Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Q1 2016 Earnings Presentation
31 slides from Hertz Global's earnings presentation, May 10, 2016
Slide 1: 1Q 2016 Earnings Call
1 1Q 2016 Earnings Call May 10, 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 earnings per share (Adjusted EPS) Revenue per available car day (RACD) Total RPD Net depreciation per
Slide 4: Agenda
4 Agenda BUSINESS OVERVIEW John Tague President & Chief Executive Officer Hertz Global Holdings, Inc. FINANCIAL RESULTS OVERVIEW Tom Kennedy Chief Financial Officer Hertz Global Holdings, Inc. HERC OVERVIEW Larry Silber President & Chief Executive Officer Hertz Equipment Rental Corporation 1Q
Slide 5: Capacity is Key Focus
5 Capacity is Key Focus 1Q • Reduced U.S. fleet by 2% in 2015; guided to another step down of 2-3% for 2016 • Capacity plan based on conservative GDP projections and softening commercial business demand across all travel sectors • 1Q:16 average U.S. RAC fleet reduced by 6% YoY • Maintained tight fle
Slide 6: Progress Toward Full Potential
6 Progress Toward Full Potential 1Q Winning with technology Leading cost and quality Earnings customer preference and delivering revenue growth • Outsourced legacy IT systems • Selected CRM system – Installation expected to be complete by year end, well ahead of schedule • Expect implementation of n
Slide 7: Quarterly Overview
7 TOM KENNEDY CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc. Quarterly Overview
Slide 8: 1Q:16 Progress Toward RAC Full Potential
8 1Q:16 Progress Toward RAC Full Potential 1Q Global fleet capacity reduced by 4% Worldwide RAC fleet efficiency increased 400 bps YoY Global direct operating/SG&A expense per transaction day reduced by 5% Outsourced legacy IT systems; New CRM system installation ahead of schedule $2.3B of liquidity
Slide 9: 1Q:16 Consolidated Results
9 1Q:16 Consolidated Results *Definitions and reconciliations of these non-GAAP measures are provided in the Company’s first quarter 2016 press release. NM – Not Meaningful 1Q GAAP 1Q:16 Results 1Q:15 Results YoY Change Revenue $2,311 $2,454 (6)% Income (loss) before income taxes $(69) $(86) (20) Ne
Slide 10: Worldwide RAC Revenue Overview
10 US RAC 1Q:16 Revenue by Location Type Excludes Donlen 1Q:16 Revenue By Geography Excludes Donlen 76%24% 74% 26% Worldwide RAC Revenue Overview Int’l RAC 1Q:16 Revenue by Location Type Excludes Donlen 56% 44% US RAC1 1Q:16 Revenue by Customer Type Excludes Donlen 64% 36% Leisure Commercial Int’l R
Slide 11: Worldwide RAC Cost Initiatives Ramp up Through Year
11 Worldwide RAC Cost Initiatives Ramp up Through Year Consolidated Global RAC Cost Savings • FY:16 Target $350M realized savings – 1Q:16 realized savings of ~$70M • FY:15 realized $230M of savings Corporate/ Operations Overhead Fleet Management Sales and Marketing Global RAC Cost Savings • 2016 sav
Slide 12: 1Q:16 U.S. Rental Car Total Revenue
12 1Q:16 U.S. Rental Car Total Revenue Note: Total RPD calculated using Total Revenue less ancillary retail car sales revenue divided by transaction days 1 The alignment of methodologies beginning in 3Q:15 recognizes a greater volume of transaction days on Dollar Thrifty as compar ed to its previous
Slide 13: Higher Fleet Efficiency Offset by Lower RPD
13 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 fleet size; captures the combined result of both revenue management and fleet management in one measurement Higher Fleet Efficiency
Slide 14: U.S. RAC Fleet Management
14 U.S. RAC Fleet Management 1Q • 1Q:16 monthly depreciation per unit $303, a 6% increase primarily due to lower residual values, higher program car costs and shorter hold period for certain vehicles • Improved processes increased cars available-for-rent as a % of total fleet by 34% YoY • Successful
Slide 15: 1Q:16 International Rental Car
15 1Q:16 International Rental Car 1Q • 1Q:16 Revenue increased 6% YoY, excluding FX - Volume 3% higher primarily due to strength in APAC countries as well as Southern Europe - Total RPD 2% higher, in constant currency, benefitting from higher yielding inbound business • Revenue per available car day
Slide 16: HERC Overview
16 HERC OVERVIEW LARRY SILBER PRESIDENT & CHIEF EXECUTIVE OFFICER Hertz Equipment Rental Corporation
Slide 17: Focused on Expanding Revenue and Operational Efficiencies
17 1Q:16: Focused on Expanding Revenue and Operational Efficiencies Revenue Growth and Expansion1 – Q1:16 versus Q1:15 • Total revenues excluding upstream oil & gas branch markets increased 12% • Worldwide pricing was flat, but pricing excluding oil & gas branch markets was up 1% • New account reven
Slide 18: Market Leader with Significant Scale and Broad Footprint in North America
18 Market Leader with Significant Scale and Broad Footprint in North America 1 IHS Global Insight (April 2016) 2 International operations are located in the United Kingdom, China, Saudi Arabia and Qatar. 18 >9% 6-9% 3-6% 0-3% <0% Industry Rental Growth 1 4-Year CAGR Herc Rentals Location
Slide 19: $3.5 Billion in Fleet
19 $3.5 Billion in Fleet at an Average Age of 47 Months Aerial 27% Earth Moving 19% Material Handling 17% Truck 11% Electrical 9% Other 17% Average fleet original equipment cost (OEC). 1Q Capital Expenditures • Reported a positive $6 million net fleet capex Fleet Mix by OEC
Slide 20: Improve N.A. Vendor Management and Fleet Availability
20 Q2 2015 Current Improve N.A. Vendor Management and Fleet Availability Driving operational gains through buying efficiency and increased availability Consolidate Brands and OEMs Substantially Increased Fleet Available to Rent 19% 18% 15% 13% 10% 2013 2014 2015 1Q2016 Target ~ 40% # of Suppliers Fl
Slide 21: Adjusted Corporate EBITDA YOY Growth Improved Each Quarter
21 Adjusted Corporate EBITDA YOY 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-15 2Q-15 3Q-15 4Q-15 Q1-16 Excl. upstream oil & gas 7% 7% 11% 21% 14% Total (7)% (8)% (3)% (0.2)% (4)% *Data is based on
Slide 22: 2016 WW HERC Guidance
22 2016 WW HERC Guidance WW HERC 2016 Guidance Segment Adjusted Corporate EBITDA*: $600 to $650M Estimated Annual Stand-Alone Public Company Costs: $35 to $40M Net Fleet CapEx: Approximately $375 to $425M *Adjusted Corporate EBITDA Guidance excludes the standalone costs of being a public company
Slide 23: RAC and HERC Remain On Track for mid-2016 Separation
23 • Form 10 Update - Initial Form 10 filed 12/21/15 - Amendment #1 filed 2/4/16 - Amendment #2 filed 4/18/2016: included FY:15 results • Operational Readiness Update - Senior leadership team in place - Prospective Board of Directors recruiting on track - Rating agency meetings completed - Capital m
Slide 24: Unique Opportunity to Build Value
24 Unique Opportunity to Build Value Strong brand recognition and reputation – 50 + years Strategically positioned to generate above market growth Strong asset base including $3.5 billion of OEC Industry savvy and experienced leadership team Commitment to disciplined capital management Significant o
Slide 25: Our New Look and Brand
Our New Look and Brand HercRentals”
Slide 26: Cash Flow / Balance Sheet Overview
26 CASH FLOW / BALANCE SHEET OVERVIEW TOM KENNEDY CHIEF FINANCIAL OFFICER Hertz Global Holdings, Inc.
Slide 27: Free Cash Flow
27 Free Cash Flow ($ in millions) 1Q16 1Q15 GAAP Pretax Income (loss) $(69) $(86) PP&E (non fleet) depr. exp. + amortization exp. 77 86 Amortization of debt items 15 16 Cash Taxes, net of refunds (16) (4) Net Working Capital/Other (121) 81 Operating Cash Flow excl. fleet depr. add-back $(114) $93 RA
Slide 28: Liquidity and Debt Overview
28 • No meaningful Corporate debt maturities until 2018 (excluding ABL, which is primarily secured by HERC assets) • Targeting RAC net leverage ratio of 3.5x at YE:16; Herc net leverage ratio of 3.25x-3.75x upon separation Liquidity and Debt Overview Corporate Liquidity at March 31, 2016 ABL Availab
Slide 29: Outlook
29 OUTLOOK
Slide 30: FY:2016 Financial Guidance
30 FY:2016 Financial Guidance FY:2016 assumptions include: • 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 fleet capex of $375M-$425M • Consolidated 37% effective tax rate • 424M shares outst
Slide 31: Q&A
31 Q&A
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