Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Q2 2015 Earnings Presentation
20 slides from Hertz Global's earnings presentation, Aug 11, 2015
Slide 1: 2Q 2015 Earnings Call
2Q 2015 Earnings Call August 11, 2015 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 uncertain
Slide 3: Non-GAAP Measures
3 *Definitions and reconciliations of these non-GAAP measures are provided at the end of the presentation. The following non-GAAP* measures will be used in the presentation: Corporate EBITDA Corporate EBITDA Margin Adjusted Pre-Tax Income Adjusted Net Income Adjusted Diluted Earnings Per Share (Adju
Slide 4: Today's Agenda
4 Today’s Agenda John Tague President & Chief Executive Officer Hertz Global Holdings Tom Kennedy Sr. EVP & Chief Financial Officer Hertz Global Holdings Business Overview John Tague Financial Results Overview Tom Kennedy Questions & Answers Session John Tague Tom Kennedy Larry Silber Larry Silber P
Slide 5: Positioned for Improvement
5 Positioned for Improvement Improved fleet management, processes and systems helping to reverse performance trends in 2H:15 • Management assessing businesses and beginning to institute improvement plans • Disposing of high mileage vehicles • Onboarding new vehicles • Aligning fleet with profitable
Slide 6: $200M FY:15 Cost Savings Update
6 $200M FY:15 Cost Savings Update Potential for additional savings from technology-enabled opportunities Corporate/ Operations Overhead Freezing defined benefit pension plan Eliminating Navigation Solutions redundancies Closing unprofitable off-airport facilities Consolidating third-party IT spend C
Slide 7: Tom Kennedy, CFO: Financial Results, Cash Flow, Balance Sheet
7 Tom Kennedy CFO • FINANCIAL RESULTS • CASH FLOW REVIEW • BALANCE SHEET REVIEW
Slide 8: 2Q:15 Results
8 2Q:15 Results C * Definitions and reconciliations of these non-GAAP measures are provided at the end of the presentation. GAAP 2Q:15 Results 2Q:14 Results YoY Change Revenue $2,692 $2,830 (5%) Income before income taxes $50 $121 (59%) Net income $23 $72 (68%) Diluted earnings per share $0.05 $0.15
Slide 9: U.S. RAC Total Revenue 2Q:15
9 U.S. RAC Total Revenue 2Q:15 Note: Total RPD calculated using Total Revenue less ancillary retail car sales revenue Airport Total RPD down for Hertz brand, up for DTG brands Off-airport insurance replacement revenue as a percent of total off airport revenue increased 7 ppts YoY to 37% Average flee
Slide 10: Cautious 2H:15 Outlook U.S. RAC Depreciation
10 Cautious 2H:15 Outlook U.S. RAC Depreciation Model year 2016 fleet buy not yet completed Approximately one-third of MY 2016 vehicles expected to be delivered in 2H:15 Third-party residual value forecasts are pointing to a continued moderate decline for the back half and into next year Monthly Dep
Slide 11: International Car Rental 2Q:15
11 International Car Rental 2Q:15 Revenue +4% YoY, excluding FX Volume +4% RPD unchanged, excl. FX, driven by mix shift toward value brands DOE + SG&A down 80bps as a % of revenue 200 basis point improvement in fleet efficiency Monthly depreciation per unit down 4% excluding FX Corporate EBITDA decl
Slide 12: HERC Revenue 2Q:15
12 HERC Revenue 2Q:15 N.A. upstream oil and gas in major markets was 11% of total rental and rental-related revenue, excl. FX N.A. upstream rental and rental-related revenue down 30% YoY, excl. FX, on substantial volume weakness and 3% pricing decline N.A. all other rental and rental-related revenue
Slide 13: HERC Corporate EBITDA 2Q:15
13 HERC Corporate EBITDA 2Q:15 Revenue improvement is a priority Expanding and diversifying customer base with focus on local accounts Decentralizing reporting structure, reorganizing sales force • Better field accountability, more focused asset management, improved customer service N.A. time utiliz
Slide 14: HERC Key Metrics
14 HERC Key Metrics 36% 37% 39% 38% 35% 36% 38% 39% 35% 35% 1Q 2Q 3Q 4Q NA Dollar Utilization 2013 2014 2015 62% 65% 68% 66% 62% 64% 67% 68% 63% 63% 1Q 2Q 3Q 4Q NA Time Utilization 2013 2014 2015 672 615 352 2013 2014 1H:15 WW FY Gross Purchases* 534 433 259 2013 2014 1H:15 WW FY Net Fleet Purchases
Slide 15: Interest Expense Summary
15 Interest Expense Summary (millions) 2015 2014 2Q $156 $164 YTD 2Q $310 $320 2015 2014 2Q $140 $151 YTD 2Q $278 $295 Remained flat as % of Rev GAAP Interest Expense* Adjusted Interest Expense* * Net of interest income
Slide 16: Free Cash Flow
16 Free Cash Flow 1H:15 1H:14 Chg GAAP Pretax Income $(37) $58 $(95) PP&E (non fleet) depr. exp. + amortization exp. 198 205 (7) Cash Taxes (19) (33) 14 Net Working Capital/Other (58) (221) 163 Operating Cash Flow excl. fleet depr. add-back $84 $9 $75 RAC Fleet Growth (net capex + depr. exp. & net f
Slide 17: Liquidity and Debt
17 Liquidity and Debt ($ in millions) ABL Availability: $1,027 Unrestricted Cash: 537 Corporate Liquidity: $1,564 Total net corporate debt $6.0 billion Total net fleet debt $10.7 billion Net corporate debt / LTM corporate EBITDA ratio 4.9x Corporate Liquidity at June 30, 2015
Slide 18: Outlook
18 OUTLOOK
Slide 19: FY:15 Financial Guidance Reaffirmed
19 FY:15 Financial Guidance Reaffirmed Full Year 2015 Forecast Corporate EBITDA - Consolidated HGH $1,450M - $1,550M WW HERC Corporate EBITDA $575M - $625M U.S. RAC Monthly Depreciation per unit $295 - $305 U.S. RAC fleet capacity growth1 0.5% - 1.5% Net non-fleet capex $275M - $295M Effective tax r
Slide 20: Financial Information and Operating Data
Q&A FINANCIAL INFORMATION AND OPERATING DATA SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share data) 2015 2014 2015 2014 Total revenues $ 2,692 $ 2,830 $ 5,145 $ 5,366 Expenses: Direct operating 1,505 1,594 2,91
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