
Revenue $1,916M $1,983M (3)%
Income (loss) from continuing operations
before income taxes
$(294)M $(76)M (287)%
Net Income (loss) from continuing operations $(223)M $(52)M (329)%
Diluted earnings (loss) per share from
continuing operations
$(2.69) $(0.61) (341)%
Weighted Average Shares outstanding: Diluted 83M 85M
Non-GAAP*
Adjusted corporate EBITDA $(110)M $27M NM
Adjusted corporate EBITDA margin (6)% 1% (710 bps)
Adjusted pre-tax income (loss) $(213)M $(106)M (101)%
Adjusted net income (loss) $(134)M $(67)M (100)%
Adjusted diluted EPS $(1.61) $(0.79) (104)%
1Q
*Definitions and reconciliations of Non-GAAP measures are provided in the Company’s first quarter
2017 press release issued on May 8, 2017 and in the Company’s Form 8-K filed on May 9, 2017.
10
1Q:17 U.S. RAC Revenue Performance
Revenue Days Total RPD
Vehicle Utilization (bps) Capacity Total RPU
(2%)(2%)
(8%)
0%
6%
2% 1%1%
(8%)
(10%)
(3%)
660540
(60) (2%)
(5%)
2%
0%
(2%) (4%)
U.S. RAC (YoY quarterly results)
Revenue is defined as total revenue excluding ancillary retail car sales. Capacity is average fleet, see calculation in Q1:17 press release. Vehicle
utilization is calculated as transaction days divided by capacity. Total RPU is calculated as total revenue divided by average fleet.
1Q:17 Performance Drivers
(1%)
(100)
3%
(3%)
1Q
(4%) (1%)
(3%)
4%
(8%)
(310)
• Rate
• RPD declined 3% YoY, impacted by Easter
holiday shift and customer mix
• Volume
• Volume decreased 1%, due in part to the 2016
leap year
• Excluding leap year:
• Business volume grew 1%, due to growth
of ride-hailing rental demand offset by
weakness in corporate contracted volume
• Negative impact of mild Winter – lower
demand in Insurance Replacement and
certain sun/leisure destinations
11
1Q:17 U.S. RAC Vehicle Utilization
Vehicle Utilization YoY bps Inc/(Dec) Capacity level is timing related
1Q
Q1’16 Q2’16 Q3’16 Q4’16 Q1’17
• Rentable utilization 170 basis points lower
1Q:17 vs 1Q:16, as mild weather impacted
demand in certain segments such as
Insurance Replacement and certain sun
destinations
• Expect fleet optimization initiatives to be
completed by end of 2Q:17
• Should allow for YoY utilization
improvements in back half 2017
Vehicle UTE Rentable UTE
660
(310)
(170)
380
540
240
(60) (60)
(100)
(50)
* Rentable Vehicle Utilization is calculated by dividing transaction days by available car days, excluding fleet unavailable for rent e.g.: recalled, out of service, and vehicle in onboarding and remarketing channels
12
1Q:17 U.S. RAC Monthly Depreciation Per Unit
34%
24%
42%
35%
24%
41%
Auction Retail Dealer Direct
1Q:17
1Q:16
Non-Program Vehicle
Disposition Channel Mix
Monthly Depreciation
Per Unit YoY %
$303
$278
$304
$321
$287
$248
$267 $269
$303
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
Current Year Prior Year
$348
+19%
+6%
+12%
+14%
1Q
+15%
Alternative Sales Channels - Core Competency
• 65% of mix 1Q:17
• Absolute sales through highest-return retail channel
grew 21% in Q1:17
• 1Q:17 used car prices did not experience historical seasonal lift,
prices continue to be under pressure in YoY terms
• Aggressively sold Risk cars in 1Q:17 to right size capacity,
despite industry residual weakness
• Sold 21% more risk vehicles YoY
• Outlook for FY17 residual decline adjusted to -3.5% from -3%
13
1Q:17 International RAC
• 1Q:17 revenue decreased 5%, or 4% YoY when you exclude FX
- Transaction days increased 1% despite the impact of leap year, and exiting certain
underperforming accounts in the UK in 2H:16
- Total RPD declined 4% due primarily to the impact of the Easter holiday falling in second
quarter in 2017 versus the first quarter in 2016
• Total vehicle utilization was 75%, 30 bps higher than the prior-year period
• Monthly depreciation per unit decreased 1% YoY
• Direct operating and SG&A expenses per transaction day improved 5% YoY
• Adjusted corporate EBITDA margin declined 180 bps YoY primarily due to the revenue decline
and 80 bps of adverse claims development, partially offset by savings in operating costs
1Q
14
LIQUIDITY / BALANCE SHEET
OVERVIEW
TOM KENNEDY
CHIEF FINANCIAL OFFICER
Hertz Global Holdings, Inc.
15
3/31/17
Senior RCF Availability $939M
Unrestricted Cash 785M
Corporate Liquidity $1,724M
Liquidity and Debt Overview
• Since our Q4 2016 earnings call, we have:
–Added $750M of U.S. RAC incremental VFN capacity
committed through at least October 2018
–Completed a $500M Donlen-sponsored term ABS transaction
• Non-Vehicle debt maturities through YE’18 limited to $262M
Corporate Liquidity at March 31, 2017
16
Limited Near-Term Non-Vehicle Debt Maturities
03/31/17 Hertz Global Non-Vehicle Debt Maturity Stack (1) (2)
($ in millions)
$250
$450
$700
$500 $500
$800
$5
$7
$7
$7
$7 $7
$655
$1,700
2017 2018 2019 2020 2021 2022 2023 2024
Senior Notes Term Loan Undrawn Senior RCF
1 Excludes $28 million of Promissory Notes due 2028 and $9 million of capital leases.
2 $761 million of letters of credit outstanding under the Senior RCF resulting in approximately $939 million of available borrowing capacity.
17
First Lien Financial Maintenance Covenant
Consolidated First Lien Leverage Ratio as of 3/31/17 was 2.4x and was calculated as follows:
– Unrestricted cash is capped at $500M; cap falls away post once Consolidated Gross Total Corporate Leverage Ratio is equal to or less than 6.0x for two
consecutive quarters post 12/31/17
– Restricts ability to undertake share repurchases or pay dividends until net corporate debt leverage ratio is below 4.0x for two consecutive quarters
Our Consolidated First Lien Leverage Ratio is tested each quarter and must not exceed the
thresholds outlined below:
Senior RCF Facility Size $1,700M
Outstanding Letters of Credit - 761
Term Loan Outstanding + 695
Unrestricted Cash - 500
First Lien Secured Net Debt 1,134
TTM Adjusted Corporate EBITDA1 / 470
Consolidated First Lien Leverage Ratio 2.4X
1 TTM Adjusted Corporate EBITDA defined as $416M Reported LTM Adjusted Corporate EBIDTA + $54M Other Adjustments as permitted in calculating covenant
compliance under the Senior RCF Credit Agreement
YE’16 1Q’17-3Q’17 4Q’17+
3.0X 3.25X 3.0X
18
Q&A