Hertz Global Holdings Inc. - Ordinary Shares (HTZ) 1 Aug 24 2024 Q2 Earnings call transcript

In the recent earnings call for the second quarter of 2024, Hertz Global Holdings outlined its strategic priorities and financial performance, offering insights into the company's transformation efforts and future outlook. The call, led by Vice President of Investor Relations Johann Rawlinson, featured key executives including CEO Gil West, CFO Scott Haralson, and Chief Commercial Officer Sandeep Dube, among others.

Fleet Refresh and Financial Transformation

Hertz Global Holdings is in the midst of a critical transformation, focusing on operational excellence, customer service, and value creation. The company has identified three key building blocks for its strategy: fleet, revenue, and cost management. The recent addition of new executive talent and investments in technology and product innovation are crucial enablers for this transformation.

One of the most significant initiatives is the fleet refresh, which involves accelerating the rotation of higher depreciation vehicles to improve customer experience, lower maintenance costs, and increase pricing power. By the end of 2025, the company expects average depreciation per unit to be in the low 300s per month, down from the current high levels. This fleet transformation is expected to not only enhance the customer experience but also contribute to improved unit economics and financial performance.

Revenue and Customer Management

On the revenue front, Hertz is focused on enhancing the customer experience through digital platforms, self-service options, and strategic marketing efforts. The company aims to grow unit revenue by tightening the fleet, managing capacity, and improving customer satisfaction. The goal is to increase revenue per day (RPD) and achieve rate parity with competitor value brands across a broader network of locations.

Sandeep Dube, the newly appointed Chief Commercial Officer, outlined the company's approach to revenue management, including a focus on direct booking channels and value-added services. The company is also investing in technology and pricing tools to optimize revenue and better understand customer demand.

Financial Performance and Liquidity

Financially, Hertz Global Holdings reported a loss of $460 million in adjusted corporate EBITDA for the second quarter, primarily driven by higher depreciation expenses. However, the company has taken steps to manage costs and improve operational efficiency, with a focus on reducing direct operating expenses and optimizing SG&A expenses.

The company has also strengthened its balance sheet and improved liquidity, securing additional capital to accelerate fleet rotation and support strategic initiatives. With a clear focus on execution and a transformative strategy in place, Hertz Global Holdings is well-positioned to navigate the challenges and opportunities in the car rental industry.

Looking Ahead

The future outlook for Hertz Global Holdings is optimistic, with a focus on operational excellence, customer service, and sustainable shareholder value. The company's strategic initiatives, coupled with a strong leadership team, position it well for long-term success. As the car rental industry continues to evolve, Hertz Global Holdings is poised to capitalize on opportunities and overcome challenges, ensuring a bright future for both the company and its stakeholders.