Why Hertz Is Up 25 Percent


 
 
07:11 08/07/2018

Hertz Global Holdings, Inc. HTZ  today reported results for its second quarter 2018.

"In the second quarter, we generated growth across every business segment with higher year-over-year revenue and Adjusted Corporate EBITDA. In the U.S., our turnaround initiatives are bearing fruit as a result of effective strategies, experienced leaders, and critical investments in fleet, marketing and our retail operations," said Kathryn V. Marinello, president and chief executive officer of Hertz. "At the same time, we're developing and testing new technology platforms with the future in mind. The successful launch of those systems in the second half of 2019 will further support our strategy to sustainably grow revenue, improve productivity and drive innovation over the long term."

For the second quarter 2018, total revenues were $2.4 billion, a 7% increase versus the second quarter 2017. Loss before income taxes for the second quarter 2018 was $86 million versus a loss of $245 million in the same period last year. Second quarter 2018 net loss was $63 million, or $0.75 loss per diluted share compared with a net loss of $158 million during the second quarter 2017, or $1.90 loss per diluted share. The Company reported adjusted net loss for the second quarter 2018 of $16 million, or $0.19 per adjusted diluted loss per share, compared with adjusted net loss of $52 million, or $0.63 adjusted diluted loss per share, for the same period last year. Adjusted Corporate EBITDA for the second quarter 2018 was $93 million, compared to $35 million in the same period last year.

Total U.S. RAC revenues increased 7% versus the prior year quarter as a result of increased volume both on and off airport. Excluding rentals to transportation network companies ("TNC"), volume increased 5%. Total RPD was flat but time and mileage pricing, which excludes revenue from value-added services, increased 3%.

Vehicle utilization improved by 100 basis points to 81% due to efficient fleet management. Vehicle capacity increased 3%, excluding fleet specifically dedicated to TNC rentals. Monthly net per unit vehicle depreciation expense decreased 19% to $285 driven by favorable residual values and strategic fleet management.

Direct vehicle operating ("DOE") and selling, general and administrative expenses as a percentage of total revenues for U.S. RAC was 70% for the second quarter of 2018 compared to 67% for the second quarter of 2017. Increases in DOE expense primarily reflect the impact of higher rental volume and incremental investments related to the Company's transformation initiatives.

Revenue growth coupled with a decrease in monthly depreciation per unit expenses supported an improvement in Adjusted Corporate EBITDA for the segment in the second quarter, despite higher expenses associated with the Company's operating turnaround initiatives and increased vehicle interest expense due to rising interest rates.


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