HERC HOLDINGS INC ESTERO, Fla., Nov. 9, 2015 /PRNewswire/ --
Consolidated(1) Three Months Ended Percent
September 30,
Inc/(Dec)
---
($ in millions, except
per share data and
where noted) 2015 2014
---------------------- ---- ----
Total Revenues $2,976 $3,121 (5)%
Net income (loss) $237 $149 59%
Earnings (loss) per
diluted share $0.52 $0.32 63%
Net income margin 8% 5% 319 bps
Adjusted net income
(loss) $226 $203 11%
Adjusted net income
(loss) per diluted
share $0.49 $0.44 11%
Adjusted net income
margin 8% 7% 109 bps
Adjusted Corporate
EBITDA $601 $553 9%
Adjusted Corporate
EBITDA margin 20% 18% 247 bps
Worldwide Car Rental
average fleet 695,900 712,200 (2)%
Worldwide Car Rental
transaction days (in
thousands) 52,760 52,596 -%
Worldwide Car Rental
Total RPD (in whole
dollars) $46.82 $47.27 (1)%
Worldwide Car Rental
Fleet Efficiency 82% 80% 191 bps
Worldwide Car Rental
revenue per available
car day (in whole
dollars) $38.58 $38.05 1%
Worldwide Car Rental
net depreciation per
unit per month (in
whole dollars) $250 $252 (1)%
Worldwide Equipment
Rental dollar
utilization 36% 37% N/A
Worldwide Equipment
Rental time
utilization 66% 66% N/A
Worldwide Equipment
Rental same store
revenue growth -% 6% N/A
Average Fleet - Donlen 160,500 169,700 (5)%
---------------------- ------- ------- ---
Note: Worldwide Car Rental represents U.S. Car Rental and International Car Rental segment information on a combined basis and excludes our Donlen leasing operations.
Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported net income of $237 million, or $0.52 per diluted share, for the third quarter 2015, compared with net income of $149 million, or $0.32 per diluted share, for the same period last year. The Company also reported that adjusted net income for the third quarter 2015 was $226 million, or $0.49 per diluted share, compared with $203 million, or $0.44 per diluted share, for the same period last year. Total revenues for the third quarter 2015 were $3.0 billion versus $3.1 billion for the same period last year. Adjusted Corporate EBITDA for the third quarter of 2015 was $601 million versus $553 million in the third quarter of 2014.
Foreign currency exchange rates had an unfavorable impact on Hertz Global's third quarter 2015 results versus the prior year period. The company estimates that the unfavorable year-over-year impact to total revenue was approximately $144 million and that the unfavorable year-over-year impact to adjusted diluted EPS was approximately $24 million, or $0.03 per share.
"Our profit improvement in the third quarter is early evidence of the potential we see in our performance improvement plan," said John Tague, chief executive officer. "Our fleet efficiency, which measures our ability to match capacity with demand, rose to record levels. In addition, we successfully completed the integration of the Dollar Thrifty operations during a quarter in which we increased customer satisfaction across all of our rental car brands around the world. I want to thank our employees for helping to make this a successful quarter.
"Meanwhile, we remained on track to achieve our cost reduction goals and made progress on strategic initiatives, including preparations to separate HERC as a stand-alone company and returning value to shareholders through the initial steps of our share repurchase program."
Unrelated to its third quarter 2015 operating results, Hertz Global today filed a restated Form 10-Q for its second quarter 2015 indicating an increase of $21 million to pre-tax income and $13 million to net income (loss) for the three and six months ended June 30, 2015. The restatement results from a prior period error related to the depreciation of vehicles sold through the company's retail car sales locations that impacted the financial statements filed in its Form 10-Q for the second quarter 2015. As a result of this error, depreciation expense during the three and six months ended June 30, 2015 was overstated by $21 million and $18 million, respectively. In addition to the depreciation expense error, the company corrected an error in direct operating expenses that resulted in a $3 million overstatement of direct operating expenses for the three and six months ended June 30, 2015. The correction of the errors described above increased diluted earnings per share for the three months ended June 30, 2015, and decreased diluted loss per share for the six months ended June 30, 2015, by $0.03.
KEY HIGHLIGHTS FOR THE THIRD QUARTER 2015
-- U.S. Car Rental fleet efficiency rose to 83%, an increase of three
percentage points from third quarter 2014 due to improvements in
out-of-service levels and higher rentable utilization.
-- Hertz Global has successfully renewed its U.S. Car Rental fleet, while
maintaining fleet cost slightly below 2014 levels through the first nine
months of 2015. Through Sept. 30, 2015, the company added approximately
335,000 2015 model-year vehicles to its fleet, approximately 50% more
than the comparable number of 2014 model-year vehicles through the same
period in 2014. More new vehicles contributed to lower out-of-service
levels and fleet maintenance costs for the third quarter.
-- U.S. Car Rental operations sold approximately 228,000 non-program cars
in the first nine months of 2015, compared to 123,000 in the first nine
months of 2014. Vehicles sold through alternative channels increased 68%
in the third quarter versus prior year with approximately 60% of all
non-program vehicles sold through these higher yielding channels.
-- Customer satisfaction across all rental car brands worldwide reached its
highest third quarter level in five years, driven by a more than 5 point
improvement versus the prior year period.
-- During the quarter, Hertz Global successfully migrated Dollar Thrifty
operations to the company's common counter and financial systems,
completing integration of the Nov. 2012 acquisition of Dollar Thrifty
Automotive Group, Inc.
-- As a result of a 2% improvement in fleet efficiency, worldwide Revenue
per Available Car Day (RACD) increased 1% despite a 1% decrease in Total
Revenue per Transaction Day (RPD).
-- International Car Rental Total RPD increased 2%, excluding foreign
currency.
-- U.S. Car Rental net depreciation per unit per month increased 1%
year-over-year.
-- International Car Rental net depreciation per unit per month decreased
6%.
-- Excluding effects of foreign currency, International Car Rental revenues
increased $22 million, or 3%, during the third quarter.
-- Excluding foreign currency impact and the effect of lower sales from
stores in upstream oil and gas markets, HERC revenues in North America
increased 14% in the third quarter.
-- Sale of Hertz Equipment Rental operations in France and Spain closed
Oct. 30.
-- Hertz Global received approximately $100 million in proceeds from the
sale of a portion of its holdings in CAR Inc. (China Auto Rental) during
the third quarter.
U.S. CAR RENTAL TOTAL REVENUE PER AVAILABLE CAR DAY (RACD) INCREASED 1% YEAR-OVER-YEAR
U.S. Car Three Months Ended Percent
Rental(1) Inc/
(Dec)
September 30,
--- -------------
($ in millions,
except where
noted) 2015 2014
--------------- ---- ----
Total Revenues $1,739 $1,768 (2)%
Adjusted pre-
tax income
(loss) $246 $209 18%
Adjusted pre-
tax income
margin 14% 12% 233 bps
Adjusted
Corporate
EBITDA $284 $247 15%
Adjusted
Corporate
EBITDA margin 16% 14% 236 bps
Average fleet 497,700 515,300 (3)%
Transaction days
(in thousands) 37,946 37,901 - %
Total RPD (in
whole dollars) $45.41 $46.41 (2)%
Revenue per
available car
day (in whole
dollars) $37.63 $37.25 1%
Net depreciation
per unit per
month (in whole
dollars) $267 $265 1%
---------------- ---- ---- ---
Total U.S. Car Rental revenues were $1,739 million in the third quarter of 2015, a decrease of 2% from the third quarter of 2014 due to flat transaction days and a 2% decline in Total Revenue per Transaction Day (RPD). As a result of a 3% improvement in fleet efficiency, Revenue per Available Car Day (RACD) increased 1% despite a 2% decline in Total RPD. Total RPD declined year-over-year primarily due to a higher on-airport competitive published-pricing environment and weaker commercial demand year-over-year. Ancillary revenue per transaction day, excluding fuel-related products, increased by 4% relative to the third quarter of 2014.
U.S. Car Rental adjusted pre-tax income for the third quarter of 2015 was $246 million, an increase of $37 million versus the prior year period. U.S. Car Rental achieved an adjusted pre-tax margin of 14% for the quarter, which was 233 basis points higher than the prior-year period. Adjusted Corporate EBITDA for the U.S. Car Rental segment for the third quarter of 2015 was $284 million versus $247 million in the third quarter of 2014.
INTERNATIONAL CAR RENTAL TOTAL RPD UP 2%, EXCLUDING FOREIGN CURRENCY; INCOME HIGHER ON PROFITABLE REVENUE MIX
International Car Three Months Ended Percent
Rental(1) Inc/
(Dec)
September 30,
--- -------------
($ in millions,
except where noted) 2015 2014
-------------------- ---- ----
Total Revenues $687 $795 (14)%
Adjusted pre-tax
income (loss) $151 $136 11%
Adjusted pre-tax
income margin 22% 17% 487 bps
Adjusted Corporate
EBITDA $162 $147 10%
Adjusted Corporate
EBITDA margin 24% 18% 509 bps
Average fleet 198,200 196,900 1%
Transaction days (in
thousands) 14,814 14,695 1%
Total RPD (in whole
dollars) $50.43 $49.47 2%
Revenue per
available car day
(in whole dollars) $40.97 $40.13 2%
Net depreciation per
unit per month (in
whole dollars) $207 $220 (6)%
-------------------- ---- ---- ---
Total International Car Rental revenues were $687 million in the third quarter of 2015, a decrease of 14% from the third quarter of 2014. Excluding foreign currency impact of $130 million, revenues increased $22 million, or 3%. Revenue growth was driven by a 1% increase in transaction days resulting from improved business mix from U.S.-inbound rentals, primarily in our European market. Total RPD for the segment increased 2%, excluding currency effects.
International Car Rental adjusted pre-tax income for the third quarter of 2015 was $151 million, an increase of $15 million versus the prior year period. Adjusted Corporate EBITDA for the International Car Rental segment for the third quarter of 2015 was $162 million, an increase of 10% versus $147 million in the third quarter of 2014.
WORLDWIDE EQUIPMENT RENTAL IMPACTED BY FOREIGN CURRENCY RATES AND WEAKNESS IN STORES SERVING UPSTREAM OIL AND GAS MARKETS
Worldwide Percent
Equipment Inc/(Dec)
Rental(1) Three Months Ended
September 30,
--- -------------
($ in millions) 2015 2014
-------------- ---- ----
Total Revenues $401 $413 (3)%
Adjusted pre-
tax income
(loss) $54 $79 (32)%
Adjusted pre-
tax income
margin 13% 19% (566) bps
Adjusted
Corporate
EBITDA $164 $178 (8)%
Adjusted
Corporate
EBITDA margin 41% 43% (220) bps
Dollar
utilization 36% 37% N/A
Time utilization 66% 66% N/A
Same store
revenue growth - % 6% N/A
--------------- --- --- --- ---
N/A Not applicable
Total Worldwide Equipment Rental revenues were $401 million for the third quarter of 2015, a decrease of 3% compared with the prior-year period. Excluding the impact of foreign currency, revenue increased $2 million, or 1%.
Worldwide revenues for the third quarter were favorably impacted by a 3% increase in worldwide equipment rental volumes. The increase in volume was driven by new account growth, which is predominantly derived from small local contractors and specialty segments as HERC diversifies its business. Pricing for the third quarter was flat year-over-year.
Worldwide revenues were negatively affected by continuing weak performance in stores serving upstream oil and gas markets during the quarter. In North America, for example, revenue in these upstream oil and gas markets year-over-year on a constant currency basis decreased 26%, while non-oil and gas markets revenue increased 14%. In response to the continued weakness in oil and gas markets, HERC reduced its equipment fleet in this segment by 16% in the third quarter year-over-year.
Worldwide Equipment Rental adjusted pre-tax income for the third quarter of 2015 was $54 million, a decrease from $79 million in the prior year period. Adjusted Corporate EBITDA for the Worldwide Equipment Rental segment for the third quarter of 2015 was $164 million versus $178 million in the third quarter of 2014.
TOTAL REVENUES AND PRE-TAX NET INCOME HIGHER FOR ALL OTHER OPERATIONS
All Other Three Months Ended Percent
Operations(1) Inc/
(Dec)
September 30,
--- -------------
($ in millions) 2015 2014
-------------- ---- ----
Total Revenues $149 $145 3%
Adjusted pre-tax
income (loss) $18 $17 6%
Adjusted pre-tax
income margin 12% 12% 36 bps
Adjusted
Corporate EBITDA $18 $15 20%
Adjusted
Corporate EBITDA
margin 12% 10% 174 bps
Average Fleet -
Donlen 160,500 169,700 (5)%
--------------- ------- ------- ---
All Other Operations segment revenues were $149 million for the third quarter of 2015. All Other Operations adjusted pre-tax income for the third quarter of 2015 was $18 million, an increase of $1 million versus the prior year period. Adjusted Corporate EBITDA for the All Other Operations segment for the third quarter of 2015 was $18 million versus $15 million in the prior-year period.
HERTZ GLOBAL REPURCHASES $262 MILLION OF ITS AUTHORIZED $1 BILLION SHARE REPURCHASE PROGRAM IN THE QUARTER
Hertz Global began buying back HTZ shares in the third quarter as part of its previously announced $1 billion share repurchase program. During the quarter, the company repurchased 14.8 million shares at an average price of $17.69 per share for a total of $262 million. The company funded the share repurchase through cash flow from operations and the sale of a portion of its ownership position in CAR Inc. (China Auto Rental) resulting in proceeds of approximately $100 million. The company will continue to opportunistically buy back shares consistent with its previously announced year-end 2016 leverage targets and will fund the share repurchase through cash from operations and other actions, including its recently completed sale of HERC's operations in France and Spain to LOXAM Group.
HERTZ GLOBAL GUIDANCE
For the full year 2015, the Company forecasts the following:
Full Year 2015 Forecast
-----------------------
Adjusted Corporate EBITDA -
Consolidated HGH(2) $1,450M to $1,550M
Adjusted Corporate EBITDA -
Worldwide Equipment Rental
segment(2) $575M to $625M
U.S. RAC net depreciation per
unit per month $270 to $280
U.S. RAC fleet capacity growth* (1.0)% to 0%
Net non-fleet capex $220M to $240M
* Excludes Advantage sublease and Hertz 24/7 vehicles
-----------------------------------------------------
For the full year 2015, the company has maintained its expected adjusted corporate EBITDA guidance for Consolidated Hertz Global Holdings and the Worldwide Equipment Rental segment. The company has lowered U.S. RAC net depreciation per unit per month, U.S. RAC fleet capacity growth and Net non-fleet capex guidance for the full year.
RESULTS OF THE HERTZ CORPORATION
Hertz Global's operating subsidiary, The Hertz Corporation, posted the same revenues and GAAP pre-tax income for the third quarter of 2015 as the Company.
(1) Adjusted pre-tax income, adjusted pre-tax margin, Adjusted Corporate EBITDA, Adjusted Corporate EBITDA margin, adjusted net income, adjusted net income margin, adjusted diluted earnings per share, total revenue per transaction day, revenue per available car day and net depreciation per unit per month are non-GAAP measures. See the accompanying Supplemental Schedules and Definitions for the reconciliations and definitions for each of these non-GAAP measures and the reason the Company's management believes that these measures provide useful information to investors.
(2) Because of the forward-looking nature of the Company's Adjusted Corporate EBITDA forecast, specific quantifications of the amounts that would be required to reconcile a pre-tax income forecast are not available. The Company believes that there is a degree of volatility with respect to certain of the Company's GAAP measures, primarily related to fair value accounting for its financial assets (which includes the Company's derivative financial instruments), its income tax reporting and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude the Company from providing accurate forecast of GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP Adjusted Corporate EBITDA would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
EARNINGS WEBCAST INFORMATION
Hertz Global's third quarter 2015 earnings webcast will be held on November 9, 2015, at 8:00 a.m. U.S. Eastern. The press release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on our 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 and reconciliations of non-GAAP measures to their most comparable GAAP measure. Following the Supplemental Schedules the Company provides definitions for terminology used throughout this press release.
ABOUT HERTZ GLOBAL
Hertz Global operates the Hertz, Dollar, Thrifty and Firefly car rental brands in more than 10,000 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global is the largest worldwide airport general use car rental company with more than 1,600 airport locations in the U.S. and more than 1,400 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global apart from the competition. Additionally, Hertz Global owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with more than 350 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global, visit: www.hertz.com.
CAUTIONARY NOTE CONCERNING 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. Among other items, such factors could include: any claims, investigations or proceedings arising as a result of the restatement of our previously issued financial results; our ability to remediate the material weaknesses in our 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 our proposed separation of our equipment rental business and ability to obtain the expected benefits of any related transaction; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives; occurrences that disrupt rental activity during our peak periods; our ability to achieve and maintain cost savings and efficiencies and realize opportunities to increase productivity and profitability; an increase in our fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs; our ability to accurately estimate future levels of rental activity and adjust the size and mix of our fleet accordingly; our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning equipment and to refinance our existing indebtedness; our ability to integrate the car rental operations of Dollar Thrifty and realize operational efficiencies from the acquisition; our ability to maintain access to third-party distribution channels, including current or favorable prices, commission structures and transaction volumes; the operational and profitability impact of the divestitures that we agreed to undertake in order to secure regulatory approval for the acquisition of Dollar Thrifty; an increase in our fleet costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles and equipment; a major disruption in our communication or centralized information networks; financial instability of the manufacturers of our vehicles and equipment, which could impact their ability to perform under agreements with us and/or their willingness or ability to make cars available to us or the car rental industry on commercially reasonable terms; any impact on us from the actions of our franchisees, dealers and independent contractors; our ability to maintain profitability 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; our ability to successfully integrate acquisitions and complete dispositions; our ability to maintain favorable brand recognition; costs and risks associated with litigation and investigations; risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt and increases in interest rates or in our borrowing margins; our ability to meet the financial and other covenants contained in our Senior Credit Facilities, our outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements; changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on earnings; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect our operations, the cost thereof or applicable tax rates; changes to our senior management team; the effect of tangible and intangible asset impairment charges; our exposure to uninsured claims in excess of historical levels; fluctuations in interest rates and commodity prices; and our exposure to fluctuations in foreign exchange rates.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report 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.
FINANCIAL INFORMATION AND OPERATING DATA
SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA
-----------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(In millions, except
per share data) 2015 2014 2015 2014
-------------------- ---- ---- ---- ----
Total revenues $2,976 $3,121 $8,122 $8,487
------ ------ ------ ------
Expenses:
Direct operating 1,564 1,702 4,475 4,738
Depreciation of
revenue earning
equipment and lease
charges, net 717 746 2,102 2,180
Selling, general and
administrative 259 303 821 845
Interest expense,
net 158 164 467 484
Other (income)
expense, net (29) 3 (34) (21)
Total expenses 2,669 2,918 7,831 8,226
----- ----- ----- -----
Income (loss) before
income taxes 307 203 291 261
(Provision) benefit
for taxes on income
(loss) (70) (54) (88) (109)
--- --- --- ----
Net income (loss) $237 $149 $203 $152
==== ==== ==== ====
Weighted average number of shares
outstanding:
Basic 454 459 457 453
Diluted 457 464 460 465
Earnings (loss) per share:
Basic $0.52 $0.32 $0.44 $0.34
Diluted $0.52 $0.32 $0.44 $0.33
Adjusted Corporate
EBITDA (a) $601 $553 $1,228 $1,254
Adjusted pre-tax
Income (loss) (a) 359 322 537 562
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedule III.
SELECTED UNAUDITED CONSOLIDATED BALANCE SHEET DATA
--------------------------------------------------
(In millions) September 30, December 31,
2015 2014
------------ ------------- ------------
Cash and cash
equivalents $509 $490
Restricted cash 280 571
Revenue earning equipment:
U.S. Car Rental 8,324 8,070
International Car
Rental 2,542 1,904
Worldwide
Equipment Rental 2,476 2,442
All Other
Operations 1,284 1,237
----- -----
Total revenue
earning
equipment, net 14,626 13,653
Total assets 24,569 23,985
Total debt 16,609 15,993
Net Fleet debt
(a) 10,068 9,047
Net Corporate
debt (a) (b) 5,752 5,885
Total equity 2,338 2,464
(a) Represents a non-GAAP measure, see the accompanying reconciliations included
in Supplemental Schedule VI.
(b) Fleet related to Hertz Equipment Rental Corporation is funded via Net
Corporate Debt.
SELECTED UNAUDITED CONSOLIDATED CASH FLOW DATA
----------------------------------------------
Nine Months Ended
September 30,
-------------
(In millions) 2015 2014
------------ ---- ----
Cash provided by (used in):
Operating
activities $2,683 $2,729
Investing
activities (3,114) (3,283)
Financing
activities 471 790
Effect of
exchange rate
changes (21) (18)
Net change in
cash and cash
equivalents $19 $218
=== ====
Fleet growth
(a) $(41) $(381)
Free cash flow
(a) 414 78
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental
Schedules IV and V.
SELECTED UNAUDITED OPERATING DATA BY SEGMENT
--------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2015 2014 2015 2014
---- ---- ---- ----
U.S. Car Rental
Transaction days (in
thousands) 37,946 37,901 104,960 106,111
Total RPD (a) $45.41 $46.41 $46.04 $46.80
Revenue per
available car day
(in whole dollars) $37.63 $37.25 $35.43 $36.62
Average fleet 497,700 515,300 499,600 503,300
Fleet efficiency(a) 83% 80% 77% 78%
Net depreciation per
unit per month(a) $267 $265 $267 $270
Program cars as a
percentage of total
average fleet at
period end 28% 15% 28% 15%
Adjusted pre-tax
income (loss)(in
millions) (a) $246 $209 $509 $515
International Car Rental
Transaction days (in
thousands) 14,814 14,695 37,112 36,186
Total RPD (a)(b) $50.43 $49.47 $48.53 $48.03
Revenue per
available car day
(in whole
dollars)(b) $40.97 $40.13 $38.38 $37.38
Average Fleet 198,200 196,900 171,900 170,300
Fleet efficiency(a) 81% 81% 79% 78%
Net depreciation per
unit per
month(a)(b) $207 $220 $214 $224
Program cars as a
percentage of total
average fleet at
period end 44% 40% 44% 40%
Adjusted pre-tax
income (loss)(in
millions) (a) $151 $136 $203 $154
Worldwide Equipment Rental
Dollar utilization 36% 37% 35% 36%
Time utilization 66% 66% 63% 64%
Rental and rental
related revenue (in
millions) (a)(b) $380 $374 $1,069 $1,049
Same store revenue
growth, including
growth initiatives
(b) - % 6% - % 6%
Adjusted pre-tax
income (loss) (in
millions) (a) $54 $79 $130 $197
All Other Operations
Average fleet -
Donlen 160,500 169,700 164,900 174,800
Adjusted pre-tax
income (loss) (in
millions) (a) $18 $17 $52 $47
(a) Represents a non-GAAP measure, see the accompanying reconciliations included in Supplemental Schedules III and VI.
(b) Based on December 31, 2014 foreign exchange rates.
Supplemental Schedule I
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
Three Months Ended September 30, 2015 Three Months Ended September 30, 2014
------------------------------------- -------------------------------------
(In millions) U.S. Car Rental Int'l Car Worldwide All Other Corporate Consolidated U.S. Car Rental Int'l Car Worldwide All Other Consolidated
Rental Equipment Operations HGH Rental Equipment Operations HGH
Rental Rental Corporate
------------ --------------- ---------- ---------- ---------- --------- ------------- --------------- ---------- ---------- ---------- --------- -------------
Total revenues: $1,739 $687 $401 $149 $ - $2,976 $1,768 $795 $413 $145 $ - $3,121
------ ---- ---- ---- --- --- ------ ------ ---- ---- ---- --- --- ------
Expenses:
Direct operating 988 351 221 6 (2) 1,564 1,041 427 221 6 7 1,702
Depreciation of
revenue earning
equipment and lease
charges, net 399 114 86 118 - 717 409 143 78 116 - 746
Selling, general and
administrative 92 57 44 8 58 259 116 68 47 7 65 303
Interest expense,
net 43 20 14 3 78 158 44 27 12 3 78 164
Other (income)
expense, net 5 24 (1) - (57) (29) (2) - (1) - 6 3
Total expenses 1,527 566 364 135 77 2,669 1,608 665 357 132 156 2,918
----- --- --- --- --- ----- ----- --- --- --- --- -----
Income (loss)before
income taxes $212 $121 $37 $14 $(77) 307 $160 $130 $56 $13 $(156) 203
---- ---- --- --- ---- ---- ---- --- --- -----
(Provision) benefit for taxes on
income (loss) (70) (54)
Net income (loss) $237 $149
==== ====
Supplemental Schedule I (continued)
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED STATEMENT OF OPERATIONS BY SEGMENT
Unaudited
Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014
------------------------------------ ------------------------------------
(In millions) U.S. Car Rental Int'l Car Worldwide All Other Corporate Consolidated U.S. Car Rental Int'l Car Worldwide All Other Consolidated
Rental Equipment Operations HGH Rental Equipment Operations HGH
Rental Rental Corporate
------------ --------------- ---------- ---------- ---------- --------- ------------- --------------- ---------- ---------- ---------- --------- -------------
Total revenues: $4,873 $1,679 $1,131 $439 $ - $8,122 $4,989 $1,918 $1,155 $425 $ - $8,487
------ ------ ------ ---- --- --- ------ ------ ------ ------ ---- --- --- ------
Expenses:
Direct operating 2,856 950 643 17 9 4,475 2,939 1,150 631 18 - 4,738
Depreciation of
revenue earning
equipment and lease
charges, net 1,200 310 243 349 - 2,102 1,224 381 235 340 - 2,180
Selling, general and
administrative 289 182 136 23 191 821 310 195 114 23 203 845
Interest expense,
net 124 54 44 8 237 467 125 73 38 10 238 484
Other (income)
expense, net 5 24 (4) - (59) (34) (31) 2 (3) - 11 (21)
Total expenses 4,474 1,520 1,062 397 378 7,831 4,567 1,801 1,015 391 452 8,226
----- ----- ----- --- --- ----- ----- ----- ----- --- --- -----
Income (loss) before
income taxes $399 $159 $69 $42 $(378) 291 $422 $117 $140 $34 $(452) 261
---- ---- --- --- ----- ---- ---- ---- --- -----
(Provision) benefit for taxes on
income (loss) (88) (109)
Net income (loss) $203 $152
==== ====
Supplemental Schedule II
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TO ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended September 30, 2015 Three Months Ended September 30, 2014
------------------------------------- -------------------------------------
(In millions, except
per share data) GAAP Adjustments Adjusted GAAP Adjustments Adjusted
(Non-GAAP)
(Non-GAAP)
---
Total revenues $2,976 $ - $2,976 $3,121 $ - $3,121
------ --- --- ------ ------ --- --- ------
Expenses:
Direct operating 1,564 (34) (a) 1,530 1,702 (61) (a) 1,641
Depreciation of
revenue earning
equipment and lease
charges, net 717 - 717 746 - 746
Selling, general and
administrative 259 (24) (c) 235 303 (43) (c) 260
Interest expense,
net 158 (15) (d) 143 164 (13) (d) 151
Other (income)
expense, net (29) 21 (e) (8) 3 (2) (e) 1
---
Total expenses 2,669 (52) 2,617 2,918 (119) 2,799
----- --- ----- ----- ---- -----
Income (loss) before
income taxes 307 52 359 203 119 322
(Provision) benefit
for taxes on income
(loss) (70) (63) (f) (133) (f) (54) (65) (f) (119) (f)
--- --- ---- --- --- ---- ---
Net income (loss) $237 $(11) $226 $149 $54 $203
==== ==== ==== ==== === ====
Weighted average
number of diluted
shares outstanding 457 457 457 464 464 464
Diluted earnings
(loss) per share $0.52 $(0.02) $0.49 $0.32 $0.12 $0.44
Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014
------------------------------------ ------------------------------------
(In millions, except
per share data) GAAP Adjustments Adjusted GAAP Adjustments Adjusted
(Non-GAAP) (Non-GAAP)
---
Total revenues $8,122 $ - $8,122 $8,487 $ - $8,487
------ --- --- ------ ------ --- --- ------
Expenses:
Direct operating 4,475 (117) (a) 4,358 4,738 (165) (a) 4,573
Depreciation of
revenue earning
equipment and lease
charges, net 2,102 - 2,102 2,180 (2) (b) 2,178
Selling, general and
administrative 821 (106) (c) 715 845 (116) (c) 729
Interest expense,
net 467 (47) (d) 420 484 (39) (d) 445
Other (income)
expense, net (34) 24 (e) (10) (21) 21 (e) -
Total expenses 7,831 (246) 7,585 8,226 (301) 7,925
----- ---- ----- ----- ---- -----
Income (loss) before
income taxes 291 246 537 261 301 562
(Provision) benefit
for taxes on income
(loss) (88) (111) (f) (199) (f) (109) (99) (f) (208) (f)
--- ---- ---- ---- --- ---- ---
Net income (loss) $203 $135 $338 $152 $202 $354
==== ==== ==== ==== ==== ====
Weighted average
number of diluted
shares outstanding 460 460 460 465 465 465
Diluted earnings
(loss) per share $0.44 $0.29 $0.73 $0.33 (g) $0.43 $0.76 (g)
a. Represents the increase in
amortization of other intangible
assets, depreciation of property
and equipment and accretion of
certain revalued liabilities
relating to purchase accounting.
Also includes restructuring and
restructuring related charges,
impairments and asset write-
downs.
b. In 2014, represents the increase in
depreciation of equipment rental
revenue earning equipment based
upon its revaluation relating to
purchase accounting.
c. In 2014 and 2015, primarily
comprised of restructuring and
restructuring related charges and
impairment charges, expenses
associated with the anticipated
HERC spin-off transaction
announced in March 2014,
consulting costs and legal fees
related to the accounting review
and investigation, expenses
associated with acquisitions,
integration charges and relocation
expenses associated with the
Company's relocation of its
headquarters to Estero, Florida.
In 2015, also includes costs
associated with the separation of
certain executives.
d. Represents debt-related charges
relating to the amortization of
deferred debt financing costs and
debt discounts.
e. Includes miscellaneous non-
recurring or non-cash items. For
2015, primarily represents the
gain on the sale of common stock
of CAR Inc, offset by a legal
reserve in the International
Rental Car segment. For 2014,
primarily represents a litigation
settlement received in relation to
a class action lawsuit filed
against an original equipment
manufacturer stemming from recalls
of their vehicles in previous
years.
f. Represents a (provision) benefit
for income taxes derived utilizing
a combined statutory rate of 37%
for all periods shown. The
combined statutory rate is applied
to the adjusted income (loss)
before income taxes to arrive at
the adjusted (provision) benefit
for taxes. The (provision) benefit
for taxes related to the
adjustments is calculated as the
difference between the adjusted
(provision) benefit for taxes and
the GAAP (provision) benefit for
taxes. Previously, we applied the
combined statutory rate to our
adjustments. Management believes
the current approach results in a
better indicator of our core
earnings.
g. GAAP net income (loss) and adjusted
net income (loss) used in GAAP
diluted earnings per share and
adjusted diluted earnings per
share calculations, respectively,
includes interest income on
convertible senior notes, net of
tax of $1 million for the nine
months ended September 30, 2014.
Supplemental Schedule III
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES
TO GROSS EBITDA, CORPORATE EBITDA, ADJUSTED CORPORATE EBITDA AND ADJUSTED PRE-TAX INCOME (LOSS) BY SEGMENT
Unaudited
Three Months Ended September 30, 2015 Three Months Ended September 30, 2014
------------------------------------- -------------------------------------
(In millions) U.S. Car Int'l Car Worldwide All Other Corporate Consolidated U.S. Car Int'l Car Worldwide All Other Consolidated
Rental Rental Equipment Operations HGH Rental Rental Equipment Operations HGH
Rental Rental Corporate
------------ --------- ---------- ---------- ---------- --------- ------------- --------- ---------- ---------- ---------- --------- -------------
Income (loss) before
income taxes $212 $121 $37 $14 $(77) $307 $160 $130 $56 $13 $(156) $203
Depreciation and
amortization 458 123 106 121 4 812 465 152 97 118 5 837
Interest, net of
interest income 43 20 14 3 78 158 44 27 12 3 78 164
Gross EBITDA $713 $264 $157 $138 $5 $1,277 $669 $309 $165 $134 $(73) $1,204
---- ---- ---- ---- --- ------ ---- ---- ---- ---- ---- ------
Car rental fleet
depreciation and
lease charges, net (399) (114) - (118) - (631) (409) (143) - (116) - (668)
Car rental fleet
interest (46) (16) - (3) - (65) (45) (23) - (4) - (72)
Car rental fleet debt
related charges (a) 8 1 - 1 - 10 3 4 - 1 - 8
Corporate EBITDA $276 $135 $157 $18 $5 $591 $218 $147 $165 $15 $(73) $472
---- ---- ---- --- --- ---- ---- ---- ---- --- ---- ----
Non-cash stock-
based employee
compensation charges - - - - 5 5 - - - - 7 7
Restructuring and
restructuring
related charges (b) 1 3 3 - 11 18 29 1 1 - 24 55
Acquisition related
costs and charges - - - - - - - - - - 1 1
Equipment rental
spin-off costs (c) - - 4 - 2 6 - - 12 - 2 14
Impairment charges
and write-downs (d) 6 - - - - 6 - - - - - -
Integration expenses
(e) - - - - 1 1 - - - - 1 1
Relocation costs (f) - - - - - - - - - - 3 3
Other extraordinary,
unusual or non-
recurring items(g) 1 24 - - (51) (26) - (1) - - 1 -
--- --- --- --- --- --- --- --- --- --- --- ---
Adjusted Corporate
EBITDA $284 $162 $164 $18 $(27) $601 $247 $147 $178 $15 $(34) $553
---- ---- ---- --- ---- ---- ---- ---- ---- --- ---- ----
Non-fleet
depreciation and
amortization(h) (59) (9) (106) (3) (4) (181) (56) (9) (97) (2) (5) (169)
Non-fleet interest,
net of interest
income 3 (4) (14) - (78) (93) 1 (4) (12) 1 (78) (92)
Non-fleet debt
related charges (a) (1) - 1 1 4 5 - - 1 1 3 5
Non-cash stock-
based employee
compensation charges - - - - (5) (5) - - - - (7) (7)
Acquisition
accounting (i) 19 2 9 2 - 32 17 2 9 2 2 32
Adjusted pre-tax
income (loss) $246 $151 $54 $18 $(110) $359 $209 $136 $79 $17 $(119) $322
==== ==== === === ===== ==== ==== ==== === === ===== ====
Supplemental Schedule III (continued)
HERTZ GLOBAL HOLDINGS, INCRECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES
TO GROSS EBITDA, CORPORATE EBITDA, ADJUSTED CORPORATE EBITDA AND ADJUSTED PRE-TAX INCOME (LOSS) BY SEGMENT
Unaudited
Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014
(In millions) U.S. Car Rental Int'l Car Worldwide All Other Corporate Consolidated U.S. Car Rental Int'l Car Worldwide All Other Consolidated
Rental Equipment Operations HGH Rental Equipment Operations HGH
Rental Rental Corporate
------------ --------------- ---------- ---------- ---------- --------- ------------- --------------- ---------- ---------- ---------- --------- -------------
Income (loss) before
income taxes $399 $159 $69 $42 $(378) $291 $422 $117 $140 $34 $(452) $261
Depreciation and
amortization 1,356 338 301 356 15 2,366 1,391 411 291 348 11 2,452
Interest, net of
interest income 124 54 44 8 237 467 125 73 38 10 238 484
Gross EBITDA $1,879 $551 $414 $406 $(126) $3,124 $1,938 $601 $469 $392 $(203) $3,197
------ ---- ---- ---- ----- ------ ------ ---- ---- ---- ----- ------
Car rental fleet
depreciation and
lease charges, net (1,200) (310) - (349) - (1,859) (1,224) (381) - (340) - (1,945)
Car rental fleet
interest (131) (48) - (10) - (189) (129) (65) - (11) - (205)
Car rental fleet
debt-related
charges (a) 23 6 - 4 - 33 5 12 - 5 - 22
Corporate EBITDA $571 $199 $414 $51 $(126) $1,109 $590 $167 $469 $46 $(203) $1,069
---- ---- ---- --- ----- ------ ---- ---- ---- --- ----- ------
Non-cash stock-
based employee
compensation charges - - - - 14 14 - - - - 20 20
Restructuring and
restructuring
related charges (b) 19 10 10 - 48 87 44 21 7 - 54 126
Acquisition related
costs and charges - - - - - - - - - - 10 10
Equipment rental
spin-off costs (c) - - 20 - 3 23 - - 18 - 9 27
Impairment charges
and write-downs (d) 15 - - - - 15 10 - - - - 10
Integration expenses
(e) - - - - 5 5 1 - - - 6 7
Relocation costs (f) - - - - 4 4 - - - - 7 7
Other extraordinary,
unusual or non-
recurring items (g) (2) 24 (1) - (50) (29) (21) (4) - - 3 (22)
--- --- --- --- --- --- --- --- --- --- --- ---
Adjusted Corporate
EBITDA $603 $233 $443 $51 $(102) $1,228 $624 $184 $494 $46 $(94) $1,254
---- ---- ---- --- ----- ------ ---- ---- ---- --- ---- ------
Non-fleet
depreciation and
amortization(h) (156) (28) (301) (7) (15) (507) (167) (30) (291) (8) (11) (507)
Non-fleet interest,
net of interest
income 7 (6) (44) 2 (237) (278) 4 (8) (38) 1 (238) (279)
Non-fleet debt-
related charges (a) - (1) 4 - 11 14 1 - 4 - 11 16
Non-cash stock-
based employee
compensation charges - - - - (14) (14) - - - - (20) (20)
Acquisition
accounting (i) 55 5 28 6 - 94 53 8 28 8 1 98
Adjusted pre-tax
income (loss) $509 $203 $130 $52 $(357) $537 $515 $154 $197 $47 $(351) $562
==== ==== ==== === ===== ==== ==== ==== ==== === ===== ====
(a) Represents non-cash charges relating
to the amortization of deferred debt
financing costs and debt discounts
and premiums.
(b) Represents expenses incurred under
restructuring actions as defined in
U.S. GAAP. For further information on
restructuring costs, see Note 8,
"Restructuring." Also represents
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, consulting costs and legal
fees related to the accounting review
and investigation and costs
associated with the separation of
certain executives.
(c) Represents expense associated with the
anticipated HERC spin-off
transaction announced in March 2014.
(d) In 2015, primarily represents first
quarter impairments of the former
Dollar Thrifty headquarters and a
corporate asset and a third quarter
impairment of a building in the U.S.
Car Rental segment. In 2014,
primarily represents a second quarter
write-down of assets associated with
a terminated business relationship.
(e) Primarily represents Dollar Thrifty
integration related expenses.
(f) Represents non-recurring costs
incurred in connection with the
relocation of the Company's corporate
headquarters to Estero, Florida that
were not included in restructuring
expenses. Such expenses primarily
include duplicate facility rent,
certain moving expenses, and other
costs that are direct and incremental
due to the relocation.
(g) Includes miscellaneous non-recurring
or non-cash items. For 2015,
primarily represents the gain on the
sale of common stock of CAR Inc,
offset by a legal reserve in the
International Rental Car segment. For
2014, primarily represents a
litigation settlement received in
relation to a class action lawsuit
filed against an original equipment
manufacturer stemming from recalls of
their vehicles in previous years.
(h) Amounts related to the Worldwide
Equipment Rental segment include
depreciation of revenue earning
equipment.
(i) Represents the increase in
amortization of other intangible
assets, depreciation of property and
equipment and accretion of revalued
liabilities relating to purchase
accounting.
Supplemental Schedule IV
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - FLEET GROWTH
Unaudited
Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014
------------------------------------ ------------------------------------
(In millions) U.S. Car Rental Int'l Car Rental Worldwide All Other Consolidated HGH U.S. Car Rental Int'l Car Rental Worldwide All Other
Equipment Operations Equipment Operations
Rental Rental Consolidated HGH
------------ --------------- ---------------- ---------- ---------- ---------------- --------------- ---------------- ---------- ---------- ----------------
Revenue earning equipment
expenditures $(5,966) $(2,499) $(532) $(1,013) $(10,010) $(4,128) $(2,694) $(470) $(1,150) $(8,442)
Proceeds from disposal of
revenue earning
equipment 4,576 1,504 122 586 6,788 3,019 1,456 130 711 5,316
Net revenue earning
equipment capital
expenditures (1,390) (995) (410) (427) (3,222) (1,109) (1,238) (340) (439) (3,126)
Depreciation of revenue
earning equipment, net 1,200 255 244 348 2,047 1,222 321 235 340 2,118
Financing activity related to car rental
fleet:
Borrowings 4,186 1,291 - 592 6,069 1,021 1,287 - 438 2,746
Payments (3,824) (850) - (549) (5,223) (1,085) (745) - (350) (2,180)
Restricted cash changes 262 24 - 2 288 85 (26) - 2 61
--- --- --- --- --- --- --- --- --- ---
Net financing activity
related to car rental
fleet 624 465 - 45 1,134 21 516 - 90 627
Fleet growth $434 $(275) $(166) $(34) $(41) $134 $(401) $(105) $(9) $(381)
---- ----- ----- ---- ---- ---- ----- ----- --- -----
Supplemental Schedule V
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURE - FREE CASH FLOW
Unaudited
Nine Months Ended September 30,
-------------------------------
(In millions) 2015 2014
------------ ---- ----
Income (loss) before
income taxes $291 $261
Depreciation and
amortization, non-
fleet, net 265 272
Amortization of debt
discount and related
charges 43 35
Cash paid for income
taxes (31) (47)
Changes in assets and
liabilities, net of
effects of
acquisitions, and other 68 89
--- ---
Net cash provided by
operating activities
excluding depreciation
of revenue earning
equipment 636 610
--- ---
U.S. car rental fleet
growth 434 134
International car rental
fleet growth (275) (401)
Equipment rental fleet
growth (166) (105)
All other operations
rental fleet growth (34) (9)
Property and equipment
expenditures, net of
disposals (181) (151)
Net investment activity (222) (532)
---- ----
Free cash flow $414 $78
==== ===
Supplemental Schedule VI
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES - DEBT, REVENUE,
DEPRECIATION AND KEY METRICS
Unaudited
NET CORPORATE DEBT, NET FLEET DEBT AND TOTAL NET DEBT
-----------------------------------------------------
As of September 30, 2015 As of December 31, 2014
------------------------ -----------------------
(In millions) Fleet........ Corporate Total........ Fleet........ Corporate Total........
------------ ------------- --------- ------------- ------------- --------- -------------
Debt $10,291 $6,318 $16,609 $9,562 $6,431 $15,993
Less:
Cash and cash
equivalents - 509 509 - 490 490
Restricted cash 223 57 280 515 56 571
Net debt $10,068 $5,752 $15,820 $9,047 $5,885 $14,932
======= ====== ======= ====== ====== =======
Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES - DEBT, REVENUE,
DEPRECIATION AND KEY METRICS
Unaudited
TOTAL RPD, FLEET EFFICIENCY, REVENUE PER AVAILABLE CAR DAY AND NET DEPRECIATION PER UNIT PER MONTH
--------------------------------------------------------------------------------------------------
U.S. Car Rental Segment
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
($In millions,
except as noted) 2015 2014 2015 2014
----------------- ---- ---- ---- ----
Total RPD
Revenues $1,739 $1,768 $4,873 $4,989
Ancillary retail car
sales revenue $(16) $(9) $(41) $(23)
Total rental revenue $1,723 $1,759 $4,832 $4,966
Transaction days (in
thousands) 37,946 37,901 104,960 106,111
------ ------ ------- -------
Total RPD (in whole
dollars) $45.41 $46.41 $46.04 $46.80
====== ====== ====== ======
Fleet Efficiency
Transaction days (in
thousands) 37,946 37,901 104,960 106,111
Average Fleet 497,700 515,300 499,600 503,300
Advantage sublease
vehicles - (1,000) - (5,500)
Hertz 24/7 vehicles - (1,000) - (1,000)
Average Fleet used
to calculate fleet
efficiency 497,700 513,300 499,600 496,800
Number of days in
period 92 92 273 273
--- --- --- ---
Available car days
(in thousands) 45,788 47,224 136,391 135,626
Fleet efficiency (a) 83% 80% 77% 78%
Revenue Per Available Car Day
Total rental revenue $1,723 $1,759 $4,832 $4,966
Available car days
(in thousands) 45,788 47,224 136,391 135,626
------ ------ ------- -------
Revenue per
available car day
(in whole dollars) $37.63 $37.25 $35.43 $36.62
====== ====== ====== ======
Net Depreciation Per Unit Per Month
Depreciation of
revenue earning
equipment and lease
charges, net $399 $409 $1,200 $1,224
Average fleet 497,700 515,300 499,600 503,300
------- ------- ------- -------
Depreciation of
revenue earning
equipment and lease
charges, net
divided by average
fleet (in whole
dollars) $802 $794 $2,402 $2,432
Number of months in
period 3 3 9 9
Net depreciation per
unit per month (in
whole dollars) $267 $265 $267 $270
==== ==== ==== ====
(a) Calculated as transaction days divided by available car days.
Supplemental Schedule VI (continued)
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES - DEBT, REVENUE,
DEPRECIATION AND KEY METRICS
Unaudited
TOTAL RPD, FLEET EFFICIENCY, REVENUE PER AVAILABLE CAR DAY AND NET DEPRECIATION PER UNIT PER MONTH (continued)
-------------------------------------------------------------------------------------------------------------
International Car Rental
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(in millions, except
as noted) 2015 2014 2015 2014
---- ---- ---- ----
Total RPD
Revenues $687 $795 $1,679 $1,918
Foreign currency
adjustment (a) 60 (68) 122 (180)
Total rental revenue $747 $727 $1,801 $1,738
Transaction days (in
thousands) 14,814 14,695 37,112 36,186
------ ------ ------ ------
Total RPD (in whole
dollars) $50.43 $49.47 $48.53 $48.03
====== ====== ====== ======
Fleet Efficiency
Transaction days (in
thousands) 14,814 14,695 37,112 36,186
Average Fleet 198,200 196,900 171,900 170,300
Number of days in
period 92 92 273 273
--- --- --- ---
Available car days
(in thousands) 18,234 18,115 46,929 46,492
Fleet efficiency (b) 81% 81% 79% 78%
Revenue Per Available Car Day
Total rental revenue $747 $727 $1,801 $1,738
Available car days
(in thousands) 18,234 18,115 46,929 46,492
------ ------ ------ ------
Revenue per
available car day
(in whole dollars) $40.97 $40.13 $38.38 $37.38
====== ====== ====== ======
Net Depreciation Per Unit Per Month
Depreciation of
revenue earning
equipment and lease
charges, net $114 $143 $310 $381
Foreign currency
adjustment (a) 9 (13) 21 (37)
--- --- --- ---
Adjusted
depreciation of
revenue earning
equipment and lease
charges, net $123 $130 $331 $344
---- ---- ---- ----
Average fleet 198,200 196,900 171,900 170,300
------- ------- ------- -------
Adjusted
depreciation of
revenue earning
equipment and lease
charges, net
divided by average
fleet (in whole
dollars) $621 $660 $1,926 $2,020
Number of months in
period 3 3 9 $9
Net depreciation per
unit per month (in
whole dollars) $207 $220 $214 $224
==== ==== ==== ====
(a) Based on December 31, 2014 foreign exchange rates.
(b) Calculated as transaction days divided by available car days.
TOTAL RPD, FLEET EFFICIENCY, REVENUE PER AVAILABLE CAR DAY AND NET DEPRECIATION PER UNIT PER MONTH (continued)
-------------------------------------------------------------------------------------------------------------
Worldwide Car Rental
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(in millions, except
as noted) 2015 2014 2015 2014
---- ---- ---- ----
Total RPD
Revenues $2,426 $2,563 $6,552 $6,907
Ancillary retail car
sales revenue (16) (9) (41) (23)
Foreign currency
adjustment (a) 60 (68) 122 (180)
Total rental revenue $2,470 $2,486 $6,633 $6,704
Transaction days (in
thousands) 52,760 52,596 142,072 142,297
------ ------ ------- -------
Total RPD (in whole
dollars) $46.82 $47.27 $46.69 $47.11
====== ====== ====== ======
Fleet Efficiency
Transaction days (in
thousands) 52,760 52,596 142,072 142,297
Average Fleet 695,900 712,200 671,500 673,600
Advantage sublease
vehicles - (1,000) - (5,500)
Hertz 24/7 vehicles - (1,000) - (1,000)
--- ------ --- ------
Average Fleet used
to calculate fleet
efficiency 695,900 710,200 671,500 667,100
------- ------- ------- -------
Number of days in
period 92 92 273 273
--- --- --- ---
Available car days
(in thousands) 64,023 65,338 183,320 182,118
Fleet efficiency (b) 82% 80% 77% 78%
Revenue Per Available Car Day
Total rental revenue $2,470 $2,486 $6,633 $6,704
Available car days
(in thousands) 64,023 65,338 183,320 182,118
------ ------ ------- -------
Revenue per
available car day
(in whole dollars) $38.58 $38.05 $36.18 $36.81
====== ====== ====== ======
Net Depreciation Per Unit Per Month
Depreciation of
revenue earning
equipment and lease
charges, net $513 $552 $1,510 $1,605
Foreign currency
adjustment (a) 9 (13) 21 (37)
--- --- --- ---
Adjusted
depreciation of
revenue earning
equipment and lease
charges, net $522 $539 $1,531 $1,568
---- ---- ------ ------
Average fleet 695,900 712,200 671,500 673,600
------- ------- ------- -------
Adjusted
depreciation of
revenue earning
equipment and lease
charges, net
divided by average
fleet (in whole
dollars) $750 $757 $2,280 $2,328
Number of months in
period 3 3 9 $9
Net depreciation per
unit per month (in
whole dollars) $250 $252 $253 $259
==== ==== ==== ====
Note: Worldwide Car Rental represents U.S. Car Rental and International Car Rental segment information on a combined basis and excludes our Donlen leasing operations.
(a) Based on December 31, 2014 foreign exchange rates.
(b) Calculated as transaction days divided by available car days.
WORLDWIDE EQUIPMENT RENTAL AND RENTAL RELATED REVENUE
-----------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(in millions) 2015 2014 2015 2014
---- ---- ---- ----
Worldwide
equipment
rental segment
revenues $401 $413 $1,131 $1,155
Worldwide
equipment
sales and
other revenue (28) (33) (79) (87)
--- --- --- ---
Rental and
rental related
revenue at
actual rates 373 380 1,052 1,068
Foreign
currency
adjustment (a) 7 (6) 17 (19)
--- --- --- ---
Rental and
rental related
revenue $380 $374 $1,069 $1,049
==== ==== ====== ======
(a) Based on December 31, 2014 foreign exchange rates.
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 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 Press Release provide useful information regarding the Company's financial condition and results of operations and additional purposes, if any, for which management of the Company utilizes the non-GAAP measures.
Adjusted Pre-Tax Income (Loss) and Adjusted Pre-tax Margin
Adjusted pre-tax income is calculated as income before income taxes plus certain non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our 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 that 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. Adjusted pre-tax margin is adjusted pre-tax income divided by total revenues.
Adjusted Net Income and Adjusted Net Income Margin
Adjusted net income is calculated as adjusted pre-tax income less a provision for income taxes derived utilizing a combined statutory rate of 37%. The combined statutory rate is management's estimate of our long-term tax rate. Adjusted net income is important to management and investors because it represents our operational performance exclusive of the effects of purchase accounting, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of our competitors. Adjusted net income margin is adjusted net income divided by total revenues.
Adjusted Net Income Per Diluted Share
Adjusted net income per diluted share is calculated as adjusted net income divided by the weighted average number of diluted shares outstanding for the period. Adjusted net income per diluted share is important to management and investors because it represents a measure of our operational performance exclusive of the effects of purchase accounting adjustments, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of our competitors.
Available Car Days
Available Car Days is calculated as average fleet multiplied by the number of days in a period. Average fleet used to calculate available car days in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days.
Average Fleet
Average Fleet is determined using a simple average of the number of vehicles owned by the company at the beginning and end of a given period. Among other things, average fleet is used to calculate our fleet efficiency which represents the portion of the Company's fleet that is being utilized to generate revenue.
Corporate Restricted Cash (used in the calculation of Net Corporate Debt)
Total restricted cash includes cash and cash equivalents that are not readily available for our normal disbursements. Total restricted cash and equivalents are restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities, our like-kind exchange programs and to satisfy certain of our self-insurance regulatory reserve requirements. Corporate restricted cash is calculated as total restricted cash less restricted cash associated with fleet debt.
Dollar Utilization
Dollar utilization means revenue derived from the rental of equipment divided by the original cost of the equipment including additional capitalized refurbishment costs (with the basis of refurbished assets at the refurbishment date).
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 before net interest expense, income taxes and depreciation (which includes revenue earning equipment lease charges) and amortization. Corporate EBITDA, as presented herein, represents Gross EBITDA as adjusted for car rental fleet interest, car rental fleet depreciation and car rental debt-related charges. Adjusted Corporate EBITDA, as presented herein, represents Corporate EBITDA as adjusted for certain other items, as described in more detail in the accompanying schedules.
Management uses Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA as operating performance and liquidity metrics for internal monitoring and planning purposes, including the preparation of our 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, operating expenses and selling, general and administrative expenses, which enables management and investors to evaluate our business segments that are financed differently and have different depreciation characteristics and compare our 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 calculation of financial covenants under the Company's senior credit facilities and 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 U.S. GAAP. When evaluating our operating performance or liquidity, investors should not consider Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities.
Equipment Rental and Rental Related Revenue
Equipment rental and rental related revenue consists of all revenue, net of discounts, associated with the rental of equipment including charges for delivery, loss damage waivers and fueling, but excluding revenue arising from the sale of equipment, parts and supplies and certain other ancillary revenue. Rental and rental related revenue is adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management and to investors as it reflects time and mileage and ancillary charges for equipment on rent and is comparable with the reporting of other industry participants.
Fleet Efficiency
Fleet efficiency is calculated by dividing total transaction days by the available car days. Average fleet used to calculate fleet efficiency in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days.
Fleet Growth
U.S. and International car rental fleet growth is defined as car rental fleet capital expenditures, net of proceeds from disposals, plus car rental fleet depreciation and net car rental fleet financing which includes borrowings, repayments and the change in fleet restricted cash. Worldwide equipment rental fleet growth is defined as worldwide equipment rental fleet expenditures, net of proceeds from disposals, plus depreciation.
Free Cash Flow
Free cash flow is calculated as net cash provided by operating activities, excluding depreciation of revenue earning equipment, net of car rental and equipment rental fleet growth and property and equipment net expenditures. Free cash flow is important to management and investors as it represents the cash available for acquisitions and the reduction of corporate debt.
Net Corporate Debt
Net corporate debt is calculated as total debt excluding fleet debt less cash and equivalents and corporate restricted cash. Corporate debt consists of our Senior Term Facility; Senior ABL Facility; Senior Notes; Promissory Notes; Convertible Senior Notes; and certain other indebtedness of our domestic and foreign subsidiaries.
Net Corporate Debt is important to management and investors as it helps measure our leverage. Net Corporate Debt also assists in the evaluation of our ability to service our non-fleet-related debt without reference to the expense associated with the fleet debt, which is collateralized by assets not available to lenders under the non-fleet debt facilities.
Net Depreciation Per Unit Per Month
Net depreciation per unit per month is calculated by dividing depreciation of revenue earning equipment and lease charges, net by the average fleet in each period and then dividing by the number of months in the period reported with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is useful in analyzing underlying trends. Average fleet used to calculate net depreciation per unit per month in our U.S. Car Rental segment includes Advantage sublease and Hertz 24/7 vehicles as these vehicles have associated lease charges. Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month.
Restricted Cash Associated with Fleet Debt (used in the calculation of Net Fleet Debt and Corporate Restricted Cash)
Restricted cash associated with fleet debt is restricted for the purchase of revenue earning, vehicles and other specified uses under our Fleet Debt facilities and our car rental like-kind exchange program.
Revenue Per Available Car Day ("RACD")
Revenue per available car day is calculated as total revenues less revenue from fleet subleases and ancillary revenue associated with retail car sales divided by available car days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management and investors as it represents a measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control and provides a measure of revenue production relative to overall capacity.
Same Store Revenue Growth/Decline
Same store revenue growth is calculated as the year-over-year change in revenue for locations that are open at the end of the period reported and have been operating under our direction for more than twelve months. The same-store revenue amounts are adjusted in all periods to eliminate the effect of fluctuations in foreign currency.
Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends.
Time Utilization
Time utilization means the percentage of time an equipment unit is on-rent during a given period.
Total Net Debt
Total net debt is calculated as total debt less total cash and cash equivalents and total restricted cash. This measure is important to management, investors and ratings agencies as it helps measure our gross leverage.
Total RPD
Total RPD is calculated as total revenue less ancillary revenue associated with retail car sales, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management and investors as it represents a measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control.
Transaction Days
Transaction days 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. Late in the third quarter of 2015 the Company fully integrated the Dollar Thrifty and Hertz counter systems and as a result aligned the transaction day calculation in the Hertz system. As a result of this alignment, Hertz determined that there was an impact to the calculation. The impact to the third quarter of 2015 is negligible, however Hertz expects that transaction days for the US RAC segment will increase by approximately 1% prospectively relative to the historic calculation.
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SOURCE Hertz Global Holdings, Inc.
