Hertz Global’s 2026 Q2 Earnings Call: Valuation, Liquidity, and Retail Sales Contradictions Don’t Match

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $2.4B, up 10% YOY
• EPS: Gap diluted EPS of 5 cents; Adjusted net loss of $47 million
• Operating Margin: Adjusted corporate EBITDA margin of 3.4%, up 260 basis points YOY

Guidance:

• Q3 adjusted corporate EBITDA expected between $275M and $325M, with positive EPS; transaction days up ~1%; Net DPU expected $285-$295 per unit per month.
• Full year 2026 EBITDA expected $225M-$275M; Net DPU ~$300; transaction days up ~2% YOY.
• 2027 target: $1B adjusted corporate EBITDA; full-year net income profitability and free cash flow positive; year-end liquidity to support modest growth.
• Full year 2026 liquidity expected between $1.0B and $1.4B.

Business Commentary:

Revenue and Utilization Growth:

• Hertz Global Holdings reported revenue of $2.4 billion for Q2 2026, a 10% increase year-over-year, despite operating with a 1% smaller fleet.
• This growth was driven by a 9% increase in RPD (Rental Rate per Day) and an increase in total fleet utilization by 80 basis points to 79%, showing strong commercial momentum and efficient asset management.

EBITDA Improvement and Cost Management:

• The company's adjusted corporate EBITDA was $81 million, marking a $63 million year-over-year improvement and surpassing guidance expectations.
• This was attributed to disciplined cost management and operational efficiencies, despite headwinds like elevated vehicle recalls and a challenging macroeconomic environment.

Fleet Strategy and Depreciation:

• Hertz maintained a strong fleet position, with model year 2025 and 2026 units comprising nearly 94% of the U.S. core fleet, and achieved a net DPU (Depreciation per Unit) of $302.
• The strategic rotation of older vehicles and a focus on higher-margin sales channels were key to managing depreciation effectively.

Platform Expansion and Strategic Initiatives:

• The company is expanding its platform with initiatives like franchising and leveraging the Hertz brand, which currently generates over 25% of branded revenue through franchises.
• These efforts aim to enhance capital efficiency, predictability, and durability of earnings, with plans to explore more strategic partnerships and expand franchise operations globally.

Sentiment Analysis:

Overall Tone: Positive

• Executives expressed confidence in progress, stating 'commercial momentum is strong' and 'the business is executing with increasing consistency.' They highlighted 'more than two years of margin expansion,' achieving 'the strongest second quarter RPD on record,' and seeing 'clear proof points' that strategies are working. The tone was optimistic about future opportunities in franchising, fleet sales, and Oro.

Q&A:

• Question from Stephanie Moore (Jefferies): In your eyes, what do you view investors are missing here? Because it feels like the drop in market cap just over the past 45 days or so is disconnected from the story you guys are telling and the confidence you have in the direction of the business.
  Response: Management believes there is a disconnect between the market's view and the company's improved fundamentals, citing stronger business performance, better liquidity, and strategic progress. They emphasized focusing on execution, as the stock price will take care of itself over time.

• Question from Stephanie Moore (Jefferies): Do you have to do some of these franchise deals for a liquidity standpoint? Or is that just more so another option that you have? And then... what could go wrong... if i'm an investor and i'm concerned about overall liquidity.
  Response: Franchising is a capital allocation decision, not a capital structure need; it's the right strategic move. Current liquidity is sufficient to fund operations and evaluate balance sheet opportunities. Management is confident in navigating variables due to improved business momentum and durable strategies.

• Question from Chris Woronka (Deutsche Bank): Relative to what you thought maybe three or six months ago, Is this more an issue of the market temporarily moved against you for a specific kind of model or something? Or is this really about channel mix not being quite what you thought or hoped?
  Response: The residual issue was due to temporary market normalization and high wholesale volume. The focus is on shifting channel mix from predominantly wholesale to more lucrative channels like direct retail and partnerships, which is a priority to create value.

• Question from Chris Woronka (Deutsche Bank): At a very high level, do you envision that you would have some kind of requirements or standards for franchisees on the liquidity side so that they would remain in good health?
  Response: It's early in the process, but the company aims to expand franchise revenue from ~25% of branded revenue. They will seek high-quality franchisees and focus on capital-efficient, predictable economics, but specifics on franchisee requirements were not detailed.

• Question from Josh (JP Morgan): I just wanted to start on the retail disposition mix, and if we could get an update where that's stood in Q2, and how should we think about the runway to expand it...
  Response: The company is focused on increasing throughput in higher-margin channels through a multi-pronged approach, including direct retail, partnerships with used car dealers, and strategic relationships. The goal is to shift from ~70-80% wholesale volume to a greater proportion in more lucrative channels.

• Question from Josh (JP Morgan): Just as a quick follow-up on Oro, I was curious, like, what's the magnitude and nature of the investment going into the San Francisco autonomous ramp? And how fungible should we think about the infrastructure?
  Response: The investment leverages Hertz's existing infrastructure and EV charging network. The company sees itself as the operating layer for AVs, analogous to data centers for AI, providing a significant running start in fleet operations and scalability.

• Question from Dan Levy (Barclays): Can you just give us a sense of the path to drive DOE lower if the intention is to keep the fleet levels tight.
  Response: The path to lower DOE involves improving unit cost efficiency through productivity initiatives, technology, and scale, but it's one of multiple levers; RPD, RPU, and DPU also contribute to overall cost and margin improvement.

• Question from Dan Levy (Barclays): As a follow-up, I wanted to ask about the liquidity dynamics... What is the confidence that those maturities can be addressed?
  Response: The company is confident in addressing debt maturities starting in 2028, citing a stronger business, improved economics, and strategic growth initiatives. They plan to pay the December 2026 maturity in cash and will fund growth internally, no longer relying on debt to fund operating losses.

Contradiction Point 1

Valuation and Business Model Communication

Contradiction on whether the company's valuation reflects its new platform and strategic assets.

Stephanie Moore (Jefferies) - Stephanie Moore (Jefferies)

2026Q2: The strategic platform (franchising, Oro, retail car sales) represents significant upside. - [Gil West](CEO) and [Scott Harrelson](CFO)

What do you believe investors are missing regarding the company's business strategy? - Chris Woronka (Deutsche Bank)

2026Q1: Hertz acknowledges its current valuation is based on the traditional rental car business, which is a challenge to change. - [Gil West](CEO) and [Scott Haralson](CFO)

Contradiction Point 2

Liquidity Guidance and Confidence

Contradiction on the company's confidence in its liquidity to address near-term debt maturities.

Dan Levy (Barclays) - Dan Levy (Barclays)

2026Q2: Current liquidity (~$1B) is sufficient to fund the business and strategic plans. - [Scott Harrelson](CFO) and [Gil West](CEO)

Can you explain the change in liquidity guidance from over $1.5 billion to $1-1.4 billion and your confidence in addressing the $2.5 billion in debt maturities in 2028 and 2029? - Dan Levy (Barclays)

2026Q1: The company expects to be free cash flow positive in 2027 (unlike historically funding losses with debt). Specific plans for maturities will be addressed in due course. - [Scott Harrelson](CFO)

Contradiction Point 3

Retail Sales Channel Aspiration and Growth Plan

Contradiction on the target mix for retail vehicle dispositions.

Josh (JP Morgan), what are your thoughts on the latest earnings results? - Josh (JP Morgan)

2026Q2: The goal is to increase throughput in higher-margin channels. Current volume is ~70-80% wholesale; target is to move toward 70-80% through more lucrative channels. - [Gil West](CEO)

Can you provide an update on the retail disposition mix in Q2, including the runway for expansion and whether there's a natural ceiling or clear path toward higher aspirations, as well as how partnerships with Amazon, eBay, and Cox are impacting these channels? - Ryan Brinkman (JP Morgan)

20260226-2025 Q4: The goal is to grow the percentage of retail sales from ~33% to ~80%. - [Wayne West](CEO)

Contradiction Point 4

Capital Structure and Franchising Strategy

Contradiction on whether franchising is a capital-light alternative or a core growth driver.

Stephanie Moore (Jefferies) - Stephanie Moore (Jefferies)

2026Q2: Franchising is a capital-light model that enhances margins and cash flow. - [Scott Harrelson](CFO)

What do you think investors are overlooking? - Chris Woronka (Deutsche Bank AG)

2025Q3: The car sales channel is a profit-accretive engine... targeting $2,000+ incremental margin per vehicle. - [Wayne West](CEO)

Contradiction Point 5

Confidence in Liquidity and Maturity Management

Contradiction on the basis for confidence in addressing large near-term debt maturities.

Dan Levy (Barclays) - Dan Levy (Barclays)

2026Q2: Confidence in addressing maturities is based on: a stronger underlying business, strategic initiatives... and the expectation of being free cash flow positive in 2027. - [Scott Harrelson](CFO)

How confident are you in addressing those maturities? - Dan Levy (Barclays Bank PLC)

2025Q3: The slate of commercial initiatives is gaining traction and expected to further support RPD in 2026. - [Wayne West](CEO)