Hertz's 2025 Q2 Earnings Call: Navigating Contradictions in Fleet Strategy, Demand, and Liquidity

Operational Improvement and Fleet Rotation:
- Hertz achieved positive adjusted corporate EBITDA for the first time in nearly 2 years, with a nearly $0.5 billion year-over-year improvement.
- This was driven by a strategic fleet rotation, selling older, higher depreciating vehicles and replacing them with newer, more efficient models, leading to better fleet utilization and lower depreciation costs.

Retail Vehicle Sales and Pricing Strategy:
- Hertz reported its highest second quarter retail vehicle sales in 5 years.
- This growth was driven by partnerships with Cox Automotive for digital transactions and a focus on selling through more accretive retail channels, resulting in stronger net returns from vehicle disposals.

Revenue and Pricing Dynamics:
- Revenue was down 7% year-on-year, partly due to a reduced fleet size, but there was a sequential improvement in year-over-year RPU by 1 point.
- The pricing environment was challenged in Q2, with an overall market pricing decline of mid- to high single digits, but Hertz's revenue per day improved by monetizing demand more effectively.

Cost Management and Efficiency:
- Direct operating expenses decreased by 3% year-over-year on an absolute dollar basis, and DOE per transaction day improved to about $36.
- This was achieved through disciplined cost control, operational agility, and improved supply chain leverage, reflecting growing operational leverage despite reduced capacity.