Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Investor Day (November 2015)
104 slides from Hertz Global's investor day presentation, Nov 17, 2015
Slide 1: Forward-Looking Statements
Forward-Looking Statements the 1995. of performance. looking, "opportunity", events. our cause expectations. December or realized. new otherwise. on above. HERTZ GLOBAL 2 We cannot assure you that the assumptions under any of the forward-looking statements will prove accurate that any projections wi
Slide 2: Disclosure on Financials in Presentation
Disclosure on Financials in Presentation the The Company has four reportable segments as follows: • U.S. Car Rental - rental of cars, crossovers and light trucks, as well as ancillary products and services, in the United States; • International Car Rental -rental of cars, crossovers and light trucks
Slide 3: Hertz Global in Numbers
---• Hertz Global in Numbers HERTZ GLOBAL 4 All numbers for Global RAC Business Ranked Loyalty program by FlyerTalk (4 years in a row) Locations worldwide #1 ~10K ~150 ~660K 10M+ ~40M+ Vehicles Monthly website visits Miles per day HERTZ GLOBAL 4
Slide 4: Agenda for today's discussion
---• Agenda for today's discussion Topic Time slot Speaker 10:30 AM - 10:45 AM Break 12:30 PM - 01:00 PM Break HERTZ GLOBAL 5 John Tague Closing 02:00 PM - 02:15 PM Lunch and Q&A 01:00 PM - 02:00 PM Tom Kennedy Path to Full Potential and 2016 Preliminary Guidance 11:45 AM - 12:30 PM Jeff Foland Earn
Slide 5: Stabilizing the foundation in 2015
HERTZ GLOBAL 6 Stabilizing the foundation in 2015 2015 has been a year of transition We have stabilized the foundation We are building a track record of enhanced execution which is starting to show in our results We have built a committed and experienced top team, combining industry veterans with fr
Slide 6: Senior leadership team
Tyler Best EVP and Chief Information Officer Jeff Foland Senior EVP and Chief Revenue Officer Tom Kennedy Senior EVP and Chief Financial Officer Alex Marren EVP North America Operations Tom Sabatino Senior EVP, Chief Administrative Officer and General Counsel Michel Taride Group President, Rent A Ca
Slide 7: On track to complete foundational commitments
Financial restatement Headquarters relocation IT systems upgrade HERC spin-off Integration II Restatement completed and remediation on going Started upgrade of the entire IT infrastructure, systems and applications HQ relocation completed 11/1 Completed Dollar Thrifty systems integration Spin-off on
Slide 8: Successful initiatives driving 2015 performance
---• In addition to our foundational commitments, the team has delivered successful initiatives to drive performance in 2015 M o:O HERTZ GLOBAL 9 Completed $262M share buy-back out of $1B authorized, and improved leverage ratios Generating favorable early returns on ancillary revenue and products Ri
Slide 9: Turning attention to Full Potential
Today's Full Potential discussion is focused on global RAC excluding HERC We are now turning our attention to Full Potential HERTZ GLOBAL 10 Executing the Stabilizing the Achieving Full Potential 2018-2020 Foundation in 2015 Plan in 2016
Slide 10: How we defined our aspiration for Full Potential
How we defined our aspiration for Full Potential HERTZ GLOBAL Full Potential GROUND UP Based on a rigorous process of identifying and evaluating initiatives that we plan to execute Broad based assessment involving comprehensive identification of opportunities by leaders throughout the business Stres
Slide 11: Continued margin growth in our core business
---We expect to see continued margin growth in our core business in Hertz Global Adjusted Corporate EBITDA margin, % 1 16%-18% 12% 10% 7% 2014 2015 mid point est. 2016 mid point est. 2017 Full Potential (3-5 years) HERTZ GLOBAL 12 1 Bars not drawn to scale 2015 and 2016 as we drive toward Full Pot
Slide 12: Pathway to low end of Full Potential range
---Pathway to low end of Full Potential range achieves 16% Adjusted Corporate risk Total Adjusted Corporate Adjusted Corporate EBITDA growth discounted for growth opportunity1 EBITDA cost inflation, fleet interest and 25% execution risk ADJUSTMENT FOR COST INFLATION, FLEET INTEREST AND 25% EXECUTION
Slide 13: Risks in achieving the Full Potential plan
We are mindful of the risks in achieving the Full Potential plan - and are building in appropriate headroom and pursuing mitigating actions Competitive Risk: Destructive competitive pricing, irresponsible actionscapacity behavior, alternative mode competition Response: Path to best cost, best qualit
Slide 14: Impact of ride sharing on car rental
We are periodically reviewing the developing impact of ride sharing on our business and the broader car rental industry Potential viewpoints: Significant disruption Unable to keep pace with technology and customer preference shifts Car rental offering becomes less relevant New possibilities Millions
Slide 15: Full Potential is achievable
---• Full Potential is achievable • within :f.\ •• industry HERTZ GLOBAL 16 Improved dynamics could provide opportunity to perform above the range Low end of the range achievable with reasonable realization of initiatives within our control Focused on initiatives we can execute vs. aspirations aroun
Slide 16: Full Potential is built around three pillars
---• Our Full Potential is built around three pillars HERTZ GLOBAL 17 US Hertz Local Edition, and International markets Global RAC focus with elements tailored to US airport, Win customer preference and loyalty through clearly defined and positioned brands supported by consistent, well-tailored and
Slide 17: Winning with Technology
Hertz. DltLLAR HEATZGLOBAL 118 WINNING WITH TECHNOLOGY Tyler Best HERTZ GLOBAL 18
Slide 18: Progress on technology priorities in 2015
---• Demonstrated meaningful progress on technology priorities in 2015 - --------.------------- ------------STARTING POINT (12/31/14) TODAY (11/17/15) Dollar Thrifty Integration 25 months in without integrated systems Brands now on one system $420M in spend Dated equipment and quality challenges res
Slide 19: New cloud-based technology platform
Cloud-based HERTZ GLOBAL 20 i Built on a foundation of security Setting the stage for future capabilities Local language and currencies Scalable Ready for future growth Integrated Single source of truth flowing to all supporting systems Flexible Adaptability to meet new customer and business needs M
Slide 20: Delivering next-generation benefits
HERTZ GLOBAL 21 Delivering next-generation benefits Automation creating consistency and efficiency Cost effectiveness with managed transition Speed and flexibility with cloud based platform Customer centric design and systems Mobile first product offering A B C D E
Slide 21: Speed and flexibility enable rapid response to market changes
HERTZ GLOBAL 22 Speed and flexibility enable rapid response to market changes Adaptability to change ... requires new capabilities... ... to enable rapid response Competitors’ pricing Customer demand Operational excellence Nimble: frequent and fast updates Responsive: Reduced time to market of new f
Slide 22: Customer centric design
CUSTOMER Transition from car centric to customer centric design Touchless, personalized customer experience Preferences Booking behavior Buying patterns Book Personalized offers CHECK-IN Self-service ARRIVAL Right car, right options EXIT Get in and go RENT On-the-go rental extension RETURN Paperless
Slide 23: Mobile First
Mobile First HERTZ GLOBAL 24 Enablement of new products 100% credit card capture enabling shopping cart buy: Reservation flexibility New products Additional options Bunding Split Billing
Slide 24: Automation driving consistency and efficiency
Automation driving consistency and efficiency Automation technologies enabled by the new platform ... ... potentially allowing significant cost savings and customer benefits Check-in Exit Return Mobile Damage detection Qr code scanner / RFID Telematics / Transponders Streamline process, reduce touch
Slide 25: IT spending redesign drives $150M savings
Redesigning IT spending across the three main levers will drive a further $150M savings opportunity $420M $45M achieved in 2015 $375M $275M $225M $100M reduction in 2016 $50M additional opportunity Does not include $50M annual investment 2014 2015 est. 2016 est. Full Potential Levers to Capture Vend
Slide 26: New technology platform roadmap over 36 months
Development of new technology platform will evolve over next 36 months Future Platform - Project Roadmap 2015 2016 2017 2018 Phase 1 - Customer Interface and Payments Phase 2 - Fleet, Counter, Personalization Phase 3 - Rates and Reservation Finance Systems Modernization CRM HERTZ GLOBAL 27
Slide 27: We will deliver
We will deliver We are building on momentum from early wins We are confident in the roadmap going forward We have the right team and partners HERTZ GLOBAL 28
Slide 28: Leading Cost and Quality
Leading Cost and Quality Tom Kennedy and Alex Marren HERTZ GLOBAL 29
Slide 29: Scope of three primary functions for cost and quality
Scope of the three primary functions for leading on cost and quality Adjusted Corporate EBITDA growth 1 Fleet Management Support and Other DOE Operational Excellence Total $200-250M $400-450M $200-250M $800-950M Increase fleet efficiency, reduce cycle time Improve efficiency through process and auto
Slide 30: Scope of three primary functions for cost and quality
Scope of the three primary functions for leading on cost and quality Adjusted Corporate EBITDA growth’ Fleet Management Increase fleet efficiency, reduce cycle time $200-250M Support and $200-250M Have right people, in right place, at right time - leading to reduced cost and increased quality Improv
Slide 31: Fleet initiatives expected to drive $200-250M
Fleet initiatives expected to drive $200-250M in Full Potential opportunity Better utilized fleet $70-80M improve demand forecasting and capacity planning Smarter fleet mix management $60-70M Enhance analytical approach and decision-making optimal supply chain $20-30M Improve transportation and logi
Slide 32: 2015 Global RAC fleet scope and scale
2015 Global RAC fleet scope and scale1 procurement and Distribution car sales 660K Global RAC vehicles 310K+ Total non-program sales $11.9B Capital Expenditure on Fleet 220K+ Total program returns $2.5B Annual Fleet Depreciation ~140K Dealer direct sales 12+ OEM Partners 78 Retail Outlets $1.2B Othe
Slide 33: Major US fleet transformation completed in 2015
Major US Fleet Transformation completed in 2015 Completed US RAC Fleet Refresh On track for 380K new vehicles added in 2015 calender year 4 point NPS improvement Reduced 2H of 2015 vechicle maintenance by $40M YoY Improved Supply Chain Managemenr estimated to drive $70M in Value Over 25% decrease in
Slide 34: Better capacity and demand planning drive fleet efficiency
Better capacity and demand planning will drive higher fleet efficiency SOURCES OF VALUE Improve capacity management Lower out-of-service levels Improve supply chain efficiency Reduce car sales inventory Cost reduction opportunity from fleet efficiency improvement Reducing fleet size and saving fleet
Slide 35: Smarter fleet mix management
Smarter fleet mix management will unlock $60-70M potential savings opportunity Real-time fleet optimization Opportunistic fleet sales Optimize vehicle lifecycle holding costs vs. depreciation rates Create enhanced program and non-program car purchase model ~$60-70M1 Full Potential Opportunity Smarte
Slide 36: Cycle time and cost of in-fleeting and de-fleeting
Continued focus on cycle time and cost of in-fleeting and de-fleeting has $20-30M additional savings potential De-fleeting In-fleeting Reallocation Decrease average time to sale Minimize ownership prior to rent Improve new car delivery timing model to better forecast fleet supply Improve decision ma
Slide 37: Opportunity through buying efficiencies
There is $20-30M of opportunity through buying efficiencies Hertz Leverage earlier in program year buys Increase spot transactions 1 Total 2018-2020 Adjusted Corporate EBITDA improvement opportunity before investments, inflation, fleet interest and before discounting for execution and other risks OE
Slide 38: Growing alternative channels and empowering the sales team
Growing US car rental alternative channels and empowering the sales team are key to bringing $30-40M in increased channel benefit Continued growth in alternative channels Total retail sales by calendar year 40% retail growth since 2014 50% dealer direct growth since 2014 Empowering sales team and ne
Slide 39: Scope of three primary functions for cost and quality
Scope of the three primary functions for leading on cost and quality Adjusted Corporate EBITDA growth 1 Fleet Management Support and Other DOE Operational Excellence Total $200-250M $400-450M $200-250M $800-950M Increase fleet efficiency reduce cycle time Improve efficiency through process and autom
Slide 40: $400-450M opportunity in support functions and other DOEs
Additional $400-450M Full Potential opportunity exists across corporate support functions and other DOEs $150M $50-70M $110-120M $50-55M $40-55M $400-450M Restructure IT spend Streamline finance organization Leverage strategic sourcing Optimize distribution channels Manage other DOE and overhead Imp
Slide 41: Finance team tools and core capability
Equipping finance team with the right tools and focusing on core capability has $50-70M value capture opportunity Where We Are Full Potential Opportunity to modernize our support and finance function Legacy shared services and financial support environment High labor content due to inefficient proce
Slide 42: Strategic sourcing levers
Key strategic sourcing levers to achieve $110-120M in global savings opportunity Vendor management Demand management Compliance management Purchasing process redesign Enhanced total cost of ownership strategy Operations parts Logistics Transporters Corporate Services Marketing Legal Other 3rd party
Slide 43: Optimize channels
Optimize channels Key focus areas: Channel mix shift Investment allocation System fees management Form of payment optimization Technology and demand management to enhance direct to consumer distribution channels 1 Total 2018-2020 Adjusted Corporate EBITDA improvement opportunity before investments,
Slide 44: Manage other direct operating and overhead expenses
Manage other Direct Operating and Overhead Expenses Other DOE Comprehensive damage program to reduce costs including initiatives for: Prevention Detection Billing Collection Overhead Expenses Management of administrative costs through: Technology adoption Spans of control Vendor management Demand op
Slide 45: Scope of three primary functions for cost and quality
Scope of the three primary functions for leading on cost and quality Adjusted Corporate EBITDA growth1 Fleet Management Support and Other DOE Operational Excellence Total $200-250M $400-450M $200-250M $800-950M Have right people, in right place, at right time - leading to reduced cost and increased
Slide 46: Achieving operational excellence
Achieving operational excellence means: PROCESS PEOPLE CORE VALUES Customer Service Revenue Generation Cost Efficiency PERFORMANCE Drivers of Value A clean, safe car; an experience that’s fast and courteous - for every customer, every car - delivering value to our customers, employees and shareholde
Slide 47: Focus on every customer touch point
We are focused on every customer touch point to drive value Industry Labor and fleet intensive 24 hour service with large footprint Multiple touch points and complexity Opportunity Deploy industry leading data mining, tools, and performance tracking to improve processes, giving value and time back t
Slide 48: Addressing core operational challenges
Reaching our Full Potential requires going further, and demands that we address core challenges across our operations Today Future Road to Success High variability in processes, many manual Standardized, centralized, and automated systems Ad hoc tracking of productivity measures Optimized workforce
Slide 49: Levers to unlock $200-250M in cost efficiencies
we have key levers to address these challenges and unlock $200-250m in cost efficiencies and drive best-in-class service for our customers adjusted corporate EBITDA growth1 smarter resource scheduling workforce redesign leveraging tools and technology $25-30m $110-130m $65-90m standardize and centra
Slide 50: Centralized workforce scheduling
Centralized and analytical approach to workforce scheduling means fewer hours with better coverage sources of value centralize field scheduling and tailor to unique facility constraints and forecasted hourly demand updated real-time by each location management fewer hours, better customer coverage m
Slide 51: Workforce redesign
workforce redesign post integration, streamlining our org structure deploy flex job structures (e.g., part time, temp, vacation time, flex time/leave) Implementing enhanced standard work tools (e.g., Fuel island tracking system) optimal work flow and flexibility clear and consistent performance stan
Slide 52: Executing in a technology enabled world
Full potential means executing in a technology enabled world more customer facing more moblie more efficient streamline customer journey with advanced mobile platform, fleet telematics and digitized frontline processes $65-90M1 full potential opportunity HERTZ GLOBAL 53
Slide 53: Applying best practices and technology for operational excellence
We are applying proven best practices and technology to achieve operational excellence and our Full Potential Cost of Service Automated and faster process Consistent and accurate handling Lower cost per transaction Quality of Service Better car availability Consistent customer experience Faster rent
Slide 54: How we will measure performance and success
How we will measure our performance and success against this plan Customer Satisfaction (NPS) Non-Fleet Cost Efficiency Asset Management Clean and Safe Speed of Service Courteous and Friendly Ease of Service Service Recovery DOE as % of Revenue Labor Cost Per Transaction Fleet Efficiency Out of Serv
Slide 55: How we will measure performance and success
How we will measure our performance and success against this plan Customer Satisfaction Non-Fleet Cost Asset Management (NPS) Efficiency Labor Cost Per Fraevelerc F // 4 DOE as % of Revenue Transaction HERTZ GLOBAL | 55
Slide 56: Earning Customer Preference and Delivering Revenue Growth
EARNING CUSTOMER PREFERENCE AND DELIVERING REVENUE GROWTH Jeff Foland HERTZ GLOBAL 57
Slide 57: Overview of Hertz Global RAC revenue
Overview of Hertz Global RAC revenue Revenue By Geography 1 Revenue By Type Of Location 1 Revenue By Customer Segment 1 28% 72% 28% 72% 31% 29% 20% 20% Published (encl. high yield) Contracted Rates 2 Unpublished Discount High Yield $8.6B+ Hertz Global Rental Car Revenues 3 1 Full year mix extrapolat
Slide 58: Considerable revenue upside within our reach
Considerable revenue upside within our reach and control Revenue Growth1 Adjusted Corporate EBITDA growth2 Strengthen Core Revenue Grow Ancillary Revenue Total Market3: $580M New4: $100 M $680M Market 3: $200M New4: $60M $260M Revenue Management execution Go-to-Market execution Merchandising excelle
Slide 59: Customer preference matters in rental car industry
Customer preference matters in the rental car industry Weekly price for midsize car rentals by brand$ / week Customers clearly show willingness to pay more for some brands even though car products are similar 1 July weekly rental rates for Midsize car type HERTZ GLOBAL 60
Slide 60: Drivers of customer preference
Preference is driven by a number of factors beyond price and vehicle, and is increasingly transparent in today’s digital world Drivers of customer preference have become more transparent which is particularly important for many customers Vehicle Price Service Speed Ease Quality of support Friendline
Slide 61: Core drivers of preference
core drivers of preference are known, and will create the foundation across all brands get the basics right (tablestakes) drivers of customers satisfaction differentiate (memorable experiences) 80% speed of service “No line waits here” courteous and friendly “we take care of you” clean and safe “eve
Slide 62: Opportunity to strengthen preference across brands
From where we are today, there is clear opportunity to strengthen preference across our brands jd power, overall customer satisfaction index premium brands value brands source: 2015 north America rental car satisfaction study, jd power hertz global 63
Slide 63: Re-energizing our portfolio of rental car brands
we are committed to re-energizing our portfolio of rental car brands Hertz Global premium smart value Experiential value deep value hertz global 64
Slide 64: Recharging the premium brand
we will recharge our PREMIUM brand... The leading top tier car rental brand offering permium services that redefine the industry Driven to succeed Bold, confident and refined influential and well-connected shphisticated but not elitist Anticipatory service HERTZ GLOBAL 65
Slide 65: Reimagined smart value brand
We will deliver a reimagined SMART VALUE brand The smart go-to choice for the disverning value seeker with elevated expectations Do more, the smart way Smart, efficient and practical Consistently easy Streamlined to give you what you value most: time HERTZ GLOBAL 66
Slide 66: Reimagined experiential value brand
We will deliver a reimagined EXPERIENTIAL VALUE brand Go-to value brand for vacationers, tourists and those who seee life as the ultimate adventure Enjou the journey Dare to do things differently Flexibility to adapt, freedom to explore Right vehicle, right adventure Unforgettable moments HERTZ GLOB
Slide 67: Reimagined deep value brand
Wewill deliver a reimagined DEEP VALUE brand Providing everything the shopper is seeking with a focus on low price Get the deal and go straightforward, easy set and managed expectations Easy ein that comes with getting the deal With the appropriate associated LOW COST structure HERTZ GLOBAL 68
Slide 68: Reimagined Local Edition brand
And we will deliver a reimagined LOCAL EDITION brand Everything you expect from Hertz, closer to home Your mobility needs solved Part of your community In markets where it matters most to you HERTZ GLOBAL 69
Slide 69: Segmented offerings across and within brands
We will address all aspects of the experience system with segmented offerings across and within brands Vehicle type and Quality Engagement (digital, social) Service Experience tone and Personality Facilities Loyalty Program gold Plus Rewards HERTZ GLOBAL 70
Slide 70: Significant rollout starting in 2016
Our work is well underway, with significant rollout starting in 2016 2015 Improve delivery against the basics 2016 Deliver exceptional service and recognition Hertz Dollar Thrifty Firefly Hertz Local Edition Car quality refresh Improved delivery of basics Performance measures launched Premium servic
Slide 71: Internal and external performance measures
We will keep score with internal and external performance measures External Measures Internal Measures 3rd party rankings Customer social reviews Committed to brand leadership in each category and improving all performance measures Net Promoter Score Detailed satisfaction drivers (e.g., speed, servi
Slide 72: Summary of earning customer preference
summary - earning customer preference is foundational to our revenue efforts customer preference drives leveraged results customer needs are diverse, as will be our brands leadership is achievable we will measure and be transparent about progress hertz global 73
Slide 73: Strengthen core revenue
Strengthen core revenue Revenue Growth 1 Adjusted Corporate EBITDA growth 2 Strengthen Core Revenue Market 3 : $580M New4 : $100M Market3: $200M New 4 : $60M $680M $260M Revenue Management execution Go-to-Market execution Grow Ancillary Revenue $485M $335M Merchandising excellence Digital enablement
Slide 74: Opportunity within our control to drive core revenue
Against the backdrop of today's industry reality, there is opportunity within our control to drive core revenue Industry Backdrop Pricing strategy in largely a function of competitive rate canvassing and automated matching Difficult to stimulate on-airport demand Relatively few periods where demand
Slide 75: Revenue Management Excellence
Revenue Management Excellence - the path from where we are to where we need to be is known PEOPLE AND ROLES New staff Refocused roles Intense development PERFORMANCE VISIBILITY From limited and untimely to comprehensive and real-time IT AND SYSTEMS From fragmented, unstable and basic to consolidated
Slide 76: Go-To-Market Excellence
Go-To-Market Excellence - profitable growth achieved through sharpened actions and investments MIX MANAGEMENT Better compete and win in high yield customer segments CONTRACTED BUSINESS Stabilize share, improve coverage, better allocate investments GLOBAL NETWORK LEVERAGE More pull-through and levera
Slide 77: The next frontier of industry potential
The next frontier of industry potential will be reached when... Typical Yield Curve Progression Yield curves increase as booking period progresses (rate “fences”) Spoiled inventory is greatly reduced Contracted business transacts at rates that float with market prices Tight linkage exists between in
Slide 78: Grow ancillary revenue
Grow Ancillary Revenue Revenue Growth1 Strengthen Core Revenue Market3: 580M New4: $100M $680M $485M $1,165M Adjusted Corporate EBITDA growth2 Market3: 200M New4: $60M $260M $335M $595M Revenue Management execution Go-to-Market execution Merchandising excellence Digital enablement New offerings Foun
Slide 79: Ancillary revenue options today
Today, Hertz drives ancillary revenue through an assortment of options to customize the rental car experience... PEACE OF MIND Coverage Child Seats CONVENIENCE Fuel Express Toll ENHANCEMENTS Upgrades GPS Satellite Radio In-Car Entertainment HERTZ GLOBAL 80
Slide 80: Ancillary sales driven through rental counter
and most sales are driven through our agents at the rental counter Approximate 2014 Ancillary Revenue By Channel Phone Kiosk Online Mobile Counter HERTZ GLOBAL 81
Slide 81: Foundational enablers to ancillary revenue growth
There are several foundational enablers to ancillary revenue growth Upfront payment collection Split billing CRM enhancements + targeted marketing Effective shopping cart displays Improved digital channels Increased automation CURRENT PRODUCTS CHOICE OFFERINGS FLEXIBILITY OPTIONS MERCHANDISING CAPAB
Slide 82: New capabilities to target, present and price offers
We will roll out new capabilities to better target, present, and price offers REAL TIME CRM AUTOMATION SPECIALLY TAILORED PRODUCT BUNDLES ENHANCED SHOPPING CART FUNCTIONALITY SUBSCRIPTIONS TARGETED OFFERS THROUGHOUT CUSTOMER JOURNEY FUEL OPTION DYNAMIC PRICING Business Traveler Family/Leisure HERTZ
Slide 83: Improved upgrade merchandising
Improved upgrade merchandising is example of how growth will be achieved BETTER UPGRADE MONETIZATION DIGITAL ENABLEMENT LARGE OPPORTUNITY 60% Percent of upgrades provided to those that paid or are entitled 1 out of 7 Buy through digital channels today +$100M In annual revenue Increase monetization r
Slide 84: Dynamic pricing of products and bundles
And dynamic pricing of products and bundles will help fuel growth Enhanced capabilities will allow us to price our products more dynamically Inventory Status Seasonality Day of Week Loyalty Tier Customer Segment Individual Customer Behavior Market Dynamics HERTZ GLOBAL 85
Slide 85: Significant revenue opportunity ahead
In summary, significant revenue opportunity ahead Customer preference and loyalty are foundational to revenue efforts Path to core revenue execution excellence is clear Ancillary opportunity significant, and largely within our direct reach and control Systems and consumer facing digital are key to u
Slide 86: Path to Full Potential
PATH TO FULL POTENTIAL Tom Kennedy HERTZ GLOBAL 87
Slide 87: Bringing it all together
Bringing it all together Full Potential is built on initiatives along three pillars: Winning with Technology, Leading Cost and Quality and Earning Customer Preference & Delivering Revenue Growth Based on where we are today, the plan has sufficient headroom such that - after accounting for inflation,
Slide 88: Recap of Full Potential Opportunity
Recap of Full Potential Opportunity Key Levers Hertz Global Adjusted Corporate EBITDA impact1, $M Revenue Market growth Additional core revenue Grow ancillary Costs2 Fleet Other DOE / SG&A Operational excellence Investments Unconstrained Opportunity 200 60 335 225 425 225 100 1,370 595 impact from r
Slide 89: Inflationary pressures and execution risks
As with any plan there are inflationary pressures and execution risks Hertz Global Adjusted Corporate EBITDA impact, $M Unconstrained Opportunity 1,370 Cost inflation and Fleet interest 300 Execution risk (10% - 25%) 150 - 370 2018-2020 Adjusted Corporate EBITDA Impact 700 - 920 Cost inflation sourc
Slide 90: Pathway to low end of Full Potential range
Pathway to the low end of Full Potential range achieves 16% EBITDA margin within 3-5 years assuming cost inflation and 25% execution risk Hertz Global Adjusted Corporate EBITDA, $M Hertz Global Adjusted Corporate EBITDA, % 2015 Adjusted Corporate EBITDA est. 875 - 925 Revenue Opportunity 595 Cost an
Slide 91: Measuring progress toward 16-18% objectives
How will we measure our progress towards our 16-18% Full Potential objectives? Key Stakeholders Customer Employee Investor/Creditor Key Metrics Net Promoter Score External/Social Media Employee Satisfaction Surveys Turnover Employer of Choice Adjusted Corporate EBITDA Margin Unit Revenue - Revenue p
Slide 92: 2016 Preliminary Guidance
2016 PRELIMINARY GUIDANCE Tom Kennedy HERTZ GLOBAL 93
Slide 93: 2016 Preliminary Guidance - Key Assumptions
2016 Preliminary Guidance - Key Assumptions Revenue U.S. industry assumed to grow with current GDP consensus forecast1 of approximately 2.7% Company growth expected at 2.5% to 3.5% Show steady improvement in current pricing Costs Deliver $100 million remaining of original $300 million cost savings D
Slide 94: FY16 Preliminary Financial Guidance
FY:16 Preliminary Financial Guidance Adjusted Corporate EBITDA CONSOLIDATED HGH, $M HERC, $M CONSOLIDATED HERTZ GLOBAL, $M US RAC depreciation per unit per month, $ US RAC fleet capacity growth, % Net consolidated non-fleet capex, $M US car rental revenue growth FY:16 GUIDANCE 1,700 - 1,800 625 - 67
Slide 95: Adjusted Corporate EBITDA forecast for 2016
Adjusted Corporate EBITDA is forecasted to reach $1,075 - 1,125M in 2016 Hertz Global Adjusted Corporate EBITDA, $M Key Levers Adjusted Corporate EBITDA Margin Revenue growth includes $100M from core revenue and $50M from ancillary revenue Cost efficiencies comprising $100M capture of 2015 initiativ
Slide 96: 2016 preliminary guidance is achievable
2016 preliminary guidance is achievable We have a fleet that is the right size, in the right condition We have completed the integration of Dollar Thrifty systems We are on track to exit 2015 with $300M in run rate cost efficiencies We have improved revenue management systems and processes We have a
Slide 97: 2016 preliminary guidance is achievable
—e 2016 preliminary guidance is achievable We have a fleet that is the right size, in the right condition Within control We have completed the integration of Dollar Thrifty systems Well underway with many initiatives already delivering We are on track to exit 2015 with $300M in run rate cost efficie
Slide 98: Break
——e BREAK HERTZ GLOBAL | 98
Slide 99: Closing
CLOSING John Tague HERTZ GLOBAL 100
Slide 100: Team has delivered successful initiatives in 2015
The team has delivered successful initiatives to drive performance in 2015 Restored US RAC Adjusted Corporate EBITDA margins to competitive levels Achieved Q3:15 YTD 27% YoY International Adjusted Corporate EBITDA margin improvement Delivering $200M in cost efficiencies in 2015, and on track to exit
Slide 101: Full Potential is real and within our control
Full Potential is real, it is within our control - and this is the right team to deliver Winning with Technology Leading Cost and Quality Earning Customer Preference and Delivering Revenue Growth HERTZ GLOBAL 102
Slide 102: Adjusted Corporate EBITDA definitions
Adjusted Corporate EBITDA Net income before net interest expense, income taxes, depreciation (which includes revenue earning equipment lease charges) and amortization as adjusted for car rental fleet interest, car rental fleet depreciation, car rental debt-related charges, and for certain other char
Slide 103: Non-GAAP measures
Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are non-GAAP measures within the meaning of Regulation G. In conformity with Regulation G, information for HGH on a segment basis required to accompany the disclosures of non-GAAP financial measure, including a reconciliation of the non-
Slide 104: Key Definitions
Key Definitions Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are non-GAAP measures within the meaning of Regulation G. In conformity with Regulation G, information for HGH on a segment basis required to accompany the disclosures of non-GAAP financial measure, including a reconcilia