ESTERO, Fla.- Hertz Global Holdings, Inc. (OTCPK: HTZGQ) ('Hertz Global' or the 'Company') today reported results for its third quarter 2020 with revenue of $1.3 billion, a net loss attributable to the Company of $222 million and Adjusted Corporate EBITDA loss of $26 million. Liquidity at the end of the third quarter was $1.1 billion.
'Our U.S. Chapter 11 process is progressing well. Recent, new funding and commitments of more than $6.0 billion allow us to continue taking steps to best position our business as a rental-car and fleet-leasing leader through the pandemic and for the future,' said Paul Stone, Hertz Global's President and Chief Executive Officer.
In the third quarter, the Company made sequential progress as month-to-month revenue improvement, disciplined cost controls and prudent working capital management enabled it to maintain its liquidity position, despite the pandemic challenges impacting the travel sector. 'Since Labor Day, U.S. rental volume has trended better, reflecting pent-up leisure demand and market-specific rate adjustments. As a result, our domestic revenue improved 14 points sequentially from July to September. And, October revenue has held steady at September's level,' Stone said.
Throughout the third quarter, Hertz Global aggressively sold fleet into a record-high U.S. residual market, taking average operating fleet down 34% through its retail, wholesale and dealer-direct channels. As of the end of October, the Company's U.S. fleet level is well positioned to match current demand. Hertz Global's average international fleet, down 51% in the third quarter year over year, also is now sized appropriately for the current rental environment.
Based on the significant reduction in direct operating and selling, general and administrative expenses to date, the Company is increasing its annualized global cost savings target to $3.0 billion, up from $2.5 billion.
In addition to the $1.1 billion in liquidity at September 30, 2020, the Company recently closed on $1.65 billion of debtor-in-possession financing which provides support for ongoing operations, vehicle procurement and key investments in the business. The Company has also secured commitments for $4.0 billion of fleet financing which, if approved by the court, will enable the Company to meet its forecasted U.S. fleet needs through 2021. In October, the Company closed on a fleet financing facility of up to $400 million for its Donlen leasing and fleet management operations.
'The impact of the Covid-19 pandemic has been tough on everyone. But our employees have met the challenges head on, adapted processes and continued to put our customers' safety and satisfaction first,' said Stone. 'Last month, we couldn't have been prouder to have Hertz awarded No. 1 in Customer Satisfaction for Rental Cars by J.D. Power for a second consecutive year. It's a true testament to our preferred position among rental car customers and our team's commitment and dedication to our Company.'
U.S. RENTAL CAR ('U.S. RAC') SUMMARY: See deatiled results at:
FINANCIAL INFORMATION AND OPERATING DATA
Note: Worldwide Rental Car represents U.S. Rental Car and International Rental Car segment information on a combined basis and excludes the All Other Operations segment, which is primarily comprised of the Company's Donlen leasing operations, and Corporate.
(a) Based on December 31, 2019 foreign exchange rates.
(b) Calculated as Transaction Days divided by Available Car Days.
NON-GAAP MEASURES AND KEY METRICS
Hertz Global is the top-level holding company that indirectly wholly owns The Hertz Corporation (together, the 'Company'). The term 'GAAP' refers to accounting principles generally accepted in the United States of America. Adjusted EBITDA is the Company's segment measure of profitability and complies with GAAP when used in that context.
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 Diluted EPS')
Adjusted Net Income (Loss) represents income or loss attributable to the Company as adjusted to eliminate the impact of GAAP income tax, debt-related charges and losses, restructuring and restructuring related charges, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs, non-cash acquisition accounting charges, reorganization items, pre-reorganization and non-debtor financing charges 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 Diluted 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 Diluted EPS are important to management because they allow management 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, net non-vehicle debt interest, vehicle debt-related charges and losses, restructuring and restructuring related charges, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs, reorganization items, pre-reorganization and non-debtor financing charges 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 to facilitate 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 to assess the performance of the entire business on the same basis as its reportable segments. Its most comparable GAAP measure is net income (loss) attributable to the Company.
Available Car Days
Available Car Days represents Average Vehicles multiplied by the number of days in a 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.
Depreciation Per Unit Per Month
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. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to management and investors as it is reflective of how the Company is managing the costs of its vehicles and facilitates in comparison with other participants in the vehicle rental industry.
Total Rental Revenues
Total Rental Revenues represents total revenues less ancillary retail vehicle sales revenues, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to management and investors as it represents a measurement that excludes the impact of ancillary revenues resulting from vehicle sales and facilitates in 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 the ratio of Total Rental Revenues to Transaction Days. This metric is important to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
Total Revenue Per Unit Per Month ('Total RPU' or 'Total RPU Per Month')
Total RPU Per Month represents the amount of average Total Rental Revenues per vehicle per month. This metric is important to management and investors as it provides a measure of revenue productivity relative to fleet capacity, or asset efficiency.
Transaction Days ('Days'; also referred to as 'volume')
Transaction Days, also known as volume, represent 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')
Vehicle Utilization represents the ratio of Transaction Days to Available Car Days. This metric is important to management and investors as it is the measurement of the proportion of vehicles that are being used to generate revenues relative to fleet capacity.
SOURCE Hertz Global Holdings, Inc.
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