Hertz(US:HTZ)2024-04-25 11:30PART I. FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited condensed consolidated financial statements for Hertz Global Holdings, Inc. and its subsidiaries, and separately for The Hertz Corporation and its subsidiaries, for the three months ended March 31, 2024 and 2023, including balance sheets, statements of operations, comprehensive income (loss), changes in stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, significant transactions, and financial instrument disclosures Hertz Global Holdings, Inc. and Subsidiaries - Condensed Consolidated Balance Sheets This section presents the consolidated financial position of the company and its subsidiaries at specific dates | Metric | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | 24,310 | 24,605 | (295) | | Cash and cash equivalents | 465 | 764 | (299) | | Total Revenue Earning Vehicles, net | 14,617 | 14,651 | (34) | | Total Liabilities | 21,498 | 21,513 | (15) | | Vehicle Accounts Payable | 632 | 191 | 441 | | Total Debt | 15,744 | 15,691 | 53 | | Total Stockholders' Equity | 2,812 | 3,092 | (280) | Hertz Global Holdings, Inc. and Subsidiaries - Condensed Consolidated Statements of Operations This section details the consolidated financial performance, including revenues, expenses, and net income (loss) over specific periods | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | % Change | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Revenues | 2,080 | 2,047 | 33 | 2% | | Direct vehicle and operating expenses | 1,366 | 1,221 | 145 | 12% | | Depreciation of revenue earning vehicles and lease charges, net | 969 | 381 | 588 | 154% | | Interest expense, net | 216 | 162 | 54 | 33% | | Income (loss) before income taxes | (581) | 62 | (643) | NM | | Net income (loss) | (186) | 196 | (382) | NM | | Basic EPS | (0.61) | 0.61 | (1.22) | NM | Hertz Global Holdings, Inc. and Subsidiaries - Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents the consolidated comprehensive income (loss), including net income (loss) and other comprehensive income (loss) items | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net income (loss) | (186) | 196 | | Foreign currency translation adjustments | (40) | 14 | | Total comprehensive income (loss) | (226) | 210 | Hertz Global Holdings, Inc. and Subsidiaries - Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in consolidated stockholders' equity, reflecting net income (loss), other comprehensive income (loss), and equity transactions | Metric | December 31, 2023 (Millions USD) | March 31, 2024 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :------------------------------- | :---------------------------- | :-------------------- | | Total Stockholders' Equity | 3,092 | 2,812 | (280) | | Net income (loss) | N/A | (186) | N/A | | Other comprehensive income (loss) | N/A | (40) | N/A | | Stock-based compensation forfeitures | N/A | (68) | N/A | Hertz Global Holdings, Inc. and Subsidiaries - Condensed Consolidated Statements of Cash Flows This section provides a consolidated overview of cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | 370 | 562 | (192) | | Net cash provided by (used in) investing activities | (703) | (1,488) | 785 | | Net cash provided by (used in) financing activities | 85 | 739 | (654) | | Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | (261) | (176) | (85) | | Cash and cash equivalents and restricted cash and cash equivalents at end of period | 945 | 1,242 | (297) | The Hertz Corporation and Subsidiaries - Condensed Consolidated Balance Sheets This section presents the consolidated financial position of the company and its subsidiaries at specific dates | Metric | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | 24,309 | 24,604 | (295) | | Total Liabilities | 21,132 | 21,061 | 71 | | Total Stockholder's Equity | 3,177 | 3,543 | (366) | The Hertz Corporation and Subsidiaries - Condensed Consolidated Statements of Operations This section details the consolidated financial performance, including revenues, expenses, and net income (loss) over specific periods | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | % Change | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Revenues | 2,080 | 2,047 | 33 | 2% | | Depreciation of revenue earning vehicles and lease charges, net | 969 | 381 | 588 | 154% | | Income (loss) before income taxes | (667) | 180 | (847) | NM | | Net income (loss) | (272) | 314 | (586) | NM | The Hertz Corporation and Subsidiaries - Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents the consolidated comprehensive income (loss), including net income (loss) and other comprehensive income (loss) items | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net income (loss) | (272) | 314 | | Foreign currency translation adjustments | (40) | 14 | | Total comprehensive income (loss) | (312) | 328 | The Hertz Corporation and Subsidiaries - Condensed Consolidated Statements of Changes in Stockholder's Equity This section outlines changes in consolidated stockholders' equity, reflecting net income (loss), other comprehensive income (loss), and equity transactions | Metric | December 31, 2023 (Millions USD) | March 31, 2024 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :------------------------------- | :---------------------------- | :-------------------- | | Total Stockholder's Equity | 3,543 | 3,177 | (366) | | Net income (loss) | N/A | (272) | N/A | | Other comprehensive income (loss) | N/A | (40) | N/A | | Stock-based compensation forfeitures | N/A | (68) | N/A | The Hertz Corporation and Subsidiaries - Condensed Consolidated Statements of Cash Flows This section provides a consolidated overview of cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | 370 | 561 | (191) | | Net cash provided by (used in) investing activities | (703) | (1,488) | 785 | | Net cash provided by (used in) financing activities | 85 | 740 | (655) | | Cash and cash equivalents and restricted cash and cash equivalents at end of period | 945 | 1,242 | (297) | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the condensed consolidated financial statements Note 1—Background This note provides an overview of the company and its primary business operations and brands - Hertz Global Holdings, Inc. is the parent company of The Hertz Corporation, which operates vehicle rental and leasing businesses globally under Hertz, Dollar, and Thrifty brands, and also sells vehicles via Hertz Car Sales4445 Note 2—Basis of Presentation and Recently Issued Accounting Pronouncements This note describes the financial statement preparation basis and the impact of new accounting standards - The report combines Hertz Global and Hertz Corporation financials, prepared under U.S. GAAP, noting the seasonal nature of the vehicle rental business4647 - New FASB guidance on reportable segment disclosures (effective for annual periods after Dec 15, 2023) and income tax disclosures (effective for annual periods after Dec 15, 2024) is being assessed for impact5253 Note 3—Divestitures This note details significant divestiture activities and their financial impact during the reporting period - In Q1 2023, the Company recognized a $29 million pre-tax gain from an eminent domain proceeding and a $133 million pre-tax gain from a sale-leaseback of its Los Angeles airport location5455 Note 4—Revenue Earning Vehicles This note provides details on the company's revenue-earning vehicle fleet, including depreciation and disposal activities | Metric | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Revenue earning vehicles, net | 14,617 | 14,651 | (34) | | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | % Change | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Depreciation of revenue earning vehicles and lease charges, net | 969 | 381 | 588 | 154% | | Depreciation of revenue earning vehicles | 684 | 422 | 262 | 62% | | (Gain) loss on disposal of revenue earning vehicles | 276 | (46) | 322 | NM | - The Company classified two groups of EVs (First EV Disposal Group and Second EV Disposal Group) as held for sale due to excess supply, elevated damage costs, and declining residual values. This resulted in charges of $81 million (First EV) and $114 million (Second EV) in Q1 20245960 Note 5—Debt This note outlines the company's debt structure, including non-vehicle and vehicle debt, and related covenants | Debt Type | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | Change (Millions USD) | | :---------------- | :----------------------------- | :------------------------------- | :-------------------- | | Non-Vehicle Debt | 3,898 | 3,449 | 449 | | Vehicle Debt | 11,846 | 12,242 | (396) | | Total Debt | 15,744 | 15,691 | 53 | - In April 2024, the First Lien RCF was amended to adjust the First Lien Ratio covenant and introduce a minimum liquidity covenant, which will sunset in Q2 202565 - Vehicle debt facilities were amended in April 2024: HVF III Series 2021-A Notes maturity extended to April 2026; European ABS maximum borrowings increased to €1.3 billion (seasonal €1.5 billion); Hertz Canadian Securitization maximum borrowings increased to CAD$625 million (seasonal) until November 2024, with maturity extended to April 2026666768 | Facility | Remaining Capacity (Millions USD) | Availability Under Borrowing Base Limitation (Millions USD) | | :-------------------------- | :-------------------------------- | :------------------------------------------ | | First Lien RCF | 866 | 866 | | HVF III Series 2021-A | 2,343 | — | | European ABS | 319 | — | | Hertz Canadian Securitization | 6 | — | | Australian Securitization | 15 | — | | New Zealand RCF | 5 | — | | U.K. Financing Facility | 8 | — | | Other Vehicle Debt | 47 | — | | Total | 3,609 | 866 | - As of March 31, 2024, outstanding standby letters of credit totaled $944 million, primarily under the First Lien RCF ($684 million) and Term C Loan ($245 million), with no remaining capacity under the Term C Loan72 Note 6—Leases This note details the company's lease arrangements and their impact on revenues and financial position | Revenue Type | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Operating lease income from vehicle rentals | 1,883 | 1,859 | | Variable operating lease income | 141 | 132 | | Revenue accounted for under Topic 842 | 2,024 | 1,991 | | Revenue accounted for under Topic 606 | 56 | 56 | | Total revenues | 2,080 | 2,047 | Note 7—Income Tax (Provision) Benefit This note explains the company's income tax provision or benefit and the effective tax rate | Entity | Period | Tax Benefit (Millions USD) | Effective Tax Rate | | :---------------- | :----------------------- | :------------------------- | :----------------- | | Hertz Global | Q1 2024 | 395 | 68% | | Hertz Global | Q1 2023 | 134 | (214%) | | Hertz | Q1 2024 | 395 | 59% | | Hertz | Q1 2023 | 134 | (74%) | - The change in tax benefit was primarily due to lower pretax income, lower estimated EV credits in 2024, and the recognition of uncertain tax benefits from European operations restructuring in 20238183 Note 8—Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global This note discusses public warrants, equity, and earnings (loss) per common share for Hertz Global - Public Warrants are recorded at fair value, resulting in an $86 million gain in Q1 2024 (vs. $118 million loss in Q1 2023)84115 - The 2022 Share Repurchase Program, which authorized up to $2.0 billion in repurchases, is temporarily suspended from April 16, 2024, through April 1, 2025, due to Amendment No. 8 of the First Lien Credit Agreement85207 | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Basic EPS | (0.61) | 0.61 | | Diluted EPS | (0.61) | 0.61 | | Basic weighted-average common shares outstanding (millions) | 305 | 321 | Note 9—Stock-Based Compensation This note details the company's stock-based compensation plans and related expenses | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Employee compensation expense | (52) | 21 | | Income tax benefit | (2) | (5) | | Employee compensation expense, net | (54) | 16 | - Employee compensation expense for Q1 2024 includes a $68 million gain from former CEO awards forfeited in March 202492 - As of March 31, 2024, $99 million of total unrecognized employee compensation expense remains, to be recognized over a weighted-average period of 1.7 years93 Note 10—Financial Instruments This note describes the company's use of financial instruments to manage market risks - The Company uses interest rate caps/swaps and foreign currency forward contracts to manage interest rate and currency exchange rate risks, but these are not designated as hedging instruments101102103104 | Metric | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :-------------------------- | :----------------------------- | :------------------------------- | | Asset Derivatives | 7 | 15 | | Liability Derivatives | 3 | 2 | | Instrument | Gain (Loss) Recognized in Income (Millions USD) | | :-------------------------- | :-------------------------------------------- | | Q1 2024 Interest rate instruments | 0 | | Q1 2023 Interest rate instruments | 4 | | Q1 2024 Foreign currency forward contracts | (11) | | Q1 2023 Foreign currency forward contracts | (5) | Note 11—Fair Value Measurements This note provides information on fair value measurements of financial and non-financial assets and liabilities | Debt Type | March 31, 2024 Nominal Unpaid Principal (Millions USD) | March 31, 2024 Aggregate Fair Value (Millions USD) | December 31, 2023 Nominal Unpaid Principal (Millions USD) | December 31, 2023 Aggregate Fair Value (Millions USD) | | :---------------- | :------------------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Non-Vehicle Debt | 3,960 | 3,619 | 3,515 | 3,285 | | Vehicle Debt | 11,907 | 11,583 | 12,314 | 11,878 | | Total | 15,867 | 15,202 | 15,829 | 15,163 | - Public Warrants are classified as liabilities and measured at fair value using Level 1 inputs, resulting in an $86 million gain in Q1 2024115 - Revenue earning vehicles classified as held for sale (First and Second EV Disposal Groups) are measured at fair value less costs to sell using Level 2 inputs117 Note 12—Contingencies and Off-Balance Sheet Commitments This note outlines potential liabilities and commitments not fully reflected on the balance sheet | Liability Type | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :----------------------- | :----------------------------- | :------------------------------- | | Self-insured liabilities | 473 | 471 | - The Company is awaiting a Third Circuit decision on make-whole and post-petition interest claims, which could total approximately $272 million or $125 million plus pre-judgment interest. An adverse ruling could materially affect financial condition120121 - After a $168 million settlement in December 2022 for false arrest claims, the Company continues to defend remaining claims and is pursuing insurance coverage122 - Litigation regarding the Company's share repurchase programs is ongoing, with parties finalizing a resolution123 Note 13—Segment Information This note presents financial data for the company's reportable operating segments - The Company has two reportable segments: Americas RAC (U.S., Canada, Latin America, Caribbean) and International RAC (other global locations)127 | Metric | Segment | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | % Change | | :------------------------------------------------- | :---------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Revenues | Americas RAC | 1,739 | 1,730 | 1% | | | International RAC | 341 | 317 | 8% | | | Total | 2,080 | 2,047 | 2% | | Depreciation of revenue earning vehicles and lease charges, net | Americas RAC | 876 | 349 | NM | | | International RAC | 93 | 32 | NM | | | Total | 969 | 381 | NM | | Adjusted EBITDA | Americas RAC | (488) | 261 | NM | | | International RAC | (27) | 53 | NM | | | Total | (567) | 237 | NM | - The significant increase in depreciation of revenue earning vehicles and lease charges, net, in both segments was primarily due to write-downs on EVs classified as held for sale129 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Hertz's financial condition and results of operations for the three months ended March 31, 2024, highlighting key performance drivers, segment results, and liquidity. It emphasizes the impact of vehicle depreciation, particularly from EV sales, on profitability and discusses the company's strategic focus and market risks Our Company This section provides an overview of the company's structure and core business activities - Hertz Global Holdings, Inc. is the top-level holding company for The Hertz Corporation, which operates vehicle rental and leasing businesses globally under Hertz, Dollar, and Thrifty brands, and also sells vehicles via Hertz Car Sales144145 Overview of Our Business and Operating Environment This section describes the company's business model, operating environment, and key factors influencing profitability - Profitability is a function of rental volume, mix, pricing, vehicle utilization, vehicle ownership costs, and other operating costs. Significant changes in vehicle purchase price, residual values, or interest rates can impact profitability146 - The Company's strategy focuses on operational excellence, distinct product offerings through its brands, leadership in ride-share, and direct-to-consumer vehicle sales147 - Revenues are primarily derived from rental and related charges, including airport concession fees, vehicle license fees, fueling/charging, value-added services, vehicle damages, retail vehicle sales, and franchisee royalty fees148150 - Key expenses include direct vehicle and operating expenses (wages, commissions, facility, self-insurance, maintenance, fuel), depreciation of revenue earning vehicles, non-vehicle depreciation/amortization, SG&A, and interest expense151 - The vehicle rental business is seasonal, with decreased activity in winter and heightened activity in spring/summer, requiring flexible fleet and staffing adjustments151 Three Months Ended March 31, 2024 Operating Overview This section provides a high-level summary of the company's operational performance for the first quarter of 2024 - Approximately 50% of the First EV Disposal Group was sold, resulting in an $81 million charge (inclusive of sales losses and write-downs on remaining vehicles) in Americas RAC153 - The Second EV Disposal Group (approx. 10,000 EVs) was classified as held for sale due to excess supply, high damage costs, and declining residual values, leading to write-downs of $107 million (Americas RAC) and $7 million (International RAC)153 Consolidated Results of Operations – Hertz This section analyzes the consolidated financial performance of The Hertz Corporation for the reporting period | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | % Change | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Total revenues | 2,080 | 2,047 | 2% | | Direct vehicle and operating expenses | 1,366 | 1,221 | 12% | | Depreciation of revenue earning vehicles and lease charges, net | 969 | 381 | 154% | | Selling, general and administrative expenses | 162 | 221 | (27%) | | Interest expense, net | 216 | 162 | 33% | | Net income (loss) | (272) | 314 | NM | | Adjusted Corporate EBITDA | (567) | 237 | NM | - The significant increase in depreciation of revenue earning vehicles and lease charges, net, was due to deteriorating residual values, per unit losses on vehicle dispositions (vs. gains in 2023), EV write-downs, and an increase in Average Vehicles162 - SG&A decreased primarily due to a non-cash stock-based compensation gain from former CEO award forfeitures and intercompany royalty assessment fees, partially offset by increased restructuring costs163 Consolidated Results of Operations – Hertz Global This section analyzes the consolidated financial performance of Hertz Global Holdings, Inc. for the reporting period - Hertz Global's results are consistent with Hertz, with the additional impact of an $86 million income from the change in fair value of Public Warrants in Q1 2024, compared to a $118 million loss in Q1 2023168 Results of Operations and Selected Operating Data by Segment This section presents detailed financial results and key operating metrics for each business segment Americas RAC This section details the financial performance and operating data for the Americas Rental and Car segment | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | % Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total revenues | 1,739 | 1,730 | 1% | | Depreciation of revenue earning vehicles and lease charges, net | 876 | 349 | NM | | Direct vehicle and operating expenses | 1,152 | 1,039 | 11% | | Selling, general and administrative expenses | 124 | 105 | 18% | | Vehicle interest expense | 116 | 93 | 25% | | Adjusted EBITDA | (488) | 261 | NM | | Transaction Days (thousands) | 30,560 | 27,879 | 10% | | Average Rentable Vehicles (units) | 433,823 | 393,512 | 10% | | Vehicle Utilization | 77% | 79% | (2) pp | | Total RPD ($) | 56.92 | 62.08 | (8%) | | Total RPU Per Month ($) | 1,337 | 1,466 | (9%) | | Depreciation Per Unit Per Month ($) | 649 | 282 | 130% | - The increase in Transaction Days was driven by volume increases across most leisure categories and ride sharing, while Total RPD declined due to lower rates172 - Depreciation of revenue earning vehicles and lease charges, net, increased significantly due to deteriorating residual values, per unit losses on vehicle dispositions, EV write-downs, and an increase in Average Vehicles173 International RAC This section details the financial performance and operating data for the International Rental and Car segment | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | % Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total revenues | 341 | 317 | 8% | | Depreciation of revenue earning vehicles and lease charges, net | 93 | 32 | NM | | Direct vehicle and operating expenses | 216 | 182 | 19% | | Selling, general and administrative expenses | 57 | 37 | 53% | | Vehicle interest expense | 25 | 18 | 38% | | Adjusted EBITDA | (27) | 53 | NM | | Transaction Days (thousands) | 6,294 | 5,908 | 7% | | Average Rentable Vehicles (units) | 95,409 | 89,776 | 6% | | Vehicle Utilization | 72% | 72% | 0 pp | | Total RPD ($) | 55.52 | 55.06 | 1% | | Total RPU Per Month ($) | 1,221 | 1,208 | 1% | | Depreciation Per Unit Per Month ($) | 326 | 120 | 172% | - Transaction Days increased due to higher volume in leisure categories, primarily in Europe179 - Depreciation of revenue earning vehicles and lease charges, net, increased due to per unit losses on vehicle dispositions, deteriorating residual values, increased Average Vehicles, and EV write-downs180 Footnotes to the Results of Operations and Selected Operating Data by Segment Tables This section provides additional context and definitions for the segment results and operating data tables - Adjusted Corporate EBITDA is a non-GAAP measure used by management and investors to assess operational performance, excluding certain items140184 - Key metrics defined include: Total Revenue Per Transaction Day (Total RPD), Total Revenue Per Unit Per Month (Total RPU), Transaction Days, Vehicle Utilization, and Depreciation Per Unit Per Month148192194195 Liquidity and Capital Resources This section discusses the company's ability to meet its short-term and long-term financial obligations and funding sources Cash and Cash Equivalents This section provides details on the company's cash and cash equivalents, including restricted amounts | Metric | March 31, 2024 (Millions USD) | | :--------------------------------- | :----------------------------- | | Cash and cash equivalents | 465 | | Restricted cash and cash equivalents | 480 | - Management believes current liquidity, operating cash flows, vehicle disposal proceeds, and available financing will be sufficient to fund operations for the next twelve months and foreseeable future200 Cash Flows - Hertz This section analyzes the cash flow activities for The Hertz Corporation | Cash Flow Activity | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Operating activities | 370 | 561 | (191) | | Investing activities | (703) | (1,488) | 785 | | Financing activities | 85 | 740 | (655) | - Decrease in operating cash flows was due to a $270 million change in net income (adjusted for non-cash items), partially offset by a $79 million working capital change201 - Decrease in cash used in investing activities was primarily due to a $947 million decrease in net revenue earning vehicle expenditures202 - Decrease in financing cash inflows was due to a $1.2 billion decrease in net proceeds from vehicle debt issuances, partially offset by a $450 million increase in non-vehicle debt proceeds and a $116 million reduction in dividends paid to Hertz Holdings203205 Cash Flows - Hertz Global This section analyzes the cash flow activities for Hertz Global Holdings, Inc. - Hertz Global's cash flow fluctuations are consistent with Hertz, except for cash flows related to common stock issuance/repurchase and Public Warrant exercises206 Share Repurchase Programs for Common Stock This section outlines the company's share repurchase activities and program status - The 2022 Share Repurchase Program is suspended from April 16, 2024, to April 1, 2025, due to Amendment No. 8 of the First Lien Credit Agreement207 - Since inception, $1.1 billion has been used to repurchase 66,684,169 shares; no repurchases occurred in Q1 2024207 Debt Financing This section details the company's debt financing arrangements, including interest expenses and liquidity | Interest Type | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Vehicle interest, net | 121 | 96 | 25 | | Non-vehicle interest, net | 58 | 36 | 22 | | Metric | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Corporate liquidity | 1,331 | 2,030 | (699) | | Cash and cash equivalents | 465 | 764 | (299) | | Availability under the First Lien RCF | 866 | 1,266 | (400) | - Amendment No. 8 to the First Lien Credit Agreement, effective April 2024, adjusts the First Lien Ratio and introduces a minimum liquidity covenant ($400M for Q2/Q3 2024, $500M for Q4 2024/Q1 2025), which will sunset in Q2 2025214 - Vehicle debt facilities were amended in April 2024 to extend maturities and increase borrowing capacities for HVF III Series 2021-A Notes, Hertz Canadian Securitization, and European ABS216218 Capital Expenditures This section provides an overview of the company's investments in revenue-earning vehicles and other capital assets Revenue Earning Vehicles Expenditures and Disposals This section details capital expenditures and proceeds from disposals related to revenue-earning vehicles | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | % Change | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Revenue Earning Vehicles Capital Expenditures | (1,904) | (2,824) | 920 | (33%) | | Revenue Earning Vehicles Disposal Proceeds | 1,233 | 1,206 | 27 | 2% | | Net Capital Expenditures | (671) | (1,618) | 947 | (59%) | | Segment | Three Months Ended March 31, 2024 Net Capital Expenditures (Millions USD) | Three Months Ended March 31, 2023 Net Capital Expenditures (Millions USD) | Change (Millions USD) | % Change | | :---------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------- | :-------------------- | :--------- | | Americas RAC | (822) | (1,585) | 763 | (48%) | | International RAC | 151 | (33) | 184 | NM | | Total | (671) | (1,618) | 947 | (59%) | Non-Vehicle Capital Asset Expenditures and Disposals This section details capital expenditures and proceeds from disposals related to non-vehicle assets | Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Non-Vehicle Capital Expenditures | (33) | (45) | 12 | | Non-Vehicle Disposal Proceeds | 3 | 175 | (172) | | Net Capital Expenditures | (30) | 130 | (160) | - The decrease in disposal proceeds was primarily due to the sale of certain non-vehicle capital assets in March 2023, with no comparable transaction in Q1 2024226 Contractual and Other Obligations This section describes the company's significant contractual commitments and other financial obligations - No material changes to contractual and other obligations outside the ordinary course of business since the 2023 Form 10-K227 Off-Balance Sheet Commitments and Arrangements This section outlines the company's off-balance sheet arrangements and potential liabilities - No significant changes to indemnification obligations compared to the 2023 Form 10-K229 Recently Issued Accounting Pronouncements This section discusses the impact of new accounting standards on the company's financial reporting - No significant changes due to recently issued accounting pronouncements compared to the 2023 Form 10-K231 Cautionary Note Regarding Forward-Looking Statements This section advises readers on the inherent uncertainties and risks associated with forward-looking statements - Forward-looking statements are not guarantees of future performance and actual results may differ materially due to various important factors234 - Key risk factors include: mix of program and non-program vehicles and residual value risk, ability to purchase and dispose of vehicles efficiently, levels of travel demand, ability to implement business strategy (including EV fleet), competitive environment, reliance on third-party distribution, cybersecurity threats, regulatory compliance, and availability of financing236239 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section describes the company's exposure to market risks and its strategies for managing them - The Company is exposed to market risks from interest rates, foreign currency exchange rates, and fuel prices, managed through operating activities and non-speculative derivative financial instruments244 - No material changes to market risk disclosures compared to the 2023 Form 10-K245 ITEM 4. CONTROLS AND PROCEDURES Both Hertz Global Holdings, Inc. and The Hertz Corporation's management concluded that their disclosure controls and procedures were effective as of March 31, 2024. There were no material changes in internal control over financial reporting during the quarter Hertz Global This section confirms the effectiveness of Hertz Global's disclosure controls and internal financial reporting controls - Hertz Global's disclosure controls and procedures were effective as of March 31, 2024246 - No material changes in internal control over financial reporting occurred during Q1 2024247 Hertz This section confirms the effectiveness of The Hertz Corporation's disclosure controls and internal financial reporting controls - The Hertz Corporation's disclosure controls and procedures were effective as of March 31, 2024248 - No material changes in internal control over financial reporting occurred during Q1 2024249 PART II. OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, and other miscellaneous information ITEM 1. LEGAL PROCEEDINGS This item refers to Note 12, "Contingencies and Off-Balance Sheet Commitments," in Part I, Item 1 for a description of pending legal proceedings - For a description of certain pending legal proceedings, refer to Note 12, "Contingencies and Off-Balance Sheet Commitments," in Part I, Item 1251 ITEM 1A. RISK FACTORS There have been no material changes to the risk factors previously disclosed in the Company's 2023 Form 10-K - No material changes to the risk factors disclosed in the 2023 Form 10-K252 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS No unregistered sales of equity securities or use of proceeds were reported for the period - None253 ITEM 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities were reported for the period - None254 ITEM 5. OTHER INFORMATION No director or officer entered into Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q1 2024 - No director or officer entered into Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q1 2024255 ITEM 6. EXHIBITS This item refers to the Exhibit Index for a list of exhibits filed as part of this Quarterly Report - The attached Exhibit Index lists all exhibits filed as part of this Quarterly Report256 EXHIBIT INDEX This section provides a detailed list of exhibits filed with the Form 10-Q, including various agreements, certifications, and XBRL documents - The Exhibit Index includes forms of Restricted Stock Unit Agreement (2024) and Performance Stock Unit Agreement (2024) under the 2021 Omnibus Incentive Plan, and an Employment Agreement for Gil West259 - Certifications from the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) are filed/furnished259 SIGNATURE The report was signed on April 25, 2024, by Alexandra Brooks, Executive Vice President and Chief Financial Officer, on behalf of Hertz Global Holdings, Inc. and The Hertz Corporation - The report was signed on April 25, 2024, by Alexandra Brooks, Executive Vice President and Chief Financial Officer263