Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — Q3 2015 Earnings Presentation
28 slides from Hertz Global's earnings presentation, Nov 9, 2015
Slide 1: 3Q 2015 Earnings Call
3Q 2015 Earnings Call November 9, 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 in the Company’s third quarter 2015 press release. 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 Adjus
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 HERC Overview Larry SilberLarry Silber President & Chief Executive Officer Her
Slide 5: 3Q:15 Overview
5 3Q:15 Overview C Accomplishments: Realized global cost savings Increased W.W. RAC fleet efficiency Improved W.W. RAC revenue efficiency Increased customer satisfaction scores Integrated Hertz, Dollar and Thrifty systems W.W. RAC adjusted Corporate EBITDA margin +300 bps to 17% Calculated as HGH ad
Slide 6: 3Q:15 RAC Revenue Efficiency
6 3Q:15 RAC Revenue Efficiency Revenue per Available Car Day (RACD = RPU/Day) Measures the capacity of the fleet to generate revenue Formula: Total revenue / number of days in period x average total owned fleet size U.S. RAC Int’l RAC W.W. RAC +1% +2% +1% 83% 81% 82% Note: Total RPD calculated using
Slide 7: Tom Kennedy, CFO
7 Tom Kennedy CFO • COST INITIATIVES AND FLEET MANAGEMENT • 3Q:15 RAC FINANCIAL PERFORMANCE
Slide 8: Cost Initiatives; Fleet Management
8 Cost Initiatives; Fleet Management FLEET MANAGEMENT U.S. RAC fleet efficiency +300bps YoY to 83%; U.S. RAC net monthly depreciation per unit +1%, better than expected - Increased use of higher return alternative sales channels - Strong industry residuals Capitalized on strong residuals heading int
Slide 9: 3Q:15 Consolidated Results
9 3Q:15 Consolidated Results C GAAP 3Q:15 Results 3Q:14 Results YoY Change Revenue $2,976 $3,121 (5)% Income before income taxes $307 $203 51% Net income $237 $149 59% Diluted earnings per share $0.52 $0.32 63% Diluted shares outstanding 457 464 (2)% Non-GAAP* Adjusted Corporate EBITDA $601 $553 9%
Slide 10: 3Q:15 U.S. RAC Total Revenue
10 3Q:15 U.S. RAC Total Revenue Note: Total RPD calculated using Total Revenue less ancillary retail car sales revenue Revenue per Available Car Day (RACD) up 1% on 300 bps improvement in efficiency Airport total RPD down - Industry published rates declined in shoulder period at the end of August -
Slide 11: U.S. RAC Net Monthly Depreciation/Unit
11 U.S. RAC Net Monthly Depreciation/Unit 3Q:15 net monthly depreciation per unit +1% to $267 3Q:15 unit sales through alternative channels increased 68% YoY YTD 2015 net monthly depreciation per unit (1)% to $267 Revised FY 2015 estimate to $270-280 net monthly depreciation per unit 60% 40% 3Q 2015
Slide 12: U.S. RAC DOE + SG&A
12 U.S. RAC DOE + SG&A 3Q:15 DOE and SG&A as a % of sales down 330 bps YoY Cost savings drivers include labor productivity, distribution efficiency, lower fleet maintenance and improved damage collections U.S. RAC adjusted corporate EBITDA margin 16%, +236 bps YoY 65% 62% 3Q DOE + SG&A as % of Sales
Slide 13: 3Q:15 International Car Rental
13 3Q:15 International Car Rental Revenue +3% YoY, excluding FX Volume +1% Total RPD +2%, excl. FX Fleet efficiency 81% Revenue per available car day +2% YoY DOE + SG&A down 290 bps as a % of revenue at 59% Net monthly depreciation per unit down 6% excluding FX Adjusted Corporate EBITDA margin 24%,
Slide 14: Larry Silber, CEO, HERC – HERC Overview
1414 Larry Silber CEO, HERC • HERC OVERVIEW 14
Slide 15: HERC – Transforming the Business
15 HERC – Transforming the Business Revenue Expanding and diversifying customer base with focus on local accounts Decentralizing reporting structure, optimizing sales force • Better field accountability, more focused asset management, improved customer service Investing in branch management Utilizat
Slide 16: 3Q:15 HERC N.A. Oil & Gas Impact
16 3Q:15 HERC N.A. Oil & Gas Impact North America Rental & Related Revenue* YoY % change Customer Account Regional Branches Upstream oil & gas (39)% (26)% Non-oil & gas 9% 14% * Excludes FX impact Due to the secondary effect in oil markets, we will now report oil and gas results by regional branch d
Slide 17: 3Q:15 HERC Revenue
17 3Q:15 HERC Revenue Note: Pricing and volume data exclude Cinelease due to the nature of that business Pricing N.A. national accounts 49% of revenue vs. 51% 3Q:14 due to expansion of local customer base Upstream oil and gas pricing pressure Volume New accounts up 67% YoY from construction sectors
Slide 18: HERC Key Metrics
18 HERC Key Metrics 36% 37% 39% 38% 35% 36% 38% 39% 35% 35% 37% 1Q 2Q 3Q 4Q NA Dollar Utilization 2013 2014 2015 62% 65% 68% 66% 62% 64% 67% 68% 63% 63% 66% 1Q 2Q 3Q 4Q NA Time Utilization 2013 2014 2015 672 615 532 2013 2014 2015 3Q YTD WW FY Gross Purchases 534 433 410 2013 2014 2015 3Q YTD WW FY
Slide 19: Tom Kennedy, CFO – Balance Sheet and Cash Flow Review
1919 Tom Kennedy CFO • BALANCE SHEET REVIEW • CASH FLOW REVIEW • TRANSACTION DAY BRAND ALIGNMENT • SECOND QUARTER 2015 10Q/A 19
Slide 20: Liquidity and Debt
20 Liquidity and Debt ($ in millions) ABL Availability: $1,334 Unrestricted Cash: 509 Corporate Liquidity: $1,843 Net corporate debt / LTM adjusted corporate EBITDA ratio 4.4x from 4.8x at June 30th FY 2016 leverage ratio target 3.5x Corporate Liquidity at September 30, 2015
Slide 21: Free Cash Flow
21 Free Cash Flow 3Q:15 YTD 3Q:14 YTD Chg GAAP Pretax Income $291 $261 $30 PP&E (non fleet) depr. exp. + amortization exp. 308 307 1 Cash Taxes (31) (47) 16 Net Working Capital/Other 68 89 (21) Operating Cash Flow excl. fleet depr. add-back $636 $610 $26 RAC Fleet Growth (net capex + depr. exp. & ne
Slide 22: Refinancings
22 Refinancings Replaced existing Hertz and Dollar Thrifty Canadian securitizations facilities with single new C$350 million facility - Matures January 2018 Extended Donlen variable funding notes - Matures September 2017 - Upsized facility by $100 million Closed $600 million U.S. RAC term ABS note o
Slide 23: Transaction Day Methodology Aligned
23 Transaction Day Methodology Aligned Operating systems integration complete Transaction days for Dollar/Thrifty now recorded under Hertz methodology Dollar/Thrifty transaction days will now be relatively higher compared to historically recorded Immaterial to 3Q:15; impact beginning in 4Q:15 - High
Slide 24: 2Q:15 10-Q/A
24 2Q:15 10-Q/A 2Q:15 U.S. RAC fleet depreciation expense error resulted from a process change implemented at the beginning of the year - Cause of error identified; additional control procedures implemented - Error is unique to the way vehicles are transferred between legal entities when sold throug
Slide 25: Outlook
25 OUTLOOK
Slide 26: FY:15 Financial Guidance
26 FY:15 Financial Guidance Full Year 2015 Forecast Adj. Corporate EBITDA – Consolidated HGH $1,450M - $1,550M No Change Adj. Corporate EBITDA – W.W. HERC $575M - $625M No Change U.S. RAC Net Monthly Depreciation per Unit $270 - $280 U.S. RAC fleet capacity growth1 (1.0)% to Flat Net non-fleet capex
Slide 27: 2015 Investor Day Agenda
27 2015 Investor Day Agenda C Panel Presentation Moderator Full potential opportunity John Tague Chief Executive Officer Customer preference & revenue mgmt. Jeff Foland Chief Revenue Officer Leading cost and quality Tom Kennedy Chief Financial Officer Winning with technology Tyler Best Chief Informa
Slide 28: Financial Information and Operating Data
Q&A FINANCIAL INFORMATION AND OPERATING DATA SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2015 2014 2015 2014 Total revenues $ 2,976 $ 3,121 $ 8,122 $ 8,487 Expenses: Direct operating 1,564
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