Hertz(US:HTZ)2023-07-27 16:39Financial Data and Key Metrics Changes - Revenue for the second quarter was $2.4 billion, up 19% sequentially, with adjusted corporate EBITDA at $347 million, reflecting strong demand and lower fleet carrying costs [16][22] - Revenue per day (RPD) in Q2 was $61.14, up from Q1, although down year-over-year due to last year's tight fleet levels [17][40] - Adjusted corporate EBITDA margin was 14%, with depreciation per unit at $195, favorable compared to previous expectations [18][22] Business Line Data and Key Metrics Changes - Rideshare revenue grew by 84% year-over-year and 14% sequentially, with transaction days increasing by 69% year-over-year [6][40] - Fleet utilization reached 82%, 400 basis points higher than Q1 and 230 basis points better year-over-year, enabling better pricing and higher revenue per unit [4][41] - Direct operating expenses (DOE) per transaction day improved by $2 sequentially to $34, driven by better internal labor productivity [23] Market Data and Key Metrics Changes - International inbound volume was at 78% of 2019 levels, with strong demand from American travelers to Europe [40][66] - The company noted a continuing tailwind in US inbound travel and further recovery in business travel, with no current evidence of softening demand [5][40] Company Strategy and Development Direction - The company is focusing on a dynamic approach to fleet management, emphasizing high utilization to command better pricing and improve margins [4][10] - Strategic initiatives include revitalizing the Dollar brand and enhancing digital properties to capture a younger, value-driven consumer [12] - The company is investing in the largest EV rental fleet in North America, positioning itself for long-term value through electrification and fleet management [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued demand growth, with expectations for a sequential uptick in revenue and improved RPD in Q3 [25][40] - The company acknowledged risks of a weaker economy but maintained a positive outlook based on strong travel trends prevailing over economic concerns [5][40] - Management highlighted the importance of disciplined fleet management in a declining residual environment, focusing on profitable channels for vehicle disposition [51][67] Other Important Information - The company repurchased 6.3 million shares for $100 million, with approximately $950 million remaining under the board's authorization [42] - The transition to cloud-based operations is expected to yield significant cost savings by reducing reliance on third-party service providers [11][62] Q&A Session Summary Question: Outlook for 2024 and demand expectations - Management sees no abatement in baseline demand fundamentals, expecting continued growth in Rideshare, Europe, and Dollar [28] Question: Impact of depreciation and vehicle sales - The company noted $110 million gains on car sales in Q2, with expectations for a dynamic fleet impacting future depreciation rates [54][55] Question: Expense management during cloud transition - Management indicated that transitioning to the cloud will lead to significant savings by reducing reliance on third-party providers [62] Question: Update on Hertz and Uber partnership in Europe - The partnership is starting in London and Amsterdam, with expectations for better risk management and potential for improved economics compared to the US [64]