|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended
|
March 31, 2020
|
|
|
OR
|
||
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
001-37665
|
|
61-1770902
|
||
|
Delaware
|
|
001-07541
|
|
13-1938568
|
||
|
(State or other jurisdiction of
incorporation or organization)
|
|
(Commission File Number)
|
|
(I.R.S. Employer Identification No.)
|
||
|
|
|
|
|
|
|
|
|
|
|
8501 Williams Road
|
|
|
||
|
|
|
Estero,
|
Florida
|
33928
|
|
|
|
|
|
239
|
301-7000
|
|
|
|
|
|
|
(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)
|
|
|
||
|
|
|
|
|
|
||
|
|
|
Not Applicable
|
|
|
||
|
|
|
(Former name, former address and
former fiscal year, if changed since last report.)
|
|
|
||
|
Securities registered pursuant to Section 12(b) of the Act:
|
|||||||
|
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which Registered
|
|
|
Hertz Global Holdings, Inc.
|
|
Common Stock
|
par value $0.01 per share
|
|
HTZ
|
|
New York Stock Exchange
|
|
The Hertz Corporation
|
|
None
|
|
None
|
|
None
|
|
|
|
|
Class
|
|
Shares Outstanding as of
|
May 4, 2020
|
|
|
Hertz Global Holdings, Inc.
|
|
Common Stock,
|
par value $0.01 per share
|
|
142,285,475
|
|
|
The Hertz Corporation(1)
|
|
Common Stock,
|
par value $0.01 per share
|
|
100
|
|
|
|
|
|
|
|
(1)(100% owned by
Rental Car Intermediate Holdings, LLC)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
||
|
|
||
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
ASSETS
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
1,017
|
|
|
$
|
865
|
|
|
Restricted cash and cash equivalents:
|
|
|
|
||||
|
Vehicle
|
368
|
|
|
466
|
|
||
|
Non-vehicle
|
24
|
|
|
29
|
|
||
|
Total restricted cash and cash equivalents
|
392
|
|
|
495
|
|
||
|
Total cash, cash equivalents, restricted cash and restricted cash equivalents
|
1,409
|
|
|
1,360
|
|
||
|
Receivables:
|
|
|
|
||||
|
Vehicle
|
1,286
|
|
|
791
|
|
||
|
Non-vehicle, net of allowance of $31 and $35, respectively
|
809
|
|
|
1,049
|
|
||
|
Total receivables, net
|
2,095
|
|
|
1,840
|
|
||
|
Prepaid expenses and other assets
|
1,121
|
|
|
689
|
|
||
|
Revenue earning vehicles:
|
|
|
|
||||
|
Vehicles
|
17,646
|
|
|
17,085
|
|
||
|
Less: accumulated depreciation
|
(3,337
|
)
|
|
(3,296
|
)
|
||
|
Total revenue earning vehicles, net
|
14,309
|
|
|
13,789
|
|
||
|
Property and equipment, net
|
765
|
|
|
757
|
|
||
|
Operating lease right-of-use assets
|
1,832
|
|
|
1,871
|
|
||
|
Intangible assets, net
|
3,231
|
|
|
3,238
|
|
||
|
Goodwill
|
1,080
|
|
|
1,083
|
|
||
|
Total assets(a)
|
$
|
25,842
|
|
|
$
|
24,627
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
|
Accounts payable:
|
|
|
|
||||
|
Vehicle
|
$
|
443
|
|
|
$
|
289
|
|
|
Non-vehicle
|
555
|
|
|
654
|
|
||
|
Total accounts payable
|
998
|
|
|
943
|
|
||
|
Accrued liabilities
|
982
|
|
|
1,032
|
|
||
|
Accrued taxes, net
|
133
|
|
|
150
|
|
||
|
Debt:
|
|
|
|
||||
|
Vehicle
|
14,438
|
|
|
13,368
|
|
||
|
Non-vehicle
|
4,316
|
|
|
3,721
|
|
||
|
Total debt
|
18,754
|
|
|
17,089
|
|
||
|
Operating lease liabilities
|
1,844
|
|
|
1,848
|
|
||
|
Self-insured liabilities
|
532
|
|
|
553
|
|
||
|
Deferred income taxes, net
|
1,108
|
|
|
1,124
|
|
||
|
Total liabilities(a)
|
24,351
|
|
|
22,739
|
|
||
|
Commitments and contingencies
|
|
|
|
|
|
||
|
Stockholders' equity:
|
|
|
|
||||
|
Preferred stock, $0.01 par value, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
|
Common stock, $0.01 par value, 144,308,001 and 144,153,444 shares issued, respectively and 142,279,069 and 142,124,512 shares outstanding, respectively
|
1
|
|
|
1
|
|
||
|
Additional paid-in capital
|
3,022
|
|
|
3,024
|
|
||
|
Accumulated deficit
|
(1,323
|
)
|
|
(967
|
)
|
||
|
Accumulated other comprehensive income (loss)
|
(228
|
)
|
|
(189
|
)
|
||
|
Treasury stock, at cost, 2,028,932 and 2,028,932 shares, respectively
|
(100
|
)
|
|
(100
|
)
|
||
|
Stockholders' equity attributable to Hertz Global
|
1,372
|
|
|
1,769
|
|
||
|
Noncontrolling interests
|
119
|
|
|
119
|
|
||
|
Total stockholders' equity
|
1,491
|
|
|
1,888
|
|
||
|
Total liabilities and stockholders' equity
|
$
|
25,842
|
|
|
$
|
24,627
|
|
|
(a)
|
Hertz Global Holdings, Inc.'s consolidated total assets as of March 31, 2020 and December 31, 2019 include total assets of variable interest entities (“VIEs”) of $1.1 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of March 31, 2020 and December 31, 2019 include total liabilities of VIEs of $981 million and $1.1 billion, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Special Purpose Entities" in Note 4, "Debt," and "767 Auto Leasing LLC" in Note 10, "Related Party Transactions," for further information.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Revenues:
|
|
|
|
||||
|
Worldwide vehicle rental
|
$
|
1,749
|
|
|
$
|
1,953
|
|
|
All other operations
|
174
|
|
|
154
|
|
||
|
Total revenues
|
1,923
|
|
|
2,107
|
|
||
|
Expenses:
|
|
|
|
||||
|
Direct vehicle and operating
|
1,241
|
|
|
1,266
|
|
||
|
Depreciation of revenue earning vehicles and lease charges
|
677
|
|
|
592
|
|
||
|
Selling, general and administrative
|
208
|
|
|
234
|
|
||
|
Interest expense, net:
|
|
|
|
||||
|
Vehicle
|
118
|
|
|
112
|
|
||
|
Non-vehicle
|
57
|
|
|
71
|
|
||
|
Total interest expense, net
|
175
|
|
|
183
|
|
||
|
Other (income) expense, net
|
(17
|
)
|
|
(19
|
)
|
||
|
Total expenses
|
2,284
|
|
|
2,256
|
|
||
|
Income (loss) before income taxes
|
(361
|
)
|
|
(149
|
)
|
||
|
Income tax (provision) benefit
|
4
|
|
|
1
|
|
||
|
Net income (loss)
|
(357
|
)
|
|
(148
|
)
|
||
|
Net (income) loss attributable to noncontrolling interests
|
1
|
|
|
1
|
|
||
|
Net income (loss) attributable to Hertz Global
|
$
|
(356
|
)
|
|
$
|
(147
|
)
|
|
Weighted-average shares outstanding:
|
|
|
|
||||
|
Basic
|
142
|
|
|
96
|
|
||
|
Diluted
|
142
|
|
|
96
|
|
||
|
Earnings (loss) per share:
|
|
|
|
||||
|
Basic earnings (loss) per share
|
$
|
(2.50
|
)
|
|
$
|
(1.54
|
)
|
|
Diluted earnings (loss) per share
|
$
|
(2.50
|
)
|
|
$
|
(1.54
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Net income (loss)
|
$
|
(357
|
)
|
|
$
|
(148
|
)
|
|
Other comprehensive income (loss):
|
|
|
|
||||
|
Foreign currency translation adjustments
|
(41
|
)
|
|
8
|
|
||
|
Net gain (loss) on defined benefit pension plans
|
1
|
|
|
(1
|
)
|
||
|
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans
|
1
|
|
|
1
|
|
||
|
Total other comprehensive income (loss) before income taxes
|
(39
|
)
|
|
8
|
|
||
|
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans
|
—
|
|
|
(1
|
)
|
||
|
Total other comprehensive income (loss)
|
(39
|
)
|
|
7
|
|
||
|
Total comprehensive income (loss)
|
(396
|
)
|
|
(141
|
)
|
||
|
Comprehensive (income) loss attributable to noncontrolling interests
|
1
|
|
|
1
|
|
||
|
Comprehensive income (loss) attributable to Hertz Global
|
$
|
(395
|
)
|
|
$
|
(140
|
)
|
|
|
Preferred Stock
Shares |
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Treasury Stock Shares
|
|
Treasury Stock Amount
|
|
Stockholders'
Equity Attributable to Hertz Global |
|
Non-
controlling Interests |
|
Total Stockholders' Equity
|
|||||||||||||||||||
|
Balance as of:
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
|
December 31, 2018
|
—
|
|
|
84
|
|
|
$
|
1
|
|
|
$
|
2,261
|
|
|
$
|
(909
|
)
|
|
$
|
(192
|
)
|
|
2
|
|
|
$
|
(100
|
)
|
|
$
|
1,061
|
|
|
$
|
59
|
|
|
$
|
1,120
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147
|
)
|
|
(1
|
)
|
|
(148
|
)
|
||||||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
|
Net settlement on vesting of restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||||
|
Stock-based compensation charges
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
|
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||||||
|
March 31, 2019
|
—
|
|
|
84
|
|
|
$
|
1
|
|
|
$
|
2,262
|
|
|
$
|
(1,056
|
)
|
|
$
|
(185
|
)
|
|
2
|
|
|
$
|
(100
|
)
|
|
$
|
922
|
|
|
$
|
83
|
|
|
$
|
1,005
|
|
|
|
Preferred Stock
Shares |
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Treasury Stock Shares
|
|
Treasury Stock Amount
|
|
Stockholders'
Equity Attributable to Hertz Global |
|
Non-
controlling Interests |
|
Total Stockholders' Equity
|
|||||||||||||||||||
|
Balance as of:
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
|
December 31, 2019
|
—
|
|
|
142
|
|
|
$
|
1
|
|
|
$
|
3,024
|
|
|
$
|
(967
|
)
|
|
$
|
(189
|
)
|
|
2
|
|
|
$
|
(100
|
)
|
|
$
|
1,769
|
|
|
$
|
119
|
|
|
$
|
1,888
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(356
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(356
|
)
|
|
(1
|
)
|
|
(357
|
)
|
||||||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(39
|
)
|
||||||||
|
Net settlement on vesting of restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||||
|
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
|
March 31, 2020
|
—
|
|
|
142
|
|
|
$
|
1
|
|
|
$
|
3,022
|
|
|
$
|
(1,323
|
)
|
|
$
|
(228
|
)
|
|
2
|
|
|
$
|
(100
|
)
|
|
$
|
1,372
|
|
|
$
|
119
|
|
|
$
|
1,491
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Cash flows from operating activities:
|
|
|
|
||||
|
Net income (loss)
|
$
|
(357
|
)
|
|
$
|
(148
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
|
Depreciation and reserves for revenue earning vehicles
|
733
|
|
|
644
|
|
||
|
Depreciation and amortization, non-vehicle
|
53
|
|
|
48
|
|
||
|
Amortization of deferred financing costs and debt discount (premium)
|
12
|
|
|
14
|
|
||
|
Stock-based compensation charges
|
—
|
|
|
3
|
|
||
|
Provision for receivables allowance
|
15
|
|
|
10
|
|
||
|
Deferred income taxes, net
|
(13
|
)
|
|
(4
|
)
|
||
|
(Gain) loss on marketable securities
|
—
|
|
|
(11
|
)
|
||
|
(Gain) loss on sale of non-vehicle capital assets
|
(21
|
)
|
|
(8
|
)
|
||
|
(Gain) loss on derivatives
|
—
|
|
|
(5
|
)
|
||
|
Other
|
4
|
|
|
—
|
|
||
|
Changes in assets and liabilities:
|
|
|
|
||||
|
Non-vehicle receivables
|
226
|
|
|
(33
|
)
|
||
|
Prepaid expenses and other assets
|
(61
|
)
|
|
(55
|
)
|
||
|
Operating lease right-of-use assets
|
100
|
|
|
90
|
|
||
|
Non-vehicle accounts payable
|
(86
|
)
|
|
32
|
|
||
|
Accrued liabilities
|
(59
|
)
|
|
25
|
|
||
|
Accrued taxes, net
|
(14
|
)
|
|
10
|
|
||
|
Operating lease liabilities
|
(66
|
)
|
|
(94
|
)
|
||
|
Self-insured liabilities
|
(17
|
)
|
|
(4
|
)
|
||
|
Net cash provided by (used in) operating activities
|
449
|
|
|
514
|
|
||
|
Cash flows from investing activities:
|
|
|
|
||||
|
Revenue earning vehicles expenditures
|
(4,346
|
)
|
|
(3,973
|
)
|
||
|
Proceeds from disposal of revenue earning vehicles
|
2,212
|
|
|
2,153
|
|
||
|
Non-vehicle capital asset expenditures
|
(59
|
)
|
|
(54
|
)
|
||
|
Proceeds from non-vehicle capital assets disposed of or to be disposed of
|
23
|
|
|
19
|
|
||
|
Sales of marketable securities
|
74
|
|
|
—
|
|
||
|
Other
|
(1
|
)
|
|
—
|
|
||
|
Net cash provided by (used in) investing activities
|
(2,097
|
)
|
|
(1,855
|
)
|
||
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Cash flows from financing activities:
|
|
|
|
||||
|
Proceeds from issuance of vehicle debt
|
3,661
|
|
|
3,667
|
|
||
|
Repayments of vehicle debt
|
(2,538
|
)
|
|
(2,736
|
)
|
||
|
Proceeds from issuance of non-vehicle debt
|
1,440
|
|
|
341
|
|
||
|
Repayments of non-vehicle debt
|
(851
|
)
|
|
(344
|
)
|
||
|
Payment of financing costs
|
(9
|
)
|
|
(12
|
)
|
||
|
Contributions from noncontrolling interests
|
—
|
|
|
25
|
|
||
|
Other
|
(2
|
)
|
|
(2
|
)
|
||
|
Net cash provided by (used in) financing activities
|
1,701
|
|
|
939
|
|
||
|
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(4
|
)
|
|
(2
|
)
|
||
|
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
|
49
|
|
|
(404
|
)
|
||
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
1,360
|
|
|
1,410
|
|
||
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
1,409
|
|
|
$
|
1,006
|
|
|
|
|
|
|
|
|
||
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Interest, net of amounts capitalized:
|
|
|
|
||||
|
Vehicle
|
$
|
103
|
|
|
$
|
87
|
|
|
Non-vehicle
|
26
|
|
|
29
|
|
||
|
Income taxes, net of refunds
|
5
|
|
|
6
|
|
||
|
Supplemental disclosures of non-cash information:
|
|
|
|
||||
|
Purchases of revenue earning vehicles included in accounts payable, net of incentives
|
$
|
200
|
|
|
$
|
431
|
|
|
Sales of revenue earning vehicles included in vehicle receivables
|
1,043
|
|
|
365
|
|
||
|
Purchases of non-vehicle capital assets included in accounts payable
|
32
|
|
|
45
|
|
||
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
ASSETS
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
1,017
|
|
|
$
|
865
|
|
|
Restricted cash and cash equivalents:
|
|
|
|
||||
|
Vehicle
|
368
|
|
|
466
|
|
||
|
Non-vehicle
|
24
|
|
|
29
|
|
||
|
Total restricted cash and cash equivalents
|
392
|
|
|
495
|
|
||
|
Total cash, cash equivalents, restricted cash and restricted cash equivalents
|
1,409
|
|
|
1,360
|
|
||
|
Receivables:
|
|
|
|
||||
|
Vehicle
|
1,286
|
|
|
791
|
|
||
|
Non-vehicle, net of allowance of $31 and $35, respectively
|
809
|
|
|
1,049
|
|
||
|
Total receivables, net
|
2,095
|
|
|
1,840
|
|
||
|
Prepaid expenses and other assets
|
1,121
|
|
|
689
|
|
||
|
Revenue earning vehicles:
|
|
|
|
||||
|
Vehicles
|
17,646
|
|
|
17,085
|
|
||
|
Less: accumulated depreciation
|
(3,337
|
)
|
|
(3,296
|
)
|
||
|
Total revenue earning vehicles, net
|
14,309
|
|
|
13,789
|
|
||
|
Property and equipment, net
|
765
|
|
|
757
|
|
||
|
Operating lease right-of-use assets
|
1,832
|
|
|
1,871
|
|
||
|
Intangible assets, net
|
3,231
|
|
|
3,238
|
|
||
|
Goodwill
|
1,080
|
|
|
1,083
|
|
||
|
Total assets(a)
|
$
|
25,842
|
|
|
$
|
24,627
|
|
|
LIABILITIES AND STOCKHOLDER'S EQUITY
|
|
|
|
||||
|
Accounts payable:
|
|
|
|
||||
|
Vehicle
|
$
|
443
|
|
|
$
|
289
|
|
|
Non-vehicle
|
555
|
|
|
654
|
|
||
|
Total accounts payable
|
998
|
|
|
943
|
|
||
|
Accrued liabilities
|
982
|
|
|
1,032
|
|
||
|
Accrued taxes, net
|
133
|
|
|
150
|
|
||
|
Debt:
|
|
|
|
||||
|
Vehicle
|
14,438
|
|
|
13,368
|
|
||
|
Non-vehicle
|
4,316
|
|
|
3,721
|
|
||
|
Total debt
|
18,754
|
|
|
17,089
|
|
||
|
Operating lease liabilities
|
1,844
|
|
|
1,848
|
|
||
|
Self-insured liabilities
|
532
|
|
|
553
|
|
||
|
Deferred income taxes, net
|
1,112
|
|
|
1,128
|
|
||
|
Total liabilities(a)
|
24,355
|
|
|
22,743
|
|
||
|
Commitments and contingencies
|
|
|
|
|
|
||
|
Stockholder's equity:
|
|
|
|
||||
|
Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively
|
—
|
|
|
—
|
|
||
|
Additional paid-in capital
|
3,955
|
|
|
3,955
|
|
||
|
Due from affiliate
|
(67
|
)
|
|
(64
|
)
|
||
|
Accumulated deficit
|
(2,292
|
)
|
|
(1,937
|
)
|
||
|
Accumulated other comprehensive income (loss)
|
(228
|
)
|
|
(189
|
)
|
||
|
Stockholder's equity attributable to Hertz
|
1,368
|
|
|
1,765
|
|
||
|
Noncontrolling interests
|
119
|
|
|
119
|
|
||
|
Total stockholder's equity
|
1,487
|
|
|
1,884
|
|
||
|
Total liabilities and stockholder's equity
|
$
|
25,842
|
|
|
$
|
24,627
|
|
|
(a)
|
The Hertz Corporation's consolidated total assets as of March 31, 2020 and December 31, 2019 include total assets of variable interest entities (“VIEs”) of $1.1 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of March 31, 2020 and December 31, 2019 include total liabilities of VIEs of $981 million and $1.1 billion, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Special Purpose Entities" in Note 4, "Debt," and "767 Auto Leasing LLC" in Note 10, "Related Party Transactions," for further information.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Revenues:
|
|
|
|
||||
|
Worldwide vehicle rental
|
$
|
1,749
|
|
|
$
|
1,953
|
|
|
All other operations
|
174
|
|
|
154
|
|
||
|
Total revenues
|
1,923
|
|
|
2,107
|
|
||
|
Expenses:
|
|
|
|
|
|
||
|
Direct vehicle and operating
|
1,241
|
|
|
1,266
|
|
||
|
Depreciation of revenue earning vehicles and lease charges
|
677
|
|
|
592
|
|
||
|
Selling, general and administrative
|
208
|
|
|
234
|
|
||
|
Interest expense, net:
|
|
|
|
||||
|
Vehicle
|
118
|
|
|
112
|
|
||
|
Non-vehicle
|
55
|
|
|
69
|
|
||
|
Total interest expense, net
|
173
|
|
|
181
|
|
||
|
Other (income) expense, net
|
(17
|
)
|
|
(19
|
)
|
||
|
Total expenses
|
2,282
|
|
|
2,254
|
|
||
|
Income (loss) before income taxes
|
(359
|
)
|
|
(147
|
)
|
||
|
Income tax (provision) benefit
|
3
|
|
|
1
|
|
||
|
Net income (loss)
|
(356
|
)
|
|
(146
|
)
|
||
|
Net (income) loss attributable to noncontrolling interests
|
1
|
|
|
1
|
|
||
|
Net income (loss) attributable to Hertz
|
$
|
(355
|
)
|
|
$
|
(145
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Net income (loss)
|
$
|
(356
|
)
|
|
$
|
(146
|
)
|
|
Other comprehensive income (loss):
|
|
|
|
||||
|
Foreign currency translation adjustments
|
(41
|
)
|
|
8
|
|
||
|
Net gain (loss) on defined benefit pension plans
|
1
|
|
|
(1
|
)
|
||
|
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans
|
1
|
|
|
1
|
|
||
|
Total other comprehensive income (loss) before income taxes
|
(39
|
)
|
|
8
|
|
||
|
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans
|
—
|
|
|
(1
|
)
|
||
|
Total other comprehensive income (loss)
|
(39
|
)
|
|
7
|
|
||
|
Total comprehensive income (loss)
|
(395
|
)
|
|
(139
|
)
|
||
|
Comprehensive (income) loss attributable to noncontrolling interests
|
1
|
|
|
1
|
|
||
|
Comprehensive income (loss) attributable to Hertz
|
$
|
(394
|
)
|
|
$
|
(138
|
)
|
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital |
|
Due From Affiliate
|
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Stockholder's Equity Attributable to Hertz
|
|
Noncontrolling Interests
|
|
Total Stockholder's Equity
|
|||||||||||||||||
|
Balance as of:
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
December 31, 2018
|
100
|
|
|
$
|
—
|
|
|
$
|
3,187
|
|
|
$
|
(52
|
)
|
|
$
|
(1,884
|
)
|
|
$
|
(192
|
)
|
|
$
|
1,059
|
|
|
$
|
59
|
|
|
$
|
1,118
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
—
|
|
|
(145
|
)
|
|
(1
|
)
|
|
(146
|
)
|
||||||||
|
Due from Hertz Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
|
Stock-based compensation charges
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
|
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||||||
|
March 31, 2019
|
100
|
|
|
$
|
—
|
|
|
$
|
3,190
|
|
|
$
|
(56
|
)
|
|
$
|
(2,029
|
)
|
|
$
|
(185
|
)
|
|
$
|
920
|
|
|
$
|
83
|
|
|
$
|
1,003
|
|
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital |
|
Due From Affiliate
|
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Stockholder's Equity Attributable to Hertz
|
|
Noncontrolling Interests
|
|
Total Stockholder's Equity
|
|||||||||||||||||
|
Balance as of:
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
December 31, 2019
|
100
|
|
|
$
|
—
|
|
|
$
|
3,955
|
|
|
$
|
(64
|
)
|
|
$
|
(1,937
|
)
|
|
$
|
(189
|
)
|
|
$
|
1,765
|
|
|
$
|
119
|
|
|
$
|
1,884
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(355
|
)
|
|
—
|
|
|
(355
|
)
|
|
(1
|
)
|
|
(356
|
)
|
||||||||
|
Due from Hertz Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||||
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
(39
|
)
|
|
—
|
|
|
(39
|
)
|
||||||||
|
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||||
|
March 31, 2020
|
100
|
|
|
$
|
—
|
|
|
$
|
3,955
|
|
|
$
|
(67
|
)
|
|
$
|
(2,292
|
)
|
|
$
|
(228
|
)
|
|
$
|
1,368
|
|
|
$
|
119
|
|
|
$
|
1,487
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Cash flows from operating activities:
|
|
|
|
||||
|
Net income (loss)
|
$
|
(356
|
)
|
|
$
|
(146
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
|
Depreciation and reserves for revenue earning vehicles
|
733
|
|
|
644
|
|
||
|
Depreciation and amortization, non-vehicle
|
53
|
|
|
48
|
|
||
|
Amortization of deferred financing costs and debt discount (premium)
|
12
|
|
|
14
|
|
||
|
Stock-based compensation charges
|
—
|
|
|
3
|
|
||
|
Provision for receivables allowance
|
15
|
|
|
10
|
|
||
|
Deferred income taxes, net
|
(12
|
)
|
|
(4
|
)
|
||
|
(Gain) loss on marketable securities
|
—
|
|
|
(11
|
)
|
||
|
(Gain) loss on sale of non-vehicle capital assets
|
(21
|
)
|
|
(8
|
)
|
||
|
(Gain) loss on derivatives
|
—
|
|
|
(5
|
)
|
||
|
Other
|
3
|
|
|
—
|
|
||
|
Changes in assets and liabilities:
|
|
|
|
|
|
||
|
Non-vehicle receivables
|
226
|
|
|
(33
|
)
|
||
|
Prepaid expenses and other assets
|
(61
|
)
|
|
(55
|
)
|
||
|
Operating lease right-of-use assets
|
100
|
|
|
90
|
|
||
|
Non-vehicle accounts payable
|
(86
|
)
|
|
32
|
|
||
|
Accrued liabilities
|
(59
|
)
|
|
25
|
|
||
|
Accrued taxes, net
|
(14
|
)
|
|
10
|
|
||
|
Operating lease liabilities
|
(66
|
)
|
|
(94
|
)
|
||
|
Self-insured liabilities
|
(17
|
)
|
|
(4
|
)
|
||
|
Net cash provided by (used in) operating activities
|
450
|
|
|
516
|
|
||
|
Cash flows from investing activities:
|
|
|
|
|
|
||
|
Revenue earning vehicles expenditures
|
(4,346
|
)
|
|
(3,973
|
)
|
||
|
Proceeds from disposal of revenue earning vehicles
|
2,212
|
|
|
2,153
|
|
||
|
Non-vehicle capital asset expenditures
|
(59
|
)
|
|
(54
|
)
|
||
|
Proceeds from non-vehicle capital assets disposed of or to be disposed of
|
23
|
|
|
19
|
|
||
|
Sales of marketable securities
|
74
|
|
|
—
|
|
||
|
Other
|
(1
|
)
|
|
—
|
|
||
|
Net cash provided by (used in) investing activities
|
(2,097
|
)
|
|
(1,855
|
)
|
||
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
|
Cash flows from financing activities:
|
|
|
|
||||
|
Proceeds from issuance of vehicle debt
|
3,661
|
|
|
3,667
|
|
||
|
Repayments of vehicle debt
|
(2,538
|
)
|
|
(2,736
|
)
|
||
|
Proceeds from issuance of non-vehicle debt
|
1,440
|
|
|
341
|
|
||
|
Repayments of non-vehicle debt
|
(851
|
)
|
|
(344
|
)
|
||
|
Payment of financing costs
|
(9
|
)
|
|
(12
|
)
|
||
|
Advances to Hertz Holdings
|
(3
|
)
|
|
(4
|
)
|
||
|
Contributions from noncontrolling interests
|
—
|
|
|
25
|
|
||
|
Net cash provided by (used in) financing activities
|
1,700
|
|
|
937
|
|
||
|
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(4
|
)
|
|
(2
|
)
|
||
|
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
|
49
|
|
|
(404
|
)
|
||
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
1,360
|
|
|
1,410
|
|
||
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
1,409
|
|
|
$
|
1,006
|
|
|
|
|
|
|
||||
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Interest, net of amounts capitalized:
|
|
|
|
||||
|
Vehicle
|
$
|
103
|
|
|
$
|
87
|
|
|
Non-vehicle
|
26
|
|
|
29
|
|
||
|
Income taxes, net of refunds
|
5
|
|
|
6
|
|
||
|
Supplemental disclosures of non-cash information:
|
|
|
|
|
|
||
|
Purchases of revenue earning vehicles included in accounts payable, net of incentives
|
$
|
200
|
|
|
$
|
431
|
|
|
Sales of revenue earning vehicles included in vehicle receivables
|
1,043
|
|
|
365
|
|
||
|
Purchases of non-vehicle capital assets included in accounts payable
|
32
|
|
|
45
|
|
||
|
Facility
|
|
Weighted-Average Interest Rate
as of March 31, 2020 |
|
Fixed or
Floating Interest Rate |
|
Maturity
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
Non-Vehicle Debt
|
|
|
|
|
|
|
|
|
|
|
||||
|
Senior Term Loan
|
|
3.74%
|
|
Floating
|
|
6/2023
|
|
$
|
656
|
|
|
$
|
660
|
|
|
Senior RCF
|
|
3.99%
|
|
Floating
|
|
6/2021
|
|
595
|
|
|
—
|
|
||
|
Senior Notes(1)
|
|
6.11%
|
|
Fixed
|
|
10/2022-1/2028
|
|
2,700
|
|
|
2,700
|
|
||
|
Senior Second Priority Secured Notes
|
|
7.63%
|
|
Fixed
|
|
6/2022
|
|
350
|
|
|
350
|
|
||
|
Promissory Notes
|
|
7.00%
|
|
Fixed
|
|
1/2028
|
|
27
|
|
|
27
|
|
||
|
Other Non-Vehicle Debt
|
|
5.71%
|
|
Fixed
|
|
Various
|
|
21
|
|
|
18
|
|
||
|
Unamortized Debt Issuance Costs and Net (Discount) Premium
|
|
|
|
|
|
|
|
(33
|
)
|
|
(34
|
)
|
||
|
Total Non-Vehicle Debt
|
|
|
|
|
|
|
|
4,316
|
|
|
3,721
|
|
||
|
Vehicle Debt
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF II U.S. ABS Program
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF II U.S. Vehicle Variable Funding Notes
|
|
|
|
|
|
|
|
|
||||||
|
HVF II Series 2013-A(2)
|
|
2.71%
|
|
Floating
|
|
3/2022
|
|
4,704
|
|
|
2,644
|
|
||
|
|
|
|
|
|
|
|
|
4,704
|
|
|
2,644
|
|
||
|
HVF II U.S. Vehicle Medium Term Notes
|
|
|
|
|
|
|
|
|
||||||
|
HVF II Series 2015-1(2)
|
|
N/A
|
|
Fixed
|
|
3/2020
|
|
—
|
|
|
780
|
|
||
|
HVF II Series 2015-3(2)
|
|
3.10%
|
|
Fixed
|
|
9/2020
|
|
371
|
|
|
371
|
|
||
|
HVF II Series 2016-2(2)
|
|
3.41%
|
|
Fixed
|
|
3/2021
|
|
595
|
|
|
595
|
|
||
|
HVF II Series 2016-4(2)
|
|
3.09%
|
|
Fixed
|
|
7/2021
|
|
424
|
|
|
424
|
|
||
|
HVF II Series 2017-1(2)
|
|
3.38%
|
|
Fixed
|
|
10/2020
|
|
450
|
|
|
450
|
|
||
|
HVF II Series 2017-2(2)
|
|
3.74%
|
|
Fixed
|
|
10/2022
|
|
370
|
|
|
350
|
|
||
|
HVF II Series 2018-1(2)
|
|
3.54%
|
|
Fixed
|
|
2/2023
|
|
1,058
|
|
|
1,000
|
|
||
|
HVF II Series 2018-2(2)
|
|
3.94%
|
|
Fixed
|
|
6/2021
|
|
213
|
|
|
200
|
|
||
|
HVF II Series 2018-3(2)
|
|
4.29%
|
|
Fixed
|
|
7/2023
|
|
213
|
|
|
200
|
|
||
|
HVF II Series 2019-1(2)
|
|
4.00%
|
|
Fixed
|
|
3/2022
|
|
745
|
|
|
700
|
|
||
|
HVF II Series 2019-2(2)
|
|
3.67%
|
|
Fixed
|
|
5/2024
|
|
799
|
|
|
750
|
|
||
|
HVF II Series 2019-3(2)
|
|
2.91%
|
|
Fixed
|
|
12/2024
|
|
800
|
|
|
800
|
|
||
|
|
|
|
|
|
|
|
|
6,038
|
|
|
6,620
|
|
||
|
Donlen U.S. ABS Program
|
|
|
|
|
|
|
|
|
|
|
||||
|
HFLF Variable Funding Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HFLF Series 2013-2(2)
|
|
2.56%
|
|
Floating
|
|
3/2022
|
|
450
|
|
|
286
|
|
||
|
|
|
|
|
|
|
|
|
450
|
|
|
286
|
|
||
|
HFLF Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HFLF Series 2016-1(3)
|
|
N/A
|
|
Both
|
|
1/2020-2/2020
|
|
—
|
|
|
34
|
|
||
|
HFLF Series 2017-1(3)
|
|
2.54%
|
|
Both
|
|
4/2020-2/2021
|
|
174
|
|
|
229
|
|
||
|
HFLF Series 2018-1(3)
|
|
2.78%
|
|
Both
|
|
4/2020-4/2022
|
|
401
|
|
|
462
|
|
||
|
HFLF Series 2019-1(3)
|
|
2.41%
|
|
Both
|
|
4/2020-1/2023
|
|
613
|
|
|
650
|
|
||
|
|
|
|
|
|
|
|
|
1,188
|
|
|
1,375
|
|
||
|
Facility
|
|
Weighted-Average Interest Rate
as of March 31, 2020 |
|
Fixed or
Floating Interest Rate |
|
Maturity
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
Vehicle Debt - Other
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. Vehicle RCF
|
|
3.61%
|
|
Floating
|
|
6/2021
|
|
146
|
|
|
146
|
|
||
|
European Vehicle Notes(4)
|
|
5.07%
|
|
Fixed
|
|
10/2021-3/2023
|
|
808
|
|
|
810
|
|
||
|
European ABS(2)
|
|
1.60%
|
|
Floating
|
|
11/2021
|
|
530
|
|
|
766
|
|
||
|
Hertz Canadian Securitization(2)
|
|
3.10%
|
|
Floating
|
|
3/2021
|
|
214
|
|
|
241
|
|
||
|
Donlen Canadian Securitization(2)
|
|
2.59%
|
|
Floating
|
|
12/2022
|
|
27
|
|
|
24
|
|
||
|
Australian Securitization(2)
|
|
2.11%
|
|
Floating
|
|
6/2021
|
|
147
|
|
|
177
|
|
||
|
New Zealand RCF
|
|
3.82%
|
|
Floating
|
|
6/2021
|
|
45
|
|
|
50
|
|
||
|
U.K. Financing Facility
|
|
2.59%
|
|
Floating
|
|
4/2020-2/2023
|
|
201
|
|
|
247
|
|
||
|
Other Vehicle Debt
|
|
3.78%
|
|
Floating
|
|
4/2020-11/2024
|
|
23
|
|
|
29
|
|
||
|
|
|
|
|
|
|
|
|
2,141
|
|
|
2,490
|
|
||
|
Unamortized Debt Issuance Costs and Net (Discount) Premium
|
|
|
|
|
|
|
|
(83
|
)
|
|
(47
|
)
|
||
|
Total Vehicle Debt
|
|
|
|
|
|
|
|
14,438
|
|
|
13,368
|
|
||
|
Total Debt
|
|
|
|
|
|
|
|
$
|
18,754
|
|
|
$
|
17,089
|
|
|
(1)
|
References to the "Senior Notes" include the series of Hertz's unsecured senior notes set forth in the table below. Outstanding principal amounts for each such series of the Senior Notes is also specified below:
|
|
(In millions)
|
Outstanding Principal
|
||||||
|
Senior Notes
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
6.250% Senior Notes due October 2022
|
500
|
|
|
500
|
|
||
|
5.500% Senior Notes due October 2024
|
800
|
|
|
800
|
|
||
|
7.125% Senior Notes due August 2026
|
500
|
|
|
500
|
|
||
|
6.000% Senior Notes due January 2028
|
900
|
|
|
900
|
|
||
|
|
$
|
2,700
|
|
|
$
|
2,700
|
|
|
(2)
|
Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal final maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness expect the outstanding principal of the relevant indebtedness to be repaid in full. The legal final maturity date is the date on which the outstanding principal of the relevant indebtedness is legally due and payable in full.
|
|
(3)
|
In the case of the Hertz Fleet Lease Funding LP ("HFLF") Medium Term Notes, such notes are repayable from cash flows derived from third-party leases comprising the underlying HFLF collateral pool. The initial maturity date referenced for each series of HFLF Medium Term Notes represents the end of the revolving period for such series, at which time the related notes begin to amortize monthly by an amount equal to the lease collections payable to that series. To the extent the revolving period already has ended, the initial maturity date reflected is April 2020. The second maturity date referenced for each series of HFLF Medium Term Notes represents the date by which Hertz and the investors in the related series expect such series of notes to be repaid in full, which is based upon various assumptions made at the time of pricing of such notes, including the contractual amortization of the underlying leases as well as the assumed rate of prepayments of such leases. Such maturity reference is to the “expected final maturity date” as opposed to the subsequent “legal final maturity date.” The legal final maturity date is the date on which the relevant indebtedness is legally due and payable. Although the underlying lease cash flows that support the repayment of the HFLF Medium Term Notes may vary, the cash flows generally are expected to approximate a straight-line amortization of the related notes from the initial maturity date through the expected final maturity date.
|
|
(4)
|
References to the "European Vehicle Notes" include the series of Hertz Holdings Netherlands B.V.'s, an indirect wholly-owned subsidiary of Hertz organized under the laws of the Netherlands (“HHN BV”), unsecured senior notes (converted from Euros to U.S. dollars at a rate of 1.11 to 1 and 1.12 to 1 as of March 31, 2020 and December 31, 2019, respectively) set forth in the table below. Outstanding principal amounts for each such series of the European Vehicle Notes is also specified below:
|
|
(In millions)
|
Outstanding Principal
|
||||||
|
European Vehicle Notes
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
4.125% Senior Notes due October 2021
|
$
|
251
|
|
|
$
|
251
|
|
|
5.500% Senior Notes due March 2023
|
557
|
|
|
559
|
|
||
|
|
$
|
808
|
|
|
$
|
810
|
|
|
(In millions)
|
|
Aggregate Principal Amount
|
||
|
HVF II Series 2017-2 Class D Notes
|
|
$
|
20
|
|
|
HVF II Series 2018-1 Class D Notes
|
|
58
|
|
|
|
HVF II Series 2018-2 Class D Notes
|
|
13
|
|
|
|
HVF II Series 2018-3 Class D Notes
|
|
13
|
|
|
|
HVF II Series 2019-1 Class D Notes
|
|
45
|
|
|
|
HVF II Series 2019-2 Class D Notes
|
|
49
|
|
|
|
Total
|
|
$
|
198
|
|
|
(In millions)
|
Remaining
Capacity |
|
Availability Under
Borrowing Base Limitation |
||||
|
Non-Vehicle Debt
|
|
|
|
||||
|
Senior RCF
|
$
|
25
|
|
|
$
|
25
|
|
|
Letter of Credit Facility
|
5
|
|
|
5
|
|
||
|
Alternative Letter of Credit Facility
|
—
|
|
|
—
|
|
||
|
Total Non-Vehicle Debt
|
30
|
|
|
30
|
|
||
|
Vehicle Debt
|
|
|
|
|
|
||
|
U.S. Vehicle RCF
|
—
|
|
|
—
|
|
||
|
HVF II U.S. Vehicle Variable Funding Notes
|
151
|
|
|
—
|
|
||
|
HFLF Variable Funding Notes
|
50
|
|
|
9
|
|
||
|
European ABS
|
695
|
|
|
138
|
|
||
|
Hertz Canadian Securitization
|
37
|
|
|
—
|
|
||
|
Donlen Canadian Securitization
|
9
|
|
|
—
|
|
||
|
Australian Securitization
|
19
|
|
|
—
|
|
||
|
U.K. Financing Facility
|
110
|
|
|
—
|
|
||
|
New Zealand RCF
|
—
|
|
|
—
|
|
||
|
Total Vehicle Debt
|
1,071
|
|
|
147
|
|
||
|
Total
|
$
|
1,101
|
|
|
$
|
177
|
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions)
|
2020
|
|
2019
|
||||
|
Operating lease income from vehicle rentals
|
$
|
1,637
|
|
|
$
|
1,800
|
|
|
Operating lease income from fleet leasing
|
169
|
|
|
158
|
|
||
|
Variable operating lease income
|
33
|
|
|
67
|
|
||
|
Revenue accounted for under Topic 842
|
1,839
|
|
|
2,025
|
|
||
|
Revenue accounted for under Topic 606
|
84
|
|
|
82
|
|
||
|
Total revenues
|
$
|
1,923
|
|
|
$
|
2,107
|
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions, except per share data)
|
2020
|
|
2019
|
||||
|
Numerator:
|
|
|
|
||||
|
Net income (loss) attributable to Hertz Global
|
$
|
(356
|
)
|
|
$
|
(147
|
)
|
|
Denominator:
|
|
|
|
||||
|
Basic weighted-average shares outstanding (excluding the impact of the Rights Offering)
|
142
|
|
|
84
|
|
||
|
Rights Offering adjustment(1)
|
—
|
|
|
12
|
|
||
|
Basic weighted-average shares outstanding
|
142
|
|
|
96
|
|
||
|
Dilutive stock options, RSUs and PSUs
|
—
|
|
|
—
|
|
||
|
Diluted weighted-average shares outstanding
|
142
|
|
|
96
|
|
||
|
Antidilutive stock options, RSUs, PSUs and PSAs
|
2
|
|
|
2
|
|
||
|
Earnings (loss) per share:
|
|
|
|
||||
|
Basic earnings (loss) per share
|
$
|
(2.50
|
)
|
|
$
|
(1.54
|
)
|
|
Diluted earnings (loss) per share
|
$
|
(2.50
|
)
|
|
$
|
(1.54
|
)
|
|
(1)
|
Reflects the impact of the Rights Offering subscription period.
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
|
Money market funds and time deposits
|
$
|
706
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
706
|
|
|
$
|
531
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
531
|
|
|
Marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74
|
|
|
—
|
|
|
—
|
|
|
74
|
|
||||||||
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||
|
(In millions)
|
Nominal Unpaid Principal Balance
|
|
Aggregate Fair Value (1)
|
|
Nominal Unpaid Principal Balance
|
|
Aggregate Fair Value
|
||||||||
|
Non-Vehicle Debt
|
$
|
4,349
|
|
|
$
|
2,872
|
|
|
$
|
3,755
|
|
|
$
|
3,840
|
|
|
Vehicle Debt
|
14,521
|
|
|
13,783
|
|
|
13,415
|
|
|
13,529
|
|
||||
|
Total
|
$
|
18,870
|
|
|
$
|
16,655
|
|
|
$
|
17,170
|
|
|
$
|
17,369
|
|
|
(1)
|
The decrease in the aggregate fair value of the Company's debt is due to the impact from COVID-19, as disclosed in Note 1, "Background."
|
|
•
|
U.S. Rental Car ("U.S. RAC") - rental of vehicles (cars, crossovers, vans and light trucks), as well as sales of value-added services, in the U.S. and consists of the Company's U.S. operating segment;
|
|
•
|
International Rental Car ("International RAC") - rental and leasing of vehicles (cars, vans, crossovers and light trucks), as well as sales of value-added services, internationally and consists of the Company's Europe and Other International operating segments, which are aggregated into a reportable segment based primarily upon similar economic characteristics, products and services, customers, delivery methods and general regulatory environments;
|
|
•
|
All Other Operations - primarily consists of the Company's Donlen business, which provides vehicle leasing and fleet management services, together with other business activities which represent less than 1% of revenues and expenses of the segment.
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions)
|
2020
|
|
2019
|
||||
|
Revenues
|
|
|
|
||||
|
U.S. Rental Car
|
$
|
1,381
|
|
|
$
|
1,520
|
|
|
International Rental Car
|
368
|
|
|
433
|
|
||
|
All Other Operations
|
174
|
|
|
154
|
|
||
|
Total Hertz Global and Hertz
|
$
|
1,923
|
|
|
$
|
2,107
|
|
|
Depreciation of revenue earning vehicles and lease charges
|
|
|
|
||||
|
U.S. Rental Car
|
$
|
463
|
|
|
$
|
386
|
|
|
International Rental Car
|
89
|
|
|
97
|
|
||
|
All Other Operations
|
125
|
|
|
109
|
|
||
|
Total Hertz Global and Hertz
|
$
|
677
|
|
|
$
|
592
|
|
|
Adjusted EBITDA
|
|
|
|
||||
|
U.S. Rental Car
|
$
|
(199
|
)
|
|
$
|
7
|
|
|
International Rental Car
|
(45
|
)
|
|
(13
|
)
|
||
|
All Other Operations
|
24
|
|
|
22
|
|
||
|
Corporate
|
(23
|
)
|
|
(20
|
)
|
||
|
Total Hertz Global and Hertz
|
$
|
(243
|
)
|
|
$
|
(4
|
)
|
|
(In millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
Total assets
|
|
|
|
||||
|
U.S. Rental Car
|
$
|
17,833
|
|
|
$
|
16,459
|
|
|
International Rental Car
|
4,216
|
|
|
4,563
|
|
||
|
All Other Operations
|
2,095
|
|
|
2,115
|
|
||
|
Corporate
|
1,698
|
|
|
1,490
|
|
||
|
Total Hertz Global and Hertz(1)
|
$
|
25,842
|
|
|
$
|
24,627
|
|
|
(1)
|
The consolidated total assets of Hertz Global and Hertz as of March 31, 2020 and December 31, 2019 include total assets of VIEs of $1.1 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. See "Special Purpose Entities" in Note 4, "Debt," and "767 Auto Leasing LLC" in Note 10, "Related Party Transactions," for further information.
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions)
|
2020
|
|
2019
|
||||
|
Adjusted EBITDA:
|
|
|
|
||||
|
U.S. Rental Car
|
$
|
(199
|
)
|
|
$
|
7
|
|
|
International Rental Car
|
(45
|
)
|
|
(13
|
)
|
||
|
All Other Operations
|
24
|
|
|
22
|
|
||
|
Total reportable segments
|
(220
|
)
|
|
16
|
|
||
|
Corporate(1)
|
(23
|
)
|
|
(20
|
)
|
||
|
Total Hertz Global
|
(243
|
)
|
|
(4
|
)
|
||
|
Adjustments:
|
|
|
|
||||
|
Non-vehicle depreciation and amortization
|
(53
|
)
|
|
(49
|
)
|
||
|
Non-vehicle debt interest, net
|
(57
|
)
|
|
(71
|
)
|
||
|
Vehicle debt-related charges(2)
|
(9
|
)
|
|
(10
|
)
|
||
|
Restructuring and restructuring related charges(3)
|
(7
|
)
|
|
(7
|
)
|
||
|
Information technology and finance transformation costs(4)
|
(17
|
)
|
|
(23
|
)
|
||
|
Other items(5)
|
25
|
|
|
15
|
|
||
|
Income (loss) before income taxes
|
$
|
(361
|
)
|
|
$
|
(149
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions)
|
2020
|
|
2019
|
||||
|
Adjusted EBITDA:
|
|
|
|
||||
|
U.S. Rental Car
|
$
|
(199
|
)
|
|
$
|
7
|
|
|
International Rental Car
|
(45
|
)
|
|
(13
|
)
|
||
|
All Other Operations
|
24
|
|
|
22
|
|
||
|
Total reportable segments
|
(220
|
)
|
|
16
|
|
||
|
Corporate(1)
|
(23
|
)
|
|
(20
|
)
|
||
|
Total Hertz
|
(243
|
)
|
|
(4
|
)
|
||
|
Adjustments:
|
|
|
|
||||
|
Non-vehicle depreciation and amortization
|
(53
|
)
|
|
(49
|
)
|
||
|
Non-vehicle debt interest, net
|
(55
|
)
|
|
(69
|
)
|
||
|
Vehicle debt-related charges(2)
|
(9
|
)
|
|
(10
|
)
|
||
|
Restructuring and restructuring related charges(3)
|
(7
|
)
|
|
(7
|
)
|
||
|
Information technology and finance transformation costs(4)
|
(17
|
)
|
|
(23
|
)
|
||
|
Other items(5)
|
25
|
|
|
15
|
|
||
|
Income (loss) before income taxes
|
$
|
(359
|
)
|
|
$
|
(147
|
)
|
|
(1)
|
Represents other reconciling items primarily consisting of general corporate expenses, non-vehicle interest expense, as well as other business activities.
|
|
(2)
|
Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
|
|
(3)
|
Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.
|
|
(4)
|
Represents costs associated with the Company’s information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes.
|
|
(5)
|
Represents miscellaneous items, including non-cash stock-based compensation charges, and amounts attributable to noncontrolling interests. In 2020, includes a $20 million gain on the sale of non-vehicle capital assets and $13 million in unrealized gains on derivative financial instruments. In 2019, includes an $11 million gain on marketable securities and an $8 million gain on the sale of non-vehicle capital assets.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
•
|
Adjusted Corporate EBITDA - important non-GAAP measure to management because it allows management to assess the operational performance of our business, exclusive of certain items, and allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally. Adjusted EBITDA, the segment measure of profitability and accordingly a GAAP measure, is calculated exclusive of certain items which are largely consistent with those used in the calculation of Adjusted Corporate EBITDA.
|
|
•
|
Depreciation Per Unit Per Month - important key metric to management and investors as depreciation of revenue earning vehicles and lease charges is one of our largest expenses for the vehicle rental business and is driven by the number of vehicles, expected residual values at the expected time of disposal and expected hold period of the vehicles. Depreciation Per Unit Per Month is reflective of how we are managing the costs of our vehicles and facilitates a comparison with other participants in the vehicle rental industry.
|
|
•
|
Total Revenue Per Transaction Day ("Total RPD," also referred to as "pricing") - important key metric to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
|
|
•
|
Total Revenue Per Unit Per Month ("Total RPU") - important key metric to management and investors as it provides a measure of revenue productivity relative to the total number of vehicles in our fleet whether owned or leased ("Average Vehicles" or "fleet capacity").
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
Transaction Days - important key metric to management and investors as it represents the number of revenue generating days ("volume"). It is used as a component to measure Total RPD and Vehicle Utilization. Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.
|
|
•
|
Vehicle Utilization - important key metric to management and investors because it is the measurement of the proportion of our vehicles that are being used to generate revenues relative to fleet capacity. Higher Vehicle Utilization means more vehicles are being utilized to generate revenues.
|
|
◦
|
Reservation bookings are significantly behind where they have historically been for the spring and summer months, our peak season, and we anticipate a material adverse impact on our results of operations on a portion or all of our peak season. This is a result of the decrease in business and leisure travel because of COVID-19, and the duration of this pandemic is unclear.
|
|
◦
|
The pandemic has had a substantial reduction to airline travel and a large portion of our business is generated at airport locations. Consequently, we anticipate a material adverse impact on our results of operations until such travel returns to historical levels.
|
|
◦
|
We expect a material reduction in our commitments to purchase vehicles with approximately a $4.0 billion reduction from original commitments in our U.S. RAC segment during the remainder of 2020.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
◦
|
We leveraged our ability to accelerate the timing for the return of program vehicles in order to reduce fleet; and in March 2020, we returned approximately 24,000 program vehicles in our U.S. RAC segment compared to 6,000 program vehicles in March of 2019.
|
|
◦
|
The conditions of the vehicle resale market have been very challenging. As of March 31, 2020, we had approximately 85% non-program vehicles in our worldwide fleet. The slowing demand in the used-vehicle market due to current conditions in the economy has negatively impacted vehicle values and the value declines are expected to continue, which could result in a substantial loss on the sale of our non-program vehicles. This may cause us to depreciate these assets at a more accelerated rate than we would have expected and require increased collateral enhancement payments to our ABS lenders.
|
|
◦
|
The downturn in our rental car business has resulted in excess fleet, which we must park in certain overflow parking areas.
|
|
◦
|
The pandemic has had a material impact on the travel industry and our operations. Although we experienced strong revenue growth in January and February of 2020 as compared to 2019, if the business and leisure travel industry does not recover in the summer of 2020 or we cannot arrange for additional financing or additional waivers and forbearances with respect to our outstanding debt, we may not be able to meet the obligations of our outstanding debt when it becomes due, or successfully refinance it prior to maturity.
|
|
◦
|
To mitigate the impact from the pandemic, we began aggressively managing costs, including the implementation of employee furlough programs affecting approximately 20,000 employees worldwide, actively negotiating to abate or defer our airport rent and concession payments, substantially reducing capital expenditures and eliminating discretionary marketing spend. During the three months ended March 31, 2020, we also borrowed $595 million under our Senior RCF, and in April 2020, we initiated a restructuring program affecting approximately 10,000 employees in our U.S. RAC segment and U.S. corporate operations, the majority of which were previously furloughed.
|
|
◦
|
Although we took aggressive action to eliminate costs, we face significant ongoing monthly expenses, including monthly payments under our Operating Lease, pursuant to which Hertz leases vehicles which we use in our U.S. rental car operations. During April 2020, we engaged in discussions with various creditors to obtain relief from our obligations to make full rent payments under the Operating Lease. While such discussions were ongoing, to preserve liquidity, on April 27, 2020, Hertz did not make certain payments in accordance with the Operating Lease. As a result of the failure to make the full rent payments on April 27th, as of May 5, 2020 an amortization event was in effect for all series of notes issued by HVF II and a liquidation event was in effect with respect to the Series 2013-A Notes issued by HVF II. As a result of the amortization event, and notwithstanding the Forbearance Agreement, proceeds from the sales of vehicles that collateralize the notes issued by HVF II must be applied to the payment of principal and interest under those notes and will not be available to finance new vehicle acquisitions for Hertz. However, in light of the impact of the COVID-19 global pandemic on the travel industry, Hertz believes it will not need to acquire new vehicles for its fleet through the remainder of 2020. Refer to Part I, Item 1 of this Quarterly Report on Form 10-Q in Note 1, "Background" for additional information.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
Worldwide vehicle rental revenues - revenues from all company-operated vehicle rental operations, including charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and revenues associated with value-added services, including the sale of loss or collision damage waivers, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and other products and fees. Also included are ancillary revenues associated with retail vehicle sales and certain royalty fees from our franchisees (such fees are less than 2% of total revenues each period); and
|
|
•
|
All other operations revenues - revenues from vehicle leasing and fleet management services by our Donlen business and other business activities.
|
|
•
|
Direct vehicle and operating expense ("DOE"), primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservation costs; and other costs relating to the operation and rental of revenue earning vehicles, such as damage, maintenance and fuel costs;
|
|
•
|
Depreciation expense and lease charges relating to revenue earning vehicles, including costs associated with the disposal of vehicles;
|
|
•
|
Selling, general and administrative expense ("SG&A"), which includes advertising and administrative personnel costs, along with costs for information technology and finance transformation programs; and
|
|
•
|
Interest expense, net.
|
|
•
|
U.S. RAC - Rental of vehicles, as well as sales of value-added services, in the U.S.;
|
|
•
|
International RAC - Rental and leasing of vehicles, as well as sales of value-added services, internationally; and
|
|
•
|
All Other Operations - Comprised primarily of our Donlen business, which provides vehicle leasing and fleet management services, and other business activities.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
◦
|
1Q 2020 versus 1Q 2019:
|
|
▪
|
Total revenues decreased $138 million, or 9%
|
|
▪
|
Total RPU decreased 12% and Total RPD increased 2%
|
|
▪
|
Transaction Days decreased 11%
|
|
▪
|
Depreciation of revenue earning vehicles and lease charges increased 20% to $463 million
|
|
▪
|
Depreciation Per Unit Per Month increased 16% to $298
|
|
▪
|
Vehicle Utilization decreased to 67% from 79%
|
|
▪
|
DOE as a percentage of total revenues increased to 70% from 64%
|
|
▪
|
SG&A as a percentage of total revenues was flat at 8%
|
|
◦
|
1Q 2020 versus 1Q 2019:
|
|
▪
|
Total revenues decreased $65 million, or 15%, and decreased $53 million, or 13%, excluding the impact of foreign currency exchange at average rates ("fx")
|
|
▪
|
Total RPU decreased 9% and Total RPD was flat
|
|
▪
|
Transaction Days decreased 12%
|
|
▪
|
Depreciation of revenue earning vehicles and lease charges decreased 8% to $89 million, and decreased $5 million, or 6%, excluding fx
|
|
▪
|
Depreciation Per Unit Per Month decreased 2% to $204
|
|
▪
|
Vehicle Utilization decreased to 66% from 74%
|
|
▪
|
DOE as a percentage of total revenues increased to 72% from 66%
|
|
▪
|
SG&A as a percentage of total revenues increased to 13% from 12%
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended March 31,
|
|
Percent Increase/(Decrease)
|
|||||||
|
($ In millions)
|
2020
|
|
2019
|
|
||||||
|
Total revenues
|
$
|
1,923
|
|
|
$
|
2,107
|
|
|
(9
|
)%
|
|
Direct vehicle and operating expenses
|
1,241
|
|
|
1,266
|
|
|
(2
|
)
|
||
|
Depreciation of revenue earning vehicles and lease charges
|
677
|
|
|
592
|
|
|
14
|
|
||
|
Selling, general and administrative expenses
|
208
|
|
|
234
|
|
|
(11
|
)
|
||
|
Interest expense, net:
|
|
|
|
|
|
|||||
|
Vehicle
|
118
|
|
|
112
|
|
|
6
|
|
||
|
Non-vehicle
|
55
|
|
|
69
|
|
|
(20
|
)
|
||
|
Interest expense, net
|
173
|
|
|
181
|
|
|
(5
|
)
|
||
|
Other (income) expense, net
|
(17
|
)
|
|
(19
|
)
|
|
(6
|
)
|
||
|
Income (loss) before income taxes
|
(359
|
)
|
|
(147
|
)
|
|
144
|
|
||
|
Income tax (provision) benefit
|
3
|
|
|
1
|
|
|
NM
|
|
||
|
Net income (loss)
|
(356
|
)
|
|
(146
|
)
|
|
143
|
|
||
|
Net (income) loss attributable to noncontrolling interests
|
1
|
|
|
1
|
|
|
(16
|
)
|
||
|
Net income (loss) attributable to Hertz
|
$
|
(355
|
)
|
|
$
|
(145
|
)
|
|
145
|
|
|
Adjusted Corporate EBITDA(a)
|
$
|
(243
|
)
|
|
$
|
(4
|
)
|
|
NM
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
March 31, |
|
Percent Increase/(Decrease)
|
|||||||
|
($ In millions, except as noted)
|
2020
|
|
2019
|
|
||||||
|
Total revenues
|
$
|
1,381
|
|
|
$
|
1,520
|
|
|
(9
|
)%
|
|
Depreciation of revenue earning vehicles and lease charges
|
$
|
463
|
|
|
$
|
386
|
|
|
20
|
|
|
Direct vehicle and operating expenses
|
$
|
969
|
|
|
$
|
976
|
|
|
(1
|
)
|
|
Direct vehicle and operating expenses as a percentage of total revenues
|
70
|
%
|
|
64
|
%
|
|
|
|||
|
Selling, general and administrative expenses
|
$
|
115
|
|
|
$
|
121
|
|
|
(5
|
)
|
|
Selling, general and administrative expenses as a percentage of total revenues
|
8
|
%
|
|
8
|
%
|
|
|
|||
|
Vehicle interest expense
|
$
|
86
|
|
|
$
|
77
|
|
|
12
|
|
|
Adjusted EBITDA
|
$
|
(199
|
)
|
|
$
|
7
|
|
|
NM
|
|
|
Transaction Days (in thousands)(b)
|
31,564
|
|
|
35,582
|
|
|
(11
|
)
|
||
|
Average Vehicles (in whole units)(c)
|
518,580
|
|
|
501,767
|
|
|
3
|
|
||
|
Vehicle Utilization(c)
|
67
|
%
|
|
79
|
%
|
|
|
|||
|
Total RPD (in whole dollars)(d)
|
$
|
42.74
|
|
|
$
|
41.90
|
|
|
2
|
|
|
Total RPU Per Month (in whole dollars)(e)
|
$
|
867
|
|
|
$
|
990
|
|
|
(12
|
)
|
|
Depreciation Per Unit Per Month (in whole dollars)(f)
|
$
|
298
|
|
|
$
|
256
|
|
|
16
|
|
|
Percentage of program vehicles as of period end
|
9
|
%
|
|
9
|
%
|
|
|
|||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
March 31, |
|
Percent Increase/(Decrease)
|
|||||||
|
($ in millions, except as noted)
|
2020
|
|
2019
|
|
||||||
|
Total revenues
|
$
|
368
|
|
|
$
|
433
|
|
|
(15
|
)%
|
|
Depreciation of revenue earning vehicles and lease charges
|
$
|
89
|
|
|
$
|
97
|
|
|
(8
|
)
|
|
Direct vehicle and operating expenses
|
$
|
265
|
|
|
$
|
284
|
|
|
(7
|
)
|
|
Direct vehicle and operating expenses as a percentage of total revenues
|
72
|
%
|
|
66
|
%
|
|
|
|||
|
Selling, general and administrative expenses
|
$
|
48
|
|
|
$
|
54
|
|
|
(12
|
)
|
|
Selling, general and administrative expenses as a percentage of total revenues
|
13
|
%
|
|
12
|
%
|
|
|
|||
|
Vehicle interest expense
|
$
|
21
|
|
|
$
|
23
|
|
|
(7
|
)
|
|
Adjusted EBITDA
|
$
|
(45
|
)
|
|
$
|
(13
|
)
|
|
NM
|
|
|
Transaction Days (in thousands)(b)
|
8,863
|
|
|
10,127
|
|
|
(12
|
)
|
||
|
Average Vehicles (in whole units)(c)
|
147,987
|
|
|
152,747
|
|
|
(3
|
)
|
||
|
Vehicle Utilization(c)
|
66
|
%
|
|
74
|
%
|
|
|
|||
|
Total RPD (in whole dollars)(d)
|
$
|
42.35
|
|
|
$
|
42.25
|
|
|
—
|
|
|
Total RPU Per Month (in whole dollars)(e)
|
$
|
846
|
|
|
$
|
934
|
|
|
(9
|
)
|
|
Depreciation Per Unit Per Month (in whole dollars)(f)
|
$
|
204
|
|
|
$
|
209
|
|
|
(2
|
)
|
|
Percentage of program vehicles as of period end
|
37
|
%
|
|
39
|
%
|
|
|
|||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
March 31, |
|
Percent Increase/(Decrease)
|
|||||||
|
($ in millions)
|
2020
|
|
2019
|
|
||||||
|
Total revenues
|
$
|
174
|
|
|
$
|
154
|
|
|
13
|
%
|
|
Depreciation of revenue earning vehicles and lease charges
|
$
|
125
|
|
|
$
|
109
|
|
|
15
|
|
|
Direct vehicle and operating expenses
|
$
|
7
|
|
|
$
|
6
|
|
|
7
|
|
|
Selling, general and administrative expenses
|
$
|
(4
|
)
|
|
$
|
7
|
|
|
NM
|
|
|
Vehicle interest expense
|
$
|
11
|
|
|
$
|
12
|
|
|
(11
|
)
|
|
Adjusted EBITDA
|
$
|
24
|
|
|
$
|
22
|
|
|
14
|
|
|
Average Vehicles - Donlen
|
201,364
|
|
|
192,799
|
|
|
4
|
|
||
|
(a)
|
Adjusted Corporate EBITDA is calculated as net income (loss) attributable to Hertz or Hertz Global, adjusted for income taxes, non-vehicle depreciation and amortization, non-vehicle debt interest, net, vehicle debt-related charges, loss on extinguishment of vehicle debt, restructuring and restructuring related charges, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs and certain other miscellaneous items. When evaluating our operating performance, investors should not consider Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance determined in accordance with U.S. GAAP. The reconciliations to the most comparable consolidated U.S. GAAP measure are presented below:
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions)
|
2020
|
|
2019
|
||||
|
Net income (loss) attributable to Hertz
|
$
|
(355
|
)
|
|
$
|
(145
|
)
|
|
Adjustments:
|
|
|
|
||||
|
Income tax provision (benefit)
|
(3
|
)
|
|
(1
|
)
|
||
|
Non-vehicle depreciation and amortization
|
53
|
|
|
49
|
|
||
|
Non-vehicle debt interest, net
|
55
|
|
|
69
|
|
||
|
Vehicle debt-related charges(1)
|
9
|
|
|
10
|
|
||
|
Restructuring and restructuring related charges(2)
|
7
|
|
|
7
|
|
||
|
Information technology and finance transformation costs(3)
|
17
|
|
|
23
|
|
||
|
Other items(4)
|
(26
|
)
|
|
(16
|
)
|
||
|
Adjusted Corporate EBITDA
|
$
|
(243
|
)
|
|
$
|
(4
|
)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
March 31, |
||||||
|
(In millions)
|
2020
|
|
2019
|
||||
|
Net income (loss) attributable to Hertz Global
|
$
|
(356
|
)
|
|
$
|
(147
|
)
|
|
Adjustments:
|
|
|
|
||||
|
Income tax provision (benefit)
|
(4
|
)
|
|
(1
|
)
|
||
|
Non-vehicle depreciation and amortization
|
53
|
|
|
49
|
|
||
|
Non-vehicle debt interest, net
|
57
|
|
|
71
|
|
||
|
Vehicle debt-related charges(1)
|
9
|
|
|
10
|
|
||
|
Restructuring and restructuring related charges(2)
|
7
|
|
|
7
|
|
||
|
Information technology and finance transformation costs(3)
|
17
|
|
|
23
|
|
||
|
Other items(4)
|
(26
|
)
|
|
(16
|
)
|
||
|
Adjusted Corporate EBITDA
|
$
|
(243
|
)
|
|
$
|
(4
|
)
|
|
(1)
|
Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
|
|
(2)
|
Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.
|
|
(3)
|
Represents costs associated with our information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize our systems and processes.
|
|
(4)
|
Represents miscellaneous items, including non-cash stock-based compensation charges. In 2020, includes a $20 million gain on the sale of non-vehicle capital assets and $13 million in unrealized gains on derivative financial instruments. In 2019, includes an $11 million gain on marketable securities and an $8 million gain on the sale of non-vehicle capital assets.
|
|
(b)
|
Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.
|
|
(c)
|
Average Vehicles are determined using a simple average of the number of vehicles at the beginning and end of a given period. Among other things, Average Vehicles is used to calculate our Vehicle Utilization which represents the portion of our vehicles that are being utilized to generate revenues. Vehicle Utilization is calculated by dividing total Transaction Days by Available Car Days. The calculation of Vehicle Utilization is shown in the table below:
|
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
|
Transaction Days (in thousands)
|
31,564
|
|
|
35,582
|
|
|
8,863
|
|
|
10,127
|
|
|
Average Vehicles (in whole units)
|
518,580
|
|
|
501,767
|
|
|
147,987
|
|
|
152,747
|
|
|
Number of days in period (in whole units)
|
91
|
|
|
90
|
|
|
91
|
|
|
90
|
|
|
Available Car Days (in thousands)
|
47,191
|
|
|
45,159
|
|
|
13,467
|
|
|
13,747
|
|
|
Vehicle Utilization
|
67
|
%
|
|
79
|
%
|
|
66
|
%
|
|
74
|
%
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(d)
|
Total RPD is calculated as total revenues less ancillary retail vehicle sales revenues, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates ("Total Rental Revenues"), divided by the total number of Transaction Days. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Total RPD is shown below:
|
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
|
Three Months Ended March 31,
|
||||||||||||||
|
($ in millions, except as noted)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
Total revenues
|
$
|
1,381
|
|
|
$
|
1,520
|
|
|
$
|
368
|
|
|
$
|
433
|
|
|
Ancillary retail vehicle sales revenues
|
(32
|
)
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency adjustment(1)
|
—
|
|
|
—
|
|
|
7
|
|
|
(5
|
)
|
||||
|
Total Rental Revenues
|
$
|
1,349
|
|
|
$
|
1,491
|
|
|
$
|
375
|
|
|
$
|
428
|
|
|
Transaction Days (in thousands)
|
31,564
|
|
|
35,582
|
|
|
8,863
|
|
|
10,127
|
|
||||
|
Total RPD (in whole dollars)
|
$
|
42.74
|
|
|
$
|
41.90
|
|
|
$
|
42.35
|
|
|
$
|
42.25
|
|
|
(1)
|
Based on December 31, 2019 foreign currency exchange rates for all periods presented.
|
|
(e)
|
Total RPU Per Month is calculated as Total Rental Revenues divided by the Average Vehicles in each period and then divided by the number of months in the period reported. The calculation of Total RPU Per Month is shown below:
|
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
|
Three Months Ended March 31,
|
||||||||||||||
|
($ in millions, except as noted)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
Total Rental Revenues
|
$
|
1,349
|
|
|
$
|
1,491
|
|
|
$
|
375
|
|
|
$
|
428
|
|
|
Average Vehicles (in whole units)
|
518,580
|
|
|
501,767
|
|
|
147,987
|
|
|
152,747
|
|
||||
|
Total revenue per unit (in whole dollars)
|
$
|
2,601
|
|
|
$
|
2,971
|
|
|
$
|
2,534
|
|
|
$
|
2,802
|
|
|
Number of months in period (in whole units)
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
||||
|
Total RPU Per Month (in whole dollars)
|
$
|
867
|
|
|
$
|
990
|
|
|
$
|
846
|
|
|
$
|
934
|
|
|
(f)
|
Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges per vehicle per month and is calculated as depreciation of revenue earning vehicles and lease charges, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates, divided by the Average Vehicles in each period and then dividing by the number of months in the period reported. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Depreciation Per Unit Per Month is shown below:
|
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
|
Three Months Ended March 31,
|
||||||||||||||
|
($ in millions, except as noted)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
Depreciation of revenue earning vehicles and lease charges
|
$
|
463
|
|
|
$
|
386
|
|
|
$
|
89
|
|
|
$
|
97
|
|
|
Foreign currency adjustment(1)
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
||||
|
Adjusted depreciation of revenue earning vehicles and lease charges
|
$
|
463
|
|
|
$
|
386
|
|
|
$
|
91
|
|
|
$
|
96
|
|
|
Average Vehicles (in whole units)
|
518,580
|
|
|
501,767
|
|
|
147,987
|
|
|
152,747
|
|
||||
|
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)
|
$
|
893
|
|
|
$
|
769
|
|
|
$
|
615
|
|
|
$
|
628
|
|
|
Number of months in period (in whole units)
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
||||
|
Depreciation Per Unit Per Month (in whole dollars)
|
$
|
298
|
|
|
$
|
256
|
|
|
$
|
204
|
|
|
$
|
209
|
|
|
(1)
|
Based on December 31, 2019 foreign currency exchange rates for all periods presented.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
(In millions)
|
2020
|
|
2019
|
|
$ Change
|
||||||
|
Cash provided by (used in):
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
450
|
|
|
$
|
516
|
|
|
$
|
(66
|
)
|
|
Investing activities
|
(2,097
|
)
|
|
(1,855
|
)
|
|
(242
|
)
|
|||
|
Financing activities
|
1,700
|
|
|
937
|
|
|
763
|
|
|||
|
Effect of exchange rate changes
|
(4
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
|
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
|
$
|
49
|
|
|
$
|
(404
|
)
|
|
$
|
453
|
|
|
|
Three Months Ended
March 31, |
|
|
||||||||
|
(In millions)
|
2020
|
|
2019
|
|
$ Change
|
||||||
|
Cash provided by (used in):
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
449
|
|
|
$
|
514
|
|
|
$
|
(65
|
)
|
|
Investing activities
|
(2,097
|
)
|
|
(1,855
|
)
|
|
(242
|
)
|
|||
|
Financing activities
|
1,701
|
|
|
939
|
|
|
762
|
|
|||
|
Effect of exchange rate changes
|
(4
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
|
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
|
$
|
49
|
|
|
$
|
(404
|
)
|
|
$
|
453
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(In millions)
|
3/31/2020
|
|
12/31/2019
|
||||
|
Cash and cash equivalents
|
$
|
1,017
|
|
|
$
|
865
|
|
|
Availability under the Senior RCF
|
25
|
|
|
526
|
|
||
|
Corporate liquidity
|
$
|
1,042
|
|
|
$
|
1,391
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(In millions)
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
Due from affiliates
|
$
|
3,627
|
|
|
$
|
3,562
|
|
|
Total assets
|
26,072
|
|
|
25,964
|
|
||
|
Due to affiliates
|
8,175
|
|
|
8,188
|
|
||
|
Total liabilities
|
17,405
|
|
|
16,982
|
|
||
|
(In millions)
|
Three Months Ended
March 31, |
||
|
|
2020
|
||
|
Total revenues
|
$
|
1,313
|
|
|
Income (loss) before income taxes and equity in earnings (losses) of subsidiaries(1)
|
(1,522
|
)
|
|
|
Net income (loss)
|
(309
|
)
|
|
|
Net income (loss) attributable to Hertz
|
(309
|
)
|
|
|
(1)
|
Includes $1.6 billion of intercompany vehicle lease charges from non-guarantor subsidiaries.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
Cash inflow (cash outflow)
|
Revenue Earning Vehicles
|
||||||||||
|
(In millions)
|
Capital
Expenditures
|
|
Disposal
Proceeds
|
|
Net Capital
Expenditures
|
||||||
|
2020
|
|
|
|
|
|
||||||
|
First Quarter
|
$
|
(4,346
|
)
|
|
$
|
2,212
|
|
|
$
|
(2,134
|
)
|
|
2019
|
|
|
|
|
|
||||||
|
First Quarter
|
$
|
(3,973
|
)
|
|
$
|
2,153
|
|
|
$
|
(1,820
|
)
|
|
Cash inflow (cash outflow)
|
Three Months Ended
March 31, |
|
|
|
|
|||||||||
|
($ in millions)
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
|
U.S. Rental Car
|
$
|
(2,051
|
)
|
|
$
|
(1,696
|
)
|
|
$
|
(355
|
)
|
|
21
|
%
|
|
International Rental Car
|
79
|
|
|
58
|
|
|
21
|
|
|
36
|
|
|||
|
All Other Operations
|
(162
|
)
|
|
(182
|
)
|
|
20
|
|
|
(11
|
)
|
|||
|
Total
|
$
|
(2,134
|
)
|
|
$
|
(1,820
|
)
|
|
$
|
(314
|
)
|
|
17
|
|
|
Cash inflow (cash outflow)
|
Non-Vehicle Capital Assets
|
||||||||||
|
(In millions)
|
Capital
Expenditures
|
|
Disposal
Proceeds
|
|
Net Capital
Expenditures
|
||||||
|
2020
|
|
|
|
|
|
||||||
|
First Quarter
|
$
|
(59
|
)
|
|
$
|
23
|
|
|
$
|
(36
|
)
|
|
2019
|
|
|
|
|
|
||||||
|
First Quarter
|
$
|
(54
|
)
|
|
$
|
19
|
|
|
$
|
(35
|
)
|
|
Cash inflow (cash outflow)
|
Three Months Ended
March 31, |
|
|
|
|
|||||||||
|
($ in millions)
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
|
U.S. Rental Car
|
$
|
(4
|
)
|
|
$
|
(9
|
)
|
|
$
|
5
|
|
|
(56
|
)%
|
|
International Rental Car
|
(6
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
50
|
|
|||
|
All Other Operations
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
|
Corporate
|
(25
|
)
|
|
(21
|
)
|
|
(4
|
)
|
|
19
|
|
|||
|
Total
|
$
|
(36
|
)
|
|
$
|
(35
|
)
|
|
$
|
(1
|
)
|
|
3
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
levels of travel demand, particularly with respect to business and leisure travel in the United States and in global markets;
|
|
•
|
the length and severity of the COVID-19 pandemic and the impact on our vehicle rental business as a result of travel restrictions and business closures or disruptions;
|
|
•
|
the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic factors;
|
|
•
|
general economic uncertainty and the pace of economic recovery, including in key global markets, when the COVID-19 pandemic subsides;
|
|
•
|
our ability to successfully restructure our substantial indebtedness, obtain further waivers or forbearance or raise additional capital;
|
|
•
|
the recoverability of our goodwill and indefinite-lived intangible assets when performing impairment analysis;
|
|
•
|
our ability to dispose of vehicles in the used-vehicle market, use the proceeds of such sales to acquire new vehicles and to reduce exposure to residual risk;
|
|
•
|
actions creditors may take with respect to the vehicles used in the rental car operations;
|
|
•
|
significant changes in the competitive environment and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives;
|
|
•
|
occurrences that disrupt rental activity during our peak periods;
|
|
•
|
our ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in our rental operations accordingly;
|
|
•
|
increased vehicle costs due to declining value of our non-program vehicles;
|
|
•
|
our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning vehicles and to refinance our existing indebtedness;
|
|
•
|
risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt, the fact that substantially all of our consolidated assets secure certain of our outstanding indebtedness and increases in interest rates or in our borrowing margins;
|
|
•
|
our ability to meet the financial and other covenants contained in our senior credit facilities and letter of credit facilities, our outstanding unsecured senior notes, our outstanding senior second priority secured notes and certain asset-backed and asset-based arrangements;
|
|
•
|
our ability to access financial markets, including the financing of our vehicle fleet through the issuance of asset-backed securities;
|
|
•
|
fluctuations in interest rates, foreign currency exchange rates and commodity prices;
|
|
•
|
our ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease);
|
|
•
|
our ability to prevent the misuse or theft of information we possess, including as a result of cyber security breaches and other security threats;
|
|
•
|
our ability to adequately respond to changes in technology, customer demands and market competition;
|
|
•
|
our ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles we purchase;
|
|
•
|
our recognition of previously deferred tax gains on the disposition of revenue earning vehicles;
|
|
•
|
financial instability of the manufacturers of our vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs;
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
an increase in our vehicle costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles;
|
|
•
|
our ability to execute a business continuity plan;
|
|
•
|
our access to third-party distribution channels and related prices, commission structures and transaction volumes;
|
|
•
|
our ability to retain customer loyalty and market share;
|
|
•
|
risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws, our ability to repatriate cash from non-U.S. affiliates without adverse tax consequences, our exposure to fluctuations in foreign currency exchange rates and our ability to effectively manage our international operations after the United Kingdom's withdrawal from the European Union;
|
|
•
|
a major disruption in our communication or centralized information networks;
|
|
•
|
a failure to maintain, upgrade and consolidate our information technology systems;
|
|
•
|
costs and risks associated with litigation and investigations or any failure or inability to comply with laws and regulations or any changes in the legal and regulatory environment, including laws and regulations relating to environmental matters and consumer privacy and data security;
|
|
•
|
our ability to maintain our network of leases and vehicle rental concessions at airports in the U.S. and internationally;
|
|
•
|
our ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy;
|
|
•
|
our ability to maintain an effective employee retention and talent management strategy and resulting changes in personnel and employee relations;
|
|
•
|
changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, where such actions may affect our operations, the cost thereof or applicable tax rates;
|
|
•
|
risks relating to our deferred tax assets, including the risk of an "ownership change" under the Internal Revenue Code of 1986, as amended;
|
|
•
|
our exposure to uninsured claims in excess of historical levels;
|
|
•
|
risks relating to our participation in multiemployer pension plans;
|
|
•
|
shortages of fuel and increases or volatility in fuel costs;
|
|
•
|
changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results; and
|
|
•
|
other risks and uncertainties described from time to time in periodic and current reports that we file with the SEC.
|
|
•
|
Changes in our revenues, profitability and customer demand: Our revenues and profitability have been negatively impacted during the first and second quarters of 2020 and we expect this to continue for the remainder of the 2020 fiscal year. We have experienced a high level of rental cancellations and a significant decline in forward bookings due to the decreased customer demand and other economic factors. Historically, we have generated a majority of our rental revenues from on-airport locations, which makes our rental car business sensitive to any decreases in air travel. Although we believe that renting a vehicle will continue to be a safe alternative and we have implemented certain procedures to mitigate the impact of COVID-19, we cannot predict when or if customer demand will return to levels before the COVID-19 pandemic.
|
|
•
|
Changes to our liquidity: We incur ongoing costs, which we cannot reduce in line with the significant reduction in revenues we have experienced from the COVID-19 outbreak. Such costs include our monthly fleet rental costs under our Operating Lease, facility rentals and concessions, debt service and labor costs. These costs require significant liquidity generated by operations or access to additional financing. If COVID-19 continues to have a significant negative impact on our cash flow from operations and we cannot access the capital markets, we may not be able to generate sufficient liquidity to cover our costs.
|
|
•
|
Our peak season: The second and third quarters of the year have historically been the strongest quarters for our vehicle rental business due to increased levels of leisure travel. COVID-19 has disrupted our business in the second quarter and we expect that it will continue to disrupt our business in the third quarter. We expect these disruptions during our peak season to have material adverse effects on our results of operations, financial condition, liquidity and cash flows.
|
|
•
|
Our fleet: In response to reduced demand due to COVID-19, we began adjusting fleet levels, leveraging our multiple used-vehicle channels, and negotiating with suppliers to reduce fleet commitments in the first quarter of 2020. However, we have not yet reduced our fleet size, and the related cost base, in line with our reduced operating results and we may not be able to do so if the challenging conditions in the vehicle resale market continue. As the downturn in our rental car business has resulted in excess fleet, we must store our vehicles in certain overflow parking areas which subjects our vehicles to possible loss due to peril and theft. We may also experience a decline in vehicle values which could increase the monthly payments under the Operating Lease.
|
|
•
|
Our workforce: The COVID-19 pandemic has caused us to furlough approximately 20,000 employees worldwide and we have terminated approximately 10,000 employees in our U.S. RAC segment and U.S. corporate operations, the majority of which were previously furloughed, in an effort to reduce our operating costs. This reduction in our operating costs related to our employees could create risks, including but not limited to, our ability to manage the size of our workforce given uncertain future economic conditions and the ability to operate locations in affected jurisdictions. Additionally, we may incur additional costs as a result of workforce reductions or suffer from employee morale issues. We may also be unable to timely respond to a business recovery due to reductions in our workforce already enacted.
|
|
(a)
|
Exhibits:
|
|
Date:
|
May 11, 2020
|
HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
(Registrants)
|
|
|
|
|
By:
|
/s/ JAMERE JACKSON
|
|
|
|
|
Jamere Jackson
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Dollar Rent A Car, Inc.
|
|
Dollar Thrifty Automotive Group, Inc.
|
|
Donlen Corporation
|
|
DTG Operations, Inc.
|
|
DTG Supply, LLC
|
|
Firefly Rent A Car LLC
|
|
Hertz Car Sales, LLC
|
|
Hertz Global Services Corporation
|
|
Hertz Local Edition Corp.
|
|
Hertz Local Edition Transporting, Inc.
|
|
Hertz System, Inc.
|
|
Hertz Technologies, Inc.
|
|
Hertz Transporting, Inc.
|
|
Rental Car Group Company, LLC
|
|
Smartz Vehicle Rental Corporation
|
|
Thrifty Car Sales, Inc.
|
|
Thrifty Insurance Agency, Inc.
|
|
Thrifty Rent A Car System, LLC
|
|
Thrifty, LLC
|
|
TRAC Asia Pacific, Inc.
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of Hertz Global Holdings, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date:
|
May 11, 2020
|
|
|
|
|
|
|
By:
|
/s/ KATHRYN V. MARINELLO
|
|
|
|
|
|
Kathryn V. Marinello
President, Chief Executive Officer and Director
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of Hertz Global Holdings, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date:
|
May 11, 2020
|
|
|
|
|
|
|
By:
|
/s/ JAMERE JACKSON
|
|
|
|
|
|
Jamere Jackson
Executive Vice President and Chief Financial Officer
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of The Hertz Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date:
|
May 11, 2020
|
|
|
|
|
|
|
By:
|
/s/ KATHRYN V. MARINELLO
|
|
|
|
|
|
Kathryn V. Marinello
President, Chief Executive Officer and Director
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of The Hertz Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
Date:
|
May 11, 2020
|
|
|
|
|
|
|
By:
|
/s/ JAMERE JACKSON
|
|
|
|
|
|
Jamere Jackson
Executive Vice President and Chief Financial Officer
|
|
|
(1)
|
the Report, to which this statement is furnished as an Exhibit, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date:
|
May 11, 2020
|
|
|
|
|
|
|
By:
|
/s/ KATHRYN V. MARINELLO
|
|
|
|
|
|
Kathryn V. Marinello
President, Chief Executive Officer and Director
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(1)
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the Report, to which this statement is furnished as an Exhibit, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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May 11, 2020
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By:
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/s/ JAMERE JACKSON
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Jamere Jackson
Executive Vice President and Chief Financial Officer
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(1)
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the Report, to which this statement is furnished as an Exhibit, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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May 11, 2020
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By:
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/s/ KATHRYN V. MARINELLO
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Kathryn V. Marinello
President, Chief Executive Officer and Director
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(1)
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the Report, to which this statement is furnished as an Exhibit, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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May 11, 2020
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By:
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/s/ JAMERE JACKSON
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Jamere Jackson
Executive Vice President and Chief Financial Officer
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