Hertz Global (HTZ) Q2 2024 earnings summary

Executive summary

• Management is executing a critical transformation focused on operational excellence, customer service, and value creation, with priorities around fleet optimization, revenue growth, and cost management, supported by a strengthened executive team with new leaders in finance, commercial, and operational roles.

• Q2 2024 revenue was $2.4 billion, down 3% year-over-year, with healthy demand but disciplined capacity and rate prioritization.

• GAAP net loss was $865 million for Q2 2024, or $2.82 per diluted share, compared to net income of $139 million in Q2 2023.

• Adjusted Corporate EBITDA was negative $460 million, mainly due to a $700+ million increase in vehicle depreciation from accelerated fleet refresh and deteriorating residual values.

• Liquidity was bolstered by raising $1 billion during the quarter, ending with $1.8 billion in corporate liquidity as of June 30, 2024.

Financial highlights

• Q2 2024 total revenues: $2.35 billion, down 3% year-over-year; adjusted Corporate EBITDA was negative $460 million, down from $347 million in Q2 2023.

• Depreciation per unit per month rose to $600 from $197 in Q2 2023, reflecting higher vehicle costs and accelerated fleet refresh.

• Adjusted free cash outflow for Q2 was $553 million, mainly due to increased fleet size ahead of peak season.

• Direct Operating Expense per Transaction Day increased 7% year-over-year to $36.25.

• Cash and cash equivalents at June 30, 2024: $568 million; total debt: $17.37 billion.

Outlook and guidance

• Fleet refresh expected to be substantially complete by end of 2025, with DPU projected to normalize in the low $300s and DOE per day in the low $30s.

• Q3 2024 Rate Per Day (RPD) is expected to be flat to up 1% year-over-year, with continued focus on premium business and capacity discipline.

• DPU will remain elevated through 2024, improving sequentially in 2025 as the fleet rotation progresses.

• The lowest liquidity point is expected at the end of Q2 2025, but management is confident in having sufficient liquidity to complete the transformation.

• Management expects continued pressure on vehicle depreciation and lease charges in the second half of 2024 due to uncertain residual values and ongoing fleet refresh initiatives.