Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Debt Investor Presentation (October 2020)
65 slides from Hertz Global's debt investor presentation, Oct 16, 2020
Slide 1: DIP Overview Materials September 2020
Strictly Confidential Subject to CA / NDA DIP Overview Materials September 2020
Slide 2: Disclaimers
Strictly Confidential DISCLAIMERS Subject to CA / NDA THIS DOCUMENT HAS BEEN PREPARED BY HERTZ AND IS FOR INFORMATION PURPOSES ONLY. BY ACCEPTING THIS DOCUMENT, YOU HEREBY ACKNOWLEDGE THAT (A) THE INFORMATION CONTAINED HEREIN (THE "CONFIDENTIAL INFORMATION") MAY CONTAIN NON-PUBLIC INFORMATION RELATI
Slide 3: Disclaimers (Cont'd)
Strictly Confidential DISCLAIMERS (CONT’D) Subject to CA / NDA Hertz Global Overview Hertz Global Holdings, Inc. is the top-level holding company of The Hertz Corporation. The Companies operate their vehicle rental business globally, primarily through the Hertz, Dollar and Thrifty brands, and operat
Slide 4: Disclaimers (Cont'd) Forward-Looking Statements
Strictly Confidential DISCLAIMERS (CONT’D) Subject to CA / NDA Forward-Looking Statements Certain statements contained in this presentation, and in related comments by the Company’s management, include “forward-looking statements.” Forward-looking statements include information concerning the Compan
Slide 5: Table of Contents
Strictly Confidential TABLE OF CONTENTS Subject to CA / NDA Executive Summary 5 Recent Performance 17 Business Highlights 23 Scenario Overview 33 Appendix 43 4
Slide 6: Executive Summary
Strictly Confidential Subject to CA / NDA Executive Summary
Slide 7: Introduction
Strictly Confidential INTRODUCTION Subject to CA / NDA Summary . As a result of COVID-19, The Hertz Corporation (“THC” and together with its direct and indirect subsidiaries, the “Company” or “Hertz”) filed Chapter 11 cases on May 22, 2020 (the “Petition Date”), and is utilizing the “breathing room”
Slide 8: Global Car Rental Company with Years of Quality Service
Strictly Confidential GLOBAL CAR RENTAL COMPANY Subject to CA / NDA WITH 100 YEARS OF QUALITY SERVICE Overview Summary Historical Performance . Hertz operates a vehicle rental business globally, primarily through Revenue Adj. Corporate EBITDA the Hertz, Dollar, and Thrifty brands ($ in Billions) ($
Slide 9: Years of Industry Firsts
Strictly Confidential 100 YEARS OF INDUSTRY FIRSTS… Subject to CA / NDA 1996 Hertz launches 2012 2019 1968 Hertz Local Edition® Hertz Global Hertz launches refreshed 1985 Holdings, Inc. mobile app offering Doris & James acquires Dollar customers a faster and 1918 1947 1959 Cassan open the UAL, Inc.,
Slide 10: Recognized Broadly Across the Travel Industry
Strictly Confidential RECOGNIZED BROADLY ACROSS Subject to CA / NDA THE TRAVEL INDUSTRY . Hertz received more than 150 awards and accolades from industry leaders Business Traveler Award FlyerTalk Awards Best Car Rental Company in the World Hertz Gold Plus Rewards® named Best Rewards Program in the D
Slide 11: Key Business Strengths
Strictly Confidential KEY BUSINESS STRENGTHS Subject to CA / NDA Hertz brand is globally recognized and respected – it brings instant credibility to growth areas and new Brand businesses Service Award-winning experience drives repeat business – customers want to rent and partner with Hertz. Excellen
Slide 12: DIP Financing Sizing Overview
Strictly Confidential DIP FINANCING SIZING OVERVIEW Subject to CA / NDA Summary . In light of the difficulty in forecasting long-term operating cash flows given the current market environment, the Company has prepared various operating scenarios to account for uncertainty regarding the projected rec
Slide 13: DIP Financing Sizing Overview (Cont'd) Key Assumptions
Strictly Confidential DIP FINANCING SIZING OVERVIEW (CONT’D) Subject to CA / NDA Key Assumptions . U.S. free cash flow represents the August 2020 to December 2021 period and includes negotiated HVF II lease payments for August – December 2020 (and an assumed rate for 20211) and HVF III lease payment
Slide 14: DIP Financing Sizing Overview (Cont'd)
Strictly Confidential DIP FINANCING SIZING OVERVIEW (CONT’D) Subject to CA / NDA . The below table contemplates the cash flows of the business through the end of 2021 Lower-for-Longer Scenario 310K Fleet Scenario Global Liquidity as of July 2020 $1,609 $1,609 (-) U.S. Minimum Cash & Unavailable Cash
Slide 15: Overview of Key DIP Financing Terms
Strictly Confidential OVERVIEW OF KEY DIP FINANCING TERMS Subject to CA / NDA Summary of Key Terms Size . $1.1bn – $1.5bn . $400mm – $600mm for general corporate purposes (e.g., working capital, lease payments, etc.) Use of proceeds . $500mm – $1.0bn for funding equity portion of new vehicle purchas
Slide 16: Illustrative Overview of Potential Unencumbered Asset Categories
Strictly Confidential ILLUSTRATIVE OVERVIEW OF POTENTIAL Subject to CA / NDA UNENCUMBERED ASSET CATEGORIES . The 1L/2L creditors have reserved rights with respect to the scope of their collateral and may contend (or have contended) that the below categories are their collateral . Cash in deposit acc
Slide 17: Illustrative Overview of Potential Encumbered Asset Categories
Strictly Confidential ILLUSTRATIVE OVERVIEW OF Subject to CA / NDA POTENTIAL ENCUMBERED ASSET CATEGORIES . The Debtors, the Official Committee of Unsecured Creditors, and the Ad Hoc Noteholder Group have reserved rights with respect to collateral and may contend (or have contended) that the followin
Slide 18: Recent Performance
Strictly Confidential Subject to CA / NDA Recent Performance
Slide 19: Current Situation Summary
Strictly Confidential CURRENT SITUATION SUMMARY Subject to CA / NDA Commentary . The Company entered 2020 riding tailwinds from a strong FY2019 performance – FY2019 revenue and EBITDA grew at 3% and 50% respectively year-over-year, and were projected to continue this positive momentum into 2020 with
Slide 20: Travel Industry Showing Signs of Recovery
Strictly Confidential TRAVEL INDUSTRY SHOWING Subject to CA / NDA SIGNS OF RECOVERY Commentary U.S. Hotel Industry Occupancy Rates Since 2/9/20 . The hospitality industry was showing increasing momentum going 64% 64% into July, with occupancy rates nearly double the lows seen in early 53% April 46%
Slide 21: U.S. RAC Business Gaining Momentum
Strictly Confidential U.S RAC BUSINESS GAINING MOMENTUM Subject to CA / NDA Commentary . Every month since the trough in April, revenue has steadily increased with the mix of rentals shifting significantly to off airport locations – Revenue was up ~$50mm from April to May and ~$80mm from May to June
Slide 22: Strong Recovery in Used Car Market
Strictly Confidential STRONG RECOVERY IN USED CAR MARKET Subject to CA / NDA Manheim Used Vehicle Value Index Commentary . Used vehicle prices have risen to their highest level 160 158 since January 2019 per the Manheim Used Vehicle Pre-COVID-19 Value Index 150 . As a result of the recovery in used
Slide 23: Strategic Defleeting in Process
Strictly Confidential STRATEGIC DEFLEETING IN PROCESS Subject to CA / NDA . Management is aggressively executing its defleeting strategy in an effort to optimize vehicle utilization based on customer demand . Hertz expects to sell approximately ~134K risk vehicles through the end of the year and tur
Slide 24: Business Highlights
Strictly Confidential Subject to CA / NDA Business Highlights
Slide 25: A Global Leader with Iconic Brands
Strictly Confidential A GLOBAL LEADER WITH ICONIC BRANDS Subject to CA / NDA Brand Overview 800K+ ~35M 150+ 250+ Vehicles Rentals / year Countries Partnerships with Commercial Leaders 10K+ $9.8B 65%+ Locations FY2019 Global Revenue Of Fortune 500 companies work with Hertz Financial Overview for FY20
Slide 26: Hertz Global Footprint
Strictly Confidential HERTZ GLOBAL FOOTPRINT Subject to CA / NDA . Unparalleled brand awareness . Global airport and off-airport network . Allows for easy and reliable experience anywhere . Trusted brand in multiple languages . North America Corporate 90% vs. Franchise 10% . Rest of World Corporate
Slide 27: Major Player in the Consolidated Rental Car Industry
Strictly Confidential MAJOR PLAYER IN THE Subject to CA / NDA CONSOLIDATED RENTAL CAR INDUSTRY Overview U.S. Car Rental Market . U.S. rental car market: highly consolidated with three largest players making up ~95% of the total market Other – ~$32 billion in revenue (~2% YoY CAGR 2018 – 2023) – ~2.4
Slide 28: Diversified Business Mix by Geography, Customer & Location Type
Strictly Confidential DIVERSIFIED BUSINESS MIX Subject to CA / NDA BY GEOGRAPHY, CUSTOMER & LOCATION TYPE Overview FY2019 Rental Revenue by Customer Type . Diversified global sales mix with over 4,200 locations in the U.S. U.S. RAC International and over 8,200 locations internationally across 160 co
Slide 29: Track Record of Consistent Revenue & EBITDA Growth and Profitability
Strictly Confidential TRACK RECORD OF CONSISTENT Subject to CA / NDA REVENUE & EBITDA GROWTH AND PROFITABILITY Revenue (Year over Year % Change) Overview Pre-COVID-19 . Before the onset of the COVID-19 crisis in March 2020, the Company was on track to deliver another consecutive quarter of 8% 10% re
Slide 30: Leading Large Company Leasing Business Through Donlen
Strictly Confidential LEADING LARGE COMPANY Subject to CA / NDA LEASING BUSINESS THROUGH DONLEN Donlen Overview Fleet Management Market . One of the leading fleet lease and fleet management companies; 2018 Market Share2 Key Growth Drivers founded in 1965 Other Increasing government . Corporate cul
Slide 31: Top Used Vehicle Retailer in the United States
Strictly Confidential TOP 10 USED VEHICLE RETAILER Subject to CA / NDA IN THE UNITED STATES Overview Non-Program Vehicle Disposition Channel Mix . Top 10 used car company in the United FY2014 FY2019 States by volume . FY2019 vehicles sold: 104K vehicles . Dynamic hold periods for optimal 26% deletio
Slide 32: Investments in Fleet, Service, Brands, & Technology Drive Sustainable Growth
Strictly Confidential INVESTMENTS IN FLEET, SERVICE, BRANDS, Subject to CA / NDA & TECHNOLOGY DRIVE SUSTAINABLE GROWTH Execution Excellence Driving Productivity and Operating Efficiency . Customer Experience Sustaining Top Line Momentum; Executing Growth Initiatives . Leveraging Scale . Disciplined
Slide 33: Key Investment Highlights
Strictly Confidential KEY INVESTMENT HIGHLIGHTS Subject to CA / NDA A Global Leader with Iconic Brands Major Player in the Consolidated Rental Car Industry Diversified Business Mix by Geography, Customer & Location Type Leading Large Company Leasing Business Through Donlen Track Record of
Slide 34: Scenario Overview
Strictly Confidential Subject to CA / NDA Scenario Overview
Slide 35: Key Forecast Assumptions
Strictly Confidential KEY FORECAST ASSUMPTIONS Subject to CA / NDA . Average fleet of ~257K and ~212K vehicles in December 2020 and December 2021, respectively Lower-for- . RPD of $41.79 in FY 2020, down ~4% relative to 2019; RPD increases to $43.22 in 2021 Longer Scenario . Total transaction days o
Slide 36: Lower-for-Longer Scenario
Strictly Confidential Subject to CA / NDA Lower-for-Longer Scenario
Slide 37: DIP Sizing Analysis Monthly Detail: Lower-for-Longer Scenario
Strictly Confidential DIP SIZING ANALYSIS MONTHLY DETAIL: Subject to CA / NDA LOWER-FOR-LONGER SCENARIO FYE 12/31 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Total Total Revenue $259 $208 $239 $218 $230 $199 $201 $241 $239 $2
Slide 38: Monthly P&L 2020 & 2021 – U.S. RAC
Strictly Confidential MONTHLY P&L 2020 & 2021 – U.S. RAC Subject to CA / NDA Month Ended, Month Ended, FY'19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 FY'20 Key Performance Indicators Average Vehicles 534,879 503,379 520,496 531,866 525,847 508,218 474,160 4
Slide 39: Vehicle Summary – U.S. RAC
Strictly Confidential VEHICLE SUMMARY – U.S. RAC Subject to CA / NDA Month Ended, FYE 12/31 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Vehicle Utilization 45% 52% 53% 58% 63% 66% 65% 74% 78% 78% 77% 80% 78% 78% 75% 79
Slide 40: 310K Fleet Scenario
Strictly Confidential Subject to CA / NDA 310K Fleet Scenario
Slide 41: DIP Sizing Analysis Monthly Detail: 310K Fleet Scenario
Strictly Confidential DIP SIZING ANALYSIS MONTHLY DETAIL: Subject to CA / NDA 310K FLEET SCENARIO FYE 12/31 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Total Total Revenue $280 $247 $279 $267 $297 $258 $276 $336 $338 $346 $37
Slide 42: Monthly P&L 2020 & 2021 – U.S. RAC
Strictly Confidential MONTHLY P&L 2020 & 2021 – U.S. RAC Subject to CA / NDA Month Ended, Month Ended, FY'19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 FY'20 Key Performance Indicators Average Vehicles 534,879 503,379 520,496 531,866 525,847 508,218 474,160 4
Slide 43: Vehicle Summary – U.S. RAC
Strictly Confidential VEHICLE SUMMARY – U.S. RAC Subject to CA / NDA Month Ended, FYE 12/31 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Vehicle Utilization 45% 55% 58% 60% 65% 69% 67% 78% 81% 81% 80% 82% 79% 80% 76% 80
Slide 44: Appendix
Strictly Confidential Subject to CA / NDA Appendix
Slide 45: Management Team
Strictly Confidential Subject to CA / NDA Management Team
Slide 46: Hertz Leadership
Strictly Confidential HERTZ LEADERSHIP Subject to CA / NDA Paul E. Stone, President and Chief Executive Officer Mr. Stone has served as President and Chief Executive Officer and as a director of Hertz since May 2020. Mr. Stone previously served as Executive Vice President and Chief Retail Operations
Slide 47: Hertz Leadership (Cont'd)
Strictly Confidential HERTZ LEADERSHIP (CONT’D) Subject to CA / NDA Kenny Cheung Scott Massengill Darren Arrington M. David Galainena Executive Vice President of Senior Vice President & Treasurer Executive Vice President, Executive Vice President Finance, Chief Operational Revenue Management General
Slide 48: Cost Cutting Actions
Strictly Confidential Subject to CA / NDA Cost Cutting Actions
Slide 49: Strategic Initiatives – Big Initiatives DOE Cost Out Actions
Strictly Confidential STRATEGIC INITIATIVES – Subject to CA / NDA BIG 4 INITIATIVES DOE COST OUT ACTIONS Driving Cost Out…Total DOE ~$1.2B Annual Savings Dynamics Labor Costs1 Maintenance2 . RoY spend in line with transactions ($0.4B) ($0.06B) . Big 4 Initiatives…~($0.58B) Q2 Actual Q2 Actual (36%)
Slide 50: Capital Structure
Strictly Confidential Subject to CA / NDA Capital Structure
Slide 51: Current Capital Structure
Strictly Confidential CURRENT CAPITAL STRUCTURE Subject to CA / NDA As of 5/22/2020, All non-U.S. facilities estimated in USD. Does not include interest accrued following the petition date ($ in millions) Amount Outstanding Non-Vehicle Debt Senior RCF $615 Senior Term Loan 656 Total First Lien Debt
Slide 52: Used Car Market Overview
Strictly Confidential Subject to CA / NDA Used Car Market Overview
Slide 53: U.S. RAC - Used Car Values and YTD MMR Fleet Valuation
Strictly Confidential U.S. RAC - USED CAR VALUES Subject to CA / NDA AND YTD MMR FLEET VALUATION . Used car values have re-bounded and are well above pre-COVID levels Manheim Used Vehicle Index Manheim Rental Index NADA Auction vs Retail 150 16,800 110 16,400 105 +1% 145 +6% +3% +6% 16,000 100 140 1
Slide 54: Organizational Chart
Strictly Confidential Subject to CA / NDA Organizational Chart
Slide 55: Organization Chart
Strictly Confidential ORGANIZATION CHART Subject to CA / NDA Hertz Global Holdings, Hertz Global Holdings, Inc. Inc. (DE) R Rental Car Intermediate and its Debtor and Non-Debtor Affiliates Holdings, LLC (DE) The Hertz Corporation (DE) Hertz Hertz Firefly Hertz Navigation Hertz Executive Hertz Hertz
Slide 56: Unencumbered Asset Overview September 2020
Strictly Confidential Subject to CA / NDA Unencumbered Asset Overview September 2020
Slide 57: Disclaimers
Strictly Confidential DISCLAIMERS Subject to CA / NDA THIS DOCUMENT HAS BEEN PREPARED BY HERTZ AND IS FOR INFORMATION PURPOSES ONLY. BY ACCEPTING THIS DOCUMENT, YOU HEREBY ACKNOWLEDGE THAT (A) THE INFORMATION CONTAINED HEREIN (THE "CONFIDENTIAL INFORMATION") MAY CONTAIN NON-PUBLIC INFORMATION RELATI
Slide 58: Disclaimers (Cont'd)
Strictly Confidential DISCLAIMERS (CONT’D) Subject to CA / NDA Hertz Global Overview Hertz Global Holdings, Inc. is the top-level holding company of The Hertz Corporation. The Companies operate their vehicle rental business globally, primarily through the Hertz, Dollar and Thrifty brands, and operat
Slide 59: Disclaimers (Cont'd) Forward-Looking Statements
Strictly Confidential DISCLAIMERS (CONT’D) Subject to CA / NDA Forward-Looking Statements Certain statements contained in this presentation, and in related comments by the Company’s management, include “forward-looking statements.” Forward-looking statements include information concerning the Compan
Slide 60: Illustrative Overview of Potential Unencumbered Asset Categories
Strictly Confidential ILLUSTRATIVE OVERVIEW OF POTENTIAL Subject to CA / NDA UNENCUMBERED ASSET CATEGORIES . The 1L/2L creditors have reserved rights with respect to the scope of their collateral and may contend (or have contended) that the below categories are their collateral . Cash in deposit acc
Slide 61: Illustrative Overview of Potential Encumbered Asset Categories
Strictly Confidential ILLUSTRATIVE OVERVIEW OF Subject to CA / NDA POTENTIAL ENCUMBERED ASSET CATEGORIES . The Debtors, the Official Committee of Unsecured Creditors, and the Ad Hoc Noteholder Group have reserved rights with respect to collateral and may contend (or have contended) that the followin
Slide 62: Unencumbered Asset Overview
Strictly Confidential UNENCUMBERED ASSET OVERVIEW Subject to CA / NDA ($ in mm) Equity Interest in HVF II . As of September 2020 the fair market value based on NADA and Black Book of the risk fleet represented ~115% of ABS NBV Fair Market Value Basis ($M) Implied Equity - HVF / HVF II Structure 9/8/
Slide 63: Unencumbered Asset Overview (Cont'd)
Strictly Confidential UNENCUMBERED ASSET OVERVIEW (CONT’D) Subject to CA / NDA Post-Petition Receivables . Total estimated post-petition debtor receivables at July 31, 2020 of ~$366 million . Includes post-petition receivables aged less than 60 days . Expectation for post-petition receivables to con
Slide 64: Unencumbered Asset Overview (Cont'd) Summary of Inventory Assets
Strictly Confidential UNENCUMBERED ASSET OVERVIEW (CONT’D) Subject to CA / NDA ($ in millions) Summary of Inventory Assets General Description of Property (Raw Materials, Work Net Book Value of Debtor Name in Progress, Finished Goods, Other Inventory or Debtor's Interest Supplies) (July 31, 2020) Do
Slide 65: Unencumbered Asset Overview (Cont'd) Summary of Leasehold Improvements
Strictly Confidential UNENCUMBERED ASSET OVERVIEW (CONT’D) Subject to CA / NDA ($ in millions) Summary of Leasehold Improvements Net Book Value Entity General Description Jul-20 DTG Operations, Inc. Leasehold Improvement $25.9 DTG Purchase Accounting Leasehold Improvement 0.1 Dollar Thrifty Automoti
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