Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Investor Day (June 2008)
126 slides from Hertz Global's investor day presentation, Jun 2, 2008
Slide 1: Hertz Global Holdings Analyst Meeting May 28, 2008
0 Hertz Global Holdings, Inc. (NYSE: HTZ) Analyst Meeting May 28, 2008
Slide 2: Meeting Agenda
1 Meeting Agenda Welcome Overview Financial Overview U.S. Rent-A-Car - State of the Business International Rent-A-Car - State of the Business Sales Break HERC - State of the Business Global Supply Chain Management Hertz Transformation Innovation Closing Questions & Answers Lauren Babus Mark P. Friss
Slide 3: Forward-Looking Statements
2 Forward - Looking Statements Certain statements contained in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements give our current expectations or forecasts of future events and our future performance and do
Slide 4: Disclosure on Financials in Presentation
3 Disclosure on Financials in Presentation Amounts shown in this presentation, unless otherwise indicated, are for Hertz Global Holdings, Inc., (HGH), the ultimate parent company of The Hertz Corporation (THC). GAAP and non-GAAP profitability metrics forTHC, the wholly owned operating subsidiary, ar
Slide 5: Non-GAAP Measures and Terms
4 Non-GAAP Measures and Terms The following non-GAAP measures and terms will be used in the presentation: •LTM • EBITDA • Corporate EBITDA • Adjusted Pre-Tax Income • Adjusted Net Income • Adjusted Diluted Earnings Per Share • Net Corporate Debt • Net Fleet Debt • Corporate Restricted Cash • Restric
Slide 6: Hertz Management Introductions
5 Hertz Management Introductions Mark P. Frissora
Slide 7: Management Presenters
6 Management Presenters Mark P. Frissora Chairman of the Board and Chief Executive Officer Elyse Douglas Executive Vice President & Chief Financial Officer Lois Boyd Senior Vice President, Process Improvement & Project Management Joseph Eckroth Senior Vice President & Chief Information Officer Josep
Slide 8: Management Attendees
7 Management Attendees Jeffrey Zimmerman Frank Camacho Jatindar Kapur Scott Sider Lauren Babus Alan Katz Senior Vice President, General Counsel and Corporate Secretary Staff Vice President, Marketing - Americas Rent-A-Car Senior Vice President, Finance & Corporate Controller President, Off-Airport O
Slide 9: Company Overview
8 Company Overview Mark P. Frissora
Slide 10: Our Goal
9 Our Goal “To be the lowest cost, highest quality, and most customer focused company in the global rental markets we serve”
Slide 11: Business Operating System — Linking Strategy to Results
10 Business Operating System — Linking Strategy to Results Strategic Initiatives Customer Satisfaction Strengthen Brank – All Segments Innovative Products/Services Improve CRM Systems World Class Website • Net Promoter Score (all RAC units) • Customer External Surveys • Channel Market Share • Turndo
Slide 12: Prior Organizational Structure
11 Prior Organizational Structure Michel Taride Joseph Nothwang EVP & President. EVP & President, Vehicle Rental & Leasing, Hertz Europe Ltd. The Americas and Pacific LeighAnne Baker SVP and Chief Don Serup Staff VP Internal Audit Human Resource Officer Lauren Babus Staff VP, Investor Relations Elys
Slide 13: Hertz COE Matrix Organization
12 Supply Chain/fleet J. Thomas Finance E. Douglas HR L. Baker IT J. Eckroth Sales R. Stuart Communications R. Broome Legal J. Zimmerman Marketing F. Camacho U.S. RAC Joe Nothwang G. Udall D. Trimm J. Johnson, P. Wright, M. Weinstein A. Jackson R. McEvily L. Diliberto Worldwide HERC Gerry Plescia J.
Slide 14: Leading Franchises
13 Leading Franchises Rent-A-Car (RAC) LTM 3/31/08 Revenue $7.0 billion +8.2%* Corp. EBITDA $729.6 million +10.0%* Adj. Pre-Tax $607.4 million +23.5%* #1 airport market share in U.S. and at 69 major airports in Europe #1 worldwide general use car rental brand #1 brand in each of the business and lei
Slide 15: Key Business Macros
14 Key Business Macros U.S. slowdown and credit market tightening impacts rental activity - Possible extension worldwide Rising fuel costs Strong global demand in select markets - Developing countries (RAC/HERC) - Oil/gas exploration and refinery (HERC) - Power generation and infrastructure projects
Slide 16: Hertz Growth Initiatives
15 Hertz Growth Initiatives RAC HERC Off-airport Market expansion Leisure brand (e.g., industrial) Selective acquisitions and joint ventures Geographic expansion (e.g., China and India) Geographic expansion (e.g., Eastern Europe and China) Product segmentation Car sharing Chauffeur drive Location op
Slide 17: Transforming the Consumer Rental Experience
16 Transforming the Consumer Rental Experience Delivering an intuitive customer experience Constantly seeking to understand different customers’ needs and expectations Always aiming to transform the rental experience Booking Changing the way the world rents Awareness Shopping/ Planning Enrollment Po
Slide 18: Projected Cost Improvement Progress
17 Projected Cost Improvement Progress Project Alpha Reduce costs/delayer Define 200+ sub-processes & 15 domains Basis for Project Genesis European restructuring Establish Project Management office Kicked off Project Genesis: Identify BPR projects Develop COEs Assess BPO COEs created IT, Property, F
Slide 19: Net Promoter Score (NPS)
18 Net Promoter Score (NPS) Customer satisfaction metric Customers fill out a survey (via email/phone) Question: “How likely are you to recommend Hertz to a friend or colleague?” Rating: 10 point scoring (Detractors: 0-5; Passives: 6-7; Promoters: 8-9) Net Promoter Score: subtract “Detractors” from
Slide 20: Customer Satisfaction NPS Trend
19 Customer Satisfaction NPS Trend N.A. and Europe RAC exceeded ‘07 NPS targets of 50 and 40, respectively 52.3 U.S. improved 16% YoYin April, Europe improved 29% YoY in April Jan 07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 08 Feb Mar Apr Total North America RAC Europe RAC 55.0 50.0 45.0 40.0
Slide 21: 2008 Employee-Focused Initiatives
20 2008 Employee-Focused Initiatives Employee Stock Purchase Plan Continued HIP Training Leadership Awards Pulse Survey (May & December) Performance Management and Employee Development System Accelerate Action on Employee Satisfaction Initiatives
Slide 22: Hertz Reinvestment Strategy
21 Hertz Reinvestment Strategy 2008 Incremental Investments to Become a “Better and Better” Hertz Incremental Spending FY-2007 Q1-2008 Our Brand $25MM $5MM Advertising - On and Offline NeverLost Expansion and Enhancement Green Collection Promotion Simply Wheelz Pilot in Orlando and Spain HERC Produc
Slide 23: Delivering On Our Strategy
22 Delivering On Our Strategy $800 Million Growth in Annual Revenue since IPO* LTM 9/30/06: $7,911 2007: $8,686 Expanded Adjusted Pre-Tax Margin by 240 bps since IPO* LTM 9/30/06: 5.2% 2007: 7.6% Increased Adjusted Net Income by 61% since IPO* LTM 9/30/06: $255 2007: $410 Generated Over $900 Million
Slide 24: Financial Overview
23 Financial Overview Elyse Douglas
Slide 25: Consolidated Historical Financials (Adjusted)
24 Consolidated Historical Financials (Adjusted) ($in millions) CAGR 2005 PF 2006 ACT 2007 ACT 05PF-07 Revenues: Car Rental Segment $6,046.8 $6,378.0 $6,920.6 7.0% Equipment Rental Segment 1,415.3 1,672.6 1,755.9 11.4% Other 7.1 7.8 9.1 13.2% Total Revenues $7,469.2 $8,058.4 $8,685.6 7.8% Expenses D
Slide 26: Historical Segment Income Statement (Adjusted)
25 Historical Segment Income Statement (Adjusted) ($in millions) WW RAC Revenues % Growth Expenses: Direct Operating and Selling, General, and Administrative Depreciation of Revenue Earning Equipment Total Expenses Before Interest Interest Expense, Net Adjusted Pre-Tax Income % of Revenues Corporate
Slide 27: Cash Flow Dynamics
26 Cash flow Dynamics Twelve months ended Twelve months ended December 31, March 31, ($in Millions) 2006 2007 2007 2008 Corporate EBITDA $1,378.7 $1,541.5 $1,424.8 $1,536.3 HERC Maintenance CapEx, Net (236.5) (272.8) (246.3) (288.3) Non-Fleet CapEx, Net (175.3) (154.6) (158.5) (169.8) Changes in Wor
Slide 28: Deleveraging Strategy
27 Deleveraging Strategy Free cash flow expected to exceed $1B over the 2007-2010 period Cash Flow to be used for: - Corporate debt retirement - Re-investment in our company - Stock repurchase Limitations on Stock/Debt buy back - Effectively governed by ability to dividend money up to HGH to buy bac
Slide 29: Consolidated Balance Sheet
28 Consolidated Balance Sheet ($ in millions) As of December 31, As of March 31, 2005ACT 2006ACT 2007 ACT 2007 ACT 2008ACT Assets Cash and equivalents and restricted cash $ 1,133.1 $ 1,227.0 $ 1,391.2 $ 668.7 $ 865.4 Other assets 2,325.1 2,138.6 2,127.6 1,907.9 2,001.5 PP&E, net 1,390.0 1,368.1 1,34
Slide 30: Key Credit Statistics
29 Key Credit Statistics ($ in millions) As of December 31, As of March 31, 2005 ACT 2006 ACT 2007 ACT 2007 ACT 2008 ACT Net total debt/Total net capital 83.4% 81.3% 78.4% 81.7% 79.1% Total corporate debt/Total corporate capital1 71.8% 67.6% 62.2% 66.8% 63.9% Net total debt/Total stockholders’ equit
Slide 31: Leverage and Liquidity
30 Leverage Liquidity As of March 31, 2008 $ 6,552 $ 4,217 $ 10,769 $ 3,550 $ 1,536 3.Ox 2.7 x Strong Capital Structure and Liquidity Position ($ in Millions) Net Fleet Debt Net Corporate Debt Total Net Debt LTM EBITDA LTM Corporate EBITDA Total Net Debt/LTM EBITDA Net Corp. Debt/LTM Corp. EBITDA As
Slide 32: Global Debt Maturity Schedules
31 Global Debt Maturity Schedules ($ in millions) Corporate Debt Maturity Schedule $1,887 $2,176 Fleet Debt Maturity Schedule $5,001 , $25 2013 2014 2016 2018 2028 (1) Current revolving debt matures on its respective facility expiration. (2) ABS debt maturities are based upon expected final payment
Slide 33: Excess Liquidity Capacity
32 Excess Liquidity Capacity ($ in millions) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Q1’06 Q2’06 Q3’06 Q4’06 Q1’07 Q2’07 Q3’07 Q4’07 Fleet Corporate Cash * Excess debt facility capacity (subject to borrowing base limitations) plus unrestricted cash. Q1’08
Slide 34: Consolidated Debt Covenant Compliance
33 Consolidated Debt Covenant Compliance Maximum Allowed Calculated Ratio Consolidated Leverage Ratio Interest Coverage Ratio 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 6.25 6.25 5.75 6.25 5.75 5.25 3.53 3.29 3.13 3.11 2.86 3.03 Favorable 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 12/31/06 3/31/
Slide 35: ABS Financing Current Status
34 ABS Financing Current Status Upcoming Maturities - 2008 Maturities: $55 million; VFN capacity reduces from $1.5B-$1.25B - 2009 Maturities: $925 million; VFN capacity reduces from $1.25B-$1.OB - Excess U.S. Fleet Financing capacity as of Mar. 31, 2008: approximately $1.6 billion - Maturities are b
Slide 36: Interest Rate Exposure
35 Interest Rate Exposure Debt Mix as of March 31, 2008 Fleet Corporate Total Fixed 69% 65% 67% Floating 31% 35% 33% Total 100% 100% 100% 1% change in interest rates as of March 31, 2008 = estimated $12.0M change in interest expense over a 12 month period Continue to monitor exposure to identify if
Slide 37: Estimated Annual Profitability Sensitivity
36 Estimated Annual Profitability Sensitivity ($ in Millions) Effect on Income Before Income Taxes U.S. RAC Int’l RAC HERC +/- 1% Volume (Transactions) $10-$12 $7-$9 $4-$5 +/- 1% Pricing - (Incremental after covering commissions, rebates, bad debt & general inflation) $30-$35 $20-$22 $12-$14 +/- 1PP
Slide 38: Competitive Benchmarking: WW RAC vs. ABG and DTG
37 Competitive Benchmarking: WW RAC vs. ABG and DTG–Q1-07/Q1-08 Income Statement Data Revenue Corporate EBITDA(3) Margin Adjusted Pre-Tax Income Margin (1) Excludes vacation accrual and swap loss. (2) Excludes $13 million of losses due to mark-to-market hedges in Q1 2008 and net separation credits o
Slide 39: Competitive Benchmarking: Hertz Global Holdings vs. ABG & DTG
38 Competitive Benchmarking: Hertz Global Holdings vs. ABG & DTG–Q1-07/Q1-08 $1,921.5 $2,039.2 6.1% $16.1 $17.1 6.2% $238.0 $235.0 -1.3% $6.3 $6.5 3.2% Q1 2007 Q1 2008 VAR % $1,365.0 $1,445.0 5.9% $5.0 ($5.0) -200.0% 0.4% -0.3% -71 bps $62.0 $44.0 -29.0% $3.3 $0.03 ($3.3) -200.0% ($0.03) -200.0% $39
Slide 40: Competitive Benchmarking: WW RAC vs. Avis Europe
39 Competitive Benchmarking: WW RAC vs. Avis Europe – 2008/2007 (In $ millions) Income Statement Data Revenue Hertz WW RAC(1) FY 2006 FY 2007 VAR % $6,378.0 $6,920.6 8.5% Avis Europe PLC (2,3,4) FY 2006 FY 2007 VAR % $1,850.1 $1,954.7 5.7% Corporate EBITDA(5) $650.9 $741.7 13.9% $167.6 $191.8 14.4%
Slide 41: Competitive Benchmarking: Hertz vs. Avis Europe
40 Competitive Benchmarking: Hertz Global Holdings vs. Avis Europe - 2006/2007 (In $ millions) Key Financial Metrics Revenues Adjusted Pre-Tax Income Margin Corporate EBITDA(5) Adjusted Net Income $486.7 7.6% 160bps $1,378.7 $1,541.5 11.8% 2.8% 40 bps (1) Adjusted Pre-Tax Income excludes non-cash ef
Slide 42: Competitive Benchmarking: WW HERC vs. RSC and URI
41 Competitive Benchmarking: WW HERC vs. RSC and URI –Q1-07/Q1-08 (In $ millions) Corporate EBITDA(2) Margin Adjusted Pre-Tax Income Margin (1) For comparabililty purposes, exlcludes used equipment sales. (2) Net of gain on sale of used equipment. Hertz WW HERC Income Statement Data Revenue( 1) RSC
Slide 43: Competitive Benchmarking: Hertz vs. RSC & URI
42 Competitive Benchmarking: Hertz Global Holdings vs. RSC & URI – Q1-07/Q1-08 (In $ millions) Key Financial Metrics Revenue(1) Adjusted Pre-Tax Income Margin Corporate EBITDA(2) Adjusted Net Income(3) Adjusted EPS(4) (1) Adjusted Pre-Tax Income excludes non-cash effects of purchase accounting, amor
Slide 44: U.S. Rent-A-Car
43 U.S. Rent-A-Car Joe Nothwang
Slide 45: U.S. R-A-C Revenue Mix
44 U.S. R-A-C Revenue Mix 2007 Total U.S Market = $20+ Bn Diversified Business... Hertz Revenue Mix U.S. Airport $10.8Bn 52% U.S. Off-Airport $10.0Bn 48% U.S. Off-Airport RAC $0.9Bn 23% U.S. Airport RAC (Leisure) $1.7Bn 44% 33% Source: Auto Rental News LTM 3/31/08 Revenue = $3.9Bn U.S. Airport RAC (
Slide 46: Key Operating Metrics
45 Key Operating Metrics 2004 2005 2006 2007 U.S. RAC Revenue (in millions) $ 3,792.1 $ 4,197.7 $ 4,373.9 $ 4,566.2 % Growth 9.7% 10.7% 4.2% 4.4% Transactions (in thousands) 20,227 21,081 20,940 21,547 % Growth 10.7% 4.2% -0.7% 2.9% Transaction Days (in thousands) 81,262 86,116 85,716 88,988 % Growt
Slide 47: Key Operating Metrics
46 Key Operating Metrics Q1 2007 Q1 2008 U.S. RAC Revenue (in millions) $ 1,081.3 $ 1,079.8 % Growth 4.4% -0.1% Transactions (in thousands) 5,073 4,900 % Growth 3.2% -3.4% Transaction Days (in thousands) 20,846 21,264 % Growth 3.2% 2.0% Rental Rate Revenue per Transaction Day $ 44.39 $ 43.10 % Growt
Slide 48: U.S. RAC NPS Scores and Operating Strategy
47 U.S. RAC NPS Scores Net Promoter Score 55.0 50.0 45.0 40.0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘07 ‘08 ‘08 ‘08 ‘08 Consumer friendly products and services Website enhancements Varied Collections U.S. RAC Operating Strategy Revenue Growth Process Imp
Slide 49: U.S. RAC Operating Metrics
48 U.S. RAC Operating Metrics Fleet Efficiency Average Fleet Age 11.1 11.2 10.8 9.9 % of Risk Vehicles 2005* 2006* 2007* Q1:08* * Vehicle count at period end Residual Values 78.3%* 69.4% 75.8% 75.1% 75.0% 2006 2007 Q1:08 Q1 ’07 Q2 ’07 Q3 ’07 Q4 ’07 Q1 ’08 76.6% 77.5% 79.6% 77.4% 76.8% 73% 73% 80% 70
Slide 50: U.S. RAC Airport Segmentation
49 U.S. RAC Airport Segmentation Airport Industry Revenue Mix Business Leisure 2007 Estimate Source: Auto Rental News and Hertz Management estimates Distinct Customer Segments Hertz Airport Revenue Mix Business Leisure 42% 58% 44% 56% 2007 Actual
Slide 51: U.S. RAC Off-Airport Market Composition
50 Hertz Revenue Mix 2007 Actual * Includes insurance, dealership, body shop and other replacement U.S. RAC Off-Airport Market Composition Distinct Customer Segments Industry Revenue Mix Replacement* Leisure Business Leisure Business Replacement* 34% 62% 20% 46% 23% 15% 2007 Estimate Source: Auto Re
Slide 52: Off-Airport Location and Revenue Growth
51 Off-Airport Location and Revenue Growth Favorable Cost Structure Operating expense is approx. 30% lower Lower commission/concession fees Longer rental length Greater fleet efficiency Less expensive, smaller cars Depreciation expense 15% less than airport Smaller facilities Limited hours of operat
Slide 53: Off-Airport Marketing Strategy
52 Off-Airport Marketing Strategy Hertz’s Specialized Product Offering Convenient pick up service Neighborhood locations/Nationwide footprint On-site in dealerships and body shops Appeal to Gold members and customers who only rent Hertz when away from home Sales Process Seamless integration with ins
Slide 54: U.S. RAC: Strategic Partnerships and Accounts
53 U.S. RAC: Strategic Partnerships and Accounts Airlines: AirTran, Continental, JetBlue, Spirit, United, US Airways Associations: AAA, ABA Hotels: Marriott, InterContinental Hotels Credit Cards: Amex Travel Agency Partners: AAA, American Express, BCD, Vacation.com Online Partnerships: Expedia, Hotw
Slide 55: Opportunities
54 Opportunities Process improvement and cost efficiencies Global supply chain management - Improved fleet acquisition, planning and disposal Geographic expansion: China, India and Latin America Account penetration — Insurance replacement — Small business — Travel industry partnerships
Slide 56: International Rent-A-Car
55 International Rent-A-Car Michel Taride
Slide 57: Global Network Composition
56 Global Network Composition Strong corporate network — represents over 80% of all cars operated under Hertz brand About 1/3rd of Hertz’s worldwide car rental revenues comes from outside the U.S. Europe Americas Asia Pacific Belgium Brazil Australia Czech Republic Canada New Zealand France Puerto R
Slide 58: Key Operating Metrics
57 Key Operating Metrics 2004 2005 2006 2007 International RAC Revenue (in millions)1 $ 1,836.3 $ 1,954.3 $ 2,079.0 $ 2,252.1 % Growth 9.6% 6.4% 6.4% 8.3% Transactions (in thousands) 6,603 6,839 7,064 7,430 %Growth 10.8% 3.6% 3.3% 5.2% Transaction Days (in thousands) 33,984 35,986 37,535 40,365 %Gro
Slide 59: Key Operating Metrics
58 Key Operating Metrics Q12007 Q12008 International RAC Revenue (in millions)2 $ 496.1 $ 535.5 %Growth 7.6% 7.9% Transactions (in thousands) 1,592 1,665 %Growth 6.3% 4.6% Transaction Days (in thousands) 8,066 8,975 %Growth 6.3% 11.3% Rental Rate Revenue per Transaction Day2 $ 50.74 $ 49.31 % Growth
Slide 60: Europe RAC Revenue Composition
59 Europe RAC Revenue Composition Airport/Off-Airport Mix Total Industry Hertz (Corporate & Licensee Operations) EMEA Total Revenue: $16.Bn Airport Off-Airport $7.2Bn $9.3Bn Airport Off-Airport $1.25Bn $1.25Bn Leisure $800M 32% 450M 18% Leisure $250M 10% Business $500M 20% Vans $350M 14% Replacement
Slide 61: Leading Market Positions
60 Leading Market Positions 2007 European Airport Market Share Hertz 25% Avis 22% Other 6% Sixt 11% National 10% Europcar 23% Budget 3% Company 2007 European On-Airport Market Share France Germany U.K. Italy Spain Other Total Hertz 34% 15% 27% 27% 20% 25% 25% Avis 23% 16% 24% 27% 21% 22% 22% Budget
Slide 62: Current European Business Environment
61 Current European Business Environment Good revenue growth (2007: +8.6%; Q108: +7.5%) RPD lowering (2007:+1.4%; Q108:-3.0%) more than offset by strong length increase (2007:+2.4%; Q108:+7.9%) Low cost airlines and on-line business growing double digit Eastern Europe, Middle East, Latin America and
Slide 63: European Operating Strategy
62 European Operating Strategy On-line Leisure Brand Replacement & Leasing Vans & Trucks Network Expansion Car Collections Urban Focus - Car Sharing, Hourly Rentals, Scooters Ancillary Revenues - NeverLost, DVD Players, Insurance, non RAC, Web Offering Partnerships, Associations and Travel Agents Ef
Slide 64: Europe: Recent Achievements
63 Europe: Recent Achievements (Last 12 Months) New organization structure, less costly, more effective — 2 regions — European/Global COEs — Shared services — BPO Acquisitions: Czech Republic and Slovakia, selected France and U.K. licensed locations Account gains: $61M* full year 07, $29M actual YTD
Slide 65: Europe: Strategic Partnerships and Accounts
64 Europe: Strategic Partnerships and Accounts Airlines: Air France, Aer Lingus, BMI and BMIBaby.com, Ryanair, Jet 2.com Associations: ARC (equivalent of AAA) -38 million members in 29 countries Hotels and Resorts: Disneyland Paris, Relais & Chateaux, Marriott Credit Cards: Amex and Mastercard Vehic
Slide 66: Europe Opportunities
65 Europe Opportunities Improved pricing Further acquisition of franchise and non Hertz businesses Continued product innovation Realize further benefits from restructuring and BPR Supply chain management (Fleet and non-Fleet) Improve market position in select countries, segments and accounts Rent a
Slide 67: Sales
66 Sales Bob Stuart
Slide 68: Globalization — Travel
67 Globalization — Travel International travel is thriving — 900 million international travelers +6% in 2007 • China: 50 million inbound visitors in 2006 +60% v. 2000 — 1.6 billion international travelers projected by 2020 U.S. inbound — U.S. airlines adding international capacity — Inbound travel t
Slide 69: Worldwide Travel Partners
68 Worldwide Travel Partners 34% Travel Agency Partners Airlines Online Tour Partners Partners 5% Hotels Travel Partners: Partner Mix (of Revenue) 52% Excess of $2 billion in revenues in 2007 AIR FRANCE Leisure sector driven by travel agency and airline partners KSREAN AIR Off airport sector generat
Slide 70: New Partnerships and Programs
69 New Partnerships and Programs Commercial Travel Industry Sales & Marketing Membership Sales (renewed) Insurance Replacement
Slide 71: Booking Channels: U.S. Airport & Off-Airport
70 Booking Channels: U.S. Airport & Off-Airport Hertz.com Fastest growing: +430 bps vs. 2005 Largest channel for leisure sector at more than 30% of revenue Lowest cost channel 30% Channel Mix of Revenue 2007 Hertz.com: % of Revenue 32% 23% 20% 15% 10% 2% GDS Hertz.com Phone Local Third Other Counter
Slide 72: Global Sales Organization
71 Global Sales Organization — Rent-A-Car Sales Force Structure Competitive Advantages More than 700 sales people provide broad reach globally across all segments — Corporate Relationships — Small Business Accounts —Membership Sales — Travel Industry Sales —Government — Insurance Replacement —Off Ai
Slide 73: Worldwide HERC
72 Worldwide HERC Gerry Plescia
Slide 74: HERC Worldwide Operations
73 HERC Worldwide Operations 2007 Revenues Locations 248 34 94 376 United States Canada Europe 73% 15% 12% Total
Slide 75: Key Operating Metrics — Worldwide HERC
74 Key Operating Metrics — Worldwide HERC ($ in millions) Total Revenue (including FX) % Growth 2004 $1,162.0 12.0% 346 $1,027.8 12.3% 3.7% 5.0% 2005 $1,414.9 21.8% 345 $1,256.1 22.2% 14.3% 4.7% 2006 $1,672. 1 18.2% 362 $1,478.5 17.7% 14.5% 3.3% 2007 $1,755.3 5.0% 376 $1,565.1 5.9% 3.3% 0.3% Avg. Ac
Slide 76: Key Operating Metrics — Worldwide HERC
75 Key Operating Metrics — Worldwide HERC ($ in millions) Three Months Ended March 31, 2007 2008 Total Revenue (including FX) $ 389.8 $ 410.8 % Growth 7.4% 5.4% # Branches 363 383 Rental and Rental Related Revenue (including FX) (A) $ 348.1 $ 369.0 % Growth 9.2% 6.0% Volume 5.8% 2.6% Pricing 1.7% -1
Slide 77: HERC: Macro-Environment
76 HERC: Macro-Environment 2007 2008 FW Dodge Leading Indicator Non-residential +7.0% (2.5%) U.S. Commerce Dept. Lagging Indicator Non-residential construction spend (in Q1) +12.2% +13.0%
Slide 78: Business Outlook
77 Business Outlook Earthmoving rental demand continues to soften Major competitors’ reported pricing down slightly (-1%) Aerial demand and fleet utilization remain solid Industrial plant activity, oil/gas exploration and power generation demand remains strong
Slide 79: HERC Recent Achievements
78 HERC Recent Achievements Provided generators to power the 2008 Kentucky Derby Provided generators to Yankee Stadium and Ground Zero for Pope Benedict XVI’s visit to New York in April 2008 Introduced HERC’s new website Gained penetration into ExxonMobil’s Port Arthur Refinery, $300K pump revenue p
Slide 80: Customer Segmentation
79 Customer Segmentation Top 20 U.S. Customers and Total Segmentation Continue to Change 2006 2007 Industrial 8 Industrial 10 Construction 6 Construction 5 Fragmented 6 Fragmented 5 Industrial segmentation highest in company history Industrial accounts now make up 50% of the Top 20 U.S. Customers Ex
Slide 81: U.S. Equipment Rental Fleet Strategy
80 U.S. Equipment Rental fleet Strategy HERC has one of youngest fleet amongst top competitors Reduce earthmoving equipment and increase aerial, industrial and specialty equipment Significant reduction in total fleet purchases Redeploying fleet assets to greenfields Residual Values Trend Fleet Diver
Slide 82: HERC Operating Strategy
81 HERC Operating Strategy Revenue Growth Business Efficiencies Continue shift of customer/fleet mix away from construction/earthmoving Continue product roll-out into U.S. and international markets Expand U.S. geographical footprint through greenfield openings and small acquisitions Increase interna
Slide 83: Key Business Opportunities
82 Key Business Opportunities Strong global demand in select markets - N.A. oil/gas exploration and refinery activity - Worldwide power generation - Infrastructure projects in developing countries Targeting smaller acquisitions, greenfields and joint ventures to increase global presence in Asia, Lat
Slide 84: Global Supply Chain
83 Global Supply Chain John Thomas
Slide 85: Global Supply Chain Operations
84 Global Supply Chain Operations Building a world-class Supply Chain to drive asset efficiency and improved service Global Supply Chain COE’s drive centralization and standardization Integrated processes to more effectively manage assets end-to-end More rigorous analytical tools guide improved deci
Slide 86: Global Supply Chain: Procurement - Current State
85 Global Supply Chain: Procurement - Current State Huge Transformation Underway on $1.7B Spend Global Procurement COE developed Elimination of silos & redundancy Strategic commodity plans in place Outsource partnership established with ICG Commerce Extension of our Supply Chain Procurement team Acc
Slide 87: Global Supply Chain Fleet Management
86 Global Supply Chain Fleet Management Fleet Portfolio Management enables improved decisions across the life cycle of a vehicle Define Fleet Portfolio that maximizes contribution margin Fleet Complexity Reduction Pro-actively negotiate fleet programs to maximize per-unit contribution $ Negotiate fa
Slide 88: Risk Vehicle Life Cycle Holding Cost Approach
87 Risk Vehicle Life Cycle Holding Cost Approach Drives Fleet Portfolio Optimization 1. Net 2. Financing Acquisition Cost Cost 3. Maintenance & Damage Cost 5. Holding Period 4. Sale Price 1. (Gross Cap Cost — Incentives) — 2. + Financing Cost Monthly Holding Cost = { 3. + Maintenance & Damage Cost 4
Slide 89: WW RAC Fleet Diversity Improvement
88 WW RAC Fleet Diversity Improvement Fleet purchases LTM 3/31/04 Fleet purchases LTM 3/31/08 Mercedes 2% Nissan 2%\ Fiat 3% Mitsubishi 3% Renault 4% Peugeot 4% Mazda 4% Total Purchases % Program % Risk Honda 3% Chrysler 3% Volkswagen 3% Peugeot 3% Fiat 4% Kia 4% Hyundai 4% 3/31/04 LTM 502,023 77% 2
Slide 90: Fleet Management: Reducing Fleet Complexity
89 Global Supply Chain Fleet Management Reducing fleet complexity has significant impact on Hertz Does it need to be so complicated? 2 Wheel drive 5 seats Current Fleet 4 Wheel drive 7 seats Future Fleet 2 Wheel drive 7 seats #of Dimension Options Model 321 Trim 542 Car Classes 92 Dimension Model #o
Slide 91: Fleet Management: Reduce Cost of Sale
90 Global Supply Chain Fleet Management Objective: Reduce cost of sale by $225 per car Auction Other Auction Dealer Direct + Web-based Sales Developing new car sales channels expected to save $16M by 2009 Hertz 2007 Sales Channels Hertz 2009 Expanded Sales Channels 99% 1% 70% 30%
Slide 92: Hertz Transformation
91 Hertz Transformation Lois Boyd
Slide 93: Hertz Improvement Process
92 Hertz Improvement Process HIP is a customer-focused culture changing process incorporating both Lean and Six Sigma methodologies to “drive change from within.” 2007 Lean Foundation $55M pre-tax identified – $19M delivered 9,000 people trained Implemented in 248 locations worldwide Revenue base co
Slide 94: HIP Management Examples
93 HIP Management Examples: Claims Management Labor Planning Tool Keys 50% reduction in process steps Standardized forms and work Reduction in locations Global view Potential for $10M+ annual savings Reduce overtime 15 pilot locations saved $164K in the first 2 months Rolling out globally in both HE
Slide 95: HIP — Let the People Do It!
94 HIP — Let the People Do It! Heathrow HIP hits a Orlando HIP, the vans Win, Win, Win! are out! Van Drive Employee Satisiaction - Senior Bus Drivers Van - 32 years with Hertz - They have input - They make it happen Customer Satisfaction Car Clean Drive Car Drive Car – Quick turnaround for our custo
Slide 96: Business Process Outsourcing (BPO)
95 Business Process Outsourcing (BPO) Developing partnerships with process experts to help Hertz quickly move to the next level while making our cost structure more variable Transitioning during 2008 -IT - Property - Procurement - HR sub-domain - Document Management and 2009 Partners with Partners w
Slide 97: Centers of Expertise
96 Centers of Expertise Global Centers of Expertise formed Consolidate knowledge of a field within a centralized group (frequently global) Develop service level agreement for internal business partners Benchmark against “Best in Class” operations to continuously lower cost and improve level of servi
Slide 98: Business Re-engineering Projects
97 Business Re-engineering Projects BPR Activities • Customer Care over-delivers on their target via BPR projects • CBRE (Property partner) • ICGC (Procurement partner) • IBM (IT partner) • HR COE in place • Marketing driving revenue, generating ideas - e.g., pre-pay • Global Portfolio Management an
Slide 99: Innovation
98 Innovation Joe Eckroth
Slide 100: Innovation
99 Innovation... Back Office • Global Financials • Global Human Resources • Strategic Sourcing • Enterprise Data Warehouse • Fleet Management •CMS Front Office • Hertz.com • Point of Sale • Next Generation NeverLost • Self Service • Mobile Service • RFID/GPS Employee Satisfaction Employee Productivi
Slide 101: Single Site Worldwide Website
100 Single site worldwide 16 languages and growing Consistent reservation process Consistent eMember process Local content 42 domains including franchisees Reservations Check-in Readable Barcode Mobile Access Live Chat NEED HELP? WELL CALL YOU NOW 14% call reduction 1,000 res/month>$500K in revenue
Slide 102: Web Sites Customer Service Enhancements
101 Web Sites Customer Service Enhancements Click to talk... 100-150 talk sessions daily - 60% conversion ratio at >$400 per rental Click to chat... 400 chat sessions daily “I’m very happy with the customer service I had with Bart W. by chat and I will no longer be using Enterprise, I will reserve w
Slide 103: Hertzequipment.com
102 Hertzequipment.com Electncal Tools & Equipment Compaction & Paving Equipment Lawn & Garden Equipment Melt Z’Equipment Rental Loan I v Account RENTALS SALES ACCOUNT SERVICES EQUIPMENT PROGRAMS LOCATIONS HELP I View Ceit I Noon. United States I OUR COMPANY ACCOUNT LOGIN He me login in Please note
Slide 104: Kiosk
103 Kiosk Reduced queuing time, self-paced transaction, and personal control Live Today Simply Wheelz US - 80% conversion rate - <5 minute transaction time Simply Wheelz - Spain Hertz Classic - Florida Coming this Summer Hertz “Classic” Top 25 US airports Outdoor unattended return Coming by 2009 Top
Slide 105: Innovation Initiatives
104 Innovation Initiatives Electronic capture of damage evidence with portable equipment Record customer acknowledgment at point of identification RFID Lot management control Automation of exit process - Verify car and driver - Rental or non revenue Unmanned car return Portable Rental Enable off-air
Slide 106: Innovation Initiatives
105 Innovation Initiatives 5th Generation unit under development - Embedded 3G and WiFi communications - Departure time/gate information & weather - Traffic-assisted route guidance HERC Workflow/GPS Large equipment tagged and tracked Efficient pick-up and drop-off routing Site/equipment location via
Slide 107: Getting You There Faster
106 Getting You There Faster... 4 Jal fla — Gate & Time 4 I Hertz® Customer Focused Innovation $ Reservation... Totally Online • Fast • Easy • Anywhere Self-service Check-in... Kiosk • Fast • Self-paced • Intutive In Car Updates... NeverLost 2-Way Info: • Gate & Time • Weather • Traffic Electronic R
Slide 108: Closing
107 Closing Mark P. Frissora
Slide 109: Why Hertz?
108 Why Hertz? L. Only Truly Global Rental Brand L. Most Diversified Revenue Stream i. Strongest and Improving Balance Sheet Highest Demonstrated Track Record for Efficiency Improvement L Clearest Strategies for Growth Significant Operating Leverage with Deleveraging, Cost Reduction and Growth Drive
Slide 110: Q&A
109 Q&A
Slide 111: Appendices
aes Appendices HEICZ,
Slide 112: Key Definitions
111 Key Definitions LTM Results for the twelve months ended. EBITDA* Earnings before interest expense, taxes, depreciation and amortization. Corporate EBITDA* Earnings before net interest expense (other than interest expense relating to certain car rental fleet financing), income taxes, depreciation
Slide 113: Key Definitions
112 Key Definitions Corporate Restricted Total restricted cash includes cash and equivalents that are not readily available for our normal disbursements. Total Cash* restricted cash and equivalents are restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet D
Slide 114: Key Definitions
113 Key Definitions Transaction Days Transaction days represent the total number of days that vehicles were on rent in a given period. Car Rental Rate Car rental rate revenue consists of all revenue, net of discounts, associated with the rental of cars including charges for Revenue and Rental option
Slide 115: Importance of Non-GAAP Measures
114 Importance of Non-GAAP Measures EBITDA and Corporate EBITDA provide investors with supplemental measures of operating performance and liquidity. Corporate EBITDA provides supplemental information utilized in the calculation of the financial covenants under Hertz’s senior credit facilities. Manag
Slide 116: Importance of Non-GAAP Measures
115 Importance of Non-GAAP Measures Adjusted Diluted Earnings Per Share is important to management and investors because it represents a measure of our operational performance exclusive of the effects of purchase accounting adjustments, one-time charges and items that are not operational in nature o
Slide 117: Non-GAAP Reconciliations: GAAP to Adjusted
116 Non-GAAP Reconciliations Condensed Consolidated Statement of Operations — Reconciliation of GAAP to Adjusted ($ in millions) Year Ended December 31, 2007 Year Ended December 31, 2006 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Total revenues $ 8,685.6 $ - $ 8,685.6 $
Slide 118: Non-GAAP Reconciliations: Actual to Pro Forma
117 Non-GAAP Reconciliations Condensed Consolidated Statement of Operations – Reconciliation of Actual to Pro Forma ($ in millions) Year Ended December 31, 2005 (Combined) Pro Forma Historical a justments Pro Forma Total revenues $ 7,469.2 $- $ 7,469.2 Expenses: Direct operating 4,189.3 74.5(a) 4,26
Slide 119: Non-GAAP Reconciliations: Adjusted Pre-Tax Income
118 Non-GAAP Reconciliations Adjusted Pre-Tax Income (Loss) A+(D-B) LTM March 31, 2008 B+(E-C) LTM March 31, 2007 A B C Three Months Ended March 31, 2008 2007 2006 D Year Ended December 31, 2007 E Year Ended December 31, 2006 Combined Year Ended December 31, 2005 PF Combined Year Ended December 31,
Slide 120: Non-GAAP Reconciliations: Corporate EBITDA
119 Non-GAAP Reconciliations Corporate EBITDA A+(D-B) LTM March 31, 2008 B+(E-C) LTM March 31, 2007 A B C Three Months Ended March 31, 2008 2007 2006 D Year Ended December 31, 2007 E Year Ended December 31, 2006 Combined Year Ended December 31, 2005 PF Combined Year Ended December 31, 2005 Actual ($
Slide 121: Non-GAAP Reconciliations: Net Corporate and Fleet Debt
120 Non-GAAP Reconciliations Net Corporate Debt and Net Fleet Debt ($ in millions) As of As of As of As of As of March 31, December 31, March 31, December 31, December 31, 2008 2007 2007 2006 2005 Corporate Debt Debt, less: $11,635.1 $11,960.1 $11,756.9 $12,276.2 $12,515.0 U.S Fleet Debt and Pre-Acq
Slide 122: Non-GAAP Reconciliations: Levered After-Tax Cash Flow
121 Non-GAAP Reconciliations Levered After-Tax Cash Flow After Fleet Growth ($ in millions) A+(D-B) B+(E-C) A B C D E LTM LTM Year Ended Year Ended Three Months March 31, March 31, Three Months Ended March 31, December 31, December 31, Ended 2008 2007 2008 2007 2006 2007 2006 December 31, 2006 Incom
Slide 123: Car Rental Rate Revenue Per Transaction Day
122 Car Rental Rate Revenue Per Transaction Day Rental rate revenue per transaction day ($ in whole dollars) 2003(a) 2004(a) 2005(a) 2006(b) (a) Based on 12/31/05 foreign exchange rates. (b) The 2003 to 2005 amounts above will differ based upon the methodology being utilized to calculate the Interna
Slide 124: Car Rental Rate Revenue Per Transaction Day
123 Car Rental Rate Revenue Per Transaction Day ($ in millions) Three Months Ended March 31, 2007 2008 Car rental revenue per statement of operations $1,505.1 $1,598.1 Non-rental rate revenue (217.5) (228.2) Foreign currency adjustment 47.1 (10.9) Rental rate revenue (b) $1,334.7 $1,359.0 Transactio
Slide 125: Equipment Rental and Rental Related Revenue
124 Equipment Rental and Rental Related Revenue Equipment rental revenue per statement of operations Equipment sales and other revenue Rental and rental related revenue (including impact of foreign exchange) Foreign currency adjustment (a) Rental and rental related revenue (excluding impact of forei
Slide 126: Equipment Rental and Rental Related Revenue
125 Equipment Rental and Rental Related Revenue Three Months Ended March 31, ($ in millions) 2006 2007 2008 Equipment rental revenue per statement of operations $363.0 $389.8 $410.8 Equipment sales and other revenue (44.1) (41.7) (41.8) Rental and rental related revenue (including impact of foreign