Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — FY2015 Earnings Presentation
32 slides from Hertz Global's earnings presentation, Mar 1, 2016
Slide 1: 4Q & FY2015 Earnings Call
4Q & FY2015 Earnings Call March 1, 2016 8:00am ET
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: Non-GAAP Measures
3 Non-GAAP Measures THE FOLLOWING NON-GAAP* MEASURES WILL BE USED IN THE PRESENTATION: Adjusted corporate EBITDA Adjusted corporate EBITDA margin Adjusted pre-tax income Adjusted net income Adjusted diluted earnings per share (Adjusted EPS) Revenue per available car day Total RPD Net depreciation pe
Slide 4: Agenda
4 Agenda BUSINESS OVERVIEW John Tague President & Chief Executive Officer Hertz Global Holdings FINANCIAL RESULTS OVERVIEW Tom Kennedy Chief Financial Officer Hertz Global Holdings HERC OVERVIEW Larry Silber President & Chief Executive Officer Hertz Equipment Rental
Slide 5: 2015 Drivers and Transactions
5 2015 DRIVERS • Realized global cost savings of ~$230 million • Executed U.S. RAC fleet refresh, leveraging higher return alternative sales channels • Increased W.W. RAC fleet efficiency by 100 bps • Increased customer satisfaction scores worldwide • Integrated Hertz, Dollar and Thrifty systems • W
Slide 6: Quarterly Overview
TOM KENNEDY CHIEF FINANCIAL OFFICER Hertz Global Holdings Quarterly Overview
Slide 7: 4Q:15 Consolidated Results
7 4Q:15 Consolidated Results GAAP 4Q:15 Results 4Q:14 Results YoY Change Revenue $2,413 $2,559 (6)% Income (loss) before income taxes $49 $(284) NM Net Income (loss) $70 $(234) NM Diluted earnings (loss) per share $0.16 $(0.51) NM Diluted shares outstanding 441 459 (4)% Non-GAAP* Adjusted Corporate
Slide 8: Consolidated Cost Savings
8 Consolidated Cost Savings • FY:15 realized ~$230M; exceeding target - 4Q:15 realized ~$75M Cost Initiatives Support Higher YoY Profit Margin Corporate/ Operations Overhead • Employee benefits redesigned • Eliminating Navigation Solutions redundancies • Closing unprofitable off-airport facilities •
Slide 9: Worldwide RAC Revenue Overview
9 FY:15 (U.S., Int’l, Donlen) 4Q:15 (U.S., Int’l, Donlen) Worldwide RAC Revenues $9.0B+ $2.0B+ Worldwide RAC Adj. Corporate EBITDA Margin 10% 5% Margin Growth YoY ~300bps NM US RAC FY:15 Revenue by Location Type Excludes Donlen FY:15 Revenue By Geography Excludes Donlen 75%25% 74% 26% Worldwide RAC
Slide 10: 2H:15 Revenue Efficiency Improved YoY
10 2H:15 Revenue Efficiency Improved YoY 0.3%1.0% 1Q 2Q 3Q 4Q Note: Total RPD calculated using Total Revenue less ancillary retail car sales revenue 1 RACD calculated as Total Revenue / number of days in period X average total owned fleet size; captures the combined result of both revenue management
Slide 11: 4Q:15 U.S. RAC Total Revenue
11 4Q:15 U.S. RAC Total Revenue • Airport revenue: - Highly competitive market pricing • Top-tier markets with significantly more competitors experienced supply/demand imbalance - Volume growth in higher yielding inbound and leisure rentals - Lower business demand, primarily driven by weakness in en
Slide 12: 4Q:15 U.S. RAC Ancillary Revenue
12 4Q:15 U.S. RAC Ancillary revenue per transaction day, excluding fuel-related products, increased 6% YoY • Driving ancillary revenue growth through better pricing, technology and product presentation Improving revenue execution and systems capabilities • Deploying new pricing strategies and survei
Slide 13: U.S. RAC Fleet Management
13 77% 79% 76% 75% 80% 75% 73% 75% 83% 79% 1Q 2Q 3Q 4Q 2013 2014 2015 U.S. RAC Fleet Management • FY:15 monthly depreciation per unit $267, a 9% improvement YoY - 4Q:15 monthly depreciation per unit $269, a 26% improvement YoY - Residual values remained strong throughout year - Rightsized fleet, FY:
Slide 14: 4Q:15 U.S. RAC Cost Management
14 4Q:15 U.S. RAC Cost Management • 4Q:15 direct operating expense as a % revenue decreased 230 bps YoY • Fleet refresh significantly reduced maintenance expense • Transportation costs decreased due to improved fleet management • Labor productivity improved due to enhanced scheduling tools • Fuel ex
Slide 15: 4Q:15 International Rental Car
15 4Q:15 International Rental Car • 4Q:15 Revenue increased 3% YoY, excluding FX - Total RPD 3% higher, in constant currency, benefitting from higher yielding insurance replacement and inbound business - Volume flat due to challenging macroeconomic conditions in Canada and Brazil European volume i
Slide 16: HERC Overview
HERC OVERVIEW LARRY SILBER PRESIDENT & CHIEF EXECUTIVE OFFICER Hertz Equipment Rental
Slide 17: HERC Transforming the Business
17 HERC Transforming the Business Organizational Redesign • Align sales and fleet by removing silos • Align compensation to drive performance and EBITDA • Align territories to drive new accounts • Target specific metropolitan markets to drive sales Fleet Optimization • Consolidate fleet spend • Enha
Slide 18: 4Q:15 and FY:15 Pricing and Volume
18 4Q:15 and FY:15 Pricing and Volume 4Q:15 FY:15 Worldwide (0.7)% 0.3% North America (0.6)% 0.5% 4Q:15 FY:15 Worldwide (2.6)% 1.6% North America 0.9% 2.7% Assumes constant FX rates Pricing and volume affected by weakness in upstream oil & gas markets PRICING VOLUME
Slide 19: New Account Revenue Offsets Impact of Upstream Oil & Gas
19 4Q:15 and FY:15 New Account Revenue Offsets Impact of Upstream Oil & Gas % of Total Revenue % Change YOY Total revenue, excl. upstream oil & gas 80% 13% Upstream oil & gas 20% (33)% % of Total Revenue % Change YOY Total revenue, excl. upstream oil & gas 77% 12% Upstream oil & gas 23% (24)% Total
Slide 20: Focus on Revenue Growth and Controlling Costs
20 Revenue Growth • New account revenue in North America increased 42% in 4Q:15 YoY and 52% for the full year • Local revenue as a percent of total business increased 330 basis points in 4Q:15 • Diversifying account mix to drive volume, reduce risk and improve pricing Controlling Costs • Redeployed
Slide 21: HERC $ Utilization a Key Metric
21 HERC $ Utilization a Key Metric: Targeting Improvement WW Fleet (in millions)WW $ Utilization* *Assumes constant FX rates and excludes France and Spain operations Utilization lower YoY due to impact of upstream oil and gas markets, but in line with 3Q:15 534 433 445 2013 2014 2015 Net Fleet Purch
Slide 22: Adjusted Corporate EBITDA Growth, Excl. Upstream Oil & Gas
22 Adjusted Corporate EBITDA Growth, Excl. Upstream Oil & Gas, Improved Each Quarter New initiatives began to take hold in second half of 2015 Adj. Corp. EBITDA* (YOY % Δ) 1Q 2Q 3Q 4Q FY Excl. upstream oil & gas 7% 7% 12% 21% 12% Total (7)% (9)% (4)% (2)% (5)% *Data is based on constant FX rates and
Slide 23: 2016 WW HERC Guidance
23 2016 WW HERC Guidance WW HERC 2016 Guidance Adjusted Corporate EBITDA*: $600 to $650M Net Fleet CapEx: Approximately $400-$425M *Adjusted Corporate EBITDA Guidance excludes the standalone costs of being a public company
Slide 24: Our New Look and Brand
Our New Look and Brand HercRentals
Slide 25: RAC and HERC Separation Update
25 • Form 10 Update - Initial Form 10 filed 12/21/15 - Amendment #1 filed 2/4/16 • Operational Readiness Update - Senior management team in place - Transition services agreement under review - Other governance and corporate matters on track • Capital Markets Update - Flexibility in leverage ratio ta
Slide 26: Cash Flow / Balance Sheet Overview
TOM KENNEDY CHIEF FINANCIAL OFFICER Hertz Global Holdings CASH FLOW / BALANCE SHEET OVERVIEW
Slide 27: Free Cash Flow
27 Free Cash Flow ($ in millions) 2015 2014 GAAP Pretax Income $341 $(23) PP&E (non fleet) depr. exp. + amortization exp. 412 412 Cash Taxes (34) (64) Net Working Capital/Other (77) 173 Operating Cash Flow excl. fleet depr. add-back $642 $498 RAC Fleet Growth (net capex + depr. exp. & net fleet fina
Slide 28: Liquidity and Debt Overview
28 • Highest level of liquidity since 2011 • No meaningful Corporate debt maturities until 2018 (excluding ABL, which is primarily secured by HERC assets) • Fleet debt funds RAC and Donlen fleet-related assets - Largely non-recourse to operating companies - 1Q:15 issued ~$1B Term ABS notes to replac
Slide 29: Refinancings
29 Refinancings 4Q:15 Actions Completed • 4Q:15 - Issued $600M U.S. RAC term ABS notes • 4Q:15 - Extended $3.325B of commitments to U.S. RAC securitization facilities until October 2017 • 4Q:15 - Extended €400M of commitments to the European securitization facility until October 2017 2016 Actions Co
Slide 30: Outlook
OUTLOOK
Slide 31: FY:2016 Financial Guidance
31 FY:2016 Financial Guidance Revised FY:2016 assumptions include: • Advanced economies global GDP growth of 2.1%1 - U.S. GDP growth of 2.5%1 • U.S. RAC residual decline of ~2.5% • $350M incremental RAC cost savings • HERC net non-fleet capex of ~$50M - Included in Consolidated guidance • HERC net f
Slide 32: Q&A
Q&A