HTZ - Earnings call transcript Q4 2021 | Hertz Global Holdings, Inc.

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Operator

Welcome to Hertz Global Holdings Fourth Quarter and Full Year 2021 Earnings Call. Currently, 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 this afternoon’s call is being recorded by the Company. I would now like to turn the call over to our host, Johann Rawlinson, Vice President of Investor Relations. ahead. go Please

Johann Rawlinson

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

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

We Risk Form concerning of is numbers Additional these non-GAAP Factors Today, available earnings XX-K reconciled contained Forward-Looking statements which business press profitability unless stated certain use press GAAP Statements website. metrics. it will COVID-XX the XXXX, against our unusual using benchmark and the be financial the relevant our All Hertz our measures, because our on comparisons section impact that are we non-GAAP SEC in more we’ll and XXXX demonstrated better release. on provides otherwise believe information in these in and from the in given is XXXX. discussed release performance and with believe a of our

of exclude we effects refer XXXX. press business and release March the XX-K. Donlen and please will our XXXX to comparisons results, also our in For to XXXX Form fleet sold Comparisons management the leasing

today traded a Hertz Our publicly focuses Holdings, Inc., on call Global company.

I’ll turn Mark. Executive Officer; have Mark Chief the we call our and Financial call Chief our to this Interim the afternoon, On over Kenny Cheung, now Officer. Fields,

Mark Fields

today open on earnings exciting everyone, and we our update our our and review I’ll an review an initiatives as contemplate year speak will Johann. call. reflect then road you with provide Q&A. up welcome XXXX Kenny Hertz. ahead call providing to Thanks, very a business a and a our for on call, transformative excited Good be before very to I’m strategic high-level quarter the today’s fourth of we afternoon, of initiatives. On financials for

some Before take our CEO. I a around to for search recognize begin, like permanent news world-class a exciting moment to I’d

we weeks we’re Scherr to Hertz to As welcome effective pleased announced as few February a ago, CEO, Stephen the family XX.

today. role, mobility led closely to with with spend on very thrilled in us to continue Hertz Sachs. and the Financial a Hertz’ which Goldman taking also Goldman’s the enabled I transition, save, of and the to digital was capacity of that to report you involved Chief at of work someone caliber results like would consumer being to modern Stephen efforts as customers of member developed ensure and my his to to banking built look staying work off to to all-digital team We’re borrow ecosystem. have platform. I Officer a the very commitment he clean center entire of plan reins forward to and by and business, Board recognizing that much hard Stephen in smooth And the the these Hertz Directors. I enable to a start was of

the chase revenue the improvements XXXX, our performance. to per results. fourth Sustained contributed both turning did maintained of to bottom increase Now, our Monthly day. rose revenue XX% structural quarter unit in We on demand, and and unprofitable our discipline strong fleet we per top in not and driven planning a We business. from fleet line below by XX% aligned a pricing. our

earnings fiscal year EBITDA and which of record $X.XX. per -- exceeded a record We guidance. in of $X.X a first adjusted resulted margin EBITDA Our fourth quarter adjusted corporate XX%, share billion adjusted of corporate achieved

contributed to and also reflect realized our structure that. previously cost this results $XXX cost annual results. quarter Our savings, just that our We million leaner mentioned in we meaningfully

and becoming result, healthier, agile. a We’re efficient And we’re as more a stronger business.

of During initiatives is Uber we the Carvana. mobility with modern center the itself unveiled positioning Tesla, ecosystem, quarter, at announcing transformative the and how Hertz

offering in originally We which as common a a through our completed on stock currently for share Global NASDAQ is less redeemed $XXX program on contracted We incremental million executing of publicly warrants. also the listing than preferred billion trades a now Select of the shares to secondary our listing. the Market, $X that do NASDAQ repurchase XX% repurchase billion premium are conjunction Board-approved with the X.X and

for that exciting Hertz would we position we for Last it five see, as serve lay quarter success. can was busy you fall, the out a do to did long-term business. As foundation everything our priorities but key behind

on include fundamentals, in these the noted in vehicles, the excellence mentality, leading slide X, executing and As a to customer-first innovating priorities adoption future. electric investing committing on in of our relentlessly,

as act the Our force X. strategic which world around behind summarized guided teams key these our of a priorities, are on by slide the execution and initiatives, driving they are

Now, with positioning the and bottom discuss modern is Carvana. context Tesla, ecosystem in we’re Uber line and mobility our at of the the of center this ourselves recent partnership

me with let a we’re few highlights that through take on progress making these partnerships. you So, the

to, our markets D.C. limited but and the Orlando, into Angeles, First, in Hertz Fort procedures. rent this customers not them been Washington, and starting rollout Los standard major United from including, now operating can learnings Teslas Atlanta, implementing we’re across already have Francisco Lauderdale, invaluable, Initial San multiple States

proving customer training very is be For instance, on-site important. to

quickly. on app get and and include their booking EV have expedited process way rental digitized EV customers educate website Our to to guidance the an them about

charging We’re our currently building out ahead plan infrastructure. of in

markets over chargers Level XX X globally. installed have across XXX We

top suburban purpose-built we shared of are Level locations locations. and our our to in rental infrastructure into chargers DC markets And XXXX. charging install mobility across consists Our stations airport, accelerating fast plans X

significant As electric strategic our number are a to vehicles our Uber. initiative we’ve Tesla dedicated explained, of with

launched program strong Francisco, in driver over Angeles, and The XX drivers seeing Chicago participating limited Atlanta. are San not is but earnings. We’re markets generating interest, including, to, Los and higher

advantage grow of learnings operations our build As a our launches continue and to We’ve and, an partners view, active competitive fleet. in the year, always-learning we’re in infrastructure, fleet industry. my committed improve us with the being models in we to we’re will seen huge out announce ongoing coming our will team. give discussions into several partners evaluating agile and having all EV our EV our and and OEM inclusion the OEM for available These

direct-to-consumer work channels. Our to expectations the Carvana’s fleet first-party retail-focused customer partnership technology management. with opportunity allows efficient as to channel, is providing network disposition and exceeding we Carvana Hertz more dedication, its revolutionize for sales increase a Leveraging nationwide initial

program vehicles on well listed platform Carvana thousand which up ramping are converting the with the are very several We into sales.

remain in of listing, view margin normalized with mentioned conjunction just we earnings accretive power. all I relative of initiatives that our to As our went our through these

ability dependent Our highly on execute of workforce. to effectively skilled course, each and motivated on these initiatives a of is,

challenges to implementing the current the people fluctuations. workforce have And and These U.S. a this in further workforce our and to right retention the the series for the experience technology process, interview more fleet aligning right been during of and benchmarking, planning Given local the closely practices has important. competitive use we place analytics more recently of improve enhancements communication right in and leveraging to the pay candidate include never time. the to market, we labor hiring began recognizing this, ensure at

to supporting conscious mobility. our addition employees, being the future to path on lead environmentally prioritizing In is of Hertz

future on We’re modernizing achieving fleet long-term charging gas investments targets end innovation be emissions fleet. delivering reduction XXXX. transportation Ongoing to growing options. and greenhouse of zero will focus critical and EV by actively the anticipated fleet emission our short- robust towards customers’ our a Last establishing our to our working technological of and emphasized infrastructure targets. having improving access portion science-based global our and We substantial in connected connecting quarter, growth we originally offerings, entire and

supplier the OEM or expect end rollout U.S. now However, make and a of for from operational select to have work service moves promote level or the telematics these cars To vehicle developments platform tell data in, fleet is, partnering our then or us, this These the majority continue can car connected we’re data implemented developed vehicle’s connected that ingests not of location that we’ve with charge and have and with a work of now to accelerated others, to technology a our it to enabled battery the summer. timing, before if various Amongst partners and we telematics a that a where engine telematics also fleet models factory. be the efficiencies. us the data of indicator. from leading should triggering

fleet this our improve expect and data efficiency further operating costs. We reduce to

a will with by fully our international management leverage side is and platform early-stage an recently EV rental in-house alongside built the experience. our technology supported The ultimately scaled Hertz’ we the of initiatives These in transportation backbone. in combined the deployment company could of efforts of to digital capabilities be a customer-centric the further system a management with best and a logistics management strong business, invested EV digital around to On which, assist fleet, globally. fleet

enhancements of experience initiatives customer that for and allow busy the customers help vehicles and experience how will year. believe This start touchless to follow to attract by business. as see customers we the new process. to enhance series coordinate also better with loyalty. and of these streamline customer-first customer app a app. more and an central taking team experience experience personalized we us month, a expanded deliver and the mentioned approach activities. Hertz And drive through will next I run to us rest Hertz the will rental earlier, is We’re with several the We’ve retain our customer will to iterative renting and to include These the the mobile improvement oversee car enhancements

industry the wave of and turning a quarter. industry. saw you first XXXX. for we’re over brought the quarter variant is Throughout fairly on on weakness The impact we was has pricing the cases the the remained this of travel significantly Industry before far remainder the what near-term February. to want thus things to first Finally, stronger period, a Kenny, and update localized of seeing of January half The disciplined. half new in I Omicron the to had than

provide As on in And Kenny a a minutes. been the result of this relative this discipline, more recovery industry will specifics has few swift.

for has international be U.S. utilization towards to week, our travel business which Business rebound inbound their midweek more of of As return and expected XXXX results business improve. by travel to leisure ready. and rates in a we at the is beginning but revenue travel as stand is improve the reminder, concentrated per unit where were rates are utilization travel the currently middle The take tends yet heavily our shape, leisure The driven to demand lowest.

units that of experiencing On and over was vehicles, the a we’re the still new side, Manheim down inventory XXXX. fleet showed with of supply for data compared still constrained XX% December

a Hertz good believe and the to and utilization we’ve led in to was result. sustainable to expect the several will shortage to believe more our fair for fleet vehicle preowned I In size, these management we We managing and tendency and we’re business new supplement as that of fleet share discipline business continue fleet with lower vehicle. persist size quality which healthier revenue we’re getting conditions, Historically, fleet quarters a come. chase Today, excess and vehicles, pricing. we’re strict on per of vehicles. maintained light a We a there and this differently, monthly

global it to Looking we shared digital-first customer and combining fleet and will focusing new priorities, a key continue brand to addition technology, in on strength expertise, management build investments our experience. in electrification, mobility with on our ahead,

mobility fleet new us and Bottom line, sector. we’re strategy diversify the to key on put firmly us very areas of on a headed, and middle we in where grow is of executing will have view in mobility the allow management Our that. a to capabilities excited profitably

I’ll to So it over with that, Kenny. turn

Kenny Cheung

good and afternoon, Thank you, Mark, everyone.

talked about discipline; distribution improvement; including: execution optimizing productivity. and deliver our continued market profitable second, growth, and segment managing During to drive I our fleet and capacity with to network rigor our on strategy third, last business call, first, our

the management the enhancing the Structural business. line, are cost our and top on we listing around discipline, resulted last $XXX in focus million positive in our has RPU which a As reductions healthier impact discussed combined profitable our or improvement time had in year, on have actions, with revenue a sustainable of earnings. cost

XXXX. transformed our business We from have significantly

increased of of and be around expect year RPU. furthering corporate to million. QX, million of of Turning strong billion, ratio fourth plan that for ended to Monthly driver changes, unit The detail guidance repurchases, for recorded which XX% contributed actions, both or ahead we our focused record shortly. ancillary EBITDA of $X.X we in better quarter and in margin cover depreciation our as how share in than with after management adjusted forward. delivered adjusted corporate and EBITDA, segment cash continued XX. preferred we the adjusted operating to RPD, XX% the $XXX quarter and quarter corporate XX% the of a at was In to $XXX increase demonstrate fourth our I’ll mix guidance and XX% adjusting XX% sale for products We Adjusted the XXXX. the diluted $X.XX liquidity which $XXX increased optimization cash results. share going was increasing key flow more free and from was $XX. in the remained quarter, fourth which We common such the on contract RPU the adjusted In was redemption quarter slightly of came per EPS, and slide flow million than RPU EBITDA XXXX. of of fourth

higher RPU total driven a in was QX combination and actions management the for by XXXX, Our period $XXX same forces. market of than

I our strong principal market gross guidance statement: of range unit $XX vehicles; per during lower to used result on our car, two second, $XX disposition. monthly today’s As was the gains is expense on quarter, and income This for than depreciation a which better of vehicle first, slightly depreciation our $XX. has effects on mentioned,

disposition anticipated reflect gross in vehicles divided at Broadly value book gross you as depreciation book is starting depreciation our the more period. are simply depreciation take our Gross the The between any and value expected is rises, in a our the detail. me value rate they difference our Let the book value closes, prices through fleet. given and disposition values bit fleet. depreciation our this anticipated cost, of our speaking, happens, depreciation hold this used vehicle our vehicle in falls. When value the our time recorded our disposition do so vehicle expected is while between is acquisition When and periodic values. gap utilized and by

We our quarters. the have in past seen this reflected over results few trend

depreciation we we gross a which its offsets when a the book sell expense above gain, statement. recognize our vehicle depreciated value, in Lastly, income

depreciated far, amplifying trough we not near of vehicles, that are that these residual rate strong more gains of in depreciation period. cars book QX are Because and million depreciation. on of vehicles. selling continued in sale any these exceptional we there see and effect. gross as $XXX vehicles statement. we booked further current well normal QX the of our which sold, depreciation Thus presence Given values, In that and prices. are fact continuing are expected our are we out the the for sale, average depreciated do and this vehicles on further values and below reduces are our resulting gain vehicles generating We record to Keep net call residual our presence skews million on When experiencing there see fully gains. which depreciation $XXX depreciation, fully in within our many strength the more fleet these XXXX, on net expense in fleet on value million $XX mind gross QX, a resulting the income rotate vehicles we their you

on gain expense gains vehicle environment QX these outsized or sale, residual be of $XX frequency of month. and again, $XX heightened strong per Given dynamics, depreciation the the to to actually a negative expect we per a

QX, factors we abate. these expect to beyond Looking

we and As will will of into and our and summer fleet, decrease. both be cars expensive fully proportion our peak more number spring depreciated we fleet vehicles the up rotating seasons, the for

to the depreciation the towards end monthly XXXX, unit of normalizing per throughout such, As expect of increase remainder year. sequentially the we

market sensitivity Given strong on is, residual to the how falling values are used car investors rightly time. focused over

residuals. XX% cash flow funded well billion, over a from would an cushion ABS ABS insulate from drop First, and of the equity the in is the $X.X perspective, which has

Second following the fundamentally slightly keeping need are cars. reflective for and deflationary on pressure rental pricing. mentioned, supply put critically, Pricing we vehicle fleet we think do Mark expected that demand. as residuals below And is of supply-demand to not rental

pricing case indicative of but it it. the the only industry world’s pandemic, is reflecting Omicron which not one outpacing around is behavior Although single study, growth, recovery from is responsible the

realize to but We factors, fleet, by industry segment continue these strong will mix. also RPU, Hertz in expect partly that our technology, offerings and enabled evolution ancillary

We will continue on be disciplined to pricing.

Turning operating now our to expenses.

XXX SG&A Continued of an to when as revenue of execution a compared more productivity improvement points on XXXX. of than DOE, drove basis percent

As in year $XXX you the have rate EBITDA were will previously of approximately vehicle corporate lower include million adjusted interest a basis, on on the full impact business implemented disclosed, to by we enhanced comparable which, XXXX cost if reduction debt.

million reduction be We cost permanent. expect of to $XXX

Our journey business bottom and processes to the is we continuous drive seek optimize operational efficiencies. to as improve line

terms liquidity, we remains demand our well share are sheet recovers. and to our business grow as repurchase positioned strategic extremely structure of fully the the fund program In including capital and initiatives, our balance healthy, and

until the quarter, in on senior proceeds premium a at reduced XXbX a repurchases the allowed of redeem approximately $X.X $X.X to corporate $X.X We cash will million, a December of private Redeeming made achieving to of plus billion period. of XX%, fourth hand net share was a savings. preferred is plan, our repurchase we basis. over million all available continue -- RCF. and the you Liquidity material us within net activities. preferred $X.X the during the a During shares issued established we restricted dividend notes specific December our $XX $XXX the or was company parameters The Company eliminate million billion of exclude unrestricted lien used under cash offering. At capital billion $XX X% first which $XX annually At structure and million save up liquidity $XXX on and annually no XXXX. have debt million maturities position the shares corporate debt XXst, when XXst, the our outstanding billion

As of plan. Consequently, amounting to repurchases have billion billion $X February have we the billion remaining repurchase about $X.X million or shares. we XXth, executed $X.X XX under

a We price to to the to discipline a fundamental conversion, EV to continue cash on we and buying in value, to repurchase opportunity. Hertz view believe capitalize is return our based way is driving earnings, believe acquisition. what of attractive share simultaneously share strategy plan our be growth below our shareholders and consider and the is an We strong excellent that our pricing fundamentals high the leverage, context of earnings, on quality of cash corporate low underlying earnings mobility sustainability very the

this Turning now normal to so we decrease the of to to a see about QX what on to we Historically, for the seasonality. towards tend quarter. from to seeing we expect end far, are the to of what first XX% QX range. Based are seeing due we favorable revenue be XX% quarter

fairly for As the feel industry are effects remainder pricing All Mark on mentioned, indications we of confident or of the this of us, upwards our based the behind the the quarter disciplined bookings. has about forward and Omicron remainder and trending remained period, throughout quarter. is the

As will international countries to reduce our results recover. segment travel continue we believe restrictions, inbound

As segment, will RPU. to contribute is global to -- globalizing this rising it continue RPU the high-value

to We contribute RPU it business that, well. expect to With as continue to back travel Mark. rebound turn to I’ll in rising

Mark Fields

Kenny. Thanks,

can Company to its restructuring transition well have fundamentals great profitable ecosystem, electric it’s as and evolution for we the executing strides growth. look opportunities creating positioned are world pivotal the and tell around a the the is together, partnership poised fleet capitalizing mobility mobility for I’ve has you part starting Hertz on leaders. to successfully leisure a digital-first and momentum So, Hertz the that of Hertz forward on and Hertz leading the to the modern and central I future. since teams a in listing, And an ahead. been at the afternoon’s of the member. world. forward we Hertz thrilled with execute that Board on experience close I the look ours, iconic energized and to role staying travelers been like for vehicle is a strategic the business to play have around strong has the about such to time hope forged made business brand from clear significant established this call, I

up the with why don’t Q&A? open session So that, for we

Operator

[Operator Chris Bank. Instructions] from with question comes Our Woronka first Deutsche

Chris Woronka

more taking second right normalizes pace a fleet the of bit drill allow questions. talk into any terms end down kind a in the seasonality. us Hey. And you to typical think and now can back bit the to because and Good of Maybe afternoon, normal sense about guys. into you’re seasonal little more fleet towards just take can a year, fewer for little pattern? way we how fleet of get for disposition buy we buying you used Is Thanks possibly normalized as does there think cars the the about cadence, a to a you on of know I schedule? get the your that of off and for in

Mark Fields

Yes. Chris. Thanks,

let first. me So, that take

past, from we’ve around strategy it as is fleet, our view forward. to just the we match our in to of So, going demand said a fleet mentioned, as standpoint,

fleet. So, our have maybe been past has in biggest the the approach, to

demand. Our approach profitable match have and capacity it to is match now the fleet -- most to

the industry significant as on just know, the the them we OEM, their you lot seasonal -- In like pattern, a chain of and supply that. car with making usual, of terms as is schedules. we with work And the industry kind challenges every the production of with having still do

we purchasing right we mentioned, the terms the ensure to also, the fleet in your again, on have to taking But going that demand. new pricing match obviously -- have the we’re we’re of Kenny of of to discipline. we’re lot get back very going as to so vehicles. for demand, being normal a level of for of in the of pattern And also being, in high-quality fleet, plants. But can right that pre-owned seasonality, the high-quality operating time part So, active vehicles ability to -- OEMs very-dependent a back the getting will question we’re in part their be to

Chris Woronka

several kind obviously, whole call of on Mark. two guys Thanks, how And to in But kind might had this that, related think of Okay, began, demand the it, which you look great. side, follow-up the like at iterations do you ago? you X ago, of process look think more since what you is, future. months or Do growing, there’s take of months ago XX going the ago, market versus think you more the is might an have months XX Hertz pie world than opportunity? share of do Is the or you you just to now size originally years thought?

Mark Fields

Well, is also have your share. sure view question -- which first share, market on off, would just I healthy on market we share, making means our market profitable

that travel I short business medium pre-COVID, obviously, term, -- to demand our think traveling our seeing of medium we in And a term, the the for for lot Omicron. a think our we’re in because bode I I to consumers mood, business of to in only it’s exacerbated well think think aspect pent-up business, by are going near in substantially. it’s good that’s the still business. and When about that’s down our was

we’re to see green Importantly, starting shoots.

sequential last every -- terms to we XXXX saw see to starting a We’re its of was improving. year-over-year in year, comparison quarter improvement

starting again. travel to were businesses So,

positioned, tends on business for in a the to mentioned, crimp travel course, our good what early be actually unprofitable week that. our but only utilization Of that because to business they mentioned, contracts. of the of number I pre-COVID, less of decide businesses But than any a travel exited I Omicron in just well is lowest. we part because Kenny as put going increase did we’re also to are renegotiated where be the Even not and rates think if

was part our our those actual of actions. but but versus at versus were only XXXX of -- versus up rates you look not XXXX, our our only so, not And XXXX, if business travel, because up, also volume

where discipline also bottom given line going no demand. positioned, best to then that around we because of be just goes, think to in think, we’ll planning. going market I pent-up matter the some went a the term, today improvements fleet of short medium through And the see, bigger pie is and I forward, the So, operational our we’re

Kenny Cheung

Chris, Yes. Kenny. it’s

to we to accretive. mentioned, structural away not were that did business, deliberately as Mark’s as implemented Mark we margin profitable walk to add Just our point, from improvement or businesses

down you versus that from. paper, walked think our XXXX, that business if we fleet it’s XX%, was about half So, on about of but away

stronger a are result, cash that, with margins sustainable as conversion. because and a business So, of stronger earnings, much higher we now

Operator

comes Kovanis with Stanley. Our next Morgan question from Billy

Billy Kovanis

really with to Is billion? stock. it fleet long-term in closer to debate And look us these and of more is some when environment initiatives actions a cost, billion, key what the hard that taken? Mark, say guys drivers. or terms we’re out Question of point you closer on point, I and I for you Hertz pass the cyclical got is $X to long-term but Because think very today that’s $X generates I’m cyclical on play and investors own can to its positive EBITDA will long positioned all the future it pricing from when the of for it’s to excited the of revenues the Hertz the under you EBITDA the sure rental, I just truth that, the financials? on have normalized don’t that car mobility. of want to And the XXX% is is doubt in near-term And that’s new still term, on initiatives. Hertz RPU. Thanks, will guys. like is, in make normalized short-term some look drivers focus these that

Mark Fields

Yes. Billy. Thanks, Great.

around fruit. these start to EVs. our when initiatives they around bear are question at tell look in to leading you your on going I that already would So, are, initiatives you when

U.S. rent here for business, the markets We’ve Our early still Tesla in vehicles. in it’s customers days. X launched to retail

line that. what bottom is We’re you Retail customers to said good. would And is the premium ICE vehicles recall, were our would be innings, healthy. you demand in of one that basically of are, show margin very we levels are for with and business, news Company versus thought the drivers the satisfaction is plan there’s over we on the the the they we the relisting, of to another if that when for benefits drivers. all again, offering profitable the early in forward. size recall, Uber through we call and willing to And And case on our markets that going Uber is, that both very business is be And the XX vehicle. on said the -- and would actions good the as of to But Uber, if us Tesla to pay we demand said customer the early are we these a the TNC that now which they case. same to the make build accrue more and those, accretive road money be strong able going

So, it’s answer is now. simple starting the

We’re going that forward. going build on to

terms of to want on look the what going to business take In you that? normalized like, Kenny, is a basis.

Kenny Cheung

Yes.

So, fair, EBITDA Donlen, to EBITDA. year." the EBITDA. we to let’s to $XXX XXXX fair, of I as out easiest And a $XXX of And Billy, back be million be think million take think is had let’s this, just way about about "normal so,

So, we $XXX in the business. structural side, roughly improvement if structural million right? get EBITDA. any I’ll plus the number. Uber it’s say billion math, roughly this Tesla, cost and plus So, you in the if And $XXX for well, any the This you’re left with have of XX% now. favorable as a we’re to for play favorable believe benefit minus going $XX that business. And $XXX math, pricing RPU $XXX let’s factor made a This we do excludes forward XXX factor for actually roughly do reduction the and business mobility right some EBITDA you you a currently about Donlen, the it’s from will excludes million of operating of million of stick that though. we This $XXX also that RPU to market And forces the million Carvana. $X.X excludes our environment in let’s residual standpoint. that with of margin the

right as the is this of the think again, and not now ceiling. So, floor

Billy Kovanis

Kenny, helpful. that’s really

around it $X.X based assumption $XXX, rates? is per it fleet billion for or on Just to the one U.S.? in the cost that follow-up. quick Is get is used What’s to that current market unit

Kenny Cheung

which on on. No. historical rate, based spot around $XXX. Yes, our roughly dep you’re [ph] was It’s

Operator

next Our John comes Healy, question Research. Northcoast from

John Healy

to on of fleet see today your would the on cost. that is what the $XXX guess gain QX the million. you’ll get north for. value take be the two to about a wanted My books ask versus fleet to I going I question is view it’s probably or you love in of

to So, those wondering guess imagine And are when at system? a kind gains the off? it’s is vehicles. I more year there. today, And look ‘XX, much I left pretty do mix you model there’s was when fleet in ‘XX the how I of got just ‘XX, all fall diverse ‘XX, in of ‘XX,

look get acquisition kind will your fleet how as your you’ve be to you maybe thoughts So, of costs your love would in I ‘XX of at to what more much ‘XX, seen compared historically?

Mark Fields

Okay.

question try answer So, few a the it let to pieces. decouple me and

of market the billion think as versus value So, And I the the think do our now, the value first ABS books. your mentioned, a how vehicles on right question is cushion. was, equity roughly $X.X I fair about you

second fell on have vehicles, I your by leads to, to wouldn’t still requirement guess, we us right? these differently, if residuals XX%, games. on the So, me ABS that any question And around said collateral

I try right? John, think of me a so So, that think, think that would and example dig our answer through think and through may forward, the deeper gains as bifurcate help going I I let take on would year. this remainder dep And bit And it rate. you to you of John, think $XX the QX the think this me way. an I -- let help --

as per right? roughly of now as have you you almost right XXX, this if of actually historical there month split $XXX. are QX, per it, piece cars And depreciating a the That’s The of moment. at vehicles amount of they’re definitely rest of fully right? think are the about meaningful closer depreciated, norms is So blended to roughly $XXX $XX, car. So, depreciation the gross you up zero that

So, blended, of XXX, line XXX. again, zero, a house. the That’s gross

Right we per of roughly per now, The have line, piece per you is asked $XXX second the which gains about. car month. vehicle, gains

XXX assets fully books. car depreciated our have driven the we the the minus by per that’s fact the Most gains So, these on XXX that of XX. are XXX,

surely it, $XXX which call values. right? monthly there residual So, as out that will the are fleet, cars depreciation, that these right? mix fleet fleet cost, factors depreciation decrease, basis, as such The And and though, past, will caveat, five like-for-like will our One hold years. gains a on impact $XXX depreciation normalize such we’ve rotate market as period, seen towards the of gross the of then, in line

gains to I gross gains XXXX, all are the dep still right? close versus thinking But not to driving then now XXX. be right rest at the especially the cars the other and the value risen expect we can of of the zero by to XXX. vehicles are residual XX%. then I price, residual and And throughout depreciating narrow you relationship expect value, piece XX% fully to that know is between you normalize other has year, purchase about think depreciation to are fleet our out think So,

correlation. usually residual direct glide impacted. reason the have depreciation and because So, a get why doesn’t price path Therefore, the purchase of

John Healy

month $XXX and car as That’s follow-up it number I is, As prices, think had and a at you there compare seems about a much ‘XX seen And you’ve question the up, way what guess just putting beyond? -- a look guess, look on cost in is you the might ‘XX different necessarily versus we I like just past? wouldn’t are for. Is the prices the that. to that a what retail those to is relevant you’ve historically you helpful. still purchased how dealers to that what number, what my

Mark Fields

it’s wish market this, think -- had -- is going to I Well, this ball good I I crystal driven. a but be on

partners. we work And would whatever would our market just that with price our so, that well. to say is would we’ll OEM as competitors offered be I offered be

to a tough and environment the would issues -- the and on first their pricing, work particularly in least of it foremost, have their know, kind they you through supply then between -- it’s retail as to us. chain and this market restock tough predict at relatively before network get be big But competitors. industry impact to to, not So as the OEMs

Kenny Cheung

we’ve of of ourselves. Difficulty] comment Yes. how to won’t modeled I it X.XX kind [Technical is X.X depreciation

Operator

next question comes Morgan. Our Ryan JP from with Brinkman

Ryan Brinkman

how versus might to their see revenue many unit trend on First, so hope so all maybe Tesla when able ICE this fleet you year I Tesla maybe vehicles like to delivery relative you far also, or by vehicles initiatives, the far, many to And comment ask possible for to example, average? leisure partnership from from at purchased on to in EVs, rent seeing wanted in or how per in corporate may vehicles Tesla, keep end your have any or electric year. demand employees the are for of sure, this customers, customers per I’m not the your including or of with day you to expect take anything total commercial like in ESG Are else trends just renting mind? to versus you their better for to pursue

Mark Fields

that question. for Yes. Ryan, Thanks,

a good. we retail in like think I X I a of numbers versus, we’re very sized launch the on is the is we the as good. this couple any our infrastructure flowing. were the There get I line going the seeing into specific Europe. vehicles Tesla, are in where we’re for are Italy front-loading very demand and And my the paying mentioned really premium get is it numbers We that, in Uber grow France making with just Suffice rollout. of from that remarks, U.S. markets Combine demand markets, our on drivers bullish the customers mentioned, like a say in vehicle, in delivered as are here actually to specific with is they’re don’t and that is rental Germany, we’re well. that mentioned So, and of business won’t to satisfaction OEM I to vehicles we’re I as kind the partners. our the charging And ability comparably fact us. ICE money, bottom more mentioned, -- I into

XX now X XXX as markets chargers. in with, I We’re mentioned, Level

your delivered And the rollout. answer the But kind to anticipating we yes. of to is further rollout as from So, continue we’re we’re vehicles around business quite with leisure simple question pleased the travelers, get and Tesla.

We’re lot experience in to from customers seeing business Hertz, that encouragingly, travel, a early it. and travelers interest from stages of pay and are the actually business of rent an having EV of very happy they’re And there’s seeing we’re about in Tesla recovery a renting -- for their travelers their willing us. corporate take excited the business

Ryan Brinkman

for maybe XX% And Thank and Is allowing strong the EBITDA in perhaps to you puts how that you should mention case? I FCF, terms fleet, expect And investment, would we used given dollar benefiting this of there? some by dynamic the car price maybe environment how least think the And there for strong, unit imagine right, interesting. long FCF. fleet grow persist? conversion Very about I sort that of of existing you the heard a conversion you. to thereafter? without additional into FCF very Can at you benefiting improved the may the from of about year. you be loan-to-value talk takes

Kenny Cheung

Yes.

so it’s a So, we’re that’s referencing. of operating So correction, right? the OCF, it’s stat just that flow, XX% cash

capital, And which that the well working then is are as standpoint less, conversion. working that of you the the EBITDA. that infrastructure from we’re bit an a the So on So have as drives the fact cap XX% given RPU, right? that generating healthier, as footprint fact we again, high drive walk is which OCF standpoint

with growth I on vehicles. say this, right, net In give that selling, unit core cars how fact many terms the on of track economics, terms we buying a gets buying, that the are of single purposing of cetera. But -- et FCF, lot have will the details several a line given fleet in and right, equity I won’t the

fleet in now, will that mentioned I standpoint. as rebill from a However, remarks, cash right our a net we my rotating and are have prepared need

it us, will obviously, So yes. impact

Ryan Brinkman

for there. prepared just of And inorganic coming management in-source could functions offer in retail already the your you all that auction remarks maybe fleet But to maybe of perfect. lion’s third-party or the vertically between already or away end highly to last out just expect vehicles while opportunities and towards And take today, just of Maybe are for there? share that sense sell not opportunities could the sure or saw price I or stores the upon far, course, capitalize you look UFODRIVE is. to investment in Okay, certain or, other fleet M&A but vehicles up consolidated, functions of given hammering your I’m investment, stand are you at cash won’t context auctions by which reasons dealer I small curious the be flow, outsourced then car I’m is repurchase But via not your the you maybe Thanks. your many sellers currently share, of of just opportunities allocation there FCF, priorities announcement. on share itself else? for including are question ample other there. there or what for Of just buyers curious, integrated the is out rental like the example, where that what be other mentioned to do repurchases direct to if similar you my out keep grow might anything you Would make to maybe certain selling. feel might ever the

Mark Fields

Thanks, Ryan.

us tuck-in we’re in We investing amount our in to and strategic So just could of I of strategy M&A a said, other give always talked things being infrastructure. first that for about do looking doing strategy be types significant past, think we’ve of our the in IT off, business going That further that we’ve to we’re I we’re growth grow, the on further M&A. grow. significant our opportunities money think would given is have opportunity initiatives ample that characterize our lots outlined. dependent to we interesting not

once. in a different it the the doing past, we’ve different in at than done way to tried boil ocean We all We’re tasks.

targeted our these of one think news around each performance for have business Kenny’s we very being owners is what given But we’re I given Now, the comment business be good you of ongoing investments. the lots and of that and to will cash going conversion, many the process. at flow it’s things opportunities look free that as us just an give to see mentioned, and

Operator

Johnson next comes with Barclays. Brian from Our question

Brian Johnson

travel. about the Thank you. talk a little just corporate I want bit to

You from utilization left kind how headwind impact drilling during the you those have or business talked which you they accounting contracts using that results, clearly of contract the just corporate. talked they a Amex restructuring a But we impression trends, particular follow-on, down, midweek would a in help And still large Avis’ that the it similar there about X appreciate. GBT have that the would the of GBT? talk RPU metric, about in global face to on opposed many with whether as have firms then, seems been play XX% issues My pricing is that out bit under the the travel particularly are big X of a large large the are into rate. market us and that, do -- accounts about unprofitable the give vis-à-vis relationship sense negotiated the Global more as how so would corporates contracts? And that have that the you big SMEs corporate rates arbitrage. than so were travel shortage, pre-COVID, rates are significantly hence, more pre you roll-off retail typical chip Can about of the leverage

talk maybe So, that pricing. corporate about of aspect

Mark Fields

Yes. questions. Thanks, Brian. of set Good

what exit to restructuring, to as can’t I kind -- we’re on contracts, renegotiate can mentioned, what of our speak we all our we just were or And almost our speak to able corporate our So obviously, contracts. competitors either I during facing. are we of seeing.

travel the substantially. and highest tailwind because, mentioned, revenue a that tend be improve our and they the of we as to week we level, know, business you quite per where the favorable is beginning us that’s going as returns, to our for so corporate as will at low, So, travel utilization in view unit

we’re they SME corporates, they the fact rates we’re to to And in which start coming it When versus on levels our as In attractive, Amex, grow we’ve that kind still market details, to And with be the terms are with And back of I much then pretty you corporates is that. into see large comes get pre-COVID, corporates, only is extremely more know, share think volume those it stability. even down and combine was to what’s and that SMEs, too And good comes it Amex time. is to as back large us also what we partnership to good I but our provide if quite renegotiated going come on the important and all large with levels, and when back starting won’t traveling. expect contracts, it us. we’re and as shape. the going doesn’t first the pleased with off, business that historical to back not you over of but SME on coming

Brian Johnson

spots, more in point overall quick but the our just business are vacation often mid-tier how not business the Miami, cars so corporate took Los kind a of And you Angeles, days, Ohios, Denver, of utilization I at Phoenix Indianapolis, us or airports? does the terms Columbus, when follow-on. as the to the utilization travels other get which impact those of need change Hartfords,

Mark Fields

the match our our data investments. so. vehicles to business, into be of us And of availability I to of things us, fleet this in to also course telematics that gives I Well, look our my fleet. like our to the right, I at that as when prepared you a forward and terms part that customers that’s and that think end, examples, our better some and mentioned remarks mean business to think managing lot for we around are, we’re of putting normal of demand, that’s able I better in And the fleet bookings manage where manage

IT fleet and management. know, making we’ve As in revenue our mentioned we’re our you Brian, to improve to continue in past that the infrastructure

Operator

Our Stephen next Grambling Sachs. question from with comes Goldman

Stephen Grambling

Stephen of the his apart the that the recognizing company? perceived direction, standpoint, him others might for from and next to company thoughts forward financials the that provide role And him. his strategy curious that stood them But if impact I’m drove sure what want will from a own quarter. aspects reputation all, on Scherr the what I’m and to at, you looked strategic how at

Mark Fields

as board. to banking an strategic excited business Stephen consumer them he up brings also Marcus. as get well, of not kind and basically having only for the operator Listen, He’s quite off, very great we’re first is Well, time. skills mentioned, started in Stephen Great. ran we what strategy because Goldman’s led on for some

we it’s So, mentioned, I navigating of strategy. of very as at Hertz. quite come at going important skills said, forward. the we their like think every are left, the as look we the as bring to that And to And CEO, supportive here and but both things about future momentum have he’s those not going I perspective, be going a building it’s they’re to body student on going be

Stephen Grambling

dynamics? then, to competitive willing could follow-up, more dictates that think most are supply standpoint be peers faster? profitable if And or asked more, or theoretically macro plays want perhaps pricing, what add unrelated fleet. another from way, as scale about an more you are benefits there And that the fleet, we mentioned out that drive the how aggressive How competitive not pricing a largest Great. to you do

Mark Fields

let’s any et about Great. OEMs, fleet cetera. Well, being marketplace any you’re supply seeing speak matching I this pricing for demand. and for by very demand. difficult I company And the car from what rental my delivered around, to now, that right you’re it’s of really is our driven is I -- And seeing at say strategy future, going substantially. of the the by in issues that’s the again, to think capacity up your can’t do point to to production -- think really to foreseeable competitors, driven be

pricing forward, a So, around that’s least bull the medium think term. to you near going I environment case, will, in the at if

Operator

Global conference call. full quarter Hertz the concludes year This Holdings XXXX fourth earnings and

Hertz Global (HTZ) 24 Feb 222021 Q4 Earnings call transcript