Hertz Global Holdings Inc ((HTZ)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Hertz Global Holdings Inc. recently held its earnings call, revealing a mixed sentiment among stakeholders. While the company celebrated notable achievements in operational efficiency, fleet management, and customer satisfaction, concerns were raised regarding revenue growth, pricing challenges, and supply chain delays. The overall positive developments were somewhat overshadowed by a cautious outlook and a decline in revenue.
Positive Adjusted Corporate EBITDA
Hertz reported a significant milestone by delivering positive adjusted corporate EBITDA for the first time in seven quarters. This marks a nearly $0.5 billion improvement year-over-year, showcasing the company’s efforts in turning around its financial performance.
Record Retail Vehicle Sales
The company achieved its highest second-quarter retail vehicle sales in five years, building on the strong performance seen in the first quarter. This achievement highlights Hertz’s successful strategies in vehicle sales and market penetration.
Fleet Utilization and Depreciation
Hertz achieved the highest fleet utilization in nearly two years and managed to reduce depreciation per unit to $251, significantly below the sub-$300 North Star target. This indicates efficient fleet management and cost control.
Operational Efficiency Gains
Despite a lower year-over-year volume, Hertz improved its direct operating expense per transaction day, demonstrating growing operational leverage and efficiency in its operations.
Improved Customer Satisfaction
Customer satisfaction saw a notable improvement with the Net Promoter Score increasing by 11 points year-over-year. This was complemented by stronger enrollment in loyalty programs, indicating enhanced customer engagement.
Revenue Decline
Revenue experienced a 7% decline year-over-year, partly due to a 6% reduction in fleet size. This decline underscores the challenges Hertz faces in maintaining its revenue streams.
Pricing Challenges
Hertz faced difficulties with pricing as the Revenue Per Day (RPD) was down about 5% year-over-year. Mix adjustments provided only a partial offset, highlighting the competitive pricing environment.
Delayed Model Year 2026 Acquisitions
Supply chain volatility has delayed the acquisition of model year 2026 vehicles, posing a challenge to Hertz’s fleet expansion plans.
Recall Headwinds
Currently, 2% of Hertz’s U.S. rental fleet is affected by recalls, which is 1.5 points higher than normal, presenting an operational challenge for the company.
Slightly Lower Full Year EBITDA Outlook
The company revised its full-year EBITDA outlook to slightly below breakeven due to delayed improvements in pricing, indicating cautious financial projections.
Forward-Looking Guidance
Hertz’s forward-looking guidance suggests a positive trajectory with expectations of maintaining a fleet size approximately 6% below 2024 levels through year-end. The company anticipates a positive adjusted corporate EBITDA margin in the mid- to high single-digit range for the third quarter. Hertz is confident in achieving $1 billion in adjusted corporate EBITDA by 2027, driven by disciplined fleet management, revenue optimization, and rigorous cost management.
In summary, Hertz Global Holdings Inc.’s earnings call painted a picture of a company making significant strides in operational efficiency and customer satisfaction, yet grappling with revenue and pricing challenges. The cautious outlook reflects these mixed sentiments, but the forward-looking guidance provides a glimpse of optimism for the future.