Sign in

You're signed outSign in or to get full access.

HG

HERTZ GLOBAL HOLDINGS, INC (HTZ)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 showed operational progress but a top-line and earnings miss vs Street: revenue fell 13% YoY to $1.81B and adjusted EPS was -$1.12, as Hertz ran an intentionally tighter fleet and faced a 5% pricing decline; however, vehicle depreciation per unit fell to $353 on fleet rotation and rising residuals .
  • Versus consensus, Hertz missed on revenue ($1.81B vs $2.01B*) and adj. EPS (-$1.12 vs -$0.98*), and adj. EBITDA (-$325M vs -$247M*), with management attributing revenue softness to accelerated infleeting ahead of tariffs, the Easter shift, and mix decisions favoring lower-depreciating vehicles .
  • Management reiterated North Star targets (DPU < $300, RPU > $1,500, DOE/day low $30s) and expects Q2 EBITDA ≈ breakeven and Q3 positive EPS, underpinned by the younger fleet and foundational revenue management upgrades; liquidity was $1.2B and credit facilities were extended to de-risk maturities .
  • Near-term stock catalysts: confirmation of sub-$300 DPU in Q2, rate stabilization into summer, execution of Amadeus-driven RM uplift, and progress on deleveraging (ATM authorization); risks include macro demand moderation in corporate/government inbound and tariff-driven parts/maintenance costs .

What Went Well and What Went Wrong

  • What Went Well

    • Depreciation per unit fell sharply to $353/month (down ~40% YoY), reflecting disciplined “Buy Right, Hold Right, Sell Right” fleet rotation; model year 2025 vehicles are already sub-$300 DPU .
    • Direct operating expense improved by $92M YoY, with DOE/day down 4% QoQ despite lower volume; utilization rose 240 bps YoY to 79% .
    • Strategic financing actions extended the First Lien RCF (~$1.7B to March 2028) and U.S./EU ABS maturities, strengthening flexibility; liquidity stood at $1.2B .
    • Quote: “Our ‘Back-to-Basics Roadmap’ is working… capitalizing on our fleet as our most dominant economic lever keeps us agile” — CEO Gil West .

  • What Went Wrong

    • Revenue declined 13% YoY to $1.81B on an 8% smaller fleet and 5% pricing decline; RPU fell 3% YoY to $1,264/month, pressured by Easter timing, leap year, and margin-accretive mix shifts .
    • Adjusted Corporate EBITDA remained negative at -$325M (margin -18%) and adjusted EPS was -$1.12; both missed consensus as pricing underperformed in late March/early April and accelerated infleeting created local market over-supply .
    • Non-vehicle interest expense and SG&A remained elevated YoY, and management highlighted continued insurance and rent headwinds; DOE/day down only 1% YoY on a volume-adjusted basis .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$2.576 $2.040 $1.813
GAAP Diluted EPS ($)$(4.34) $(1.56) $(1.44)
Adjusted Diluted EPS ($)$(0.68) $(1.18) $(1.12)
Adjusted Corporate EBITDA ($USD Millions)$(157) $(357) $(325)
Adjusted Corporate EBITDA Margin (%)(6%) (18%) (18%)
Net Income (Loss) Margin (%)(52%) (23%) (24%)

YoY comparison and vs Estimates (Q1 2025):

MetricQ1 2024Q1 2025 ActualConsensus (Q1 2025)
Revenue ($USD Billions)$2.080 $1.813 $2.010*
Adjusted Diluted EPS ($)$(1.28) $(1.12) $(0.98)*
Adjusted Corporate EBITDA ($USD Millions)$(567) $(325) $(247)*
RPD ($)$55.94 $53.38 n/a
RPU/month ($)$1,299 $1,264 n/a
DPU/month ($)$588 $353 n/a

Values marked with * were retrieved from S&P Global.

Segment breakdown (Q1 2025):

SegmentRevenue ($USD Millions)Adjusted EBITDA ($USD Millions)Adjusted EBITDA Margin (%)
Americas RAC$1,490 $(238) (16%)
International RAC$323 $(17) (5%)

KPIs across quarters:

KPIQ3 2024Q4 2024Q1 2025
Utilization (%)82% 79% 79%
RPD ($)$62.63 $57.10 $53.38
RPU/month ($)$1,567 $1,376 $1,264
DPU/month ($)$537 $422 $353
Average Rentable Vehicles (units)550,074 497,875 477,273
Transaction Days (000s)41,298 35,998 33,902

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Depreciation Per Unit (DPU)Q2 2025< $300 by YE 2025 Achieve < $300 in Q2 2025 Raised (earlier timing)
Adjusted Corporate EBITDAQ2 2025Not specified≈ Breakeven New specificity
EPSQ3 2025Not specifiedPositive EPS (first since 2023) New
EBITDA MarginFY 2025Low single digits (prior expectation) Reaffirmed low single digits Maintained
LiquidityQ2 2025Not specified> $1B even with potential make‑whole payment New
Credit FacilitiesN/ARCF June 2026 maturitiesExtend ~$1.7B RCF to Mar 2028; ABS U.S./EU maturities extended Strengthened capital flexibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesFocus on transformation; no AI specifics in Q3 8-K Partnerships with Palantir (fleet/workforce), UVI (AI inspections), Amadeus (revenue mgmt), Decagon (CX AI) Expanding tech adoption
Supply chain, tariffs, residuals$1.0B impairment driven by residual declines; rotation timing impacted cash flows (Q3) Pulled-forward MY2025 deliveries ahead of tariffs; tariffs and disruption seen as tailwinds to residuals/RPD Residuals turning tailwind
Revenue managementRPD relatively flat YoY (Q3) ; RPU declines narrowed (Q4) Multiyear RM upgrade with Amadeus; expected margin-accretive Structural uplift targeted
Off-airport & mobility mixNot highlighted in Q3/Q4 8-K Feed off-airport/mobility heavier for durable margins and lower DOE/day Diversification
Customer experienceNot highlighted in Q3/Q4 8-K NPS +11 pts YoY; loyalty enrollments +11% YoY, increasing loyalty bookings Improving CX/loyalty
Legal/regulatoryBankruptcy-related litigation reserve in Q3 ($288M) No new reserves disclosed; monitoring tariff impacts Reduced acute legal drag

Management Commentary

  • “Disciplined fleet management, revenue optimization, and rigorous cost control are driving meaningful results… our fleet is our most dominant economic lever” — CEO Gil West .
  • “Q1 depreciation expense decreased 45% YoY… DPU was $353… we expect gross DPU below $300 in Q2” — CFO Scott Haralson .
  • “We are in the early stages of a multiyear transformation journey with Amadeus to modernize revenue management and deliver incremental EBITDA on a regular basis” — CCO Sandeep Dube .
  • Financing and liquidity: “RCF extended to March 2028; ABS extensions… expect to end Q2 with >$1B liquidity even if make‑whole is paid” — CFO Scott Haralson .

Q&A Highlights

  • Local-market overfleeting from accelerated deliveries hurt utilization and pricing temporarily in late March/early April; macro fleet remains tight and down 8% YoY .
  • Tariff exposure minimal for MY2025 (previously agreed pricing); benefits expected through residuals pricing dynamics .
  • DOE target low‑30s will require scale and efficiency; aiming to reach North Star metrics around 2027 .
  • RPD stabilization seen in recent weeks; path to Q2 EBITDA breakeven assumes modest RPD improvement into the summer .
  • Strategy to prune lower-margin channels while leaning into premium brand direct and partner volume, off-airport, and mobility to improve unit economics .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $1.81B vs $2.01B* (miss), Adjusted Diluted EPS -$1.12 vs -$0.98* (miss), Adjusted Corporate EBITDA -$325M vs -$247M* (miss). Management cited pricing softness around Easter and accelerated infleeting as transient, with RM upgrades and mix shifts expected to lift margins through 2025–2026 .
  • Forward context: Management expects Q2 2025 EBITDA ≈ breakeven and Q3 positive EPS; North Star metrics reaffirmed (DPU < $300, RPU > $1,500, DOE/day low $30s), implying potential upward revisions to H2 profitability if pricing and utilization trends hold .
    Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Depreciation normalization is arriving faster-than-expected (sub‑$300 DPU targeted in Q2), materially improving unit economics; watch Q2 print for confirmation .
  • Revenue miss was driven by tactical capacity and calendar effects; evidence of recent rate stabilization and utilization improvement supports Q2 breakeven guidance .
  • Foundational RM and mix initiatives (Amadeus, off‑airport/mobility, direct/partner channels) are designed to be margin-accretive across a large revenue base; execution will be key to closing the gap to Street expectations .
  • Liquidity and refinancing actions materially de-risk near-term maturities; ATM authorization adds deleveraging optionality, potentially equity-value accretive via interest savings .
  • Near-term focus: pricing momentum into summer, sustained utilization gains, DOE/day trajectory, and retail vehicle sales mix supporting residual gains (record retail quarter in Q1) .
  • Medium-term thesis: achieving North Star metrics by ~2027 could support >$1B EBITDA run-rate; tailwinds include residual value strength and diversified demand, but macro corporate/government softness remains a risk to RPD .
  • Position sizing should reflect transition risk and sensitivity to macro demand/tariffs; catalysts include Q2/Q3 inflection to positive EPS and visible progress on deleveraging .