• Revenue: Just over $2 billion for Q4, down 7% year over year.
• Adjusted EBITDA: Loss of $357 million for Q4.
• Fleet Utilization: Improved year over year for the first time in 2024.
• Fleet Size: Average fleet size down 4% in Q4 year over year; 7% below the start of 2024.
• Vehicles Sold: Over 100,000 vehicles sold in Q4.
• Depreciation Per Unit (DPU): Gross depreciation at $347, slightly better than guidance.
• Liquidity: $1.8 billion at the end of 2024.
• Debt Issuance: $500 million raised through first-lien senior secured notes.
• RPU (Revenue Per Unit): Year-over-year improvement, down 1% in Q4.
• Net Promoter Scores: Strong gains in customer experience and service recovery.

• Warning! GuruFocus has detected 8 Warning Signs with HTZ.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hertz Global Holdings Inc (NASDAQ:HTZ) has successfully implemented a transformative fleet rotation, with over 60% of its fleet now comprised of vehicles one year old or less.
• The company has improved its Net Promoter Scores by addressing key customer satisfaction issues, such as reducing line waits and enhancing digital experiences.
• Hertz Global Holdings Inc (NASDAQ:HTZ) has made significant progress in its retail car sales channels, prioritizing retail as the primary car selling channel to achieve better margins.
• The company has seen year-over-year growth in loyalty enrollments, with an 18% increase in Q4, indicating strong customer engagement.
• Hertz Global Holdings Inc (NASDAQ:HTZ) has a strong liquidity position with $1.8 billion at the end of 2024, providing financial flexibility for future operations and strategic plans.

Negative Points

• Hertz Global Holdings Inc (NASDAQ:HTZ) reported an adjusted EBITDA loss of $357 million for Q4 2024, driven by a decrease in volume and higher depreciation costs.
• The company faced challenges with insurance costs, which continue to be a headwind, impacting operating expenses.
• Hertz Global Holdings Inc (NASDAQ:HTZ) experienced a book value loss on vehicle sales in Q4 due to lower-than-forecasted MMR values.
• The company anticipates a seasonal EBITDA loss in the first quarter of 2025, with continued pressure from inflated depreciation costs.
• Hertz Global Holdings Inc (NASDAQ:HTZ) has upcoming debt maturities and pending litigation, which could impact its financial position and require careful management.

Q & A Highlights

Q: Could you give us some metrics to gauge Hertz's progress on the operational front? A: Gil West, CEO, mentioned that the North Star metric for fleet rotation is achieving a DPU of less than $300. The company is focused on optimizing fleet strategy, including timing vehicle sales and increasing retail sales channels. Scott Haralson, CFO, added that utilization and Net Promoter Scores (NPS) are critical metrics for driving revenue and cost efficiency.

Q: How should we think about net DPU going through the year? A: Scott Haralson, CFO, explained that the net DPU was inflated in Q4 and will remain high in Q1 but is expected to decrease throughout the year. The company aims to exit the year with a net DPU of less than $300.

Q: How do you see the fleet size trending, and how does this affect demand? A: Sandeep Dube, Chief Commercial Officer, stated that Hertz plans to maintain a smaller fleet to capture demand more efficiently. The focus is on durable demand and maximizing RPU, with an emphasis on high RPD segments and customer loyalty.

Q: Is there a medium- or long-term margin target for the company? A: Scott Haralson, CFO, indicated that the company targets an RPU of $1,500, DOE in the low 30s, and DPU below $300. These metrics will guide EBITDA production, although the business's volatility makes it hard to predict exact margins.

Q: How does the fleet rotation impact your financials, especially with competitors also rotating their fleets? A: Gil West, CEO, noted that Hertz has been proactive in its fleet strategy, with 60% of cars less than a year old. The company is well-positioned with locked-in model year '25 buys and expects to sustain a sub-$300 DPU. Scott Haralson, CFO, added that the company is seeing stabilizing residual values, which supports their guidance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.