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HERTZ GLOBAL HOLDINGS, INC (HTZ)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue declined 7% year over year to $2.040B; GAAP net loss was $479M ($1.56 per diluted share). Adjusted Corporate EBITDA loss narrowed to $357M versus $382M a year ago, with net income margin of (23)% and Adjusted EBITDA margin of (18)% .
  • KPIs showed improving depreciation dynamics and asset productivity: Depreciation per unit per month (DPU) fell to $422 (down 16% YoY), utilization rose to 79%, and RPU decline narrowed to (1)% YoY; however, heavy defleeting drove loss on sale, pushing net DPU above the planned range in Q4 per management commentary .
  • Transformation milestones: completed 30,000 EV fleet reduction; year-end liquidity at $1.8B; management reiterated 2025 targets of sub-$300 net DPU exit rate and a low single-digit full-year EBITDA margin, with Q1 loss, Q2 ~breakeven, Q3 sizable profit, Q4 small profit cadence .
  • What moved the quarter: revenue volume pressure and higher insurance and non-cash lease expense (post Q3 impairment) outweighed SG&A savings; vehicle depreciation improved YoY as 2023 EV loss-on-sale did not recur, but Q4 defleeting created new loss-on-sale headwinds .

What Went Well and What Went Wrong

  • What Went Well

    • Vehicle depreciation improved 19% YoY as Q4’23 EV loss-on-sale did not recur; DPU fell to $422 and utilization rose to 79% .
    • SG&A declined 9% YoY, driven by lower personnel and advertising, reflecting execution on cost initiatives; Adjusted Corporate EBITDA loss narrowed vs. Q4’23 .
    • CEO on transformation momentum: “The foundation we built in 2024 positions us to execute our transformation in 2025… lead the industry again.” .

  • What Went Wrong

    • Top line and earnings pressure: revenue down 7% YoY; GAAP net loss widened YoY; Adjusted EBITDA margin remained negative .
    • Heavy defleeting in Q4 led to book losses on sale and pushed net DPU above guidance; Q1 is expected to remain pressured before improving thereafter .
    • Insurance cost headwinds and non-cash lease expense recognition (post Q3 impairment) lifted operating cost per day; DOE per transaction day rose 6% YoY despite structural cost progress .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($B)$2.184 $2.576 $2.040
GAAP Diluted EPS ($)($1.14) ($4.34) ($1.56)
Adjusted Diluted EPS ($)($1.36) ($0.68) ($1.18)
Net Income Margin (%)(16)% (52)% (23)%
Adjusted Corp. EBITDA ($M)($382) ($157) ($357)
Adjusted EBITDA Margin (%)(17)% (6)% (18)%

Segment results (Q4):

SegmentQ4 2023 Revenue ($M)Q4 2024 Revenue ($M)Q4 2023 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA ($M)
Americas RAC$1,805 $1,669 ($309) ($297)
International RAC$379 $371 $44 $1

Key KPIs:

KPI (Global RAC)Q2 2024Q3 2024Q4 2024
RPD ($)59.65 62.63 57.10
RPU per month ($)1,446 1,567 1,376
Utilization (%)80% 82% 79%
DPU per month ($)600 537 422

Balance sheet and cash:

  • Cash and equivalents: $592M; total liquidity $1.8B at 12/31/24 .
  • Vehicle debt $11.231B; non-vehicle debt $5.104B; Total Net Debt $15.355B; Net Corporate Leverage (based on LTM Adjusted Corporate EBITDA) (2.8)x .
  • Q4 operating cash flow $414M; Adjusted free cash flow $(332)M, reflecting rotation and fleet investments .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net DPU target (run-rate)Exit 2025“Low $300s” (Q2 framework) “Sub-$300” exit 2025; Q1 pressured, decline after Q1 Lowered target (more aggressive)
2025 EBITDA cadenceFY 2025Not providedQ1 loss; Q2 ~breakeven; Q3 sizable profit; Q4 small profit; FY low single-digit EBITDA margin New detail
DOE per dayRun-rateLow $30s target (prior) Reiterated; progress gradual, headwinds from insurance Maintained
RPU (“North Star”)Run-rate$1,500 target (prior) Reiterated $1,500 trajectory; sequential improvement Maintained
Liquidity low point2025Mid-2025 low point (prior) Reiterated mid-2025; year-end liquidity $1.8B Maintained

Notes: Management also expects normalized DPU to benefit from newer model-year mix, retail disposal channel optimization, and seasonally stronger sales periods post-Q1 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3 2024)Current Period (Q4 2024)Trend
Fleet strategy & DPUAccelerated fleet rotation; aimed for low $300s DPU by end-2025 . Q3 improved to sub-$300 run-rate target; Q4 DPU guided $350–$375 (gross/net dynamics) .Executed heavy defleeting; gross depreciation ~$347 with loss on sale; reaffirm sub-$300 net DPU exit-2025 .Improving trajectory; nearer-term noise from rotation
Technology/dataUpgrading pricing/forecasting; dynamic pricing for value-added services .Palantir/data tools to optimize fleet; dynamic pricing driving VAS gains .Scaling execution
Cost structure/DOEDOE per day targeted low 30s; progress but insurance/labor headwinds .Core costs (labor, maintenance, collision) improving; insurance and lease accounting are headwinds .Mixed: structural progress vs. external headwinds
Disposals channel mixFocus on retail to maximize proceeds (Q3) .<10% through auctions; prioritizing retail/partnerships to lift proceeds, shorten cycles .Positive mix shift
Tariffs/macroQ3: market conditions normalizing; residual volatility discussed .Management sees Hertz largely insulated; tariffs could lift residuals; diversified supply .Neutral-to-positive
Legal/regulatoryBankruptcy-related litigation reserve increased in Q3 .Talks to resolve timing/outcome; reserve continues accruing .Ongoing overhang

Management Commentary

  • CEO: “We are turning our fleet into a business advantage... The foundation we built in 2024 positions us to execute our transformation in 2025” .
  • CFO on Q4 rotation impact: “MMR values drop below forecast… drove a book value loss on sale… right to… not carry the additional vehicles into 2025… expect DPU for the first quarter to be slightly below… and decline after Q1… exit… sub-$300” .
  • CCO on commercial progress: “RPU declines narrowed from down 7% in Q1 to down only 1% in Q4… improved demand generation and mix toward high RPD segments” .
  • On 2025 cadence: “Seasonal EBITDA loss in Q1… Q2 roughly breakeven, sizable profit in Q3 and a small profit in Q4… low single-digit EBITDA margin for the year” .

Q&A Highlights

  • DPU trajectory and mechanics: Q4 net DPU inflated due to loss on sale; Q1 to remain pressured; exit 2025 sub-$300 net DPU remains the goal .
  • Fleet size and utilization: Running inside the demand curve; smaller fleet targeting same days to lift utilization and asset efficiency .
  • Disposal channels: Less than 10% via auctions; prioritizing retail channels and partnerships to maximize proceeds and support sub-$300 DPU .
  • 2025 earnings cadence and targets: Low single-digit EBITDA margin; DOE low 30s targeted but insurance remains a headwind near term .
  • Liquidity and maturities: Year-end liquidity $1.8B; confident in addressing maturities; main ABS equity cushion improving with newer vehicles .

Estimates Context

  • S&P Global consensus (revenue, EPS) for Q4 2024 could not be retrieved due to API rate limits; as a result, we cannot assess beat/miss vs. Street. We will refresh when data access permits.

Key Takeaways for Investors

  • Fleet rotation is progressing: depreciation per unit materially improved YoY and utilization edged up; the near-term P&L drag is from accelerated sales losses, which should abate as rotation completes and retail channels ramp .
  • 2025 roadmap is clearer: management laid out a quarterly EBITDA cadence and reiterated run-rate targets (sub-$300 DPU, DOE low 30s, RPU $1,500), supporting an FY low single-digit EBITDA margin if execution holds .
  • Cost control is bifurcated: structural operating costs are improving, but insurance and lease accounting (post-impairment) pressure near-term unit costs; insurance initiatives begin to contribute later in 2025 .
  • Balance sheet/liquidity are adequate to fund rotation: $1.8B liquidity at year-end; ABS equity cushion benefiting from newer fleet; recent first-lien issuance in Dec’24 bolstered flexibility .
  • Watch execution on retail disposal mix and demand generation: moving more volume to retail channels and growing direct/loyalty demand should support RPU and DPU goals and reduce loss-on-sale volatility .
  • Potential catalysts: visible progress toward sub-$300 DPU, sequential DOE per day improvements, resolution of litigation reserve timing, and stabilization/improvement in used car residuals (tariff dynamic potentially supportive) .

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