HTZ - Earnings call transcript Q4 2018 | Hertz Global Holdings, Inc.

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Operator

Welcome to the Hertz Global Holdings Fourth Quarter and Full Year 2018 Earnings Call. [Operator Instructions]. I'd like to remind you that today's call is being recorded by the company. I'd now like to turn the call over to your host, Leslie Hunziker. Please go ahead.

Leslie Hunziker

everyone. morning, Good should information. you press and release By have financial associated now, our We've conference accompany be to also slides provided our our accessed website. call on can that call certain I made you to information. that want on remind this contain forward-looking statements

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

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

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

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

turn the to I'll call Now Kathy. over

Kathryn Marinello

With year. the unit, foundation place is for X% managing Leslie, as strategies most highest an result and a combination in favorable of comes a in capacity, to and higher utilization right focus good right key the priority unit the our because trifecta meet and a AI-led demand with addition performance our generated popular for the value volume, organization. how our Driving Worldwide, disciplined of head growth and reduced in long-term due as even price ride-hailing revenue growing progress people, XXXX our us. morning, confidence hit And and and management the important comes in led in significant attention process a into We effectively diverse upon XX highest Culture earning sustainable result fleet we backgrounds, which programs the values customer When Choice life X% to in revenue. on metric with sales customer our Ultimate momentum locations, months. day actions our greater and personifying provide top have a am the reenergized vehicle else every assets strategies, and higher and and and field capabilities we of you, I a advantage. priority in enhanced the reduction revenue performance leadership loyalty XX help of year, expense retail to but relevant led part year, clear rebuilding new our team experiences, to the XXXX. car the our the built. last expense we most replacement rigorous a which and to per Hertz time excellence enhancing our channel of They powered culture Thank processes focus will per to our Last everyone. serving unit increased fleet cards assets, you a I become requires return more tell last on pleased can't new quality These the leverage we U.S. fleet over price. arguably our we more in our everything ABS fresh the asset the customer And fleet. of to insurance best growth, growth capabilities it like the In by speed, is right importantly, Last throughout right one we expansion showcase competitive and market, our industry. depreciation preference, the revenue to systems. was XXXX. XX% opportunistic monthly to accomplishments the perspectives car the with forecasting new longer biometrics, service training creation broad-based brand a experience. residual and people, ensure through and our in strategy, revenue promise. rental locations, depreciation mix, mobile segment. With Aligning is and often, we better and lane, CRM expanded at customers U.S. fast we When product to expediting we it did. in XXXX, to acquisition we in innovation now turnaround segmentation values used in customer-first primarily and more remain convenience

transparent rewarding We most are purpose accountability, trust and driving is employee the impact I've What people. We're for creating speed embraced the simplifying greatest a for our our of values. regular organization so reinforcing these with and earning and found priorities communications. sense urgency the which far through goals has

in we're amount accelerate their We encouraging decision-making get to their have to feel and and a talent our conviction done. stuff of business in people huge confident

Our to feedback represent focusing the get and a faster customers priorities. every ever year acting more listening XXX,XXX their roughly than month, and consistent than a and people we're we delivering telling adapt from to changing are to We better on office were brand. We're the us experience They that more Hertz and front customers ago. they're in back our on line.

our in momentum. As all three the has that shows all performance higher brands turnaround our in scores are a result, customer generating XXXX measures, By satisfaction U.S. strong

created. for to energy are plan. long and our two place, significant higher revenue payoff their fleet necessary, and it's the completing investments utilization costs. have be that been long-term easy, improvement can productivity With cost, but because to That's in XXXX. in be sustainably lower we're this turnaround, a last short-term our and not priority continuing the just connect We've revenue the cut shows early been looking again year, years, and gains we're great is that's rates and business working. to that growth-led increasing significant value solution. term towards earnings growing This reflecting in turnaround greatest grow But the will on a clear where a Over the strategies

better nimble, cash of to customers improving more and is foundation. for become for business goal better and return in results that greater strategies and Our employees. efficient and allows more a productivity execution and our know focused at and our faster income a experience We our

their begin reduce zero-based fleet and time, driving fleet to data businesses costs analytics through maintenance to are Jamere smarter working potential achieve determined efficiency, we've benchmark our the our improvement. coming resources to of and transformation, offset can our optimizing improvement maximize on Towards future that and that goals better and trends will office savings we're to accurately to flow SG&A. budgeting systems-enabled strategic to productivity through to lower and comes end, out productivity faster. every organizational technology collectability sure and to our make to that the incremental the to goals we drive further service are decisions will help make to to are come. procurement in the predict leveraging more serve spending centralizing explore working in and this roll initiatives impact been by out repair transformation and America spending system years the operations capabilities an and year. it In and expect later our so as and laser-focused against with of customers into prioritize have we real-time from North Phasing higher XXXX, service these continue avenue entire system's smarter When to our the visibility we team new

fleet back-office Our system. cloud-based major platform for CRM, management our in implementation transformation apps, reservation, includes mobile rental,

streamlining simplify the and we're upgrade, fewer the our As data. improve with usability to our and part accessibility infrastructure of quality, of applications

logistics connected and in Driver growth launched Donlen's monitoring device, accelerating. is through XXXX, levels, and information acquisitions, of forecasting marketing connected acquisition points our analytics next-generation actual customers in sales they While management system's managing trends customer driving driver for we number improve XX% route will the X/X advanced generating outcomes, include from our collecting telematics accounts today, allow will efficiency, and data, Donlen Connected and step lower XX% Consumer increased point March cost. fleets during has combining launched our next all help. behavior, fuel Donlen's GPS maintenance connected demand allow optimize already enhance design. by to lines, customer incremental and benefit, is dynamic, platform. of shows diagnostic roughly of and smarter proprietary evolution. to customers continues since In channel been year-over-year. versus business rental XXXX, to accounts revenue to fleet our And the track as traditional capabilities Donlen new With marketing rental further ability diagnostics support total been goals operating customers flow in our satisfaction, Corporate XXXX, productivity leasing engine the vehicle its ability levels driver to data absorb and the lease and lower consumer get us savings. we've planning provide customer that XXXX a optimize a of The and us the analytical allows in have inventory cost life to cost benefits point tool accounts in pressure data higher our informed experience. since all service odometer fleet data and connected which better have and

decade world. we that creating base straightforward While once and piloting into global purpose data value fully teams We've capabilities in with a connected At common several place, point, value experience. we're is rental sustainable resonate integrated to their technology enterprise be pilot committed in rental fleet already from moving with employee should growth real capabilities leadership car an appreciates platform. established Donlen's in strong customer in-market real segments, as of customers new markets and expeditiously connected U.S. the around that platforms and to are quickly the Donlen's a our that long-term momentum leverage

launch transformation Our quarter's over and detailed continued we insight initiatives you growth I'll more later to technology will our it With expansion that, focus turn support the margin fourth year. give a Jamere performance. this as in into productivity to XXXX

Jamere Jackson

Thank quarter XXXX. morning, and a strong you, and Kathy, great had We to another good everyone. finish

Our growth margin and faster a initiatives higher building delivering business. are growing, we're

we strong The product made pricing in profitability. our in revenue, growth resulted improvement that along of with have offering, building brand the operating in and key fleet, many management, our and fleet metrics. customer investments corporate and year-over-year driving execution in are EBITDA marketing, quarter Our and service disciplined adjusted

move line we margin intense drive along to growth year. into growth, momentum, top we expect productivity, As expansion forward focus this on this XXXX, with earnings and an

was Slide basis RAC and $X.X GAAP along billion, quarter me U.S. segment. our of with driven in measures on revenue and strong total of segments, quarter an the RAC full moderate First, a our X exceptionally our let XX%, our growth company provide shows another fourth up results. overview year. consolidated in International non-GAAP growth by results the our Total for U.S.

In diluted which through points from share included On resulting $X.XX share, $XXX addition, benefit was sales basis XXXX. million and fourth diluted corporate to income fourth loss XXX% Donlen up quarter. a XXXX, higher to XX% loss a $XXX of of million the basis, expanded reform. U.S. to XXX corporate adjusted $X.XX from net million per per quarter capital quarter business in $X.XX our share a EBITDA EBITDA adjusted margin fourth attributable and in improved our non-GAAP the tax was to Global net $XX increase of per the X%, Hertz or Net was compared lease

$X.XX support corporate as RAC by by were vehicle prior driven interest increased well partially Our depreciation offset share $XX expense, improved volume investment as the $X.XX transformation vehicle expense Adjusted year from adjusted pricing from loss These to to million increased primarily and diluted the and U.S. our net results our improved lower loss quarter. and revenues business. initiatives XX% for to adjusted drivers higher in in operations. spending quarter EBITDA per were in

in to $X.XX for million, the year, our lower X%. solid X%, was segment vehicle and up points XXXX depreciation net income international. revenue company EBITDA was U.S. debt attributable of were strong $XXX share basis loss more share Adjusted in million That in interest. by and per corporate and For full XXXX, total operating growth $X.XX net led RAC strong up XXXX. investment $XXX performance the growth EBITDA was and to revenues than Hertz $X.X offset million, vehicle for net with XX%. in expanded income loss Global Adjusted margins million of compared per Net versus $XXX by XXX corporate

related $XXX a XXXX As in driven reminder, tax benefit XXXX recorded reform. were by the to results a U.S. million

color additional the some quarter, with RAC on me start let and let U.S. starting segment, Now provide with revenue. our me

with ex-TNC We total Day X%. business rates and X% revenues Total U.S. excluding XX% had X% volume year. pricing prior outstanding CNM RPD for year TNC. strong fleet versus RAC the ride up RAC an versus $X.X were and dedicated a X% growth Total up hailing, year, saw U.S. billion, and Our up up increase was Transaction solid RPD in grew X%. prior with or

be business with a positive business XXXX, revenue XXXX. and nearly growth nearly versus for revenue doubling in million volume behind In continues TNC to Our Hertz TNC pricing. we doubled the driver generated $XXX from more than and

In growth and on- across drive addition, to both and continue off-airport leisure. brands, we business in all and

on the prior will rollout of way management, growth growing, million, results which sustaining quadrupled disciplined by vehicle is offerings U.S. corporate $XX Clear, in customer While the in will versus disciplined the brand in products delivered We're as drive growth new business. to and year, our a a marketing. focused both behind and line we XX% enable RAC recent in strong more technology top adjusted future and driven that those We investments, line building the than fleet invest service service results and strong EBITDA remain innovation as has top such per-unit and market transform depreciation. productivity. in our execution was operations continuing decrease heavily exceptional

revenue RAC year, tremendous U.S. EBITDA business up corporate a margins Our XXX adjusted and basis X% points. had up with growth

in solid XXXX. in capabilities the help profitability growth deliver XXXX Importantly, and built we will us that

fleet. turning Now to

up focus XX%, to tools been our our management manage was with capacity science driving fleet analytics tools U.S. ex-TNC Leveraging X% continue and and Vehicle price, rigor organization strong and predictive discipline. utilization to as sophisticated success and on we demand. against basis of revenue backdrop has the and in talent the mask we Fleet use was and our lowering our capacity demand. capacity X% data XX up fleets. market We up to key to and points, profitable driver the a costs utilization of fleet as fleet continue

Monthly and unit disciplined depreciation. decrease quarter. unit year of expense the was expense depreciation strength it the value depreciation XX% to Moving versus acquisitions, The fleet and per vehicle prior vehicle in decreased was solid $XXX execution. residual result

drive significant residual our combined with outcomes contributor results high continue to return on and manage cost These a our been will retail We channel aggressively to to have depreciation. vehicle market, acquisition actions, in utilize our favorable value better a XXXX.

fleet Moving to our sales initiatives.

quarter. dispositions vehicle nonprogram Our were up XX% in the

retail undervalued stand-alone in us a we XXXX, is basis. capability tremendous advantage. will is one competitive top Our which sales on sales used up a sales given the the make to has of the believe car operations continue and In asset, our country

As and to and platform I've world-class said sales we expanding is revenue previously, team, locations growth have we're driving new our profitable a web-based profitability.

our they We have our assets company. enormous continue as for these creates value in invest tremendous and operations, RAC with will to synergies

The In of International organization reported management as U.S. we've expect higher $X the capabilities XXXX, RAC flat also a International Asia by and Transaction revenues a all driven interest and was international segments. across on and versus by adjusted prior reap in $XXX RAC to we constant-currency and to RPU XX contributed Pacific was driven X% up fleet $X quarter, seen million down grew corporate basis. our segment. in our expand growth million Total X%, through X which cost. enhanced will at similar RPD segment EBITDA and Moving Utilization a decline. basis point benefits the decrease revenue Europe, our to Days points, were flat customer million,

to flow. to corporate free update financing provide our Now an balance flow. I and the liquidity and cash would our cash on activities, I'll like sheet move

EBITDA turns We're Our corporate X on as results XXXX. focus by from to corporate delevering to measured adjusted our XX.Xx X.Xx business the leverage corporate to net as improve. debt year-end declined operating continuing at

maturities an executed revolving under cover $X.X X.Xx Xx. liquidity first-lien front, no ABS to extension included covenant our XXXX ratio XXXX. drawings revolving was of billion for financing and of vehicle in U.S. corporate credit $XXX XXXX. the $X.X senior with with February, our On liquidity required billion transactions our facility we forecasted in X-year to inside well a ended quarter In the the of corporate of March commitments of million ABS fleet seasonal series a term The RAC and and needs March issuance we

In a for coverage commitment revolving peak a had addition, to round facility season. new the we ABS seasonal out under U.S. facility and our

the we maturity the proactively focused address We months. on managing no which in maturities XXXX, of non-vehicle also to significant October the debt until profile plan remain coming with

$XX an business. adjusted our turnaround. up. XXXX. cash, market help marked the consistent to tremendous customers, important will value in we're value capabilities from was initiatives the With improvement years a will by us in of are a XXXX excluding cash control debt deliver, flow faster the We've that vehicle U.S. our momentum free primarily ABS positive of higher-margin us, issue. wealth to wrap with on Prior improvement a driven including market operating marks fair fleet, Many have create environment. past invested growing, vehicle in million milestone and strong flow we our cash advance favorable million, our XXXX, entering European challenges Turning rates the To $XXX depreciation. few that with remediation behind of residual winning

management, maintain beyond key transformation Our the growth a focus momentum in will brand service this innovation XXXX excellence, be on marketing executing with building profitability technology disciplined for XXXX. and enabler is fleet to while that and

operational productivity. and We efficiency will drive

updating to operator turn it progress that, on be to questions. future Operator? on back all term execution to with over drive you And the for I'll long actions forward catalyst look the value. quarters. a will laser-focus have in I now these We shareholder and our

Operator

[Operator Instructions].

of from line Woronka to question from Bank. the is first going Our Deutsche Chris come

Chris Woronka

to where this significant there or if at in more that wanted you're year that business, I TNC revenue, for year? of than I Is -- certain you mean, $XXX mentioned ask could in capped that or terms a get targeting could, million could how 'XX. I become? versus the double level next

Kathryn Marinello

I great are think planned. been the of our coming has The of better in it to all aspects contributor a news than it is growth. significant

are But business, growing accretive. we'll at cars So that to it coming aging the off are we over The able that getting and business great ease on have, -- them they're we efforts grow to we've again, this it we're drivers like is allows and to it We at of the into profitable ridesharing. frankly, TNC of the our maximize the with from out. they're and because XX,XXX XX% XX,XXX program XX% fleet and responsibly miles plan ended these put numbers. year's will We probably vehicles. come we feedback value is to people cars it it, expenses that but that been of and into we about the the

continue And to our to we're wealth contributor continue to it. be a But will business. sensibly. going of It's it do so the grow it to growing and we profitably overall

And it's going been so far, pretty well.

Chris Woronka

Okay. Great.

there Just the progress fleet trend few anything a you kind of that costs? the the cadence the I of, And downward the it's sustainable Yes, are is, market thoughts remarkable residual XXXX? really might seen change guess follow-up we've there. on is cadence in on a costs. maybe that -- -- fleet in or things question made

Kathryn Marinello

you've on Well, for buy seen product cars delivering or sell growth an the at ability me most -- to say level. guess the what's I industry-best to and it's hard

CFO X at and the long used -- be, And enormous business lines my I'm looking Controller, are our those volume, P&L. way. a -- background in ago, is proud been biggest always so revenue lines sustainable done a And the of we've achievement we've and made pretty progress getting doing been we're a and time but and both and both to those it it of it, with tough which has and it we've those in

key the fundamentals there the cost, is getting fleet the right. On

And so fundamentals right. we've gotten the

the the slots. of doing are think we put great team, great price a And sales them that want to into a business the business, cars We And sales we're our that point the great side cars, of have really sales leader. driving. retail used at customers cars. have we thrilled they in lower a other that's team about the those this cars well. #X is I at And that, job at retail buy a right And when a on then going great buying

I opening over up think the another retail XX outlets we're next year.

fundamentals really great the managing selling and in strong we've and So buying them in utilization at between then level. gotten cars

number we of out-of-service on next have one, a better quickly we challenge, on great if selling or change now and need buying of -- any we utilization outside mentioned in too. getting we and think good So maybe, know in if at it I I at buy cars. in X values, there cars, But got to we can point selling we're and profitable earlier, line. a fundamental residual cars to our pretty up, And do the X by capability where is kind levels that, fleet

any best through of is the just about best-in-class how X% and to downturn Right way your in now, have values. in to residual cars. residual buy on a we're practices the sell get building So decline you ability kind

well. the off And fairly is so year starting far,

Jamere Jackson

this class, market our thing from that was absolute range seeing on The Difficulty] XXXX, Kathy saw down was we the mix from our variety nuanced. in We execution year. factors. some only I'll on what depends distribution, our acquisition, decision It as execution terms exposure, the model expect you the of add volume, unit on a by reality [Technical the in more do at position, that rebuild our in car have external But is debt residuals we're forecast. is results, is vehicle said. what of XXXX, declines XX% to So and low see per for single-digit monthly the number

sure are there a statistics our is matter the are no are, What tell in for put and So will a market that those to at that acquiring and return our have right we actually cars, impacted Those tough Kathy you execution, up, determining channel. them. through cars point that feel be number execution very end the what of number things the moving have right be it's that depreciation where solid making I the the that time can will we've normalized good as we making instilled the and capabilities then mentioned, sure our of the highest number, mix, that about kinds factors we cars given of any organization. capability for we those at

Kathryn Marinello

you as what the value. probably, know, And OEMs do clearly impacts residual

unusual so far, seeing not concern. And real we're any spark any behavior to

well. think, the I all, in pretty all environment is So up holding

Operator

Our come of line next Barclays question Capital. Brian then the will from Johnson from

Brian Johnson

Two questions.

the up following K, in we'll disaggregate the then the maybe but the you and can domestic First, performance? when portion sale we residual on the of the for numbers, year, on that get and gain XQ get

Jamere Jackson

doing driven combination our So from I exact of the moving performance. was what year-over-year, about in results our with of actually look We the depreciation on and X/X follow look with on that A acquiring I of can about at up and terms doing cars would say we're at them. that channels. we're you results you if had numbers associated the cars -- what retail the through we

you should code. get In in the fact, zip right it

Brian Johnson

Okay.

OpEx could we Second and in side the -- get kind as trying detailed think guidance, talking, of SG&A, cost side technology not on increased but the us so the Kathy -- between I can any in SG&A direction question. giving spend you're about including versus cost side 'XX? give to know business the of was takeouts you just

Jamere Jackson

Yes.

investments what than tech here's SG&A is at XXXX So in say, the expect are our In slower related to revenue we a I'll transformation. DOE significantly primarily and to rate XXXX, grow growth. our

productivity incremental to will and help expect this serve despite frankly, expand you us SG&A payers, margins as drive making. quite incremental will, We if to we're bill this And the investment. will investments operations in and the

a adjusted in margin And result, we as transformation. see as corporate Kathy as XXXX, in the tech complete improvement XXXX. you So should then improvement incremental mentioned, and EBITDA

Operator

Millman line of will Mike question Research. come the Our from next from Millman

Michael Millman

indeed, the let margin follow-up margin you last Kind be the how A half, if EBITDA of you did. expect know the you of, when, to much terms -- not to compare up, the is you of at catch the that And it and not same much continue of with you could additional world, exceed the on in into half I expand cost get does quite question. how about were in vein, never if and technology it'll Avis, catch -- When once do up? catch benefits, up. -- and if helpful maybe they is will, cost guess, cost you us you

or look for your relatedly, that? So what do reach can we margin -- what you is target EBITDA to expect when and

Kathryn Marinello

Okay.

our car the look business our business Donlen, well as guess, as of that our I in I've given X as business, sales have leasing strength largest average fundamentals we the is clear no doing corporate given lower our of So -- get our said before, now, wouldn't and on right, the if this margin. used weighing And it's which used at our brand, up right EBITDA Hertz leverage, there brand, that in there around the we reason, we well be best-in-class we're the EBITDA, industry impacts that interest obviously because than and are our as as to investing expense structurally, our EBITDA back ability into our business. assets catch

invested would out, brand we our reenergizing but which particular, spending to probably without growth-related as the is we that Instead, strategic in it we're pump well costs that our our been EBITDA, infrastructure have and ultimately taken done, company less, focus in have could and cut done assets investing -- our taking they and past. of kind sometimes which right in panned in to not up are technology So where was marketing. course, spending productive path any which more the and we when around a brands. dramatically of the would have it comes as the haven't And our initiatives our the we've in

company effective the actual bulk technology into back of the getting is term. Where the the needs there. we've our investment really been operating longer to be very driving it of And where we're So shape. structure

And XX-, a some XXX-year-old technology is we're that company. XX-year-old, of

So need it has dire in been of repair.

downturn good last the is cars. we're consistently around I had Consistently think cost we've quarters, I came and business from first our been consistently in started and the that rates the expanding improving in. And price margins we're when news reducing of then turning been several the for the on from getting cars. it

continue to best need brought sustainable all and metrics to we we our clearly, is the we've here if attack they've the costs and they we to predictor a consistently we lines we those infrastructure now, consistent in when to as we in make need progress? back two it areas. they and costs. do great forward, they got team and And to So And get performed our look is, are do operating this continuing something, need to have the where to largest make done be, progress that

term on waste cars out we So on little and expanding and to that pay and go you can -- ahead. if get in margins and any now growth have the and very to focus of looks consciously a we that what using start you are did our XXXX. focusing further the into and productivity more the the our bit kind longer there we bills And in want like, decisively cost Jamere,

Jamere Jackson

strategy. the the do. order was seen a size cars to having right you've Yes, that is to line first us just and we how top investing mix to we're that the we had so invest growth, of frankly manage and a Since fleet, that's we apple very right approach this company helped that's quite locations was, in as us better on disciplined return the split, returning quite Kathy our we've focused right getting what we're been mentioned, and utilization the price great in on our backbone what's enables fleet and frankly, the and This of we're of have. business

and are us is must service these in and productivity these That all that next underpin all we're it the making in running forward. fundamentally technology, being of capabilities, market to productivity, of So that the leg investments capabilities stool And said, with as have is operations play the brand-building strategy. the SG&A. move we're for across in quality, you drive intensity you

the opportunity in every we're of and P&L that. line virtually item have We attacking

us have we as rate that's that margin that these we focus are in emerge those faster offset detailed -- efforts productivity and making, us from industry-leading be But that the XXXX, tech at to XXXX, a In not us segment you'll higher fundamentals no business, growing right are business. we're impediments for So the transformation but for that the primarily structural growth to the building and plan also building And only in has transformation. investments that. do help things pretty the then inside not see margins company. the a

business. with back into So in the that go we've with from move and drive needle them an margin I'm excited the about the them capabilities way, is a standpoint to productivity EBITDA built. built built We've that we have margin and a the them we've rigor, help to opportunity built going the right calories we've now, us way get discipline

Michael Millman

analysts reach market is of I that. know appreciate under always and drill can what timing down -- I guess good conditions? of So into level as that you sort reasonably EBITDA some want to to

Kathryn Marinello

in 'XX XX%, to when 'XX costs XXXX, of and there's forward and our will in that EBITDA interest at And improvement should to X I now say down that the no the XX% continue think should leverage think improve EBITDA point, have plans also and debt get in the the we predictor should of EBITDA cash with of double-digit is XXXX. we right headwinds did redundant best by EBITDA obviously into not year. investment our out, and in into I be technology down kind the double range get not investment, future spending. help technology, carrying that we to of our maybe industry-competitive clearly at we're expense that new reason levels. we're this our bulk point, the go at And and definite the but cost very out efforts that where growth old It and significant technology versus of going

company profitability. progress year we we're significant two intend that years industry So competitive back bringing up over progress in to plans on year XXXX. And and continue the very we have this focused making to last after

Jamere Jackson

And very drive share growth in fair standpoint, to mean in a And get of XXXX We I that, I our mentioned, we're think as top available growth going intend on way. I to profitable and a marketplace. there's the of from that do that productivity.

that DOE expect in about improvement and and XXXX. for the growing So to SG&A going made our that you're I [indiscernible] rate XXXX, have than to going comment our at lower significantly a revenue we're margin growth,

Again, the will company of leg comments, going a returning to way my the the I job it the had. kind productivity higher which adding in in next is done you business. confident we've We've a done the have that is we've that And fundamentally if faster. stool, top growing right we're create we're margin capabilities line. and I'm of So great of will, mentioned

focus have company. on a that We laser inside the

Kathryn Marinello

I'd and And the order, any that is, these most at to great X they And leaders are but our ask CEO, thing And if is I are then costs. where has up in secondarily, CEO getting awake things them generally Having the end cut you operating place; night important?" the keep -- control. "What easiest things: change do and it's may in That's any honestly, X growth.

this over battle our that do place X chill out the in think growth. I to in factor at have strength costs world in right of can on confidence get So think leadership bringing given getting which the been now, And the tougher I team, last and put way back significant has a they all and in we've the done, I company a and the years doesn't the that way. rate, it a leadership higher growth growth the a the

Michael Millman

industry future? margins, was XX% that XX% there time, one your talk at in So in to the is of EBITDA

Jamere Jackson

number not Well, macro things, how there. of a number depreciation and the it'll and trucks of [indiscernible] cost factors, there's the depend grown know. the on I will vehicles, execution. a think of happens on It will depend has fast depend industry on what out as will the depend obviously whether well It with or on you that's our available big chunk that of a

for business what at of us margins, impediments be no will. you we we're again, think if building leading to will there is are business And industry structural not say in I cycle. no matter the the of the are that fundamentals that our sort strengthens where I

me that driving going revenue all for basis, be on from company. and of be be we've And enable and now, So this in lot that we of gives benchmark. put that's underpinned inside growth around that have productivity, discipline growing, the like-for-like a faster productivity, both industry standpoint the is ability our a to right confidence by management stack us a business managing a higher-margin to a that an the thing technology fleet, doing and focus

Michael Millman

Okay.

pushing get we but a keep to number, try to what do. Sorry to that's

Jamere Jackson

totally get it. I

Operator

then Our question come line Northcoast John the from Research. will next from of Healy

John Healy

the not Kathy, to stabilizing in congratulations it turn only other EBITDA, the way. beginning on trends but

So deserve road that. it's a for credit top about the long to of a and you been ask line. picture big guys lot question Wanted a

business really this not growing. there's think car perception is I out that the rental there

on was And the back just fight two on I results revenue hoping understand Your that. to line. things

the data you you sure If of reporting rental in see grew lot know revenue industry I airport that of at concession in airport a what U.S. that. I'm you're guys and the business? you do believe lot there's a look the XXXX,

a of revenue EBITDA be curious the what market level for of know you, then thought those be the And produce grew. you to do growth returns? secondly, to I'd think you level of to at So revenue the what types company normalized or get to needs sort

Kathryn Marinello

we what to guess drive right. on focused progress, is I

So would year obviously, before and low double year, better high that is every being digit than seeking growth. fabulous, what be single digit, the

I happy of any rates. think So those be CEO would kind with

economic about in mid-single industry embedded -- the X think digit probably I growth. right now is

different grow there's airports We are different at -- rates. that

focused we've on pay of people time improvements demand and and reason the we very I saw price where rate So day the greatest analytic better part at where we we're we and U.S. to getting that's particularly tools growth, and a to it great is why in and have are saw the think significant same the every been willing learning at

the to. So about interesting me ask I industry where's going, they story think things two them share one when people point there I car do are -- rental that there's with I'd

the I we water is provide and eclipse, stations hit the blown came, first got we when The because cars. of people out all news couldn't first the

more a started and ridesharing we're different they companies is as Lyft, Uber expensive need they well found people in want from their perspective, towards all renting And that was as they around, solve cars get when car. car places can't to a need the moving corporate where dramatically than even that all a car. they and So as and car a solutions need and

big somebody so the car still a leasing you're many want there's time. you reasons multiple a to into be need There all car new to and to college and avoid whether cars people So a and you reasons, rent the whether rent why continues great miles, SUV. you're reasons

a and favor, business fleet have corporate our Then business perspective, fleet. mid single be with the to we managing we autonomy an we general a unique along you from the are large add it, ability at a unique just in to have goes growth. rental in best-in-class company population that So in that a

way, to big business, great our of of car value used us comes there largest think a car business, in approaching perspective, out fleet So for partners a the if business then there. add for have play, and autonomy really we're But the the actually that. getting online. building used the we're know we're eighth value some more as are a that growing it, win don't opportunity world that I see autonomy. the and you We're getting for our in And into around into corporate from we don't we coming we I are

great We have capabilities around great a brand. it's industry-leading we -- And have by backed that.

in assets great ways growth seeing that not necessarily today. see we future plus overall, So we're

seeing a business. economy we're mid-single-digit supporting stable pretty though, our economy the Within

Jamere Jackson

Yes.

plan the at cars. just on looking volume So it's and that growing what clear, that placement data-rich in help day-to-day the on price from Historically, market macro environment. at see, I'll look the quite market available by at complainant, GDP we've looked not very also say really frankly, is, and you We're is but demand the data data both I our and growth. we've of But there's standpoint. managing level signals we're be capacity growth a a can us when business mean a to plane basis, marketplace a

So like with systems people. and build I our said before, we'll both continue to capability

management scientists growth. all forecasting talented and are things revenue have helping and us drive these that We data are

a us the be to the in also we've capabilities standpoint. inside volume standpoint, from So to capture And do built from largely available and really allowing capabilities that see company. marketplace that growth our are clear, that's that pricing the both on building but we're we a based again,

Operator

from come Edge will Derek of Glynn Consumer then line question next the Research. from Our

Derek Glynn

today would last conditions has the your industry U.S.? And find the or competitors environment change you in and fleet quarters? couple characterize behavior in the competitive been rationally do How you there acting any

Kathryn Marinello

I think over tight. are the any fleeting. see we fleets don't general, In

candidly, what's great. keep is think values are tight helping fleets residual I the

people So selling are cars.

tend think of So does I help us of car as overall, and And you price and think demand. sales shining a got to make the supply hay It sun's while I world is amount around seeing fair we're up. to that a well. keeping

on in seeing costs all really sure we and result, the price do is those cars. forecasting get of to up have really And tools And the helping price to about going we're and on And industry are decent cars labor that a tight wage fleets have and improve. cost how steadily margins overall many is need, for we is moving going know think make to the maintain that have and way as have with to -- rational shareholders. are get us forward, the of I we to, we minimum I and cards it has think to only general up, pretty demand we continuing rational the also everybody a we smarter for be As that. see improved

Jamere Jackson

a is intelligence, using. had data the such some that and discipline that seeing. this learning. machine impressed revenue past opportunity an to And quarter have Fred are It's the using teams I by his our environment. scientists internally a management by we're we're tools The data-rich I'm artificial we encouraged our we're teams. and mean they're I adding really the the capabilities know fleet that Yes, day time every using with lot the a management spend see to get we market-by-market to demand this. an marketplace, help signals opportunity about And all in on are to we team because us that have smarter the us and certainty, and some of us helping importantly need location helping to tight, to by we with utilization. it's capacity number and cars basis, drive to pricing plan and have keep capacity doing

reflected in that's results. think I our

what capabilities I'm of that you see well. So maintain the the as we have those kind encouraged are and from we marketplace that by healthy need to the in the dynamics environment competitive

Derek Glynn

it think secondly, the during Okay. fourth mix to onetime revenue relates color. impact the to forward should the as in being or then the of sales leases that limited quarter to Donlen is quarter, And or benefit expect that should we Appreciate that some carry driving for reason? type growth is we revenue something

Jamere Jackson

always of little than more had the some fourth leases part quarter. had bit We've in as normal We mix. the a capital

up the normalized the will sheet. wouldn't on I one as a view. leases year, operating happen balance changed, now are rules ending is know, did basically where thing that you So call that The leasing this

sort We're we'll still There's of no transparent balance it's same will, those reality make of some They're when more capital business had leases, leases that trade-offs where managing profile, The So operating off of but the operating the the We'll kept if on some terms the it. data. balance and in see on operating. different an front, all all leases. decisions the we customers if you you they spikes could decision terms be the managing profile, sort change some sheet swap we'll is, in see way. in between is sheet. customers we're making leases having lease how and very keep capital EBITDA even that on going eye of now and any between capital they their the up many share

Operator

of line Macquarie Mazari We from have the from a Hamzah question Capital.

Hamzah Mazari

the around is question tech transformation. My

execution the around systems seems risk, transformation? as Maybe sort running. guess I that remaining a if year of you for you about on color risk? Any XXXX. talked in, touch I have like we you. the ending guess XXXX spend tech complete if could that's So execution duplicate normalized you investment

Kathryn Marinello

I before been all this to think we're goes the make we all, on deck was is, joined in it's here. time is this The understand been reality in hands the I've this sure well. have and entire that I company, company, going play to

track. time the right lot sure making so And on spent we've of a we're

possible, to -- us their have best And this committed happen obviously. is make partners intent We effort. very behind we smoothly as the resources as with backing our

Now these that are and things are of have we're been it and of on that for I some the transformations the we prepared I've we enough lines. risks been wrong, efforts both that of and is anticipating these doing reality types of will we through in sides place the will think how go mitigate along And it. and those

have months do full a phased-in anticipated year the America, starting throughout a XXXX we North So going in approach rollout. couple nationally a in with of and

deep supporting the think business fantastic So seasoned a types who's efforts all experience built brought hands here. we're and in team the of get and of We're throughout I professionals a He's going that. we got We lot challenges. CIO a this on done. in deck to industry these around managing have from it

Hamzah Mazari

you for of what around high? assuming OEMs just Are on comment in do a assuming you down pretty residuals you are incentives year, up levels get Or just not are then auto inventory are step this of incentives? quo U.S. And are on aggressive the assuming given doing? Great. being sort the X% OEMs status

Kathryn Marinello

part, the in already already for the XXXX. Well, big buy a have we most of for bulk

on any buying is there kind our fleet So and of fleet minimal the happening -- of we're somewhat of cost. the that size impact and the

floors -- continue I OEMs spent across-the-board I one And than and fairly to seen X how years the time, every the incentives across I've I I they're what buying they is the United anybody rational are much the watch the see years how that, who behavior. frankly, rational industry, all more dramatic of selling States. XX I've else think selling, -- what in on what doing change been they're you and before -- spent residual as in know, OEM month, I cars to, a

And I it. see have manage be smart every so they about keep margins, production, incentives they've manage to And and figured to their manage they out, got to they to smarter up have to price them year. getting and

again, for is kind in just great So 'XX there best we our capabilities case great a place buy, behavior. defense have in our any offense irrational is, of and

Operator

Jonas a line We question the of Adam from from Morgan have Stanley.

Adam Jonas

Just a What brief on? question in TNC is here. business Enterprise doing the can that comment rental you arena

Kathryn Marinello

focused very now, do I seeing we ourselves. rental admire And the the company, honestly actions is what company we're doing. on know. the handling is right real only as sizable but I Enterprise in -- that not we're a stay space

Adam Jonas

that be you would imagine Okay. a but just business, aware if would would interplay because were I mega as rental they synergies and that I see and -- car mean, of I ask you of the manager active, given -- them. obvious that the you the business that fleet in large growth the and

as that big it's -- now. that not Is you'd answer not just So -- a fair? your interpreting right I'm more they're they're presence

Kathryn Marinello

I'm just know. being don't candid, really I

Adam Jonas

life. the roughly the the tell fleet company, you mileage with that can of a How this and give guess vehicles vehicles by mentioned and and that, on Carl's as Was have where you a if only owned that program great for I could -- okay. Okay, you but And what running Auto long are XXX then the how useful on do in this I when And kind fleet -- you much of provides know curious, couple Leasing, -- relationship are been miles some us these opportunity average, follow-up, enter XXX you've does and extend TNC they the units kind of go? VIE. that leasing to XX,XXX years, they the exit? have for TNC them XX,XXX the

Kathryn Marinello

around incremental growing I'm since you that miles. business, been We some that the not and leased as the we've the but vehicles XXXX we're the business even smarter market. in business comment business, XXX it. expanding put to generally and Well, We in and do vehicles comment, going getting buy I better TNC know, XX,XXX in on at will

you have we on the network at expenses generally expenses sales buy time, about extensive cars. the based and that believe those but maximize demand. these love vehicles And our We dealer where XX,XXX maintenance at some out will same that down, guys car well a take as keeping fairly we miles, pollution retail

very they relatively If and they are you ask have these attractive, -- with cars any we tell when a buyers dealer new into these shops they affordable low cars, purchasing. retail end there, buyers we great mileage attract actually cars our and buy candidly, will will out pull our times, you lot they and extraordinarily and lot fairly margin up what because have of of they a into -- up

we margins the it. cars need all we've the to is incremental very on with it when filling already our marketing at we around business the great them used bends they're sell And go same the It's demand on well device them, -- a lots. at sell So in with and time, been they're our invested attractive puts is in. into the doing to ridesharing. And filling this we've how and curve based business pull and assets then

Jamere Jackson

Yes, at business. ride look growth market. there's a add a growth the competitive we to is, you of lot couple if the This a things -- in be this is that's hailing expect available, I'll very

I models, they think to and and the that having business drivers enough about those constraints think if one I service to of demand. is have that enough be cars able those businesses

interesting to is it's very service also be expect different of lots very be XXX are competitive the a out doing and expect be We'll And your be where it's But we to whether entrants expect business in, U.S. on of an available there's won't to obviously a are I that today, industry. puts we're that shakes the marketplace be that models this multiple there, points part there small that mean And is XXX very or capturing RAC Again, that happy for couple that models competitive. a here but what some our to see growth so this of a there this a be to doing, then market coming and model. our industry. on in going what to point we it and business. growth today. lot but is driver don't of out us, a we're we

Operator

the Goldman We of line question Sachs. David have Tamberrino a from from

David Tamberrino

spend past been the the basis on of level IT years? what has just you elevated an us annual Kathy, could two remind

Jamere Jackson

take I'll so that. Yes,

So associated XXXX. $XXX we've it had the neighborhood And going we're somewhere have in the to call of, with in transformation expenses elevated million-or-so technology spend.

move will said, a big that productivity as we I As chunk forward. with offset initiative of our

now new off. we're run I in the company where period think with have but just for the One, costs with the also redundant So but that the focus the costs that we'll associate development is: it it's getting we old it, technology that and us dual transformation then have inside isn't between see completed, running because costs system need the system. We'll to

on So track. we're

expense other start roll areas a of XXXX associated direct the operating we then be productivity of as see it. off deliver and that. to elevated margin expect associated spend to XXXX, and payer you sort [indiscernible] with have that some in to and with We move we'll SG&A into And the bill with

Kathryn Marinello

it expenses, business, again, focus The the than focused what getting sure productivity we do. to levels. industry the car I reality point focused is And line -- three maybe the average is, competitive not now of competitive And brand, -- earnings of part would getting Our good closing no we got third corporate right team and expenses, cars. the on of reason we're but is fleet waste why the industry back spending? very to of and an had shouldn't does hardest the the brought and structurally, bring think on I about: be I'm will When given if better things Yes, and I over retail are our last sales be technology in turnaround the this is easier on which been up growth part is has industry as our there's talked much we as years, the out it say, we out the the over? industry back, at cost have two levels? very and easiest how finishing Honestly, waste you transformation, you

at it it's So not we about paid broken X/X been if some in things expenses, and we've it's it's attention about look elevated efficiency, that the and why past, been in about X/X X/X been have spending technology rebuilding to.

our further And we -- margins as an there's that impact side should go move the spending incremental we've no having and the So other 'XX, to is expanding to margins. as down excuses, how of coming into been and contributing bulk done. then see on we impact expanding we the work XXXX, our --

David Tamberrino

Okay.

got you've for year. back $XXX million So your Is the spend you're same elevated adjustments million adjusted information into adding that technology corporate of that spend, $XX EBITDA?

Jamere Jackson

Yes, the $XX million Difficulty]. is the [Technical FX.

David Tamberrino

transformation G sorry, transition technology and for $XX finance cost, information information million technology programs? represents and part company's adjustment I'm financing the

Jamere Jackson

correct. That's

David Tamberrino

add $XXX elevated the of an million spend. back That's

I misinterpreting that? am So

Jamere Jackson

the correct. $XX That's back. the is No, add Yes. million

David Tamberrino

Okay.

with I if won't further. So comes understand down, look, that it, your spend that improve, trying walk adjusted any to doesn't elevated already your for up but you've follow corporate but EBITDA just

flow XXXX, you could looks improvement Trying like cash XXXX, to by or understand generation benefited or going to It much similarly going how fleet be think you're just driven from growth. actually XXXX? get are factor, expecting if flow some cash perspective? if free a it's free fleet you to flow free core from For to positive of to you don't positive what a cash back a the get in

Jamere Jackson

free not in flow Yes, to XXXX. back we're to get cash positive planning

standpoint, which residuals year have favorable a little from a just expect we from did recall year, bit you a impact are. that As we don't given the windfall residual this next to of of marks where repeat

facility The us pretty second enabled there. thing is European benefit that that the rates advance we also with had significant associated our increase a to

see us. focused planning say where So dynamics up pick but those company those sort XXXX. What impacted other of not that we'll of we're it some operating X big profile [indiscernible] I the for we're cash is improving are of things that the would flow and on on

Operator

Instructions]. [Operator

a question from Patel of We from Sachs. Komal Goldman have line the

Komal Patel

has couple since I And on to structure do refi? that both it earlier proactive coupon given time or the about wanted 'XXs makes opportunities addressing to a targeting? mid-last the market had clarify or non-vehicle what the the just the the come thinking capital the your comments tackling 'XXs? specific Are coming Is XXXXs the company's to month year, to and right company debt. you that

Jamere Jackson

We'll of be been I've stack. And balancing well. XXXX the both sort opportunistic results. as We about plan which months we've market before, into include in could as the with do to entry improvement coming and addressing in stack, said that XXXX the the our

that with I We in we'll market. this the results to impacted [indiscernible]. and coming aware the and the include back in both are said, improvement address of [indiscernible] pleased the could way well has as be months in opportunistic the that, our frankly, the XXXXs quite We're

Operator

ahead. Thank go you, please

Kathryn Marinello

have much, very great you Thank day. a and

Operator

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

disconnect. now may You

Hertz Global (HTZ) 26 Feb 192018 Q4 Earnings call transcript