Hertz Global Holdings, Inc · NASDAQ:HTZ
Hertz Global — FY2009 Earnings Presentation
28 slides from Hertz Global's earnings presentation, Mar 2, 2010
Slide 1: Q4 & FY 2009 Earnings Call
Q4 & FY 2009 Earnings Call Wednesday February 24, 2010 10:00 a.m. ET Dial In: (877) 531-2989 (US) (612) 332-0637 (International) Passcode: 145795
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: Non-GAAP Measures
Non-GAAP Measures 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: 3 • Same Store Revenue Growth • Adjusted SGA Rental Related Revenue • Adjusted DOE • Equipment Rental and • Corp
Slide 4: Agenda
Agenda Industry & Strategic Overview Mark Frissora, Chairman and CEO Financial & Operating Results Overview Elyse Douglas, Executive VP and CFO Outlook Mark Frissora, Chairman and CEO Question & Answer Session 4
Slide 5: Consolidated Financial Results
Consolidated Financial Results Definitions and reconciliations of these non-GAAP measures are provided at the end of the presentation. 5 $593.1 $733.4 $1,767.0 $29.8 Total net cash low $167.7 $183.4 $430.5 $5.3 Levered after-tax cash flow after fleet growth 325.5 407.7 325.5 407.7 Adjusted diluted n
Slide 6: Full Year 2009 Operating Review
Full Year 2009 Operating Review Total cost savings $760 million, exceeded $620 million target Demonstrated fleet, labor & location flexibility WWRAC fleet reduced by 9.7%; transaction days down 8.0% Added Advantage leisure brand to augment diversified portfolio Already gained 1% of U.S. airport mark
Slide 7: Q409 Consolidated Highlights
Q409 Consolidated Highlights 7 Consolidated Q409 revenue decline moderated to -2.7% vs. -15.7% Q309 Strong Christmas leisure demand Recovering corporate travel volumes Growth in off-airport products: leisure, monthly, insurance replacement Stabilizing volume trends in equipment rental (HERC) end mar
Slide 8: Q409 U.S. Rent-A-Car
Q409 U.S. Rent-A-Car 8 U.S. RAC – Airport Leisure RPD +9.6% (largest airport segment) +2.5% rental rate revenue, driven by +7.1% off-airport rental rate revenue Recovering corporate travel revenue, improving monthly since Aug. 2009 Q409 corporate revenue: -7.0% vs. lows of -26% experienced earlier i
Slide 9: Q409 U.S. RAC Revenue Mix by Category
Q409 U.S. RAC Revenue Mix by Category On-Airport 73% of US RAC revenue Off-Airport 27% of US RAC revenue Q409 Avg. Daily Rate $44.45 $48.80 $30.00 $26.59 $24.86 $39.88 9
Slide 10: Europe Rent-A-Car Q409
Europe Rent-A-Car Q409 10 Europe’s economy slowly improving, but still fragile Corporate RPD positive yoy for first time in 2009 Europe Rent-A-Car demonstrated outstanding cost management Streamline & consolidate regional operations Centralize work functions Delayer organizational structure Reduced
Slide 11: Q409 Hertz Equipment Rental (HERC)
Q409 Hertz Equipment Rental (HERC) 11 HERC Corporate EBITDA Margins Worldwide Hertz Equipment Rental Volume down 24.2%, improved +450bps from Q309 Pricing down 9.5% due to excess fleet and competitor discounting Focused on profitable expansion National accounts; Yield management Pockets of recovery:
Slide 12: Diversified Growth Strategies
Diversified Growth Strategies Connect by Hertz – hourly / urban New locations opened in Madrid & Berlin 5 new universities added in Q409, now available at 17 schools U.S. pre-paid rentals - value conscious $18.2 million in revenue Q409 $81.9 million in revenue since Dec ‘08 launch Advantage Rent-A-C
Slide 13: Q409 Consolidated Financial Results
Q409 Consolidated Financial Results Adjusted DOE and SG&A lower by 4.3% and 8.6% yoy, respectively in Q409 Focus on aligning operations to market conditions 25% lower damage costs in worldwide rental car process efficiencies drove 8% lower corporate staffing levels 4.2% higher labor productivity in
Slide 14: FY09 Consolidated Financial Results
FY09 Consolidated Financial Results Definitions and reconciliations of these non-GAAP measures are provided at the end of the presentation. FY09 adjusted pre-tax income decreased $38.3mln on $1.4bln revenue decline Adjusted diluted EPS beats guidance due to: Greater that expected RAC demand Offset e
Slide 15: Q4 & FY09 Worldwide Rent-A-Car
Q4 & FY09 Worldwide Rent-A-Car 16 Q409 Adjusted pre-tax margin: 6.6% or on 3.4% higher revenue (flat excl. FX) Improved leisure demand in U.S. & EU RAC Reduced total adjusted DOE & SGA by 1% yoy Fleet depreciation & interest 17.6% lower yoy Corporate EBITDA: +$153.2 mln, 8.0% margin Table 3 press re
Slide 16: Rent-A-Car Fleet Efficiency
Rent-A-Car Fleet Efficiency Fleet efficiency: % of days car is rented compared with avg. number vehicles available to rent. Formula: ((Annualized Transaction Days / 365) / Average Fleet)) 17 Average Worldwide Fleet, units FY09 Worldwide fleet efficiency up 140 bps to 78.4% Q409 refreshed fleet with
Slide 17: Rent-A-Car Fleet Depreciation
Rent-A-Car Fleet Depreciation 18 US RAC Monthly Depreciation Per Car Worldwide monthly rental car net depreciation continues to improve Q409: down 10.1% yoy, FY09: down 3% yoy Q409 U.S. monthly rental car net depreciation down 14% yoy, FY09 down 4.3% Strategic fleet management strategy lowers 2010 f
Slide 18: Hertz Equipment Rental (HERC)
Hertz Equipment Rental (HERC) Q409 revenue -26.1% yoy, better than Q309 -35.2% Pricing still pressured: -9.5% vs. -8.6% in Q309 Volume trends improving: -24.2% vs. -28.7% in Q309 Revenue diversification strategy Strategic acquisitions in industrial markets Entertainment & Energy Services RAC off-air
Slide 19: HERC Fleet Residuals
HERC Fleet Residuals (Dec. ‘09 OLV Rouse Data): +1.6% from 11/09 Average fleet age: 45 months, +2.5 months from Q309 Purchase new equipment in 2010 as commercial construction begins recovering FY09 Adjusted pre-tax income margin: 6.9% FY09 Corporate EBITDA margin 41.3% 20 WW HERC Fleet Size ($ in mi
Slide 20: WW HERC Fleet Change
WW HERC Fleet 21 ($591.5) ($399.4) ($196.5) ($56.4) Disposals (1st Cost Basis) (Table 6: "Equipment rental fleet growth capital expenditures") ($492.7) ($343.4) ($215.1) ($58.2) Fleet Capex, net $2,147.2 $1,811.5 $2,147.2 $1,811.5 Ending Fleet (Table 6: "Equipment rental maintenance capital expendit
Slide 21: 2010 Refinancing Update
2010 Refinancing Update U.S. Completed Maturities Growth $5.0 $0.8 $4.2 $2.1 $1.2 Estimated 2010 Refinancing Needs U.S. Amend & Extend 2009 ABS $1.7 Remaining 2010 Need ($ in billions) International Opportunities Asset backed securitization Secured bond offering Revolving asset-based loan Leasing st
Slide 22: Interest Expense
Interest Expense 23 2010 total interest expense expected to be ~$90 to $110 mm higher vs. 2009 Increase in rates as we refinance balance of the fleet debt Full year’s interest impact from May 2009 convertible debt issuance Higher fleet debt to fund growth in rental car fleet to meet expected demand
Slide 23: Restructuring | Taxes
Restructuring | Taxes Restructuring & restructuring-related charges $34.5 million Q409 of which $26.1 million was cash Severance expense, location closing costs, loss on surplus fleet sale $153.3 million in FY09 vs. $242.5 million in FY08 Anticipate less than $50 million in restructuring expenses fo
Slide 24: Corporate Covenants
Corporate Covenants Full compliance with all corporate covenants 3.85x (Max 5.00x) on consolidated leverage ratio 3.16x (Min 2.25x) on interest coverage ratio NOTE: Covenant calculations do not include Convertible Notes issued under Hertz Global Holdings in May 2009, since covenants only apply to Th
Slide 25: Corporate Liquidity and Cash Flow
Corporate Liquidity @ 12/31/09 ($ in millions) Unrestricted Cash: $ 986 Corporate Revolver: 925 Corporate Liquidity: $1,911 Cash Flow & Liquidity 26 ($ in millions) Net Corporate Debt Levered Cash Flow Less car sales in Q409 vs. Q408 Defleeted modestly due to higher demand Investing to refresh fleet
Slide 26: Current Trends & Outlook
Current Trends & Outlook 27 The International Monetary Fund expects 2010 to be a year of transition and modest growth, reflecting a 3% gain in U.S. GDP. IMF forecasts less than 1% growth in Europe this year; in a few countries recession to continue. Pursue targeted growth initiatives and reinvest to
Slide 27: 2010 Guidance & Assumptions
2010 Guidance & Assumptions Total Revenues: $7.4 to $7.6 bln RAC revenues grow 2X GDP, U.S. improving more than Europe HERC faces most difficult quarter in Q1 with pricing pressures expected to continue Should see sequential monthly volume improvements throughout 2010 Corporate EBITDA: $1.045 to $1.
Slide 28: 2010 Upside Opportunities
2010 Upside Opportunities Upside in volume and pricing in WW RAC and in global cost efficiencies 29 1) 1.0% of total cost base excluding net depreciation ($ in millions) 2010 Pre-tax Approximate Opportunity Guidance with 1.0% Assumptions Improvement WW RAC Pricing 0.6% $50.0 Volume (Days) 7.4% $18.0