HTZ - Earnings call 4 2023 | Hertz Global Holdings, Inc.

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Operator

Welcome to the Hertz Global Holdings Fourth Quarter 2023 Earnings Call. [Operator Instructions] I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to your host, Johann Rawlinson, Vice President of Investor Relations. Please go ahead.

Johann Rawlinson

Good morning, everyone, and thank you for joining us. have press should financial and you information. now, our release earnings associated By slides conference of accompany can also contain certain to We've provided this on our to you through call Investor statements made want information. be the call Relations website. I section our forward-looking remind that accessed these and

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

information Additional make statements we with our in the Securities earnings Commission. contained press concerning and and filings these release the Exchange is

use provide our evaluation are profitability believe GAAP and Hertz our to these to of our Relations earnings and measures otherwise in Our our a discussion website. information useful EV filings earnings reconciled release better fleet. Today, on regarding that which certain and which the we we'll X-K financial January are Investor of numbers press XX, the website. the sale your information We attention would presentation business. includes our available noted, today non-GAAP with the also operations, the available non-GAAP allowing about global additional direct measures, Form SEC our on furnished on that on website performance. Unless section the on of portion decision I SEC's strategic of the focuses

Keppy, over Operating now the Chief and our Scherr, Financial Executive Chief our call Officer; Officer. I'll have Justin Brooks, this call Chief to Stephen the On Alex Officer; turn Stephen. we morning, our

Stephen Scherr

joining you quarter our thank earnings call. and fourth morning, for Good

this the morning good as of the morning. we The is XXXX the challenges quarter, message performance, faced as to the we environment sharing one well continue demand fourth amount will we in and which confidence the the core that On as we We XXXX experience. address our business a to are were of begin throughout this faced a continuation have cost challenges solid we on cover stable rate forward.

of to that quarter With based Our turn told, we XXXX the decision expect be performance enhanced regain revenue is All in the operational confidence demand the to Hertz, me we select strategic a expected execution that continued and reduce and our our environment, continued made of and with cadence that, also QX year expect let our and benefits our the EV results, fleet, plan. the of cost operational fourth is XXXX. initiatives. and transitional rate to regarding into expected effect will distraction progress profitability which for the on financial both improve we our increasing on our and stability

we XX with on our turn before questions. then to our with enhance and days first prepared on our the our will from will Operating remarks for conclude he and over liquidity outlook XXXX. Keppy initiatives the his to Chief productivity his your goals performance a Alex focus then impressions as call additional role share Officer; Justin in financial is commentary leading particular

revenue quarter, with in line and year-over-year. X% seasonality $X.X was the On with line billion, our sequential expectations and up in

trends reported line with continued top our reflected hotels. consistent for Our performance product, airlines demand travel across and

in rate product to the stable whole for a comparisons RPD quarter expected performance that than relative on delivered than the in XX% rate. of rate rate year-over-year yield. underscores the rate of revenue the this Revenue came and volume the remain relatively better in XXXX of than environment higher quarterly Year-over-year decline better quarter at and QX slightly per rate Specifically, prior Overall, better-than-expected decelerated. trend would organization day reflected with strong QX typical up seasonality which is $XX.XX, a moderating year-over-year. The a XX% in was was focus XXXX.

fourth our demand, lower-margin all Against asset utilization. our capture what keeping stable business, to profitable it RPD. was was product quarter, at more decisions even return expense a we end might prioritization declining though a yield some into on decisions to we regarding in an returns ROA forgo sale, rate on assets. anticipated. had vehicle ability the the inside only these did of of saw not with objective previously Our this the We Like Further utilization, continued of deployment fleet, we residual are fleet in for of the to demand. quarter of or intentional we guided made by supplier than values mindset in we cars but central quarter the very opportunity carry great and

you on accommodate been which mileage customer rideshare focusing like dollar of aware, we've As both higher growing channels and are vehicles. can

In channel. disposition very addition, we about being are choice intentional of our

the see to our including opportunity to through network. proprietary continue We sales retail and Carvana increase vehicle channels

XX%. versus the more channel residual of for to for when selection to are auction between in In disposition gross we variance in to favorable optimize typically price higher example, positive yields immediate to prices returns. X% This attention related a selling prioritization asset retail and retail our saw and of price wholesale, As compared QX, prices wholesale of range to reflects decline. economics the continued continued rental

the fourth operating in for to values, higher costs and on more carrying was expand in With expense took a will costs. Quickly Let we per in Weakness detail. on Alex carrying in EVs, or on respect the quarter. day direct this rates, operating held-for-sale DOE costs. transaction costs, interest the vehicle quarter. residual higher-than-expected the $XX.XX me charge with resulted along turn together operating to carrying vehicle with

extraordinary by adjusting in of XXXX, flat for fourth ago per and day transaction net and was Excluding expense quarter DOE damage versus year litigation X% in year. and a the collision QX for the decreased

an more EV supporting sales the costs advisability on to continue running with further challenge elevated had impact our of by experience operational and fleet. more driven our EVs quarter, the efficiency plan. in perhaps largely the collision the And We significantly, EV our damage associated of generally,

million the beginning million, more, EVs. depreciation understood my speak will includes which are achievable line said as have Justin in with this plan in EBITDA quarter expense clear, remarks, our As bottom before of unacceptable. at EV associated I result is real. a being of and but drivers sights. All is But the our fourth and out of addressed be the bold around squarely told, cost the sales confidence I outcome with us trajectory, this incremental to our particularly decision net of $XXX To loss plan. the adjusted $XXX corporate was are and opportunities are The DE

of is fleet opportunity. driver EV the regarding decision Our one

in the forward. of positive consequences decision QX expect to X-K, be material we our our we and discussed As on the

decision. cash improved expect EBITDA We corporate and from that adjusted over X years next the flow

positioned better exhibited yielded And where We EV damage are will a the meets demand through and demand. again, meet highest of to higher level eliminating vehicles. on also customer of lowest profitable fewer fleet utilization less supply the fleet expensive be because better maintaining RPD an while and portion incidents. ICE we that EV the

on adjusted in payback We would expect the we over terms growing into includes of to separate apart understood X initiatives, now share aggregate fleet benefit billion previous XXXX, ride revenue as opportunity in profitable discussed then QX This our benefit to EVs, corporate and the expand our an XX% which yield from size calls. EBITDA in driven to on anticipated a entirely related will This which The opportunity falls each over corporate next, improving X on have Uber we taken disproportionately on higher from the million have we across miles is incremental be which EVs areas: to EBITDA, the over reduction value of the and European revenue. adjusted rented businesses. In the have these initiatives of creation million charge first, XXXX, prior $XXX by made incremental the generate incremental project-driven on year. X-year and this Hertz. to are brand drivers production we imply. financial of focused progress year rideshare of and $XXX in included growing

by over across and prior Our increased customer annual channels the year. revenue XX% international volume business grew key

enable also made our loyalty. Thrifty now customer in websites progress enhance new We where direct and designed and improved brands we to Dollar have bookings

and the have a we on assets management. enhance improved our on revenue core efforts deployed through focus the it to against business Second, our yield

to specific Some note. progress

the Pay through value-added secure we services out Our team process reducing customer the an for the pressure started roll or channels. during rolled customers improving payment field of and improved providing the U.S. in an to easy, Apple our quarter, out brand channels, on Hertz skip-the-counter option. employees real and airports increase in opportunity brands select across products VAS private sale with select with all experience to digital And

of We eligible are with completed Apple already over reservations XX% Pay. seeing

focus reduce our in throughout productivity costs most now business. the perhaps Third and on approach disciplined to is

team Keppy. cost-out turn this energized and in Chief team Justin position is his new deliver to is for the to I'm Officer, us a will underway. work more the to putting the our And but an is who The to opportunity is detail, working opportunity is add improved speak comments. in already it and terrific seize well pleased Operating Justin over

Justin?

Justin Keppy

days It's happen. forward at passion customers everyone. field support visiting operations move business our and meeting Their XX the and who and the make exciting our been larger inspiring. good engagement operations Stephen, it first Hertz you, Thank teams learning an morning, is the to business, and

improved towards We have to great pivot profitability. a foundation

and in benefit I the as It's operations. to partnership out. back million to variable bringing the expect achieve Stephen road matters, on see fixed clear the In to to getting accelerate costs our We the referenced. that we leaders, reduction. fundamentals year addition with in EV bold the X operational are to cost productivity both to discipline forward, from Looking line what $XXX and areas, this our get take getting aimed we by we in need immediately growth and profitable greater benefit action across on focusing with

more. company ] successful believe tackling do the efforts in costs, has X we -- can X On [ been fall we and productivity cost areas. into benefit While

spend staffing across our with and business. start Let's third-party

are enhancing third-party in actions. better a workforce our Within staffing We volume planning align we first have assessing our taken process to step spend and further are location. rightsizing operations, to fleet reducing and and

We expect focus these our is meaningful core Footprint from area. benefit second actions.

actions expect underperforming focus designed attractive assessed of provide we cost the our and reduce These vehicles estate to are and over of our we remaining to off-airport as more real the footprint redeployment without exit enable locations. our use to to have the network. detriment physical XX,XXX network, We robustness the more of

network these actions within expect We to QX. initiated be

we improving maintenance, collision, field targets. prime of transportation, damage, fuel, the are attacking productivity, and are costs out Third, service operating and

digital to We the rolling improve tools out decision-making. field new and to are visibility

lot. to digital a capture This tool began field and of big enable into fourth area deploy incidents capabilities yield upon outcomes. better damage with the vehicle's we to an documentation the better real-time of reimbursement to simpler number procurement, $X quarter, with opportunity return billion. is nearly to addressable damage of increasing promises precision ultimately During an The spend a more and

consolidated We centralizing buy have more effectively. spend reduce started consumption to and

this to in is to final do. Technology We progress to opportunities we key our explore area. what will The critical continue accelerate is area technology.

As retiring cloud, and our we platforms. have mentioned, well in solutions previously infrastructure, underway modernizing the are legacy moving software we to

expanding a our We the and have a developing progress newly year-over-year target governance plans To by XXXX, seeing KPIs office. detailed action and for benefit a process run real are made spend, we year, we'll and as $XXX in formed implementing previously against reduction progress start highlighted. including with program in ensure million

look and In million quickly include reduce and get key leveraging across wrap and and separate We digital you better and collision Hertz do just OEMs expanding in collections do progress. our rideshare churn forward organized I $XXX and to insights pricing, to are specifically, the our access a and the network. To know In our first joined calls, at are driver future providing more charging to to addition, opportunities to excited discussions I'm EVs positive, and progressing labor make on efforts and My damage These we to lowering to real up, improve what ahead. the and our it. active updates I impact. benefit underwriting with parts with business impressions of are capture broadly. I tools EV more to outlined, to from

turn to Now let Alex. me it over

Alexandra Brooks

Thank morning, everyone. you, Justin, and good

as year-over-year, Revenue billion, XX% full at start noted $XX.X. XXXX down by up XXXX, This was across up our compared meaningful the Let X% share. was X% healthy was Volume $X.X for XX% although me results. year year-over-year, rates leisure, remained about to with corporate XXXX, ride earlier. and above growth covering

XXXX, than RPU for in resulting utilization grew points driven average primarily ] and basis X%, to utilization XXX the levels. Our meaningfully that of contributed broadly XXXX. only expectations the of resulting $X,XXX fleet was at fleet service by size sale. higher notwithstanding in in [ improved Strength of slightly our line of of $XXX year, of XXXX the $XXX versus depreciation down expense the incremental EV our DPU plan XXXX, net with from was start million

For of and inclusive the the charge. the $XXX, fourth quarter, incremental DPU $XXX, was depreciation excluding

factors drove particularly watching fleet factors, well viewed As residual our course plans you're closely materially aware, in a our higher by as We're of as to of values driven XXXX a than mix, fleet to and QX, rotate these DPU including DPU condition over and on combination younger of QX The variety experience. was values sales historical we expected. light of mileage entering forward residual the composition.

maintaining and fleet a within includes demand. profitable our of return asset we tenet mentality our plan, to shared, that central Kevin As fleet on bring

in DOE operating with our year. per Regarding was costs, transaction prior XXXX consistent day

from discussed to was XXXX corporate and hundred and collision X% was net with litigation and primarily the environment on drag million, cost by in and the settlements in the DOE a XXXX, XXXX $XXX previously damage headwinds initiatives. higher for burdened size. a to non-vehicle was in by years EV our EBITDA points fleet further reflecting compared and and rate reflected X% to margin, day modest plan. macro Excluding related EV per impact the basis progress both interest Adjusted expense driven of Both sale charge related XXXX, which vehicle down several

capital fourth respect to the our leverage balance in liquidity. With resulting of structure at our the year-end. net was corporate at $X.X and end quarter debt net to of billion, X.Xx sheet, Turning corporate

intend leverage over ambition While improved long-term time this X.Xx, to of profitability. is we well our our above as yield operational delever initiatives

million first at Our the balance credit of $XXX cash $X available December lien and comprised was XX revolving available of facility. the liquidity unrestricted billion, under

had corporate capacity Our timing XXXX. At mature conditions. equity global XX% we the of facility until in December is ladder approximately in ABS our of normal of refinance Of U.S. course we fixed was debt material facilities We maturities structured to business of notes ABS $X facilities in XXXX. debt under those portfolio a and the medium-term vehicle subject XX, to our of sufficient cushion with under the well rate. at maturity note, billion intend notes December with market end globally, 'XX, maintained no exact billion our $X.X that with

cash Turning to million $XXX flow revenue fleet free ] Net [ in growth on allocation. Adjusted fleet million dispositions. and for supported year our net comprised growth. lower-than-anticipated vehicle cash capital $XXX cash adjusted offset primarily slightly increase million, flow the of $XX of $X.X operating was a vehicles billion by an of earning flow of outflow

in sale was offset year including Our were to nonfleet adjacent as the expenditures estate sales, CapEx for LAX previously by the disclosed minimal asset QX. real of

stable rate Lastly, in a with million XXXX demand in common XXXX, environment. entered we repurchased stock. We of $XXX solid our

seasonal services expect bigger price upgrades, historical through monetization RPD digital of revenue initiatives and value our and as channels supporting in incremental such anticipate improved We demand to value-added capture to patterns through brands. track

call closing, referenced, carrying earlier. vehicles market, strategic fleet car that, course notwithstanding open residual our rotation costs, bringing with Regarding EV and I for to adjusted course, the we in medium X/X the we benefits opportunities productivity $XXX short return the the environment not on of benefit the used to the an discipline. In our plan benefit the ahead. to our forward market achieve productivity, of fundamentals the to as the broadly, the the fleet let's from well to More the focus as normal business and It look discussed corporate of associated for trend expect to as EBITDA Justin be will we term. On in and sale in over in seasonality to fruition. With million approach we improvements Q&A. that important is dynamic structurally depreciation our future a and, XXXX, covered for used macro initiatives, near improved view of look influence, we year asset-based on our the industry dictate and of but as expect of operational today vehicle cost

Operator

first the Deutsche Bank. Our comes of Instructions] question [Operator of Woronka line Chris from

Chris Woronka

that regarding to made at reduction guess on is, of you that question be further. possibly that the what the of since in what EV accelerate announcement So might you do planned progress I you kind kind the your fleet, point And markers that? the evaluate cause would

to trying the or get do and if more. might you need more want do it sense decide going to Just success how a you when for need you're you of to to evaluate

Stephen Scherr

more damage. be with taking EVs. the is have content on Sure. Thanks the XX,XXX [ are dynamic. taking that ] an going largely That's Chris. of have I capital inside we candidly, and out, think component return movie of to cars, the question, we to in We or residual do the this rung disposition And equally the XX,XXX we're whether reference is but obviously of we fleet fleet the the the of most the it out. this are not of on ROIC, a demand bring time, terms the just mean all there's Look, clipped on as EV defensive about In it invested as on assessing to demand. demand had. RPD effectively to related made the simply assessment a frame for took way, to the we of whether lowest supply and we cars

you that's will, we're there. view to And the expectation of while capture we that our the down taking if that is X/X posed our drag of economic fleet is half, so close will

expect aggregate in free in to from? of EBITDA million that million $XXX the X-K We about obviously of the that recapture X cash flow does $XXX come told the over million. about years we to $XXX you where So and

of So at fleet costs and what's higher cars utilization And first and to context transport collision to all, harvest then in expect the fewer that? we embedded of this? relating as going labor. out. be for Well, XX,XXX will replace reduction only to that's than at carrying That's that captured. us. I of XX,XXX are of a the and take. cost reduced going front in in fact there's the carrying we taken unit And deploying do in in cost, enhanced we we're of is And what out. the The depreciation the mean, charging operating lower of look there's taking we revenue terms What economics to cars we're us a cars function on

operating the So costs, utilization expensive will much around operating depreciation, higher will cars, lower less these so that dollars vehicle and and carrying simply just at to there. are collision transport lower be labor us. higher costs produce margin

around we And flow so, then more pace get. at If out these reassessment. was we a, against we to December our the be laid where we're the demand take that show, to than day, we've end cost need returns believe action EBITDA realize the the cash are fleet you balance constant we to should the the and And on of assume and doesn't that third, we none. modeling will a of mark to do there that need make to or for we need to capture that sell through go at at XX. the Two, the cars, savings

of in this, distraction of away are And reduction cost through. are in expense the meaningful relieving action will reducing the a think field EVs. aspect have I in sort ourselves that Justin I categories to around and derisked costs go clear of you of is the runs doing way. sale very position we Meaning EVs, of operational the we I the this. initiatives field that the unrelated point in of we from the The kind an Justin to that's that, at has out, some in think this the would we the important that expense has kind will variable the take And dramatically to other ability and the

And that elements always to inside the to again, assure if don't return, I of will, choice down wrestle on further the is with. a action and going We you to of a fourth demand. so comfortable need the to that this, we're consequence take we've we're about providing execution work against scratch bite were in look, with the mindset we you and supply we that this landed deployment quarter, enough, to not that of is, speed attractive meets big it. issue can demand. as that think EV the think take of work not I us If as going to And it evident we'll fleet of were front customers. not and But steps adequate returns a will keeping that's out numbers those the an And play fleet, of took on was one forward an more. if lesson vehicles. was EVs of in incremental if with do And the those we we'll cost then with

Chris Woronka

your I'm curious ICE sales I kind And or this that's Stephen, environment really now table that sourcing. to want that's into also used current pricing willing the market a for car on the are backfill the rotation. so as follow-up, year. how EV to mean, kind more both guess but is the there, you lean given you're just XX,XXX I this that about something more thinking of natural cars with, you the fleet about is that of helpful.

Stephen Scherr

fleet. a say the would things on couple I of Well,

ICE vehicles fleet, network on the we are redeploying of the to mostly As locations, all, vehicles of sort locations. reduced for okay? ICE unprofitable back noted, airports that substitute Justin recognized in and First to other as EVs, down we

and service. where capturing out continue from out lowest Number at service locations number right, of month drive are this to going utilization we're not the can. we will vehicles down vehicles, So other two, We're to those we part one. of is be okay, sufficient, XX,XXX, of where that and redeploy our use

return and look between sales of on modulate of purchases what again, the to kind and based deference to profile activities cash, to have. we're that, in of sort manage those Third, going

ICE was to XX,XXX we're used go I out Again, was XX,XXX point will utilization. not need higher lower-cost the take it to to the that and out taking XX,XXX cars level So buy making We of vehicles additional a EVs. the that cars replace at make cars do in happen. be that that the our service. of redeployment locations. fleet in pinch will Part of what's as out ability will we're of around Part comfortable backfill overall for lower be quite unprofitable of sort network to the I particularly off And of think with there that we demand.

Operator

comes Zaffino Our of the from next question line Ian of Oppenheimer.

Ian Zaffino

so Thanks the about cost do savings. that on think And the Great. understand to EBITDA here, just you guess, this to number, trying number? you now then normalized conceptually, previously, what that top earnings this is? normalized that all details for on number? And Or stated EBITDA need is you when you've I'm think it I number of your where or get cost to savings is

Stephen Scherr

the for Ian. thanks So question,

would tell what I you. Here's

to $XXX forecasting we're trip, charge in the of EBITDA separate we of relative took quarter. sale, okay, such we will, X round okay, EBITDA be what over if you from benefit years in that, the that fourth believe a that's EV to out million terms which need You to the uplift,

yield the higher $XXX the is the we projects, of sweating get. fleet call and coming million the It's in that in way business. The has we new the can. pull go of top of And XXXX. normal we've and of about EV yield we and those that like that gain is third most productivity that were, that through move. a and Justin combination costs talked of have, $XXX are within a important cost this spoken million and cost as projects realizing things: on combination that assets before, context amount million of that to set back of is an the being the for X in aside a it realized perhaps the Second that So ability call that, million otherwise, so productivity right, the and which to rideshare out million okay? let's adjusting $XXX $XXX $XXX On to

EBITDA $XXX that out $XXX give sale, back definite this that cost is you million of on on that the of year. out million productivity comes us $XXX million very can within Justin that of the XXXX. EV focused separate So again, what's the kind benefit EBITDA out in then makeup And on to and cost his And take of addition. a

Justin Keppy

it, Sure. $XXX Thanks, look just out. cost million at the planned if of Ian, our say benefit the I'll majority you productivity is Stephen. for year

So globally, it's an out. working we're we're across taking I looking not and businesses. of reduction, our look all If Americas across costs just spend it's effort, the categories,

and First already third thing we've within staffing party, action. taken

So that got hire-new we've into head count us actions locking down the We're coming year. are benefiting requests.

reductions. it already you, third-party being closed X year-to-date, footprint, done look we're of million So only And a any to tell more can and locations And we're scrutinized, profitable as underperforming. to took locations, spend new an adding yet. On free lower-performing when over of $XX essential. other to us ads as we've we've are we've assessment completed were of the others. relationship looking with spend, we our And identified Carvana I gives up reallocate or vehicles highlighted, and are ability Stephen ones tough first at expand thing not our I the rent-a-car that locations. retail in, And and off-airport on-airport came our

here the be We're productivity. those launched year out complete digital portion teams hold. taken QX. On to field We in last expect to Technology say a we actions has it's that very billion. Also it's In rolling going. on $X the pleased spent sizable energized, of almost looking seeing mentioned collision. that's positive. procurement, the been It's before. on tool it's the I on expanding, telematics real fuel progress and I talked said we accelerating, about I'm before.

to think as such larger Just kind category, tire can last there's -- categories our you and finally, going and leverage to. second, $XX or million. X% more we that for And real that on can And we of about do just is observations, here, glass if first a technology. spend the we're reductions get meaningful

the all it's a the that of across year. This a And the continues we're prioritization, I'm like why we build. $XXX in in we're And opportunities outlined, the capabilities you meaningful year-over-year. can disappointed more. reductions say, to the to The benefit personally activity as for modernization see Our see office. programmatic It's I don't to million you be completion, about just out do track and the hear, stay updates to spend activities. I going of on it's this giving building we and momentum reason clarifies. question. there's while were future. that of exciting taking going we're And program seeing there productivity are continue year, if Hopefully, developed that forward ensure speed to there. to of to I see Thanks last effort I'd look lot

Ian Zaffino

great. No, just maybe guess topic. I on higher another a And that's level

seem what bit Or of that confident in guys more a us saw a You giving point Kind forward. maybe you confidence? and environment give RPD the going rate little January? on what little data you in

Stephen Scherr

Sure.

January. me saw we're let So January start or with what we in seeing in what

activity high of year-over-year growth, in strong the a backwards, decelerating. showing First is Hawaii as Sunbelt particularly considerable demand we've remarks, we're strong, rebound. across decline are in volumes looking quite to say would and all Florida from volume. like the quarterly making sort Midwest, prepared Chicago a the Detroit the really on the west said of that locations of I corporate of is basis seen I and and rate that considerable all, seen leisure larger leisure inbound Hawaii, growth, seeing and business We've sort way

as the in view this promise a us back lower and think in economic in. the that airlines the is of say holds we looking clear saw listen, in And the hotels seen, is what of we to fourth as we performance rate travel listen which that is the year they're so half consume continues sort than again, the sort substantial. of in quarter year-over-year which that interest industry growth, better on forecast quarters. I'd And a partake considerable lower for and inflation, prior that to and to the consumer, particular, context also reporting you experiential of American had basis that travel are an as on playing, I good rates trends the

about seeing are less sort around what we one and regard, both higher look demand. I good than I as seeing, we're where in decline. that in remarks, saw rate. we of And of for And is to feel in that what that, trend point cost out the decelerating inputs, did of of is we're were also terms I as think front terms in where strong XX% in think, and there demand a we're on generally better quite that the lower players that And so incentive of number, I just us. very we major to there any say -- rental I'd would stability in also

Operator

Our next line of Adam the of from Jonas Morgan Stanley. question comes

Adam Jonas

worse, But is what Hertz army kind it one money, that get? for that confidence where against Hertz would surprise there's the for test year question worse A what now a some a Steve getting betting I in we I'm from of just of or -- Steve, of the another that and the to and kind cash, people Justin. earn might year. to of does of of how and lose lot. I some do for covenants? how but lack have is there message without kind execution. you. right be bottom questions providing terms confidence Obviously, base not of I'm have That or a mean this have sign kind guidance, covenants does clearing sure know lot Could much of gets that's the an of questions have mean mean? bottom would transitional clients on you you some lot a of in strategy

Stephen Scherr

Yes.

say, I and step sort that I we it think quarter, the we fleet. of So continuing that did operational fourth taken trying cost that not the in of the otherwise EVs would bottom up X/X around forward what Adam, the would rocky for of the in we had terms incurring to were a patch here's be distraction path that on

cost I've intake that largest X/X as fourth a This the ourselves quarter, will, structure in of cost path of step We experiencing that and set with the is challenge, position. said, experiencing is strong cost sort reducing single was off line revenue a that taking to our that we've to up or clearer by a of EVs. What much in think we of challenge. demand. the I pinched the is not revenue company and reconciliation so And sustainable. And need fleet it which component puts more, a is but do we is us if better to

to lower yields to operating relative with our in view expense and and ability meet expense, a to that ICE direct short a reduction demand It depreciation out it vehicles. certainly on carry on promises

for but element and cost a much residual much quarter. whole. position emerge a equally executing itself the Hertz, that front and items that XXXX, the it stability easier down lower and we taken core are on across into which of a interest is spells the end might he well precise the relying confidence against and charge that better fleet us, already to These series And elements the are look that for in us confidence back EV are lends think blueprint. to we backdrop, into success rates over very equally, I year the revenue payment like, execution prior that that the that we've a if path think one won't cost-out what in to 'XX therefore It cost of is transitional in very solid actions a front this end the of 'XX I the level the are where up being right in and at will play Justin achieve demand be with year And forecast can in rate covenants taken will out against think us. a engage the a come and secondly, of that we And we gives question. against a sets we demand I us big reflected which in we structure of and this now. an fourth in means gives control I'm very in against prices, have cost of these as his in of demand where sort lower both and reduction continued not business, the that for of on a good inflation elements of the in took therefore, not demand

to a in referring little I'm of transitional about what kind that's terms and my how of bit mindset so the of own And forward is accomplished.

Adam Jonas

Stephen. Thanks,

well, at what interested for Justin, on licensees, managers what Justin, their say most the the you I'd have the to -- very but you got anything you've from is follow-up them? were I'd company you this. And that field. people hearing I what -- were you one know and -- one about? to as question, top What's been a XX be not concerned the This field follow-up, fix you did take just they're I desk, in out days, I What good enough. have be in by little and surprise. but only like

Justin Keppy

Yes, sure thing.

I'll if is will aren't say rates and that And I'll we're they whatnot, with that feedback was to These question EV of having customer incident see were to didn't known to to has lightly, field. them. say Hertz has consumers collision. answer looking is back not do. seeing theme the are servicing unanimous people we on to for certainly this decades, for -- it damage us focused. the about wanted was kind It's some an might of go extremely the the take But announcement give EVs one And that the or and gotten So substitute focus this NPS of effect. hugely customers some of have been drive It an I've service-oriented the bandwidth been your otherwise EVs to have invigorating passion there employees, them this announcement. as that and concerned

Adam Jonas

smelly follow-up understanding -- old, what fleet, come mileage you know mileage you you Where have I car a damn if And What's be? XX,XXX up. want KPI, what on are you cars strikes Justin, me it really as your consider doing give but that. that your OpEx right example, that is is the in the it's Enterprise about us the versus an data Where my something getting are. you'd it your if Because of normal? now, U.S. it's I'd Avis on curious That's cars? be do And just that did of miles if got is, to there for please not average don't just could Okay. but it, -- My is up? with some and that the indicator. something a

on to where are you you where So That's want tell important. us and be that. really

Stephen Scherr

of terms it mean basis 'XX pass in and of take I'll older. points reduce for the age it let be meaningfully of hundred we then Justin. first, to percentage the by I to plan The that XX,XXX miles me fleet the have cars that is will fleet. or Adam, ultimately several

of path that have not the in to being your second for the context that are So do otherwise The we ] be cars are on the the [ customers. about that's premium we homes question of ] part Kurt's and rented okay? [ is first that transition,

I'm are an sort TNC, -- growth context think that are about and is And in ask example, of Dollar older sort that to not of that's want younger, homes in become in to these them. wouldn't But fleet not comparison for question. I'll it. think rideshare or to have be to rented, to finish and others, of our fleet to for miles. And up important that in the your to in a So meant age but business suggesting rendered meant on cars cars plan current these are be where our I that both others Justin the the common is appreciably element

Justin Keppy

too. upon bit a that, expand to Yes,

with in are XXXX, earlier. positive experienced thing seller's our a fleet seeing we're at it good that that to is experienced to Stephen buyer's and with what very couple over a the enables fleet other for of And noticing past a with becoming that the transition we rates our of actions market to than we The the market we've we're the more Europe, plan otherwise look in in 'XX cars refresh outlined. take program already years. favorable us OEMs

Stephen Scherr

residual lightly the in one And sell. to between I unlike and network retail wholesale okay, of be buy say a in historically comment others like market, delta part XX% also context and part and younger, wouldn't our retail because proprietary I'd declining in that, them. it part Adam, take greater. others, and Carvana fleet is the rendering the one access, obviously, in your can or a that

of the that track us the fleet trying reflected rotation. us a kind of benefit auction wholesale the you will so to in year, do balance indices be managing element context in this to we're of dispose a financial in what not fleet for of transitional see are necessarily of within what And to in that ability prices the at

Adam Jonas

if to provide Okay. mileage later We'll follow on up it. want you didn't the

Operator

from comes Northcoast question Healy of Research. the John next of line Our

John Healy

a couple of I of EV to of lot a time morning businesses But the ride that are into together, about Obviously, and on you. big newer hailing kind get wanted company this over we questions picture obviously, to the Stephen, last talk spent EV. can X years. X

I'm just know with those revisited in the reality, margin just just we the of be could does that businesses, on them, type penciled to you learning there at in economics than what different longer-term the and sign potential been As maybe Excel, ride it hailing if businesses, the you've these agree or penciling potential EV businesses expectation thought. an the actually because you of accretive that that this to now is but of need longer maybe are kind these out or I you're look hypothesis out think and curious term was be businesses. from

to there. I'd love So get your thoughts

Stephen Scherr

excellent would an the question. I that's following. say No,

I think good the business a around that proposition one. long-term is

MSRP become of has the damage you Teslas the of came down the when happened, came which experience it not will, because when Hertz has it's have the financial proposition up. deployment around bankruptcy, be this think And number of ignored been to the and time least things elevated. more I if a the that is came down, went that a entered of the residual model, depreciation expensive not that at out obviously, against

So intake near you depreciation, your look but or which margin, to a had not it deduct and then the of and expenses, if about damage -- at other that, your car, we largely you intended yields cost think deduct initially revenue initially you do. you it positive had it

have the less rotate business cars down which there, that in cars, obviously to will more And render will expensive there. need of and sort that the we of deployment the forward in number profitable. we of EVs are reduced be So

The for other drivers period weeks. that I an is thing will you of are business in our that this to for extended say car

level because you when of extended and keeping damage is experience, the combination weeks the the just driver margins when So driver at perhaps turn the economics car, in that low in that get are hadn't in X experienced other get they The the you that on level driver, the low underwriting the driver driver driver in an as the held. the the weeks is need some because is driver that the car past car goes the context the been are very words, down, the EV, model because maintenance the you because or meaning experience of part incident a and is start. X very attractive in attractive, period underwritten initial okay, get a well of that a to of and through has of car

with very, issue. Uber will, challenge by get the and that So if you real very attractive. is of driver longer-term And overcome to margin is Lyft we that cost to of the working driver the because assume the others on on the sort should acquisition are you and

it of yes finesse And business sort or I a model, more think it bit a than so works. answer, I no that's little is and but know a

we modeled I segment that's a an going. out think And of how from of through we're think to sort but start, attractive general business but it to direction the that's that relative curve a thrown the as underwriting were I need matter, we work it. think I

John Healy

we recovered me. benefit years that think you over for XXXX? rate question you like for that cost of How the year? $XXX million run this those of parse follow-up much the When in of through talk is quick about the about actually how kind EV this do a cost flow recovered a and items, just we $XXX then And cost EV million on number? year, item what do year. talked being see X And when this Or results that we might guys is you

Stephen Scherr

Sure.

I XX-XX, mean, I production. roughly then our runs, permanent $XXX as So million years X on and aggregate, say it's and speaking, in of 'XX would recapture in 'XX the obviously over a would say EBITDA right, overall over EBITDA okay, I the fixture then

referring Justin basis in that forward of to, carry move. productivity cost as and you million materializing cost. rate a as view $XXX Again, out to a byproduct separate and and both that's that on of run was cost we the should coming On XXXX out

Operator

comes question Moore from line Jefferies. next Stephanie Our the of of

Stephanie Benjamin Moore

moving of of you here on number good the through call a that went kind There's pieces here.

expected Stephen, cost EBITDA case? to the current and So But in your know own said growth but still -- that you you the reduction given dynamics achieve I the programs, is also XXXX. in past this

Stephen Scherr

'XX, think I was Well, that produced show will 'XX account of QX. charge in EBITDA taken to higher the taking otherwise than we be EV what in in

'XX. a think of production number we'll I 'XX higher level EBITDA relative in in see the reported So to

Stephanie Benjamin Moore

on perfect. again, offset. more those the cadence materialize color helpful. second as these this think be headwinds when expect No, would Okay. initiatives, start just to How cadence Or major XXXX in helpful. of of see cost to these a certainly of quickly should half can savings, these That's I kind the we start you kind we XXXX? of mean, be that can saw about XXXX? to any XXXX in is And throughout then

Stephen Scherr

on Well, I they much the the being are has been depreciation obviously, EVs, now, stopped out as cars. on sold think those

should fall is down cost vehicles, of made itself. than pace. to that on in ask chart Maybe and the quickly depreciation reduced is progress on sale incented quite be of zeroing Justin later the the running context as which in at comment some that I'll Obviously, quicker the pretty some categories see the pace earlier, of So focused out XX,XXX on the the will obviously longer. when on. see he's of you'll to we're happen And kind context the

Justin Keppy

those enacted third-party ] adjusted reductions Sure. budget On out already. or we've [ some spend, on cost

benefit to the those So QX, the entire run which of year. rate starting through here we're in will see going

will items time of other out the get across a Some as broader just to network. the in place well more take bit as roll

any of see reduction will program cost as So through. year natural as But ramp we with you goes implement. a bit that's a the

benefits the year. the in compound of see back You the half

Stephanie Benjamin Moore

Got it. question. [indiscernible] of one just related And then kind

I be Can think last the in major pretty impact you kind we saw us that of your a walk just announced could on of business? recall Tesla through that what couple weeks. here

Stephen Scherr

to and I laws assume Well, as necessary on at industry. been recall, think the you that the over say they've follow of should it that least been we always recalls we make that car would relates the obviously with respect have Tesla, all air comply with to software sure adjustments in I made. with the and rules recalls, past so the rental that

on And of recalls. But with so how to those dealing is it easier execute all that's largely them. we're

Operator

the Our from comes of JPMorgan. line question Brinkman of next Ryan

Ryan Brinkman

taking headaches from damage earnings EBITDA to EVs XQ RPD charge think in you to the after apart should of to in still of trend the investors to might the into RAC nevertheless account be the maybe in the considerations? head into are shortfall the depreciation how sale, the bled even curious charge more on order the ex results about of I normal or of cetera. pressures about softer charge, charge to such the from as versus the XQ as from the given trend XQ you repair EBITDA, may this many softer as costs or over help much the I'm EVs to how I the the have RPD, fleet a XX,XXX having EV et such guess, that incrementally nature, XQ rate XQ off or sell significantly more retaining understand too the do better how pattern? seasonal jumping How these And generally we excluding much should annualized non-EV, in related year of related them shortfall rest the fleet and the portfolio to excluding onetime on wanted course to electric relative the on that thinking ameliorate in higher typical of ask sequential XXXX, be us the XQ recurring plan vehicles. point

Stephen Scherr

relative Well, say of that to of several effect -- EV points we margin I remember, ICE. about would spoke the as

earlier, as context that So million the of challenge, this $XX the has a which us to that effect of in of wholly take in I costs we fourth of higher were quarter manifested the than personnel the spillover cost. charge expense, transport the quarter I with EV think we to needed that entry that and in the million meant drag the made about It more the broadly. think action and distraction implication part specific higher meant were to. on did independent the $XX we field we we I running overall comment and in would needed the say It than motivated is to. the incurring that categories

several uplift that will, All virtue you itself there's the EV EV we broader and of impact of sort by to to in cost becoming linked, get RPD the trend right But the made. arrest the you we on if related giving way the of of we worst X/X of the say, fleet are to points effect there. pulling will, and the I in of down collateral then can I spillover that's of effect was fleet in not was those you're which removing that like. EV an context the there's action performers to or fleet that by should terms base because on widespread refer among both think those, of, if the a sort bolder margin. But was taking the our RPD And the therefore, that I'm of that equally to and to cost you choice

Ryan Brinkman

the of And help last benefits integration certain efforts costs that dimensioning Could on suggest are or X/X are and than XQ drop the did us step what there's or you the in more something. the these there of more was with on those repair repair about it that then would Tesla sufficient, problematic right? that of on maybe maybe it the in you know will don't there. now topic Okay. that call, kind that parts I cadence by But down, like And talked supplying But amount right? that you sufficient. the step-down a then be delving knock-on given also, of wasn't vertical other the more vehicles, just pace cost,

the versus EBITDA in of in for something Just that? factors, an savings dollar like don't day given these all 'XX, DOE in per estimate 'XX I have or or know, transaction

Stephen Scherr

trend track and that of with labor the and OEMs begin remember cost parts wanted. that fast was cost. should lower sufficient negotiate difference, to both sort lower day, didn't a at address they as listen, we not there on on the to going end okay, to as taking we But of steps us series were elevated the make of back put lower. we a that to just Well, the to as try And the Justin damage of damage, referenced, including were elevated

EVs the is and fleet the defenders removing is that, biggest translate more saying effective which reduction And therefore, X/X opposed means have again, there. more that taking, of in the were a though of the into itself. It balance the reduction only before, of will will, the what to RPD cost the taking was that I of don't, the aggressively of fleet okay, on the of we'll out, incident fleet therefore, that move And damaged cost So on we that also if notwithstanding offenders XX% on then XXX%. they But if against and X/X mattered. out EVs XX% probably as effect the biggest you will are measures greater the of size. those standing effect

Ryan Brinkman

we've was looked -- then is that. just on there's What helpful. just at this like EBITDA beyond from about maybe What some noise, say about an know some have earnings, out very earlier discussion numbers. or That's I something now power? there the know looking I years you like lastly, earnings normalized And you but normalized just I all it market structural X maybe mean, would in change the drivers sort any differences per in share? expect got the big size the EBITDA of tailwind basis it or market RPD biggest there are you And that improvement? car what versus because or there, you is of what is? And of do are car the per given pre-pandemic, the when EBITDA compare improvement the normalized what

Stephen Scherr

Well, pace the achievement I the mean, listen, and million get from pull revenue you to is million and productivity years or a we've a been And about, back normal to there. $XXX a cost. that talked it sort and to right, methodology start would forecasting point will need as of over of of be view yourself view to the both reverse which of to what the of of back sale X number, EV from of question try you $XXX the benefit then we've be

I think in to do by 'XX. $XXX to the ability we end be the gains that million tune there cost as of will the confidence the represented of to take heightened we productivity ought the ascertain out and

the of should EV. progress of $XXX And 'XX, seen with the right, end be of million million $XXX on so half that by

that year, you in So market EV the there's want listen, and of be $XXX me $XXX to ] is million million in Of namely like. understand But ], had. $XXX of the to first place put sort and ] to there's XXXX. the [ million it's make million [ ] and broader myself about assumptions hard [ for [ your $XXX the

and I think than don't pre-pandemic assumptions were reason hit whether sort normalized a you better of you we to as more see in are we we holds, position. believe XX% then where need make rate a decline extent deceleration shouldn't about the why I that to it which the

stock residuals seen structural weren't U.S. years was no reality to and the The cars weighs used two, you short there age on because cars elevated of levels very on the in the -- that again, while a the they I at it XX roads is we years, industry, that right pandemic. Number 'XX. think the in about less It's less as of made okay? how is, off good of that than now -- now ourselves, existed need precipitous that relates of take to decline fact that XX.X quality there's pre-pandemic. have

cars lower. are off-lease So

will if of believe further lead at factors you residuals, we come auto upon just toward at are at that attainable back the price uptick I an rate very that I do loans you more your the will, of the I'm where a think lower that question, response half. cocktail sort reduce that. there of where for you independent stability the not to is If of residuals believe where and tactical not could think a we're to of if Again, least to sense half kind that the come in cost. back will market we're gaming, of giving is, modeling that be or in making necessarily do year, wholly you should moves

Operator

Our question Dove next from comes the of line Lizzie Sachs. Goldman of

Elizabeth Dove

about change to could whether over mid-single mean you repeatedly talked stable? this at you're do you if of numbers think by in that what You down if may year digits. that, you're But this reflects just also utilization call. I quarter, the the noted exactly be RPD kind prioritizing this And strategy? it you've thinking I look stable during that RPD and wondering clarify how

kind about it for range kind of and I want so see kind XXXX RPD. how And of to the into think just you of outcomes of

Stephen Scherr

Yes. we're okay? peaks. have principle we demand moves, inside can level think demand guess, that troughs are mind in is hold a right, to Well; There of going are to run obvious we I not that expect and should cars supply capital respectable of be, cars deployed of against utilization quick be simply and a where not continue at first to to variations so we used, that I

our if hold it demand for chase to that, that cars to need you so been falls. even of sort And view meant has utilization not low-quality

mind a to not demand execution So of I'm expressing not inside holding And demand. is where there's of in a moment of the supply then low-quality sort baseline sufficient of RPD. sort there that's chase the

And hold so us X of combination should the those there.

at brings world split markets. a there the don't is by competitors. down stability, okay? of you of but may been optimism which demand what drive at is. It motive, I look no in very broader industry. I right, share, the sort In more terms sort believe of our the which lowering of look I price confidence has there price look to to variety or whether at, There's any of majors one share on across candidly, across is stable

So Nobody decision is rate take on a not is or trip business lower. vacation to car a the there's not the to an or take rental embedded incentive. not, because or or $X making a higher

demand. no to there's for again, travel, stability So basis. And growth at these a airlines generate that our seem then and incentive on doesn't there sort particular our going fact, that's in if industry-driven as what to industry it's seeing the of in where And across being forecast chase we're be of rate lower are to context hotels right in deposit customers and airport. to by the the left across share they

saying, see off-airport price was to very our travel are us so locations continues, should the time. redeploying travelers sufficiency rationalize coming extent these is you Justin at and to maintaining where that but optimizing as think same which airport to I to cars the network, of us, the And valuable

Elizabeth Dove

this this you kind the initial kind framework minimum have was of headline do the agreements purchase that's year? Pulsar. any is you're causing on of of XX,XXX kind you a saw just agreements. or of have purchase others, that buy curious there That's one just But know Tesla. plans I'm GM helpful. EV. the year kind if for with agreement follow-up EVs I the have whether the to outstanding I I minimum -- from agreements of any to And yesterday curious you if any hit

Stephen Scherr

way, and price obligated have like buy model more a any we're number that speaking, -- of the the decided. year The runs the obligated final of the generally until about not to over number broad when cars not understanding Remember, is commitment with They're trim than we these of under broader agreements. is that ways. By deliver aggregate both the all long and not had is to OEMs sort agreements some years.

pause be put we it's a EVs but except vehicles, so a were large, on that based in. And will EVs with for lower sale net EVs, very minimis de the we minimis on de number the other amount ICE of there. based extent the of come to the packaged that's sure they context buying and that in on obviously By and

Operator

line next question Our the comes SIG. from of Christopher Stathoulopoulos of

Christopher Stathoulopoulos

finer a [ little I think third be wondering you identified, Dollar that the be with and just about guess on upside if more, respect the more like X as if But you give on potential you've comment little category Justin, $XXX do you cost don't you to just the things a of with ] identified? there. X category could look and operating more about point should if for areas a would that that. how detail million per your collision disappointed you've we would bit think it the those we categories for in bit

Justin Keppy

Yes. first. Sure, Chris

to internal much target can that you going building we're cost. plans higher are a As imagine,

we're drop And things, committed. first some benefit time we categories. of subro time. accounting less So of as between [ for a these turned the spending see are secondly, over things There's kind instance, through That's this bucketing ] benefits one. period

it it there. from we bleed we're getting the while the through before benefits in recoveries, of So immediate may portion a time recognize fully

have reduction, and to the future of immediate solidify beyond be traction provide we cost suggestion calls. reduction, plans as in continue these see So spend you there clarity my would to updates further kind the and real commitment my

Christopher Stathoulopoulos

second then Okay. And question, Steven.

affect here starts how that, rentals? we is airlines Any potentially sort your arguably half phenomenon of comments confidence or to demand of of net Or like whether demand that the guess return that some might the as We've outlook. nonpeak you similar were thoughts to up a thoughts nuanced then season. from would wrap peak travel for length alluded it to I could mandates airlines. sort sounded versus leisure the pointing this is it normalize. to here office there. around you in question around change and and to around So the as heard Curious potentially a second comments drive And be your earnings healthy around But -- accelerate neutral

Stephen Scherr

Yes.

let intra-week corporate manage So and to second me always take I leisure one first, like is that so as which of the period. tried we've to sort manage think -- trough

inevitably car the week. was normalize, in terms employee So as normal the their benefit of return and if what corporate contracts stand course put to to airlines they it us To as sort the there's have extent the own in the better, profitable but does that will, and that the more over others. of smoother we of right, to do need you will use, a corporate behavior

of than do they back track the So we otherwise differently shouldn't of normal. the what's in context benefit returning defined to as

for optimism and more of would is inclination macroeconomic first one that In second the the terms trends components of of I I'm kind half, referring various our here, to mean, benefit the travel. sort and to just business. of proclivity demand Obviously,

from there rates not inflation of confidence down be the and inevitably So for travel degree better if consumer will to it, us. come is industry, and things a higher down comes limited -- springs if that that interest

lifts of indicators the historically January second And the around into Those end. The the will lower back of stay volume residual the that ] and benefit the us. be used a context structural whether to period of like. Typically, people the making which in happens, was pricing age in cars, will positive The the on sustained as not to stay up of forward. will market around interest And used the we'll the are think as So was they drivers compelled their will I old more the to drive market the then car you component which you And of the that was a or to will, comment are is activity that will, of think at the [ movement. I short The recycle average I and is December that low comment weaken. in positive think be car, is is and rates, see what happen, a should buying or spring context be presidents car of that elevated extent period, into that curve see leading question making or do. that? if move is was, what kind residuals. if you seasonal if you whether of we'll factors getting

today. you So your we thank all for to participation want

you operator. we our turn continued and it and like efforts, possible. sharing their obviously would this back year. close whose dedication the we hard I'd to call. In the work the none that, to our I'll next Before with without updates forward for of employees over be thank And further look closing, to call, on with

Operator

Thank you. XXXX Earnings Fourth you Holdings Conference Hertz the Call. for This Thank your Quarter Global concludes participation.

Hertz Global (HTZ) 6 Feb 242023 Q4 Earnings call transcript