Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — FY2007 Earnings Presentation
17 slides from Hertz Global's earnings presentation, Feb 27, 2008
Slide 1: Fourth Quarter and Full Year 2007 Conference Call
4 Hertz Global Holdings, Inc. th Quarter and Full Year 2007 Conference Call February 21, 2008
Slide 2: Safe Harbor Statement
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 uncertaintie
Slide 3: Today's Agenda
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
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 these
Slide 5: FY 2007 Financial Highlights
FY 2007 Financial Highlights • Hertz had a strong year – Met internal expectations – Delivered on guidance to Wall Street 2007 Increase 2007 Actual vs. 2006 Guidance Revenue $8,685.6 7.8% $8,500 - $8,600 Adjusted Pre-Tax Income $660.7 35.8% $600 - $630 Adjusted Net Income $409.8 36.7% $372 - $395 Ad
Slide 6: Diversification – Hertz's Advantages
Diversification – Hertz’s Advantages • Car rental & equipment rental operations • Domestic and international networks • Strong presence on and off airport • Varied customer base – Business and leisure renters – Travelers and local users – Construction, industrial and fragmented equipment rental user
Slide 7: Leveraging the Hertz brand
Leveraging the Hertz brand • Revenue growth initiatives gaining traction – Car Rental: • Off airport market • Simply Wheelz • On-line leisure market penetration • Collections revenue reach $700 million • Hourly and monthly rentals • NeverLost and other ancillary revenue –HERC • Specialty initiatives
Slide 8: Efficiency Initiatives Drive Profitability
Efficiency Initiatives Drive Profitability • Adjusted pre-tax income margin +160 bps y-o- • Annualized net savings in 2008 expected to be $250 million – $75 million included in pre-tax income guidance – Restructuring costs: $30 – $40 million in first half 2008 • Efficiency from 5 major initiatives –
Slide 9: Car Rental Commentary
Car Rental Commentary • Domestic Operations – Slowing airline traffic and economy impact Q4 volume – Leisure pricing was under pressure – Corporate increases +2.4% in Q4 – Current pricing outlook improved • International – Strong volume through 2007 slows in December – Reservation book is encouragin
Slide 10: HERC Commentary
HERC Commentary • Impact of U.S. construction market softening offset by – Strong industrial and oil-related activity – Continued growth in initiatives – International operations • Q4 worldwide pricing down 1% • Young fleet -29.1 months • Fleet capital expenditure to moderate FY 2007 Actual Maintena
Slide 11: Q4 2007 Consolidated Highlights
Q4 2007 Consolidated Highlights • Strong performance in challenging quarter Actual vs. 2006 Revenue $2,138.8 7.4% Pre-tax Income $81.3 90.4% Net Income $80.7 102.8% Diluted EPS $0.25 78.6% Adjusted Pre-tax Income $152.5 15.1% Adjusted Net Income $93.9 14.9% Adjusted Diluted EPS $0.29 16.0% Corporate
Slide 12: Fleet Residual Value Update
Fleet Residual Value Update • Hertz fleet diversity is natural hedge – Limited exposure by manufacturer, make and model – Strategic selection of program cars • U.S. residuals stable @74-75% range in 2007 • 73% U.S. vehicles are non-program cars • 25% Europe vehicles are non-program cars • HERC marke
Slide 13: Debt and Liquidity Highlights
Debt and Liquidity Highlights • Ample room under existing covenants – Consolidated leverage ratio 2.9:1 (maximum 5.75:1) – Consolidated interest coverage 3.7x (minimum 1.75x) • Total liquidity of $5.1 billion* – $2.8 billion fleet financing** – $1.6 billion corporate credit – $.7 billion cash • Net
Slide 14: U.S. Fleet Financing Update
U.S. Fleet Financing Update • Total ABS debt at year-end: $4.6 billion – $4.6 billion in ABS Notes – $1.5 billion VFN facility -$0 used • Funded by bank conduits with committed backstops • Ample liquidity to meet upcoming maturities – $165 million in May 2008 – $1 billion in February 2009 • Alternat
Slide 15: Update on Taxes
Update on Taxes • Lower statutory income tax rates enacted in 2007 reduced Hertz’s deferred income tax liability FY 2007 FY 2008 Actual Projected Effective tax rate 26.5% 34.0% Cash taxes (mlns) $28 $65 • Hertz not expecting to pay material U.S. cash federal income taxes until 2011 – Like Kind Excha
Slide 16: Strong Cash Flow in 2007
Strong Cash Flow in 2007 • Cash flows from operating activities increased 19% to $3.1 billion • Levered after-tax cash flows after fleet growth increased by $268 million to $553 million – Higher earnings -$163 million – Improved working capital -$268 million – Lower HERC fleet investment -$111 milli
Slide 17: 2008 Full Year Guidance
2008 Full Year Guidance • Expectation for continued improvement in all metrics • First half of 2008 more challenging than second half Total Revenue Corporate EBITDA Adjusted pre-tax income Adjusted net income Adjusted EPS Levered after-tax cash flow after fleet growth Note: Notional tax rate of 34%