Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Q1 2008 Earnings Presentation
18 slides from Hertz Global's earnings presentation, Apr 28, 2008
Slide 1: 1st Quarter 2008 Conference Call
1st Quarter 2008 Conference Call April 24, 2008 Hertz Global Holdings, Inc.
Slide 2: Safe Harbor Statement
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 uncertaint
Slide 3: Today's Agenda
3 Today’s Agenda • Strategic Overview – Mark Frissora, Chairman and CEO • Operating and Financial Review – Elyse Douglas, Executive VP and CFO • 2008 Outlook – Mark Frissora, Chairman and CEO • Question & Answer Session
Slide 4: Non-GAAP Measures
4 Non-GAAP Measures The following Non-GAAP measures will be used in the presentation: • Corporate EBITDA • Adjusted Pre-Tax Income • Adjusted Net Income • Adjusted Diluted Earnings Per Share • Net Corporate Debt • Levered After-Tax Cash Flow After Fleet Growth Definitions and reconciliations of thes
Slide 5: Q1 2008 Financial Highlights
5 Q1 2008 Financial Highlights • Hertz had a solid quarter – Overcame challenging macro-economic environment $ in millions, except per share calculations Q1 2008 Q1 2007 Better / <Worse> Actual Actual vs. Q1 2007 Revenue $2,039.2 $1,921.5 6.1% GAAP Pre-Tax Loss ($55.8) ($90.6) 38.4% Net Loss ($57.7)
Slide 6: Hertz Is Well Diversified
6 Hertz Is Well Diversified • Global brand – International revenues grew 24% inclusive of currency effect – Represents 33% of consolidated revenues – Network expansion • WW R-A-C – Strong U.S. off airport market growth – Online penetration increased to 28% – Enhanced travel partnerships • WW HERC –
Slide 7: Hertz "Under Construction"
7 Hertz “Under Construction” • Continued focus on cost and efficiency initiatives – “COE” model (Center of Expertise) • Global cross-functional units to improve processes • Real Estate, Human Resources, Information Technology, Marketing, Finance – Outsourcing contracts • Information Technology (IBM)
Slide 8: Fleet Management Sensitivity
8 Fleet Management Sensitivity • Consolidated fleet holding costs = ~30% of revenues – Fleet efficiency improvement of 1 percentage point • R-A-C: $30 million per year • HERC: $7 million per year – Fleet depreciation & interest reduction of 1% • $25 million per year • Consolidated fleet purchases of
Slide 9: Fleet Portfolio Management
9 Fleet Portfolio Management • Driving to a more diverse car rental fleet – Largest single supplier at 44% four years ago, now at 26% – Over 30 different manufacturers • Objective: Lower R-A-C/HERC fleet holding cost – Strategic acquisition and disposal practices • Dealer direct purchase/sale benefi
Slide 10: Customer Focus Initiatives
10 Customer Focus Initiatives • Hertz Improvement Process (HIP) – Over 13,000 employees trained – Training additional 1,500 employees in 2008 – 60% of consolidated revenues covered by year end • Net Promoter Score (NPS) – Customer satisfaction improving • North America R-A-C: +9 points (year-over-ye
Slide 11: Car Rental Commentary
11 Car Rental Commentary • Domestic – RPD <2.9%> due to price pressure and mix shift • Online leisure and off-airport in U.S. – Average rental length: +5.6% – Transaction days: +2.0% • International – RPD <2.8>% due to mix shift – Average rental length: +6.4% • Europe (+7.9%): Growth in vans, monthl
Slide 12: HERC Commentary
12 HERC Commentary • Q1 revenue growth of 5.4% – U.S. construction market softness – Continued strength in industrial and oil-related activity – Quilovat and All Reach Equipment acquisitions • Fleet age of 30.8 months – relatively young • Fleet capital expenditure YTD $ in millions Q1 2008 Maintenan
Slide 13: Q1 2008 Consolidated Highlights
13 Q1 2008 Consolidated Highlights • Solid performance in challenging quarter $ in millions, except per share calculations Q1 2008 Q1 2007 Better / <Worse> Actual Actual vs. Q1 2007 Revenue $2,039.2 $1,921.5 6.1% GAAP Pre-Tax Loss ($55.8) ($90.6) 38.4% Net Loss ($57.7) ($62.6) 7.8% Loss per Share ($
Slide 14: Fleet Efficiency & Residual Update
14 Fleet Efficiency & Residual Update • Fleet efficiency* year-over-year – WW R-A-C: +0.9 pps • Fleet initiatives – WW HERC: <2.6> pps • Fleet rebalancing • U.S. residual values under pressure year-over-year – Manheim Index average for Q108: <4.7%> – Hertz average for Q108: <89 bps> • Younger, more
Slide 15: Debt and Liquidity Highlights
15 Debt and Liquidity Highlights • Ample room under existing covenants – Consolidated leverage ratio 3.0:1 (maximum 5.25:1) – Consolidated interest coverage 4.0:1 (minimum 2.0x) • Total liquidity of $5.6 billion – $3.5 billion fleet financing – $1.4 billion corporate credit facilities – $729 million
Slide 16: Update on Taxes
16 Update on Taxes Q1 2008 FY 2008 Actual Projected 5.3% 34.0% $8.9 $65 Cash taxes (mlns) Effective tax rate • Q1 GAAP effective income tax rate is low due to the interaction between interim period tax accounting treatment (FIN 18) and the seasonality of our business • Hertz not expecting to pay mat
Slide 17: Cash Flow Update
17 Cash Flow Update • LTM Levered after-tax cash flows after fleet growth were $197 million Q108 vs. $462 million Q107 – Higher earnings: $112 million – Improved working capital: $170 million – Lower HERC fleet investment: $26 million – Higher R-A-C net equity need: $496 million • Cash flows reduced
Slide 18: 2008 Full Year Guidance Affirmed
18 2008 Full Year Guidance Affirmed • First half of 2008 more challenging than second half Expected range Increase vs. 2007 Total Revenue* $8,900 - $9,000 2.5% - 3.6% Corporate EBITDA $1,575 - $1,615 2.2% - 4.8% Adjusted Pre-Tax Income $725 - $750 9.7% - 13.5% Adjusted Net Income** $450 - $470 9.8%
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