Le Lézard
Classified in: Transportation, Business, Covid-19 virus
Subjects: ERN, ERP

HERTZ REPORTS SECOND QUARTER RESULTS: REVENUE OF $2.3 BILLION, NET INCOME OF $940 MILLION, ADJUSTED CORPORATE EBITDA OF $764 MILLION, OPERATING CASH FLOW OF $708 MILLION AND ADJUSTED FREE CASH FLOW OF $484 MILLION


"Our second quarter results were impressive and position us well for the peak summer season," said Stephen Scherr, Hertz chief executive officer. "We produced record Adjusted Corporate EBITDA and adjusted free cash flow, taking advantage of positive market conditions. The hard work of our team and the resulting financial performance provided us with the opportunity to pursue investments in technology and a younger fleet, while returning capital to shareholders."

ESTERO, Fla., July 28, 2022 /PRNewswire/ -- Hertz Global Holdings, Inc. (NASDAQ: HTZ) ("Hertz", "Hertz Global" or the "Company") today reported results for its second quarter 2022.

HIGHLIGHTS

Revenue was $2.3 billion, up 25% year over year and 30% quarter over quarter, and Adjusted Corporate EBITDA was a second quarter record of $764 million. Adjusted free cash flow was a second quarter record of $484 million, reflecting increased free cash flow conversion. Our financial results for the second quarter reflect the continued strength of our underlying business, positive market forces and high demand for our services, as well as our team's continued dedication to the customer. Results in the quarter further demonstrated the Company's ability to deliver increased earnings and free cash flow, through efficient capital deployment, while still investing in our fleet and non-fleet capital assets.

SUMMARY RESULTS


Three Months Ended

June 30,


Percent Inc/
(Dec)

2022 vs 2021

($ in millions, except earnings per share or where noted)

2022


2021


Hertz Global - Consolidated






Total revenues

$          2,344


$          1,873


25 %

Adjusted net income (loss)(a)

$             520


$             408


27 %

Adjusted diluted earnings (loss) per share(a)

$            1.22


$            2.55


(52) %

Adjusted Corporate EBITDA(a)

$             764


$             639


20 %

Adjusted Corporate EBITDA Margin(a)

33 %


34 %









Average Vehicles (in whole units)

513,307


421,166


22 %

Average Rentable Vehicles (in whole units)

490,236


413,957


18 %

Vehicle Utilization

79 %


79 %



Transaction Days (in thousands)

35,444


29,885


19 %

Total RPD (in dollars)(b)

$          66.66


$          62.22


7 %

Total RPU Per Month (in whole dollars)(b)

$          1,606


$          1,497


7 %

Depreciation Per Unit Per Month (in whole dollars)(b)

$               71


$               91


(22) %







Americas RAC Segment






Total revenues

$          1,973


$          1,643


20 %

Adjusted EBITDA

$             770


$             664


16 %

Adjusted EBITDA Margin

39 %


40 %









Average Vehicles (in whole units)

422,113


350,122


21 %

Average Rentable Vehicles (in whole units)

399,588


344,150


16 %

Vehicle Utilization

80 %


80 %



Transaction Days (in thousands)

29,160


24,992


17 %

Total RPD (in dollars)(b)

$          67.67


$          65.70


3 %

Total RPU Per Month (in whole dollars)(b)

$          1,646


$          1,590


4 %

Depreciation Per Unit Per Month (in whole dollars)(b)

$               49


$               77


(36) %







International RAC Segment






Total revenues

$             371


$             230


61 %

Adjusted EBITDA

$               92


$                (1)


NM

Adjusted EBITDA Margin

25 %


? %









Average Vehicles (in whole units)

91,194


71,044


28 %

Average Rentable Vehicles (in whole units)

90,648


69,807


30 %

Vehicle Utilization

76 %


77 %



Transaction Days (in thousands)

6,284


4,893


28 %

Total RPD (in dollars)(b)

$          61.96


$          44.45


39 %

Total RPU Per Month (in whole dollars)(b)

$          1,432


$          1,039


38 %

Depreciation Per Unit Per Month (in whole dollars)(b)

$             172


$             160


7 %


NM - Not meaningful

NOTE: Hertz Global - consolidated key metrics reflect global rental car operations only and exclude Donlen fleet management and leasing

(a)

Represents a non-GAAP measure. See the accompanying reconciliations included in Supplemental Schedule II.

(b)

Based on December 31, 2021 foreign exchange rates.



LIQUIDITY AND CAPITAL RESOURCES
During the second quarter 2022, the Company completed the $2 billion share repurchase program announced in November 2021, having repurchased 97.8 million cumulative shares. The Company also announced the authorization of a new $2 billion program and have repurchased approximately 9.3 million shares with $1.8 billion remaining under the new plan as of July 21, 2022.

During the second quarter 2022, the Company also took a series of actions to enhance its liquidity and capital allocation flexibility:

The Company's liquidity position was $2.5 billion at June 30, 2022, of which $1.0 billion was unrestricted cash.

In July 2022, Hertz increased the aggregate committed amount of the First Lien RCF by $55 million where the aggregate committed amount remains at $1.9 billion and the sublimit for letters of credit by $55 million where the aggregate sublimit remains at $1.8 billion.

Also in July 2022, an increase to the commitments for the Series 2021-A Notes was made, increasing the maximum principal amount that may be outstanding from $3.8 billion to $3.9 billion.

EARNINGS WEBCAST INFORMATION
Hertz Global's live webcast and conference call to discuss its second quarter 2022 results will be held on July 28, 2022, at 8:30 a.m. Eastern Time. The conference call will be broadcast live in listen-only mode on the company's investor relations website at IR.Hertz.com. If you would like to access the call by phone and ask a question, please go to  https://register.vevent.com/register/BI2433af661d3d4b639a2e3512a894d4d6, and you will be provided with dial in details. Investors are encouraged to dial-in approximately 15 minutes prior to the call.  A web replay will remain available on the website for approximately one year.  The earnings release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on the Hertz website, IR.Hertz.com.

UNAUDITED FINANCIAL DATA, SUPPLEMENTAL SCHEDULES, NON-GAAP MEASURES AND DEFINITIONS
Following is selected financial data of Hertz Global. Also included are Supplemental Schedules, which are provided to present segment results, and reconciliations of non-GAAP measures to their most comparable GAAP measure. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout the earnings release and its view of the usefulness of non-GAAP measures to investors and management.

In the first quarter of 2022, the Company began using Average Rentable Vehicles when calculating Available Car Days, Total RPU and Utilization instead of Average Vehicles. Average Rentable Vehicles excludes vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels. Prior periods have been restated to conform with the revisions, as appropriate. The Company has also restated historical quarterly and annual periods beginning with first quarter 2019 to reflect this change and has posted this information to its investor relations website at IR.Hertz.com.

ABOUT HERTZ
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Additionally, The Hertz Corporation owns and operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit www.hertz.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this release, and in related comments by the Company's management, include "forward-looking statements." Forward-looking statements include information concerning the Company's liquidity and its possible or assumed future results of operations, including descriptions of its business strategies. These statements often include words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts," "guidance" or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate in these circumstances. The Company believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and that the Company's actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on Form 10-K, 10-Q and 8-K filed or furnished to the SEC.

Important factors that could affect the Company's actual results and cause them to differ materially from those expressed in forward-looking statements include, among other things:

Additional information concerning these and other factors can be found in the Company's filings with the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date of this release, and, except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

UNAUDITED FINANCIAL INFORMATION


UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended

June 30,


Six Months Ended

June 30,








(In millions, except per share data)

2022


2021


2022


2021








Revenues

$               2,344


$               1,873


$              4,154


$              3,161








Expenses:















Direct vehicle and operating

1,199


946


2,252


1,724








Depreciation of revenue earning vehicles and lease charges, net

106


116


47


359








Depreciation and amortization of non-vehicle assets

36


50


69


104








Selling, general and administrative

257


172


492


321








Interest expense, net:















Vehicle

45


98


50


202








Non-vehicle

41


91


80


135








Total interest expense, net

86


189


130


337








Other (income) expense, net

2


(10)


?


(13)








Reorganization items, net

?


633


?


677








(Gain) from the sale of a business

?


(8)


?


(400)








Change in fair value of Public Warrants

(461)


?


(511)


?








Total expenses

1,225


2,088


2,479


3,109








Income (loss) before income taxes

1,119


(215)


1,675


52








Income tax (provision) benefit

(179)


46


(309)


(33)








Net income (loss)

940


(169)


1,366


19








Net (income) loss attributable to noncontrolling interests

?


1


?


2








Net income (loss) attributable to Hertz Global

$                  940


$                 (168)


$              1,366


$                   21








Weighted average number of shares outstanding:















Basic

398


160


415


158








Diluted

424


160


443


158








Earnings (loss) per share:















Basic

$                 2.36


$                (1.05)


$                3.29


$                0.13








Diluted

$                 1.13


$                (1.05)


$                1.93


$                0.13








 

UNAUDITED CONSOLIDATED BALANCE SHEETS


(In millions, except par value and share data)

June 30, 2022


December 31,
2021




ASSETS







Cash and cash equivalents

$               1,041


$               2,258




Restricted cash and cash equivalents:







Vehicle

221


77




Non-vehicle

301


316




Total restricted cash and cash equivalents

522


393




Total cash and cash equivalents and restricted cash and cash equivalents

1,563


2,651




Receivables:







Vehicle

136


62




Non-vehicle, net of allowance of $42 and $48, respectively

839


696




Total receivables, net

975


758




Prepaid expenses and other assets

1,094


1,017




Revenue earning vehicles:







Vehicles

13,962


10,836




Less: accumulated depreciation

(1,632)


(1,610)




Total revenue earning vehicles, net

12,330


9,226




Property and equipment, net

605


608




Operating lease right-of-use assets

1,562


1,566




Intangible assets, net

2,893


2,912




Goodwill

1,044


1,045




Total assets

$             22,066


$             19,783




LIABILITIES AND STOCKHOLDERS' EQUITY







Accounts payable:







Vehicle

$                  182


$                    56




Non-vehicle

477


516




Total accounts payable

659


572




Accrued liabilities

1,048


863




Accrued taxes, net

206


157




Debt:







Vehicle

10,411


7,921




Non-vehicle

2,981


2,986




Total debt

13,392


10,907




Public Warrants

811


1,324




Operating lease liabilities

1,493


1,510




Self-insured liabilities

470


463




Deferred income taxes, net

1,258


1,010




Total liabilities

19,337


16,806




Commitments and contingencies







Stockholders' equity:







Preferred stock, $0.01 par value, no shares issued and outstanding

?


?




Common stock, $0.01 par value, 477,722,177 and 477,233,278 shares issued, respectively, and
   368,386,372 and 449,782,424 shares outstanding, respectively

5


5




Treasury stock, at cost, 109,335,805 and 27,450,854 common shares, respectively

(2,321)


(708)




Additional paid-in capital

6,274


6,209




Retained earnings (Accumulated deficit)

(949)


(2,315)




Accumulated other comprehensive income (loss)

(280)


(214)




Total stockholders' equity

2,729


2,977




Total liabilities and stockholders' equity

$             22,066


$             19,783




 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended

June 30,


Six Months Ended

June 30,

(In millions)

2022


2021


2022


2021

Cash flows from operating activities:








Net income (loss)

$              940


$             (170)


$           1,366


$                19

Adjustments to reconcile net income (loss) to net cash provided by (used in)
     operating activities:








Depreciation and reserves for revenue earning vehicles

165


145


145


420

Depreciation and amortization, non-vehicle

36


50


69


104

Amortization of deferred financing costs and debt discount (premium)

14


64


25


98

Loss on extinguishment of debt

?


8


?


8

Stock-based compensation charges

36


?


64


2

Provision for receivables allowance

10


35


23


64

Deferred income taxes, net

146


(78)


249


(16)

Reorganization items, net

?


329


?


314

(Gain) loss from the sale of a business

?


(8)


?


(400)

Change in fair value of Public Warrants

(461)


?


(511)


?

(Gain) loss on financial instruments

(21)


1


(65)


2

Other

(2)


(8)


(3)


(10)

Changes in assets and liabilities:








Non-vehicle receivables

(157)


(141)


(200)


(214)

Prepaid expenses and other assets

(47)


20


(87)


(67)

Operating lease right-of-use assets

7


76


79


154

Non-vehicle accounts payable

(83)


54


(32)


94

Accrued liabilities

109


(73)


233


(11)

Accrued taxes, net

22


55


52


91

Operating lease liabilities

(13)


(82)


(93)


(160)

Self-insured liabilities

7


(12)


15


(27)

Net cash provided by (used in) operating activities

708


265


1,329


465

Cash flows from investing activities:








Revenue earning vehicles expenditures

(3,104)


(2,619)


(6,089)


(4,136)

Proceeds from disposal of revenue earning vehicles

1,416


513


2,887


1,199

Non-vehicle capital asset expenditures

(29)


(8)


(59)


(17)

Proceeds from non-vehicle capital assets disposed of or to be disposed of

5


6


6


10

Collateral payments

?


(303)


?


(303)

Collateral returned in exchange for letters of credit

2


114


19


114

Return of (investment in) equity investments

?


?


(15)


?

Proceeds from the sale of a business, net of cash sold

?


?


?


818

Other

?


(1)


?


(1)

Net cash provided by (used in) investing activities

(1,710)


(2,298)


(3,251)


(2,316)

Cash flows from financing activities:








Proceeds from issuance of vehicle debt

2,699


7,843


7,379


8,939

Repayments of vehicle debt

(1,332)


(7,174)


(4,824)


(8,120)

Proceeds from issuance of non-vehicle debt

?


2,579


?


3,139

Repayments of non-vehicle debt

(5)


(6,340)


(10)


(6,341)

Payment of financing costs

(14)


(144)


(38)


(151)

Proceeds from Plan Sponsors

?


2,781


?


2,781

Proceeds from Rights Offering, net

?


1,635


?


1,635

Proceeds from the issuance of preferred stock, net

?


1,433


?


1,433

Distributions to common stockholders

?


(239)


?


(239)

Proceeds from exercises of Public Warrants

?


?


3


?

Share repurchases

(881)


?


(1,647)


?

Early redemption payments

?


(85)


?


(85)

Contributions from (distributions to) noncontrolling interests

?


(5)


?


(15)

Other

?


?


(4)


?

Net cash provided by (used in) financing activities

467


2,284


859


2,976

Effect of foreign currency exchange rate changes on cash and cash
     equivalents and restricted cash and cash equivalents

(24)


4


(25)


(8)

Net increase (decrease) in cash and cash equivalents and restricted cash
     and cash equivalents during the period

(559)


255


(1,088)


1,117

Cash and cash equivalents and restricted cash and cash equivalents at
     beginning of period(a)

2,122


2,440


2,651


1,578

Cash and cash equivalents and restricted cash and cash equivalents at end
     of period

$           1,563


$           2,695


$           1,563


$           2,695



(a)

Amounts include cash and cash equivalents and restricted cash and cash equivalents of Donlen which were held for sale as of December 31, 2020.

 

Supplemental Schedule I

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Three Months Ended June 30, 2022


Three Months Ended June 30, 2021

(In millions)

Americas
RAC


International
RAC


Corporate


Hertz
Global


Americas
RAC


International
RAC


All other
operations


Corporate


Hertz
Global

Revenues

$       1,973


$            371


$            ?


$      2,344


$       1,643


$            230


$             ?


$            ?


$      1,873

Expenses:


















Direct vehicle and operating

1,002


197


?


1,199


793


154


?


(1)


946

Depreciation of revenue earning vehicles and lease charges,
     net

61


45


?


106


80


36


?


?


116

Depreciation and amortization of non-vehicle assets

30


4


2


36


43


4


?


3


50

Selling, general and administrative

99


47


111


257


69


40


?


63


172

Interest expense, net:


















Vehicle

35


10


?


45


77


21


?


?


98

Non-vehicle

(13)


?


54


41


(3)


?


?


94


91

Total interest expense, net

22


10


54


86


74


21


?


94


189

Other (income) expense, net

(1)


(4)


7


2


(6)


(1)


?


(3)


(10)

Reorganization items, net

?


?


?


?


94


12


?


527


633

(Gain) from the sale of a business

?


?


?


?


?


?


?


(8)


(8)

Change in fair value of Public Warrants

?


?


(461)


(461)


?


?


?


?


?

Total expenses

1,213


299


(287)


1,225


1,147


266


?


675


2,088

Income (loss) before income taxes

$          760


$              72


$         287


1,119


$          496


$             (36)


$             ?


$        (675)


(215)

Income tax (provision) benefit







(179)










46

Net income (loss)







940










(169)

Net (income) loss attributable to noncontrolling interests







?










1

Net income (loss) attributable to Hertz Global







$         940










$        (168)


NOTE: Effective in the second quarter of 2021, as a result of the sale of the Company's Donlen fleet management and leasing business on March 30, 2021, the All Other Operations reportable segment, which consisted primarily of the former Donlen business, was no longer deemed a reportable segment.

 

Supplemental Schedule I (continued)

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED STATEMENT OF OPERATIONS BY SEGMENT

Unaudited



Six Months Ended June 30, 2022


Six Months Ended June 30, 2021

(In millions)

Americas
RAC


International
RAC


Corporate


Hertz
Global


Americas
RAC


International
RAC


All other
operations


Corporate


Hertz
Global

Revenues

$       3,531


$            623


$            ?


$      4,154


$       2,610


$            415


$          136


$            ?


$      3,161

Expenses:


















Direct vehicle and operating

1,905


348


(1)


2,252


1,434


279


5


6


1,724

Depreciation of revenue earning vehicles and lease charges

(32)


79


?


47


290


69


?


?


359

Depreciation and amortization of non-vehicle assets

56


7


6


69


87


9


2


6


104

Selling, general and administrative

185


89


218


492


121


70


10


120


321

Interest expense, net:


















Vehicle

37


13


?


50


149


41


12


?


202

Non-vehicle

(21)


?


101


80


(5)


1


1


138


135

Total interest expense, net

16


13


101


130


144


42


13


138


337

Other (income) expense, net

(2)


(7)


9


?


(7)


(1)


?


(5)


(13)

Reorganization items, net

?


?


?


?


80


12


(1)


586


677

(Gain) from the sale of a business

?


?


?


?


?


?


?


(400)


(400)

Change in fair value of Public Warrants

?


?


(511)


(511)


?


?


?


?


?

Total expenses

2,128


529


(178)


2,479


2,149


480


29


451


3,109

Income (loss) before income taxes

$       1,403


$              94


$         178


1,675


$          461


$             (65)


$          107


$        (451)


52

Income tax (provision) benefit







(309)










(33)

Net income (loss)







1,366










19

Net (income) loss attributable to noncontrolling interests







?










2

Net income (loss) attributable to Hertz Global







$      1,366










$           21


NOTE: Effective in the second quarter of 2021, as a result of the sale of the Company's Donlen fleet management and leasing business on March 30, 2021, the All Other Operations reportable segment, which consisted primarily of the former Donlen business, was no longer deemed a reportable segment.

 

Supplemental Schedule II

HERTZ GLOBAL HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED NET INCOME (LOSS), ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE AND ADJUSTED
CORPORATE EBITDA

Unaudited



Three Months Ended

June 30,


Six Months Ended

June 30,

(In millions, except per share data)

2022


2021


2022


2021

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share:








Net income (loss) attributable to Hertz Global

$                  940


$                 (168)


$               1,366


$                    21

Adjustments:








Income tax provision (benefit)

179


(46)


309


33

Vehicle and non-vehicle debt-related charges(a)(m)

14


68


26


104

Restructuring and restructuring related charges(b)

15


37


21


50

Acquisition accounting-related depreciation and amortization(c)

?


12


1


25

Reorganization items, net(d)

?


633


?


677

Pre-reorganization and non-debtor financing charges(e)

?


17


?


40

Gain from the Donlen Sale(f)

?


(8)


?


(400)

Unrealized (gains) losses on financial instruments(g)

(21)


?


(65)


?

Change in fair value of Public Warrants

(461)


?


(511)


?

Other items(h)(n)

27


6


83


(78)

Adjusted pre-tax income (loss)(i)

693


551


1,230


472

Income tax (provision) benefit on adjusted pre-tax income (loss)(j)

(173)


(143)


(307)


(123)

Adjusted Net Income (Loss)

$                  520


$                  408


$                  923


$                  349

Weighted-average number of diluted shares outstanding

424


160


443


158

Adjusted Diluted Earnings (Loss) Per Share(k)

$                 1.22


$                 2.55


$                 2.08


$                 2.20

Adjusted Corporate EBITDA:








Net income (loss) attributable to Hertz Global

$                  940


$                 (168)


$               1,366


$                    21

Adjustments:








Income tax provision (benefit)

179


(46)


309


33

Non-vehicle depreciation and amortization(l)

36


50


69


104

Non-vehicle debt interest, net

41


91


80


135

Vehicle debt-related charges(a)(m)

9


26


16


54

Restructuring and restructuring related charges(b)

15


37


21


50

Reorganization items, net(d)

?


633


?


677

Pre-reorganization and non-debtor financing charges(e)

?


17


?


40

Gain from the Donlen Sale(f)

?


(8)


?


(400)

Unrealized (gains) losses on financial instruments(g)

(21)


?


(65)


?

Change in fair value of Public Warrants

(461)


?


(511)


?

Other items(h)(o)

26


7


93


(72)

Adjusted Corporate EBITDA

$                  764


$                  639


$               1,378


$                  642


Supplemental Schedule II (continued)

(a)

Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.

(b)

Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. For the three and six months ended June 30, 2022, charges incurred related primarily to International RAC. For the three months ended June 30, 2021, charges incurred were $19 million, $10 million and $8 million for Corporate, International RAC and Americas RAC, respectively. For the six months ended June 30, 2021, charges incurred were $25 million, $17 million and $8 million for Corporate, International RAC and Americas RAC, respectively.

(c)

Represents incremental expense associated with the amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.

(d) 

Represents charges incurred associated with the Reorganization and emergence from Chapter 11, primarily for professional fees. The charges relate primarily to Corporate.



(in millions)

Three Months
Ended June 30,
2021


Six Months
Ended June 30,
2021

Professional fees and other bankruptcy related costs

$                     199


$                     257

Loss on extinguishment of debt

191


191

Backstop fee

164


164

Breakup fee

77


77

Contract settlements

25


25

Cancellation of share-based compensation grants

(10)


(10)

Net gain on settlement of liabilities subject to compromise

(11)


(22)

Other, net

(2)


(5)

Reorganization items, net

$                     633


$                     677



(e)

Represents charges incurred prior to the filing of the Chapter 11 Cases comprised of preparation charges for the Reorganization, such as professional fees. Also includes, certain non-debtor financing and professional fee charges. The amounts incurred for Americas RAC, International RAC and Corporate were $8 million, $2 million, and $7 million for the three months ended June 30, 2021, respectively. For Americas RAC, International RAC, All other operations and Corporate were $17 million, $5 million, $2 million and $17 million for the six months ended June 30, 2021, respectively.

(f)

Represents the gain from the sale of the Company's Donlen business on March 30, 2021, primarily associated with Corporate.

(g)

Represents unrealized gains (losses) on derivative financial instruments, primarily associated with Americas RAC.

(h)

Represents miscellaneous items. For 2022, primarily includes bankruptcy claims, certain professional fees and charges related to the settlement of bankruptcy claims. For 2021, includes $100 million due to the suspension of depreciation in the first half of the year for the Donlen leasing and fleet management operations while classified as held for sale in all other operations, partially offset by letter of credit fees recorded in the first half of the year in Corporate and charges for a multiemployer pension plan withdrawal liability recorded in the first quarter in Corporate.

(i)

Adjustments by caption on a pre-tax basis were as follows:



Increase (decrease) to expenses

Three Months Ended June 30,


Six Months Ended June 30,

(In millions)

2022


2021


2022


2021

Direct vehicle and operating

$                   (19)


$                   (28)


$                   (21)


$                    59

Selling, general and administrative

(6)


(36)


(11)


(67)

Interest expense, net:








Vehicle

(9)


(34)


(16)


(73)

Non-vehicle

(8)


(44)


(14)


(50)

Total interest expense, net

(17)


(78)


(30)


(123)

Other income (expense), net

7


2


(4)


(10)

Reorganization items, net

?


(633)


?


(677)

Gain from the Donlen Sale

?


8


?


400

Change in fair value of Public Warrants

461


?


511


?

Total adjustments

$                  426


$                 (765)


$                  445


$                 (418)



(j)

Derived utilizing a combined statutory rate of 25% and 26% for the three and six months ended June 30, 2022 and 2021, respectively, applied to the respective Adjusted Pre-tax Income (Loss).

(k)

Adjustments used to reconcile diluted earnings (loss) per share on a GAAP basis to Adjusted Diluted Earnings (Loss) Per Share are comprised of the same adjustments, inclusive of the tax impact, used to reconcile net income (loss) to Adjusted Net Income (Loss) divided by the weighted-average diluted shares outstanding during the period.

(l)

Non-vehicle depreciation and amortization expense for Americas RAC, International RAC and Corporate for the three months ended June 30, 2022 was $30 million, $4 million and $2 million, respectively. For the three months ended June 30, 2021 was $43 million, $4 million, and $3 million for Americas RAC, International RAC and Corporate, respectively. Non-vehicle depreciation and amortization for Americas RAC, International RAC and Corporate for the six months ended June 30, 2022 were $56 million, $7 million and $6 million, respectively.  For the six months ended June 30, 2021 were $87 million, $9 million, $2 million and $6 million, respectively, for Americas RAC, International RAC, All other operations and Corporate.

(m)

Vehicle debt-related charges for Americas RAC and International RAC for the three months ended June 30, 2022 were $3 million and $6 million, respectively, and were $21 million and $5 million, respectively, for the three months ended June 30, 2021. Vehicle debt-related charges for Americas RAC and International RAC for the six months ended June 30, 2022 were $9 million and $7 million, respectively. For the six months ended June 30, 2021, vehicle debt-related charges for Americas RAC, International RAC and All other operations were $42 million, $10 million and $2 million, respectively.

(n)

In 2022, includes letter of credit fees recorded in Corporate.

(o)

In 2022, includes an adjustment for certain non-cash stock-based compensation charges recorded in Corporate.

 

Supplemental Schedule III

HERTZ GLOBAL HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURE - ADJUSTED OPERATING CASH FLOW

AND ADJUSTED FREE CASH FLOW

Unaudited



Three Months Ended

June 30,


Six Months Ended

June 30,

(In millions)

2022


2021


2022


2021

ADJUSTED OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW:


Net cash provided by (used in) operating activities

$              708


$              265


$           1,329


$              465

Depreciation and reserves for revenue earning vehicles

(165)


(145)


(145)


(420)

Bankruptcy related payments - post emergence

42


?


78


?

Adjusted operating cash flow

585


120


1,262


45

Non-vehicle capital asset expenditures, net

(24)


(2)


(53)


(7)

Adjusted operating cash flow before vehicle investment

562


118


1,210


38

Net fleet growth after financing

(77)


(1,420)


(646)


(1,827)

Noncontrolling interests

?


(4)


?


(7)

Adjusted free cash flow

$              484


$          (1,306)


$              563


$          (1,796)









CALCULATION OF NET FLEET GROWTH AFTER FINANCING:



Revenue earning vehicles expenditures

$          (3,104)


$          (2,619)


$          (6,089)


$          (4,136)

Proceeds from disposal of revenue earning vehicles

1,416


513


2,887


1,199

Revenue earning vehicles capital expenditures, net

(1,688)


(2,106)


(3,202)


(2,937)

Depreciation and reserves for revenue earning vehicles

165


145


145


420

Financing activity related to vehicles:








Borrowings

2,699


7,843


7,379


$           8,939

Payments

(1,332)


(7,174)


(4,824)


$          (8,120)

Restricted cash changes, vehicle

79


(128)


(144)


$             (129)

Net financing activity related to vehicles

1,446


541


2,411


690

Net fleet growth after financing

$               (77)


$          (1,420)


$             (646)


$          (1,827)

 

Supplemental Schedule IV

HERTZ GLOBAL HOLDINGS, INC.

NET DEBT CALCULATION

Unaudited



As of June 30, 2022


As of December 31, 2021

(In millions)

Vehicle


Non-Vehicle


Total


Vehicle


Non-Vehicle


Total

Term loans

$                    ?


$               1,532


$               1,532


$                    ?


$               1,539


$               1,539

Senior notes

?


1,500


1,500


?


1,500


1,500

U.S. vehicle financing (HVF III)

9,233


?


9,233


7,001


?


7,001

International vehicle financing (Various)

1,147


?


1,147


860


?


860

Other debt

82


13


95


93


16


109

Debt issue costs, discounts and premiums

(51)


(64)


(115)


(33)


(69)


(102)

Debt as reported in the balance sheet

10,411


2,981


13,392


7,921


2,986


10,907

Add:












Debt issue costs, discounts and premiums

51


64


115


33


69


102

Less:












Cash and cash equivalents

?


1,041


1,041


?


2,258


2,258

Restricted cash

221


?


221


77


?


77

Restricted cash and restricted cash equivalents associated with Term C Loan

?


245


245


?


245


245

Net Debt

$             10,241


$               1,759


$             12,000


$               7,877


$                  552


$               8,429













Corporate leverage ratio(a)



0.6x






0.3x





(a)

Corporate leverage ratio is calculated as non-vehicle net debt divided by LTM Adjusted Corporate EBITDA.

 

Supplemental Schedule V

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited


Global RAC



Three Months Ended

June 30,


Percent
Inc/(Dec)


Six Months Ended
June 30,


Percent
Inc/(Dec)

($ in millions, except where noted)

2022


2021



2022


2021


Total RPD












Revenues

$       2,344


$       1,873




$       4,154


$       3,025



Foreign currency adjustment(a)

19


(14)




21


(23)



Total Revenues - adjusted for foreign currency

$       2,363


$       1,859




$       4,175


$       3,002



Transaction Days (in thousands)

35,444


29,885




66,065


54,534



Total RPD (in dollars)(b)

$       66.66


$       62.22


7 %


$       63.19


$       55.05


15 %













Total Revenue Per Unit Per Month












Total Revenues - adjusted for foreign currency

$       2,363


$       1,859




$       4,175


$       3,002



Average Rentable Vehicles (in whole units)(c)

490,236


413,957




472,871


387,710



Total revenue per unit (in whole dollars)

$       4,819


$       4,492




$       8,828


$       7,743



Number of months in period (in whole units)

3


3




6


6



Total RPU Per Month (in whole dollars)(b)(c)

$       1,606


$       1,497


7 %


$       1,471


$       1,290


14 %













Vehicle Utilization












Transaction Days (in thousands)

35,444


29,885




66,065


54,534



Average Rentable Vehicles (in whole units)(c)

490,236


413,957




472,871


387,710



Number of days in period (in whole units)

91


91




181


181



Available Car Days (in thousands)

44,615


37,671




85,616


70,216



Vehicle Utilization(c)(d)

79 %


79 %




77 %


78 %















Depreciation Per Unit Per Month












Depreciation of revenue earning vehicles and lease charges, net

$          106


$          116




$            47


$          359



Foreign currency adjustment(a) 

3


(1)




3


(3)



Adjusted depreciation of revenue earning vehicles and lease charges

$          109


$          115




$            50


$          356



Average Vehicles (in whole units)

513,307


421,166




497,259


394,383



Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)

$          213


$          273




$          100


$          903



Number of months in period (in whole units)

3


3




6


6



Depreciation Per Unit Per Month (in whole dollars)

$            71


$            91


(22) %


$            17


$          151


(89) %


Note: Global RAC represents Americas RAC and International RAC segment information on a combined basis and excludes Corporate and the Company's former Donlen leasing operations which were sold on March 30, 2021.

(a)

Based on December 31, 2021 foreign exchange rates.

(b)

Effective in the third quarter of 2021, the Company revised its calculation of Total RPD and Total RPU to include ancillary retail vehicle sales revenues.

(c)

Effective in the first quarter of 2022, the Company revised its calculation of Total RPU and Vehicle Utilization to use Average Rentable Vehicles in the denominator which excludes vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels.

(d) 

Calculated as Transaction Days divided by Available Car Days.

 

Supplemental Schedule V (continued)

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited


Americas RAC



Three Months Ended

June 30,


Percent
Inc/(Dec)


Six Months Ended
June 30,


Percent
Inc/(Dec)

($ in millions, except where noted)

2022


2021



2022


2021


Total RPD












Revenues

$       1,973


$       1,643




$       3,531


$       2,610



Foreign currency adjustment(a)

?


(1)




?


(1)



Total Revenues - adjusted for foreign currency

$       1,973


$       1,642




$       3,531


$       2,609



Transaction Days (in thousands)

29,160


24,992




54,739


45,243



Total RPD (in dollars)(b)

$       67.67


$       65.70


3 %


$       64.50


$       57.67


12 %













Total Revenue Per Unit Per Month












Total Revenues - adjusted for foreign currency

$       1,973


$       1,642




$       3,531


$       2,609



Average Rentable Vehicles (in whole units)(c)

399,588


344,150




386,363


320,232



Total revenue per unit (in whole dollars)

$       4,938


$       4,771




$       9,139


$       8,147



Number of months in period (in whole units)

3


3




6


6



Total RPU Per Month (in whole dollars)(b)(c)

$       1,646


$       1,590


4 %


$       1,523


$       1,358


12 %













Vehicle Utilization












Transaction Days (in thousands)

29,160


24,992




54,739


45,243



Average Rentable Vehicles (in whole units)(c)

399,588


344,150




386,363


320,232



Number of days in period (in whole units)

91


91




181


181



Available Car Days (in thousands)

36,366


31,319




69,952


58,000



Vehicle Utilization(c)(d)

80 %


80 %




78 %


78 %















Depreciation Per Unit Per Month












Depreciation of revenue earning vehicles and lease charges, net

$            61


$            80




$          (32)


$          290



Foreign currency adjustment(a) 

?


1




?


(1)



Adjusted depreciation of revenue earning vehicles and lease charges

$            61


$            81




$          (32)


$          291



Average Vehicles (in whole units)

422,113


350,122




409,867


325,364



Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)

$          145


$          231




$          (78)


$          894



Number of months in period (in whole units)

3


3




6


6



Depreciation Per Unit Per Month (in whole dollars)

$            49


$            77


(36) %


$          (13)


$          149


NM


NM - Not meaningful

(a)

Based on December 31, 2021 foreign exchange rates.

(b)

Effective in the third quarter of 2021, the Company revised its calculation of Total RPD and Total RPU to include ancillary retail vehicle sales revenues.

(c) 

Effective in the first quarter of 2022, the Company revised its calculation of Total RPU and Vehicle Utilization to use Average Rentable Vehicles in the denominator which excludes vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels.

(d) 

Calculated as Transaction Days divided by Available Car Days.

 

Supplemental Schedule V (continued)

HERTZ GLOBAL HOLDINGS, INC.

KEY METRICS CALCULATIONS

REVENUE, UTILIZATION AND DEPRECIATION

Unaudited

International RAC



Three Months Ended
June 30,


Percent
Inc/(Dec)


Six  Months Ended
June 30,


Percent
Inc/(Dec)

($ in millions, except where noted)

2022


2021



2022


2021


Total RPD












Revenues

$             371


$             230




$        623


$        415



Foreign currency adjustment(a)

18


(12)




21


(22)



Total Revenues - adjusted for foreign currency

$             389


$             218




$        644


$        393



Transaction Days (in thousands)

6,284


4,893




11,326


9,291



Total RPD (in dollars)(b)

$          61.96


$          44.45


39 %


$     56.82


$     42.31


34 %













Total Revenue Per Unit Per Month












Total Revenues - adjusted for foreign currency

$             389


$             218




$        644


$        393



Average Rentable Vehicles (in whole units)(c)

90,648


69,807




86,508


67,478



Total revenue per unit (in whole dollars)

$          4,295


$          3,116




$     7,440


$     5,825



Number of months in period (in whole units)

3


3




6


6



Total RPU Per Month (in whole dollars)(b)(c)

$          1,432


$          1,039


38 %


$     1,240


$        971


28 %













Vehicle Utilization












Transaction Days (in thousands)

6,284


4,893




11,326


9,291



Average Rentable Vehicles (in whole units)(c)

90,648


69,807




86,508


67,478



Number of days in period (in whole units)

91


91




181


181



Available Car Days (in thousands)

8,248


6,352




15,664


12,216



Vehicle Utilization(c)(d)

76 %


77 %




72 %


76 %















Depreciation Per Unit Per Month












Depreciation of revenue earning vehicles and lease
     charges, net

$               45


$               36




$          79


$          69



Foreign currency adjustment(a) 

3


(2)




3


(4)



Adjusted depreciation of revenue earning vehicles and
     lease charges

$               48


$               34




$          82


$          65



Average Vehicles (in whole units)

91,194


71,044




87,392


69,019



Adjusted depreciation of revenue earning vehicles and
     lease charges divided by Average Vehicles (in
     whole dollars)

$             526


$             480




$        934


$        948



Number of months in period (in whole units)

3


3




6


6



Depreciation Per Unit Per Month (in whole dollars)

$             172


$             160


7 %


$        156


$        158


(2) %



(a)

Based on December 31, 2021 foreign exchange rates.

(b)

Effective in the third quarter of 2021, the Company revised its calculation of Total RPD and Total RPU to include ancillary retail vehicle sales revenues.

(c)

Effective in the first quarter of 2022, the Company revised its calculation of Total RPU and Vehicle Utilization to use Average Rentable Vehicles in the denominator which excludes vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels.

(d)

Calculated as Transaction Days divided by Available Car Days.

 

NON-GAAP MEASURES AND KEY METRICS
The term "GAAP" refers to accounting principles generally accepted in the United States. Adjusted EBITDA is the Company's segment measure of profitability and complies with GAAP when used in that context.

NON-GAAP MEASURES
Non-GAAP measures are not recognized measurements under GAAP. When evaluating the Company's operating performance or liquidity, investors should not consider non-GAAP measures in isolation of, superior to, or as a substitute for measures of the Company's financial performance as determined in accordance with GAAP.

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share ("Adjusted EPS")
Adjusted Net Income (Loss) represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax; vehicle and non-vehicle debt-related charges; restructuring and restructuring related charges; information technology and finance transformation costs; acquisition accounting-related depreciation and amortization; reorganization items, net; pre-reorganization and non-debtor financing charges; gain from the sale of a business; change in fair value of Public Warrants; unrealized (gains) losses on financial instruments and certain other miscellaneous items on a pre-tax basis. Adjusted Net Income (Loss) includes a provision (benefit) for income taxes derived utilizing a combined statutory rate. The combined statutory rate is management's estimate of the Company's long-term tax rate. Its most comparable GAAP measure is net income (loss) attributable to the Company.

Adjusted EPS represents Adjusted Net Income (Loss) on a per diluted share basis using the weighted-average number of diluted shares outstanding for the period. Its most comparable GAAP measure is diluted earnings (loss) per share.

Adjusted Net Income (Loss) and Adjusted EPS are important operating metrics because they allow management and investors to assess operational performance of the Company's business, exclusive of the items mentioned above that are not operational in nature or comparable to those of the Company's competitors.

Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin
Adjusted Corporate EBITDA represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax; non-vehicle depreciation and amortization; non-vehicle debt interest, net; vehicle debt-related charges; restructuring and restructuring related charges; information technology and finance transformation costs; reorganization items, net; pre-reorganization and non-debtor financing charges; gain from the sale of a business; change in fair value of Public Warrants; unrealized (gains) losses on financial instruments and certain other miscellaneous items.

Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues.

Management uses these measures as operating performance metrics for internal monitoring and planning purposes, including the preparation of the Company's annual operating budget and monthly operating reviews, and analysis of investment decisions, profitability and performance trends. These measures enable management and investors to isolate the effects on profitability of operating metrics most meaningful to the business of renting and leasing vehicles. They also allow management and investors to assess the performance of the entire business on the same basis as its reportable segments. Adjusted Corporate EBITDA is also utilized in the determination of certain executive compensation. Its most comparable GAAP measure is net income (loss) attributable to the Company.

Adjusted operating cash flow and adjusted free cash flow
Adjusted operating cash flow represents net cash provided by operating activities net of the non-cash add back for vehicle depreciation and reserves, and exclusive of bankruptcy related payments made post emergence.  Adjusted operating cash flow is important to management and investors as it provides useful information about the amount of cash generated from operations when fully burdened by fleet costs.

Adjusted free cash flow represents adjusted operating cash flow plus the impact of net non-vehicle capital expenditures and net fleet growth after financing. Adjusted free cash flow is important to management and investors as it provides useful information about the amount of cash available for, but not limited to, the reduction of non-vehicle debt, share repurchase and acquisition.

KEY METRICS
Available Car Days
Available Car Days represents Average Rentable Vehicles multiplied by the number of days in a given period.

Average Vehicles ("Fleet Capacity" or "Capacity")
Average Vehicles is determined using a simple average of the number of vehicles in the fleet whether owned or leased by the Company at the beginning and end of a given period.

Average Rentable Vehicles
Average Rentable Vehicles reflects Average Vehicles excluding vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels.

Depreciation Per Unit Per Month ("Depreciation Per Unit" or "DPU")
Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges per vehicle per month, exclusive of the impacts of foreign currency exchange rates so as not to affect the comparability of underlying trends. This metric is important to management and investors as it reflects how effectively the Company is managing the costs of its vehicles and facilitates comparisons with other participants in the vehicle rental industry.

Total Revenue Per Transaction Day ("Total RPD"or "RPD"; also referred to as "pricing")
Total RPD represents revenue generated per transaction day, excluding the impact of foreign currency exchange rates so as not to affect the comparability of underlying trends. This metric is important to management and investors as it represents a measure of changes in the underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.

Historically, the Company excluded revenue generated from ancillary retail vehicles sales. Effective in the third quarter 2021, the Company revised its calculation of Total RPD to include ancillary retail vehicle sales revenues to better align with current industry practice. Prior periods shown have been restated to conform with the revised definition.

Total Revenue Per Unit Per Month ("Total RPU" or "Total RPU Per Month")
Total RPU Per Month represents the amount of revenue generated per vehicle in the rental fleet each month, excluding the impact of foreign currency exchange rates so as not to affect the comparability of underlying trends. This metric is important to management and investors as it provides a measure of  revenue productivity relative to the number of vehicles in our rental fleet whether owned or leased, or asset efficiency.

Historically, the Company excluded revenue generated from ancillary retail vehicles sales. Effective in the third quarter 2021, the Company revised its calculation of Total RPU to include ancillary retail vehicle sales revenues to better align with current industry practice. Also, historically, the company used Average Vehicles as the denominator to calculate Total RPU and effective in the first quarter of 2022, the Company revised the calculation to use Average Rentable Vehicles. Prior periods shown have been restated to conform with the revised definition.

Transaction Days ("Days"; also referred to as "volume")
Transaction Days represents the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. This metric is important to management and investors as it represents the number of revenue-generating days.

Vehicle Utilization ("Utilization")
Effective in the first quarter of 2022, in connection with the appointment of the new CEO (who serves as our Chief Operating Decision Maker) and arising from significantly increased activity in vehicle dispositions, we began using Average Rentable Vehicles when calculating Available Car Days, Total RPU and Utilization instead of Average Vehicles. Average Rentable Vehicles excludes vehicles for sale on the Company's retail lots or actively in the process of being sold through other disposition channels. We believe this is a better measure of the productivity of our rental fleet as it is unaffected by fluctuations in disposition activity. Prior periods have been restated to conform with the revisions, as appropriate.

SOURCE Hertz Global Holdings, Inc.


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