Hertz Global (HTZ) is set to report Q4 earnings today after the close. Consensus stands at EPS of $0.05 on Revenue of $2.51 bln.

Shares of HTZ have been obliterated over the past 18 months. The stock is down 75%  as increased competition from disruptive companies like $UBER have impacted pricing and margin while a hefty balance sheet and accounting issues have plagued investor sentiment. The industry remains under pressure as evident by the results posted by peer Avis ($CAR) on February 23. 

Investors would like to see improving operating environment before finding an interest in this cast off name. 

Key Metrics

  • Net Income Margin- Q3 was 8% which was an increase of over 300 bps from the prior year.

  • Worldwide Car Rental Total RPD (RPD stands for Revenue per Transaction Day)- Q3 was $46.82, down 1% y/y. Investors would like to see sequential improvement here.


  • On 1/13 Reaffirmed initial 2016 outlook-

  • Separation of RAC and HERC on track for mid-2016.

  • Sees EBITDA margin 16-18% in 3-5 years
  • Reaffirms FY16 HGH EBITDA $1.7-1.8 bln, HERC $625-675 mln, Hertz Global $1.075-1.125 bln.

Fleet Refinancing

  • On February 4 HTZ announced a private offering of $1.06 bln in medium term rental car asset backed notes. This fleet refinancing removed a major overhang on the stock as there was questions on whether or not rental car companies could even obtain financing. The co no longer has any corporate debt maturing in 2016.


Q3 Recap

  • HTZ reported Q3 (Sep) earnings of $0.49 per share, excluding non-recurring items, $0.05 worse than the Capital IQ Consensus of $0.54; revenues fell 4.6% year/year to $2.98 bln vs the $3.07 bln Capital IQ Consensus.
  • Adjusted Corporate EBITDA for the third quarter of 2015 was $601 million versus $553 million in the third quarter of 2014.
  • As a result of a 2% improvement in fleet efficiency, worldwide Revenue per Available Car Day (RACD) increased 1% despite a 1% decrease in Total Revenue per Transaction Day (RPD).
  • For the full year 2015, the co has maintained its expected adjusted corporate EBITDA guidance for Consolidated Hertz Global Holdings ($1.45-1.55 bln) and the Worldwide Equipment Rental segment. The company has lowered U.S. RAC net depreciation per unit per month, U.S. RAC fleet capacity growth and Net non-fleet capex guidance for the full year.