HTZ - Earnings call transcript Q2 2018 | Hertz Global Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Hertz Global Holdings Second Quarter 2018 Earnings Conference Call. At this time, all lines are in listen-only mode.

Following the presentation, we will conduct a question and answer session. I would like to remind you that today's call is being recorded by the company. to call like host, to now Hunziker. Leslie would turn over the our I ahead. go Please

Leslie M. Hunziker

Reform accompany Private everyone. you forward morning, the press information. slides I call can associated our you contain our on statements Securities release financial call of Act website. to meaning made be provided this accessed also to of Good within We've now, certain XXXX. and looking By remind Litigation information should want conference the that that our all have on

are looking circumstances. to by this Any of call Forward that update may uncertainties. of their this nature not reflect as obligation materially. statements guarantees Actual date, information to performance and are forward-looking differ inherent on only and information the relayed subject changed company to speaks no results undertakes

Form Additional XX-K statements these and our the and Risk earnings contained section at the our and our and on XXXX filing second Copies in SEC the in of information concerning Hertz Statements XXXX of Forward-looking this XX-Q. Factors is Form available press release is quarter financial We we'll profitability performance release all X-K, metrics. non-GAAP certain is are Form demonstrated and non-GAAP our our with measures, numbers our Today, website. reconciled related of which press on posted using these which believe our GAAP that use website. are in better and

Hertz traded focuses Our as Holdings, for Holdings. Results company. publicly Corporation Hertz Hertz call materially the on same Global today Inc., are the Global

Tom call our the On morning, Officer. Kathy CEO; we this Kennedy, Hertz's have Chief Financial Marinello, and

Kathy. over to call the turn I'll Now,

Kathryn V. Marinello

both U.S. initiatives growth consecutive our year-over-year In every we latest and again increased leaders, was and growth the by are business the with latest Thank experienced in X% up period time gaining revenue in higher second and third revenue higher growing in turnaround good marketing, volumes our is operations. traction you, quarter, across critical mileage In EBITDA. strategies, investments of everyone. adjusted particular, and quarter the a generated result of Leslie, quarter all segment fleet, across brands. and rates. effective retail morning, delivered we and driven U.S. as and It

bought residual vehicles is tools site pushing revenue lower Asset new the Since bent all the our most U.S. local with unit support year-over-year of and retail car costs spread lower for sales utilization is able match of to the utilization our business favorable been innovation, economic in level. are learning, to XXXX, the the the as cycle. we've management on and fleet With cost return and a we've supporting per increase ensure demand opportunistic instituted outcomes, that our fleet Fleet depreciation fourth beginning resilient, four-tiered consecutive up adaptable for successfully the foundation and growth rotation, and fleet. to been the the processes through unit, plan economics, initiatives working down way depreciation new curve higher per negotiated to strong, higher and better we've fleet any navigate quarter. on significantly better machine with expanded ride-hailing as channels, revenue new improving forecasting our leveraged

creating these enhance of in investing a recurring plan technology. employee It's time, organization, and in or sustainable It's deliberate skills short-term A continually leadership capabilities. product, Our to is value that capabilities. to path metrics. revenue initiatives our to cost-cutting. to all we're drive not areas team invest the result is improvements. of creating We across fundamental bolstering encompasses the service, lot the our sustainable quick-fixes a and turnaround in is most key process productivity and At improvement successful success but the and same know across brands work to

we lot significant and that We of takes long-term get don't are time. right, a it and it derail operations getting area any can but putting growth, making if one in the technology in right deficiencies earnings, we're investments know pressure also on

and we're are about XXXX. trends the pace rest performance early cautiously However, of optimistic encouraging the progress throughout of

and successful opportunities, to and the more returns, fastest prioritizing turnaround the resources, higher outcomes each efforts return required to our the adding For has effective. learning approach experience subsequent have most from make

incremental result short-term elevated additional transformative we in in and update and the field related technology operations A operations some resources continue improvement the portion are spending XX-year through consulting In efficiencies, remain our old resources as areas, complete of support. to productivity those hold. as platform. primarily significant will well program benefits XXXX as personnel Additional until and actions take is our spending technology

categorize hand, from other brands. suffered under this are sales marketing investment investment so ongoing on and time, the as investments value. to to brand On base long spending a Marketing reflects for continue level new has would in catch-up the what to a I area's leverage reenergize

and last to fix off from expense we keep depreciation management processes is investment year more range. made and strategies reasonable the in fleet in benefiting Finally, better the a we're now to fleet paying

account So we demand broad fleet management Better improving training what our of intuitive and progress capacity, customers of our revenue delivery system. coverage the combines an Ultimate model, It's and one platform about system those into incentives a that forecasting management in driving constant defined car-class that our XXXX that win-back fleet AI-powered service brand investments initiatives, and our our for today. segmentation scores, management prefer, corporate are Choice customer strategy, benefits? that vehicle made mix more

that products relevance with targeted and where partnerships upgraded introducing (XX:XX) whole visibility is we areas of and to has Dollar's three key brand travelers as top Chevrolet consideration, brands The industry-leading is HR, re-launch lot But consumer message delivered to launched and drive choice customers just along do. of highlight retail those premium a and new brand we're re-launching our leading for launched digital sponsor specifically were pickup in Miami. have to NASCAR great still return, with in The either all tour. Innovative frequent and families all sponsored XX-year-old the targeted This and the Motorsports budget of We're with increased for the positioning an of trends support brand, one there, drivers. like William year's BOP Byron generation focuses the a iconic category to business lead further our to work Chicago brand are Hertz, Traverse, brand phenomenon Hendrick and new marketing Dollar to leaders number reliability. segments. where you program, store additional here and leisure underscore choice, our year, in cities promise Hertz: operations is targeted on All from on get new the with investments royalty market. catalyst of national consumer at distinct XXXX. improving the XXXX a KIDZ this consistency Hertz seeing the marketing there we're

For As Thrifty, Thrifty You we slogan just started As out rolling ads with Are. online the

gauge a place in performance campaign. to granular very each We tracking have the of

are higher So all time, higher and same brands engagement, to margin we're At growth across dotcom far, conversions up channel. higher. our volumes driving are trending the

location. but Lean experience. centralizing the that's you marketing become field oversight to year, fleet, processes customer to not add also out-of-service across productive, addition the initiative to service, deliver standardize only you and our In you best process When later in training, more campaigns investing optimization and up and improve get the reduce this Sigma right, and maintenance site Six our we're recruiting fall this stepping and

program is see is just making but also top website to year quite our in at lots opening undertaking, for even course, a good which used this We're handful We're us. an XX recently this car power to Of retailing we we're the airports, progress. and it investing coverage, retail car digital a key sales capability. to our of online our geographic asset improve upgraded business,

less XX% our sales of total now higher channels, represent As grown than disposition. alternative we've in auction return

Finally, coming from operations, as marketing are heavy IT I mentioned, continues. and while fleet field spending benefits

benefits especially is to the the it when As the case, always investments. lag comes but technology,

who those designing fleet the digital, for included story, we're core to building systems cloud-based a major a CRM and and five are reservation, of fleet accounting, in you midst of upgrade rental. that platforms: end-to-end the and our management our legacy For and technology infrastructure outsourcing new

As phase. get pilot new to we've launching IT been in transitioning closer begin we the leadership XXXX, next that testing and platforms for

the deep for to day opportunity vendor me dedicating three CIO my performance, go job, data there afforded and spending months, Over held controls, into an the addition accountability understanding Interim and really strategy, of to a project timeline last the position to in time, better flow each I've get the initiative.

our testing and about on we done. launch wanted we've and reservation a a the our the The is is our underway. XXXX sales its to complete. adjustments fleet fleet system Hertz New and before a realized re-sequencing We're system for substantially system bit peak XX% new summer While we're XX% track be result, fall XX% our accounting delivery platform's of force has CRM through are app rental targeting because few management Development is the digital build-out created we To-date, been fall and is development. the cloud and through done roughly engine, date. of redesigned as technologies. little well made The applications

progress. again, So we're making good

job. well better applications end-to-end that's connected, choosing as intuitive for upgrade. future integrated revenue and the the and that be being I capitalizing next experience support as faster, comes developing, CIO our on agile technology and to more one the incremental fleet she so will autonomous Our it is one XX partner insights touchless of lead great more Hertz. we systems of on and and That These cloud-based It of and we designing new me vehicles centennial and we're month. recently Opal and leaders gave and integrating into feel confident global management with our years the analytics, for technology over building strategy search. plan microservices. in close Opal mobility already a doing as XXXX very in the we're delivery than anniversary, fleet will Being mind. new prioritization Allstate, Hertz's board Most XXX so cloud-native IT years. by Opal later as gave more operations the to that all year. this Incorporating our like from With system also great global to handing she leader, brings future our compel innovations work to development in a to rolled reins transformation systems, being reservation technology streams, our year as me platforms, means out as confidence next underway systems and the think new to our Perry this when digital of cohesive driven advantages mean are with conducted data architecture. rental as

look our XXXX, technology and further in will of from accelerate, progressive, leverages shape the We with operations benefit on our efficient new XXXX next future In operations away, that only grow the that Hertz's recognize drives technology end resources. and probably In tools, and brands, further that management leads through partner. capabilities to steps an have XXXX, offsetting XXXX value. asset systems' iconic are the platform productivity You priorities. investments as revenue leveraging our through new field They of the fleet contributions year. more and Hertz's as will latest saw rollout operational continue a development best-in-class, fall mobility unlocks which Aptiv and enhance the is our completed the continues initiatives more will our growth, investments management fleet the our Those up. and to company will turnaround technology interface

tools capabilities, An through us period. tells revenue and September a heading roughly peak everything transitioning U.S. shoulder track. we on Car have to up the left fleet capacity standpoint fall. before is early Rental So we're few of the XX% expanding very positioned sales be on with our the looks management still our well read summer With the car right encouraging and a start we into far, July's weeks goal enhanced from

We quarters in you EBITDA metrics and adjusted detail. over revenue last I'll With it walk financial expect that, through trends to to the Tom the turn to three continue. improvement corporate the over

Thomas C. Kennedy

and Kathy, you, good morning, everyone. Thank

are metrics operating year-over-year reflect improvement results nearly adjusted in and quarter as key of quarter mentioned, fleet improve technology, that operational focus, marketing a our investments of service, brands and investments corporate of quarter in results year-over-year segment, Second U.S. driving sales these of Kathy product, from in in results consecutive all reflect quarter. RAC improving reflect the in consolidated trend the areas enhance EBITDA. four to third key of And improvement and continued and our

XXXX growth and still investment have and period consolidated cash to into improving ahead we spending earnings a year-over-year growth, improvements, margin expansion XXXX. flow we of expense us, While to of see positive revenue expect productivity elevated and continue

more Now, U.S. I'd the despite versus in revenue flows airport driven a The like the timing of with the or this July revenue preliminary increase U.S. of increase percentage total per activities, of liquidity, XXXX of growth prior an sequential day our transaction RAC and look total results quarter, grew growth comparison difficult revenue to year. businesses in segments. to revenues quarter flat in all on and improvement segment's customer RPD. due volume in move financing RAC into first Easter our The X% U.S., at primarily cash X International update both In year by reflected update from an strong second the days was nearly transaction day holiday RAC. off-airport our points X% and the results the

that growth total our grew demand our and a transaction TNC company-specific is X%. investments. market believe volume strong a We in growth Excluding the days of function business,

has rental growth and demand top half to first markets off-airport X% in For market revenue X% a XXX strong. industry in example, of the airport experienced the appears car XXXX

reporting RPD company's timing Total was contributing rollout as holiday flat Ultimate our also the X% rates, of flat the be of of headwind second field increase the to still our quarter from with unfavorable with total Our The improved prior our personnel to June total quarter. mix on favorable and trend the the exited benefiting improvement revenues growth. mileage during year. revenues. an we Also, pricing. includes specific the and products, in a total sequentially also this in volume and increased sequential versus investments operations RPD was being vehicles, year and a despite in achieved reflected Choice a overall RPD increase quarter each improved and such value-added improving service first the time in seem comparable demand which nearly Easter better value-added service first The RPD quarter service a month during X% quarter, despite

service progress However, call, as decline have revenue make versus to per quarter's overall this value-added as year initiatives four day seeing performance of we XXX the have our the rate quarter last service quarter, excluding of points basis in the improved second to through first products in this in place we positive value-added up that the key we discussed on the revenues. TNC first compared the XX% We're turned improve as quarter in two and nearly of area.

excluding demand dedicated increased Also fleet, evidenced in responding X%. the year capacity fleet reduced ride-hailing, to TNC second turning fleet of fleet, transaction last core we XXXX in our growth recall Now to as the or fleet X% capacity to quarter by days. that market X% strong core by

and fleet essentially incur year that posted XX%, of is of approximately the core is The capacity of our So, and result quarter market quarter. at about points XX,XXX end service. in had our core depreciation At the of Total rental as utilization expense we we year at as end result versus spoke utilization end, our they're decreased the fleeting versus but first RPD, lower vehicle TNC quarter to expense the fleet prior points TNC and utilization checks XXXX rate $XXX to reached before fleet higher-end rents. unit the increases quarter quarter. use (XX:XX) into the vehicle maintenance lower retitling total values month XXX have of XXX TNC index, per vehicle basis residual put largely XX,XXX and capacity dedicated lower our TNC length profitable achieve vehicles higher XXXX. depreciation XX,XXX which volumes of basis call XX% in of is being an improved XXXX. compared TNC The depreciation year. on fleet in per longer prior rentals Monthly increase favorable the first in XX% the the entire in of unit continued Manheim including these reflected decrease flat monthly a business the in we All excluding mileage and vehicles

XX% as first end direct as fleet like-for-like total opportunistic at dealer the certain a million ongoing year models systematic second market through of the volumes XX-percentage-point and quarter richer the loss year has dispositions the quarter fleet, our fleet XXXX dispositions net comprise of versus the XXXX fleet, U.S. second mix XX% in lower vehicles. the and and quarter of $XX end of nearly RAC when for market was the compared model at sales XXXX were optimizing more what favorable in we of increase holding to the Continued which of a weaker XX% and the vehicles of percentage of lower No a higher-yielding finalizing recorded prices, sold and retail sales prior we're the the in in rebalancing reviews conditions costs. approximately losses reported channels, increase a on net fleet reflecting quarter and of

to sales a organization Our be we're growth. its and the retail in car investing strength operation of continues

increase an contributed in adding online we the of retail. $XX digital the quarter. a to in of for vehicle RAC our XXXX. in to the potential is million step upgraded to selling we're about levels, year quarter web-based U.S. an to rate mix. rates, relative increased Variable bank in fleet our growth impact increase due key rate year interest new wider platform ABS million Both platform blended second investment commensurate interest cash increased in spreads as average addition and in last contributed related fall's the physical the to Funding (XX:XX) was expense to locations second excited expense. new rate our launched $XX relative experience expense demand sales development commitment, our retail In XXXX, in benchmark in and Total and quarter-of-a-percentage higher floating expense increase and channels in This notes. volume fleet interest as higher last approximate our in to with levels The higher An vehicle prior Notes of increase well the in also fleet reflecting versus debt term higher

ABS floating. current is the of two-third one-third RAC approximately U.S. debt Our fixed and mix

debt year, we growth the elevated higher vehicle to expect primarily expense. million about U.S. investment a prior due the U.S. and in due depreciation interest improvement of contribution negative interest revenue full RAC corporate higher the to adjusted $XX to $XX unit vehicle EBITDA year on Despite For million expense rates improved $XX expense fleet and to million RAC multi-vehicle about versus impact posted due increase levels. spending, and

Moving revenues total on RAC to our segment, International million. X% increased $XXX to

of $XX Excluding revenues favorable X% currency on in days. increase total increased RPD flat by million total impact, driven X% transaction

increased to results XXXX, light Europe. Consistent Brazil total in in was by offset Excluding days of revenues driven commercial operation by increased rate the transaction transaction commercial, with the X% the vehicle pressure our total attributable days currency business multi-month in flat, leisure by strong and in constant stronger is pricing and volumes X%. quarter RPD first largely increase XXXX, and commercial in

$XXX, increase increase due in impacted the prior year-over-year travel increase month Easter during tournament per in X-percentage-point is International World of vehicle to the which leisure still versus XXXX quarter unit Cup, the X% year, dampened the the to net first an vehicle the quarter. shift a and of first period versus sequential Football depreciation which also utilization. year, reflected was compared improvement a per to during in prior lower XXXX demand While travels quarter of versus leisure XXXX

by cash April of the our million. attributable (XX:XX) million operating is issue fleet interest quarter, and million increased by RAC than on X%, increased with vehicle Eurobond to the depreciation vehicle expense to Higher expense of which the expense million. facilities premium Eurobond million coupon international increase, the the interest International of $XX of interest results net $XX increase $XX and expense about Excluding €XXX over Of the $X increased cash vehicle unit impacted further segment vehicle by million. increased interest reflecting rates less In expense $XX redemption per the associated spreads XXXX, increase Brazil higher $X new equates million just

improvement also higher year-over-year in net customer adjusted reflect decrease resulting debt an RAC difference. somewhat approximate In up made million quarter. International and from summary, The $XX expense, Foreign levels expertise. the management the $XX remaining a corporate million, exchange quarter improving EBITDA claims versus liability segment XX% prior-year of insurance with our results mix

like issuance Notes. million as and Vehicle mentioned corporate Now, liquidity an In January free €XXX notes I'd with March our redeemed European of cash April, provide million activities, to €XXX on earlier, flow. from proceeds we update XXXX I due financing in our

In again under $XXX two notes term amount addition, maturity million program. June, with RAC II. in million entity, The aggregate fleet ABS million of market of term with ABS tapped one for three-year ABS car lease $XXX U.S. And five-year €XXX HVF rental we balanced issued we series of of transaction one commercial of structured notes, maturity with each. consisted principal and an for

RCF we $XXX up standalone the Finally, to letter from letter reissuing credit able to by under letter facility. of Senior utilized credit fall set the facility for last this our terminating were of up standalone of (XX:XX) access and We facility million credit of first time. facility credits outstanding

Hertz's quarter, standalone corresponding stated we This moved million of to impact commitments $XXX RCF of by But were structure. Senior junior credit. no the reduced for facility. of liquidity. the to incurrence million. our letter on amount facility, credit liability $XXX The approximately first debt RCF the reducing permanently maintain under issued continue the we our the of focus the had our During by increased letters debt on million capacity size and lien we extending Overall, of $XXX to debt Senior

non-vehicle of refinance opportunities our not will book nearest assess of continue is XXXX. October to but maturities, our pending debt, until Regarding dated maturity to we

in notes, refinance opportunities and to marketplace. financial to available improvement our the not in the benefit the evaluate but will trade-off these until waiting minute continued We from between we'll wait last performance

liquidity credit X.X the well ended drawings our On ratio senior inside the required no and billion covenant X.X our corporate first almost and times. with in quarter lien corporate times revolving of front, we the liquidity was under facility $X.X

first the summer flow, expect cash the of adjusted last free peak negative seasonal discussed June, we fleet. through year cash in go cash to be $XXX in flow to the negative through will strong expect I call, flow to add through as Overall, our the Year-to-date normal we half free last half Turning we expect half cash million year. relative second first the $XXX that negative a improvement free while year be albeit significantly is continue full million, better the of and to XXXX. flow we than

first Finally, results. as to industry I contributing in be our mentioned positive call, our and to quarter appear favorable fundamentals

However, revenue are have we EBITDA. investments made, contributing corporate improvement adjusted and will to continue also in to make, year-over-year and top-line growth

We improving growth expect corporate spending. trends being these year-over-year a to elevated EBITDA in investment of revenue quarterly and despite adjusted period in continue

and or in RPU approximately as fleet the it back nearly revenue were questions. prior operations. TNC, our will RAC RPD month versus results in relative core X% both With to increase U.S. utilization average by off-airport the grew and X% I to volume per discipline Total excluding in increased X% revenue result fact, In encouraging of as as XX% unit operator the transaction in approximately growth and growth total a and Total continued per evidenced now July in grew and our following. basis very maintain turn by increased X% that, airport at revenues for XX to vehicle we increase points. preliminary year Operator? with days rate fleet demand

Operator

Please Gabelli. And we do Brian ahead. question the go have with a Sponheimer of from line

Brian C. Sponheimer

in maybe on about thinking could the (XX:XX) potentially lot there done guess optionality. your that a Is there strategic international one. focus Donlen I are congratulations operations? is with line Tom. be Good heard thinking we've more something and you Kathy you're of my value business number question servicing about and that How or good on here, morning business, so momentum the about? U.S. Well, strategic the much

Kathryn V. Marinello

very And strategically the go-forward which we autonomous distribution invaluable and not think corporate they a XX, corporate-owned table the more we're managing of having business that you recently, forward our When future we size, we just with much corporate an what fleet fleet think of management real that's XX announced going as capabilities, in to basis. some think a to we regardless future have management world fleet into, their reach or fleets I between look broad global our things and of and both then locations, particularly global pretty look bring vehicles. with management, we've the franchise and is like again autonomy around we of if capabilities reach capability, thinking Aptiv, of entered the on from around about mobility at thousands having where but a global fleet the a we our and brand, go the that telematics our tens combine deals perspective.

think really we the that's that So, advantage. strategic

Brian C. Sponheimer

are and just Okay, other these nature. regarding arrangements, by great. And of none your the exclusive Aptiv

You're you free to partner entire as will with the spectrum of developers?

Kathryn V. Marinello

of in support, a we corporate really proprietary Aptiv is look fleets, we that is it's so fleets not corporate to do space anything have thousands on obviously basis. position now exclusive other our we purely, only as us, but with to a we're

fleet. in multiple, just open our pretty both to manage corporate and much autonomous we're So, large regular we do connected or car fleet like business,

Brian C. Sponheimer

Well, of for second great terrific. best right, a half. All luck

Kathryn V. Marinello

hard you. you. working We're for Thank

Operator

have Bank. question Please Deutsche Chris ahead. do the go And from Woronka we of with a line

Chris J. Woronka

there, Hey, providing good years. morning, I is couple but everyone. know the bridge in I that it's next there directionally, numbers hard of think for Also of helpful. not thanks for kind EBITDA the the

perspective how underwriting on investment guess, the of industry to growth from is just of expect is get bucket initiatives? you're, kind from to an your kind versus own it what So, much you the revenue I question possible front,

Kathryn V. Marinello

question? what think So, we've are been growth now, the you using saying what and with? Is is that do then just economic the we (XX:XX) right growth underlying that

Chris J. Woronka

Yeah, exactly right. Yeah.

Kathryn V. Marinello

we're wouldn't in economic that Well, we think going having I an forward, wise. (XX:XX) stability and be obviously – think assuming now all number, July XX% with

doubling our we're now I economically. investments think seeing what than more are right

fronts So clearly drive doing what to around we've improved working. multiple revenue is been

amazing .com So investment more strong we coming a perspective, the demand, those doing to in a a brand multiple into in are little be, accurate very strong we particular. from it's to as initially We're as more continue Hertz where very a as channels, is is our across play. we and to much growth brand helpful see there going moving the brand, seen and we're which more rate and very well strong as lot have pricing is things of growth. we've and strengthen investment what sense the demand With things business

charged customers So real that pride have that important strong they I done capability. term, up thousands something off. gone great we're on on the just in much of we uniforms investment put really some as We've long between top in they've our also we charged an that, base fleet growth as paying are incredibly but from up. a a is of a employees investments the seeing all we've think really driving of employee better half the different things amazing near P&L that's general wise place up way, simple see over our a charged prefer, and got perspective, service tens

and customers economic we've customers So play, we've lot a seeing lot the a come really strong return into growth positives. and we're seen of new seen of over

Chris J. Woronka

kind the – or that is helpful fleet U.S. – – lower That's this very Kathy. $XXX net going drive Okay. fleet mix view and the a does we increased the costs, And of something that impact, of $XXX? forward? how TNC run what's as rate that just Could on is could of

Kathryn V. Marinello

fleet, obviously the minimal manage like cost, vehicles up overall smart you much somewhat so in XX,XXX the all a it's add from XX% even you All strong costs, OEMs business, equipment are doing we're at, a prefer, we well titling to with take these at sell doing sold now, demand as percentage really it's is, even and quickly. auction service to and service gets But fleet things right amazingly go fleet we better we are different centralizing them these kind and with an the our impact sure out out forecast that it working what of goes the has with with things things people we a then but from if we're to quicker. the powerful. cost, on of look maintenance auction used we're cars, – the working to and utilization, of very what a the cars between to make larger And which of car of price. down very get as and/or they earlier It's – doing leverage care buy along what that over an we're mentioned them, we've driving actually around things sell then perspective, but some well, then Manheim probably to the under cars been would of maintenance, what right if when resilient

we're business, auction other much that as have win them business doesn't well. Manheim ways and win giving maybe in they we as So

all the car driving these difference things a big us. So and strategies for really individual cost of we're a are on the that making

Operator

ahead. question And with have do a line go Millman Research. we from the Please Michael Millman of

Michael Millman

Thank you.

of about EBITDA Regarding volume? down could XXXX, what between talk be break looking for between July, price at may kind we Thank you and can the in be XX% you that corporate retail both generally you. at leisure talk company? terms Also roughly and or should of least about,

Kathryn V. Marinello

start I don't guidance. your frustrating question. everybody I'll give but it's know with we to last

improving We've if I improving bottom we we've our look However, cash XXXX every the positive place, goal on is, we've to the our what you improving trends at be that been quarter, cash to earnings. in been and every been is strategies have and based we've say contribution what the continue. of And do those month, and we through line. in level EBITDA, can doing been will

we of and for productivity seasoned, though we've is and a half a from – expenses improvements about on and experienced and a to we're drive a peak will making and days of we're continue investments, of be efficiency already. At to our hard the July retail same continue He in got earnings time rate place to Walmart, continue and quality working both the will to revenue. we we goal our our year. during contributions leader in that executive get he's now operations out as quality very drive had a perspective, period a So growth making

we Sigma at So get expect we're Six systems get but in doing all efforts an in in processes like airports. of but right things the out impact, will things like centralizing the maintenance to between benefits place tools XXXX, as major great have our there, we

other positive your price volume. break and don't we that different of will can get EBITDA going So, On get we're perspective cash about we a kind question, I that continued to competitive rate us will would up from the margins. you talk our and a don't improvement how industry we out figure guidance how prices grow have and in say where and out we we that

Operator

from of question And Please the line Healy Northcoast have we with John go a do ahead. Research.

John Healy

progress just Just impacted last the I be kind the kind And impact volume, of how those price will the Is congrats how question hurricanes made the encounter maybe storms the just wanted a again on hurdle about way of from I impact we quarter. in in as ask you revenues the should maybe in what of on car XXXX, thinking on to coming September period guess and the the guys cost? and you. kind both on this time rearview October is, – think the of there headwind and to that a Thank up? that the year.

Thomas C. Kennedy

were impact Yeah, estimated that back standpoint, that's the about, somewhere around John, million, saw range impact. go the yes, yeah, of estimated $XX Manheim fleet think in Index transitory the From as the Rental our impact the that we But million so Tom. $XX it's because impact, all talked in favorable of was We over we (XX:XX) so negative clear on hurricanes about it's we and in some a the were impact, course revenue XQ, expense if a as the of so I in kind we an favorable a benefit. and wash that some releases roughly was of little you there was hurricanes residuals the it impact, to saw year. plus uptick there bit

John Healy

be about side. you've there. talking out most calls spend just spend some question marketing fleet marketing on the and marketing to may of bit and two additions be of for term should we you three little more I brands years I it Great. feel technology. see, time compared is? or the and Thrifty, color the like was next could you've maybe big maybe of the a marketing Hertz, past more team and But just know, of over curious on maybe how strategy what the Kathy, to technology long how I a done that And you be the in know and, expecting pillars you've a picture Dollar made I fleet bit you service how to you positioned we how laid was little the then hoping company the kind see and them

Kathryn V. Marinello

day it's Well, you probably more felt the one business and It exercise the is top-line your top-line, the more most to would a the well as I the you guess, from the invest growing expand I I of margins. math business. as in have grow on say

between to has solid fix out and actually you scenario fixing So double-digits. it's programs, around we one adding made the fleet that you seen. technology, team. up and build a having number on of intensively a that social multiple we've the the your you there in are made rare and service that with turnaround, changes those top-line immediate you focused tracking operations if in fronts are of the hires that team growth that the corporate XX% experience, a grow customers progress but are all have made And I we've things with gone the where want, enormous also clearly win-back areas like very July, media, And

if all the they work marketing the has and more think energy and most the more done around .com, gets into pricing our business that done employees, representing back people our to and what it's of social I field, company has I was branding put the they coming has in team brands its management back the and around this the channels, So the and done. the revenue done people and media proud we've attracts team effort out more deliver hard demand, people in addition to driving service

to airport Chicago Dollar, go for airport the If you we've as Miami, well. in we've wrapped wrapped the

we're and out more focus tighter Thrifty a where both segmenting. And effort From Dollar on a we how So sure what that and again, marketing the for we've and July for and and positive branding sure has so to we improved we've and efforts we the towards. is for that doing make something fleet and in pricing the then we're and all testing around it. – We're with and we seeing analytics Hertz, and sophisticated the something works, around that we been retail effective, do it perspective, we doesn't marketing out and price get there. segmenting traveler, with better concerted with group that the volume a results making the if have a if we brands we're work made higher stop exactly segmentation, end we and we're we're have do number very fleet seeing that of there doing family, the for are value market of brand conscious people the premium do frequent

I levers clear growth. So of driving to that the they growth very in line those growth continue have and And returned we're that in think consistently that very consistently short ones level about and all going all is what's order impressive here improved manage returned that working. and and levers team the of are are we to have that stronger sight add for most

John Healy

to going there when that lines trying one some Tom. or then an that's and add like cost. know there, just there quarter but that cost, housekeeping implementation what line quarter of what's for If question kind I those In million technology the in understand, on transformation add is to the EBITDA? back in a on had done back $XX Great you along you was just I item? first and was

Thomas C. Kennedy

are part quarter, the as that EBITDA, of Yes, so so development our so impacting where are below to are about recorded related some an see talked the investments costs of last being EBITDA to of back financials so is add in are you'll continue to our investments we and corporate aspect, the like line, those elevated. adjusted (XX:XX) some they

CapEx. be the Those making. the line spending summation that a plus our John, three that kind think to non-vehicle So investment financials up, the you spending we're impacting some related, areas you primarily about plus so the (XX:XX) as of of EBITDA global are investment would gives investment in that shows our overall spending,

Operator

Brian the do have we Please with line Barclays. ahead Johnson of go And question a from

Brian A. Johnson

into CUVs, a Yes, you you carry RPU the what least sense sedans for are we demand those are us not the data give and fleet right compensates roughly increased there CUVs. look sure on percentages is talked how but those from Could you bit costs, right have your fleet which And costs? carry the you've sharp of when increased toward pretty your then purchases, cars fleet at about there making rotation (XX:XX) from for some the away auto if evolved be? at if in might

Kathryn V. Marinello

Actually price we how have how approach we we a really and the buy, reevaluate. sophisticated we to continuously cars

cars, cars, So we we we basis will actual car margin of margin we a them. less more and by see see with on buy look those cars, certain If monthly as example. RPU buy the we model on on and will demand of results, at the price great we get based on for less

we on monthly manage fleet, a per unit adding cars cars revenue we're constantly into and actually so deleting basis. And real-time as the

to If we'll for we addition a at out. that certain see car sales. certain look though, environment a opportunistic we rotate car at great a In mileage, that

great network OEMs and delete the able cars effectively. with we're cars add a dealer developed So good to pretty where and we've relationships

great when we model. account see buy – Malibu, still like in buy, cars. we're on the an clearly cars into what cars margin demand we seeing next taking buy So still for what our evaluating we see We're in and we're seeing we're those RPU

sized a on corporate buying a drive, same selling and So and we of cars large we've manage mix to they consistently based are SUVs, want have the still those different the all time, fairly – at we and they those demand. are of business

continue lesser towards still moving but cars at buy to of somewhat more we So the is SUVs, we there. the obviously see need mix rate, but a

Brian A. Johnson

it is just And Okay. had percent or channel the it directly on move there it's away on impact quantify coming in way terms bookings impact of and the opaque pricing through channels to from the of any .com price?

Kathryn V. Marinello

our and we directly We say attract Hertz, we do, advise do you drives opaque don't prices price. more what improve and get obviously – directly people you is but the publicly, experience Thrifty.com to also ability us price at you the we customers down want service and the your to to break though to car that want. going to I'll out going Dollar better that the

very we to value the that of to are directly So and our service and customers us to also, time service come there the not websites and getting issues but encourage valued going level get there well, when are directly around value – opaques at is as that. as way customer guarantees well, same that

Operator

Hamzah Inc. And question go have from morning, thank a Mazari Macquarie Capital we the of do Good you. with Hamzah - (USA), line Macquarie. Please ahead Mazari

of like just on second investment on half piece. the the that's then is second of maybe execution question your you in Page spend investment risk of tech of fall-off. half spend, feels XX, offsetting reinvestment help And if think the sort as first in could the it roll piece spend about out, just new bridge us is one XXXX The systems is

on gave about Thank spending you. I that $XX some think sales/marketing, Kathryn, of in but million half are way of to the off could in the fleet is and then rolls you second call out? million and $XXX $XXX a just you if IT, mix guess, it, this that XXXX I you XXXX flush So, million million $XXX on know half color

Kathryn V. Marinello

asking you're there, so I'm questions just multiple thinking it. Hamzah, through

every it, to going big making and not think and you all despite we've is hands business, the having offsetting want being are it's if much still both growth level. training the operations what legacy grow requirements business we the the month, to back tools, in the credit of paying growth the the we're people, are behind forward. around, spending and back to with employees here finding in our we're going done investments off are they already. growing and quarter. What the tied to systems more years to we're obviously we're we're I getting And to working spend reinvest a And EBITDA about And on that to despite the want XXX way. team, investment than that, time it in our continue around of and seen are the core our energy and your drive think our I who every the yet next win, and upgraded think old want still of marketing to and question having XX-year

through marketing in have. bulk force the you're what the basically that that already and whatever some and been then we'll that benefits in sourcing the completed of have of to we're have the we're have and getting the sure price programs I'll we'll support these these CEOs Deloitte the on work attention to don't up engagement am based what without in and now, really reason the those talent and happening pleased together. of and with successfully So, of we of done right successful. we actually And it and we and we of sales We've year manage in and for conversion. we if rollout see getting place which XX% gotten to I next it IBM we systems get systems, companies the have make get the without through marketing their level the are we in we've partners We've those some have work also the doing say pricing Infor, it, partners through. continue three very right really get we're doing, great to in seeing to through

have get done. confidence I every it in will So that we

contingency that more these but rooting senior in that we're partners We really us successful. sure the putting are rooting they have fantastic us, resources make the and place energy for than plans for are very at to and efforts will behind we have levels

So in I very a we're believe place. good

helpful. over. - as invest we a and sense. (USA), it. very Inc. investment we that ask as sales thing turn will see of marketing growth, that That's things Capital in follow-up making Macquarie I'll XX% I'll appreciate I July just to the it right when and the investments, continue doing far makes and ongoing So, says like Hamzah Mazari incremental we're

base business And ancillary value-added products as you potentially I out Could two said on the next Just base. of positive revenue can services, the year? how business that investors that this of mean you view revenue big remind the ancillary think does positive then that's is? majority us turned four the and turning

Kathryn V. Marinello

driving at now out. the training more do year We it an we Inc. sell impact? it do products all Does we and don't the on positive marketplace employees, Capital almost that time the we've our same we and going you. see and positive the out break how forward. going reconfigured Thank as turning - incentives Yes, narrowed Hamzah have products, Great. those gap that them Mazari through and (USA), Macquarie reconfigured we've see we're we've capabilities next in

Operator

ahead. And David have do with Please we a the Tamberrino line from of question Goldman Sachs. go

David Tamberrino

year to looking the are has? the levels million can sequentially. positively Great. you $XXX July pull Couple backdrop Tom, came balance end and of what by target questions. approximately down as to what doesn't Liquidity enhance at, if market as cash that materialize you levers

Thomas C. Kennedy

said cash XXXX We for flow said better we'd we'd be year. than We slightly turn We haven't positive provided guidance prior-year. cash – negative, but the significantly for we'd in cash believe. be we flow

stronger seasonality so first globally. much So, from and both always be just yeah, the half expect of flow after stronger, of downturn, there's as we flow deplete because the cash summer of always second obviously and the the the cash business, to the half any have could the year you negative we the seasonally pull if year is half of U.S., is second levers internationally peak we

we a cash. investment can and Fleet now where right big we fleet elevated source As fleet big, we think is is the about up pull, X%. of clearly, elevated have levers spending

cash We of in that. in on toggle And the business return that's opportunity. through the investment continue the depending and work an to investment on our optimizing on so and have we we're to then improving the deployment always spending up we the down or go the what the fleet on as utilization fleet, getting of spending, clearly ability

So fairly levers. significant there's some

lever you closely. is very the As biggest that know, we're think fleet I managing and very,

David Tamberrino

of that, XXX think ride fleet Hertz XX,XXX in versus vehicles to I following what how Auto's about Okay. And heard, fleet again assets? last maybe are XQ was on many of the size the up owned hailing XXXX then the XX,XXX grew and units year those

Thomas C. Kennedy

if year the the was Yeah, XX,XXX mean, fleet quarter. second around XX,XXX correctly I recall I last at to of end

quarter you're checks growing cost, profitable it's small, is maintenance doing footnotes in those that with had think we been our component as it's than and before longer And liquidity first see, some some sequentially TNC in XXX dedicated is business, in cars I and – they XXX we've of a of go you'll yeah, I So, lower that more financials component. it's quarter, and depreciation so there rent, very it's because the the important extensive an we said, was so small re-titling very (XX:XX) our of one into drag in service. length (XX:XX) think cars, the

Operator

line of from a with ahead. of do Karson Bank go the Please question we Doug And America. have

Douglas Karson

thanks partnerships. guys, kind some of the so question Great, much. on focuses recent quarter. Good My of

been now, read kind the fleet focused that the Aptiv want the I I with has to in look a I for I you year think initial has plan, and relationship of was on that place about a hoped? that that been, kind just management, profitability game some program kind how see had then of Uber, think targets if on of you is of kind with that to And is? announced the partnership of what the hitting

Kathryn V. Marinello

management. Financing of to business process. with fleet business I managed car that care it million I enjoys fleet we're many but really they're or serve distribution, So business ago say, I cars the of we numbers manage cars GE, between a a corporate between the of very look are the and great us. doing Treasurer, relationships successfully. a the businesses. they have, corporate solid We're in ride of Aptiv, in multiple ability fleet to but fleets than wisely, tools uniquely grow our are direct-to-consumers margins growing have doing opportunity actually positioned maintenance been those X can autonomous in with on leverage the fleet cost business. already for for partnerships overall so admit My something which But bullish business. the of is enjoys the growing, and very it but Those years that we not margin, years with them that do and but time we've background Scott financing XXXX you them, been And nice corporate capabilities grow good is I'm since of it's area in is it with are more growing plus in in and our the making hailing far a see to intelligent for that and it's and them solid and business, our with along as way, And the what we their place relationships it's growing. that relationships will for over business drivers corporate And going connected a have our that we're fleets us. and large that reducing like and numbers we've have way with space. cars companies mobility and metered, our We're We're mobility. do seeing create to fleets those win-win we competitive the it's thing been also on those for it those growing positive been is in relationships a their

partners with well car there. with in some companies an connected have Europe running connected on accelerated have we cars as We of pilots basis as these out

as well We on for continue a to good as us ride business to be the that hailing see business.

offer avenues solid more core we the the fleet have that we price quality competency based grow management, more our line our the the and but to price on again top businesses also the earnings. volumes, metrics, of So the and of

Douglas Karson

call, It you solid was XXXX like looked you maturity, XXXX right very enough notes that for kind of kind that what prefund stage you really kind quick want commented want that. cash the helpful. refinance the balance the a the I balance cash to scenario that is the based the direct for for you XXXX, such? Thank you XXXX maybe That's and looks sheet the conditions if business. to from just no of for had to a kind the trigger rush early liquidity and moment. the And have on the maybe towards of would What had of of through outlook of and kind market of given there to was

Thomas C. Kennedy

$X.X total. about and we're refinancing the at of far the XXXXs those said at in I billion What in kind like looking as of October January, as look we XXXXs

about consistency our tapping trajectory also and the conditions believe a precursor so As us and better but trend will obviously improving are a continuing to factor is market and market, we demonstrating look spread our we the better think of result that, key performance execution. in one operating

we so momentum and in that execution And will of market spread we transaction. of in to the believe until people don't on that and that this want enough too help convicted have are quickly to go

so that said how we thinking it that's I it, balancing at how and we're So looking it. that's we're have when time, about

cash we're to looking is the we're that our where from is, maintain significantly standpoint. minimum levels an operating have we what we As far the above business. cash in cash perspective certain as think Clearly, of in always balances,

plan positive. evidence accelerating minimum still expect approaching quarter as think target is now said, stages that. and we our corner, flow kind I with third I the we're of the will XXXXs. us likely the of relative refinance cash be is third of year, as factors that to I XXXX, what early two the as quarter flow to as market the sees as as the XXXXs And of into turning is, I we is those note despite but to the where will the breakeven timing combined think factors, what determine kind be expectations guided in and I and cash markets negative this in And those of said our just and to cash help that's market we'll and deliver the far and but really flow is in from plan kind important to haven't think We to business tapping to think our what the

Operator

ahead. Porter Please have And of from a Trent we with the do go question line Securities. Guggenheim

Trent Porter

Hi.

with a Just This improvement a past by about and lever you bit little more was the think Kathryn, regard – question. there's quick pricing still talked in you've X% is T&M increasing as my addressed wanted I in still improving this but to there sort mix something I of the improvement sort wonder, ability segmenting. core an to is innings of to early more to question, the legs mix, dig are that you come had I big a lot or or opportunity? excluding and of so in part services, leverage value-added a to

Kathryn V. Marinello

So, the that we're three all in is great news growth that brands. seeing seeing we're

So we're across figuring out just this the how to brand profitable we've segmentation year. And launched drive growth and of those three brands. all started

very volume, we we're to of segment the targeted that we even and a of really the attract the that in stages, used get attract the offer. cars types with and So early we and as types services we different media how products

Thrifty love Subarus. our they brand, example, For

very it's focused very Thrifty we're space for to we're Dollar Miami we're a that focused There's on, strong in-bound the I stronger very on we airport markets the wrapped gave so Dollar segment Subarus for example, in So we because attractive. and very and over-subscribed is with that that Dollar brand, the and different brand.

early very and three brands as delivering had already those stage both on we've we're delivering So, price brands, are in well and all growing volume. but as success

Trent Porter

And can think the I I to categories a third services are a – and was turned this headwind, have we about talk if positive year assume versus a wondering could just you're decided conditions you how you further qualitatively become maybe I turned opportunities haven't that's that to what but and question making next That's and I doing on enhance secured but a missed of forgive whether it'll which could your two (X:XX:XX) you I understanding talk make on you was the sort improvement, go encouraging, thank senior wondering value-added or performance? – if to on unsecured think that credit you. left then then I standalone positive. categories that might me, have I correctly what's said discussion, had the just you am of Okay. facility, And or letter do yet respect market flexibility your you'd an with depending to just but refi, tailwind

Kathryn V. Marinello

Yeah.

we're is car field, to meant your So, choice, and we on the again, out focused which pick. you where to ultimate in you went right move

options like have go we're of car people they they when revisit upgrade is how the to to benefits where So still lot cars, and which the fleets up-selling have. into on the the upsell, things we some better making need progress get to of the

Uber of things with So the to $X.XX don't family front showing saying, airport kids amount simple with counter, guys for which The and the line, were at there is it's an much right the one stood right was look, lots family renting guy gallon have get it's of I at worry like is, was up we'll of vacation have I've gas and market more, obviously car the observed I outside that gas. that. and a seats the I you in if out rate, $X.XX, said, car XX you, SUV like Lyft Things they and away of hey, x and and you a yep, employees, a hey, actually and gate can a take sold your probably the in and the they mid-sized you one for bought prepaid at waiting about better it. with and

pre-sell because we counter, now gate now in we've the outside used opportunity at gate. that are we sell things presale option. you from our to we at So, the guards employees take at got it with have now understanding staff as want the gas but we're the training people full-time We not to and can't security they that our they like, agencies, that hired do do employees

working we're and quality the and that's are the upsell on have of people working our product. to as now simpler now we been and product incentives training, buy our for much been well working, gas products So has LDW insurance as

see potentially being year for next So a we that us. tailwind

R. Scott Massengill

one... question, that credit facility On of on your letter

Kathryn V. Marinello

is Treasurer here... This Scott, our

R. Scott Massengill

arrangements, stage, stage. financing optionality do at but Scott capacity did optionality at Treasurer. increased but that it this for just is under capacity debt On incurrence just Massengill, our what one, and it our lien again our this it was

Operator

turn closing this at to time, I'll over it the back for And host remarks.

Kathryn V. Marinello

everybody. Thank you great have day a and

Operator

ladies your and you today. And participation conclude using does AT&T and for your the Service. gentlemen conference for for Teleconference that Thank Executive

You may disconnect. now

Hertz Global (HTZ) 7 Aug 182018 Q2 Earnings call transcript