Hertz(US:HTZ)2025-11-04 15:00Financial Data and Key Metrics Changes - The company achieved $2.5 billion in revenue and delivered adjusted corporate EBITDA of $190 million, marking a $350 million year-over-year improvement and positive EPS for the first time in two years [5][28]. - The average fleet age is now under 12 months, with a record high utilization rate of 84%, the highest since 2018 [6][29]. - Direct operating expenses (DOE) per day improved both year-over-year and sequentially, while maintaining a sub-$350 DPU goal [7][29]. Business Line Data and Key Metrics Changes - Revenue per unit (RPU) came in at $1,530, nearly flat year-over-year, with record utilization driving performance despite a 7% smaller fleet [17][28]. - The company reported a 2% year-over-year improvement in RPU across the total fleet, with utilization across the total fleet improving by 460 basis points [18][29]. - The rent-to-buy program has a 70% purchase conversion rate, significantly exceeding traditional dealership rates [11]. Market Data and Key Metrics Changes - The international segment saw strong margins with larger RPD and RPU gains, indicating a robust pricing environment [28]. - Inbound demand remains down low single digits year-over-year, particularly affected by EMEA and Australia/New Zealand markets [66]. - Corporate demand showed improvement in October, indicating a positive trend moving into Q4 [64]. Company Strategy and Development Direction - The company is focused on transforming its rental car business while simultaneously laying the groundwork for a diversified, value-creating platform spanning rental car, fleet, service, and mobility [9][14]. - The strategy includes enhancing customer experience, optimizing fleet management, and leveraging e-commerce channels to drive sales [12][20]. - The company aims to grow its mobility business, including partnerships with rideshare companies and exploring autonomous vehicle opportunities [14][45]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for a stable setup in 2026, with expectations for mid-single-digit growth in transaction days and fleet size [33][36]. - The company anticipates challenges in Q4 due to government shutdown impacts and external system outages, which may affect revenue [32][68]. - Management emphasized the importance of execution and maintaining focus on core rental operations while expanding into new areas [39][45]. Other Important Information - The company ended the quarter with $2.2 billion in total liquidity, including $1.1 billion in unrestricted cash [30]. - The company completed a $425 million senior unsecured exchangeable note issuance, with plans to use part of the proceeds to redeem a $500 million bond maturing in December 2026 [30]. - The company is targeting a 3%-6% EBITDA margin for 2026, aiming for $1 billion in EBITDA production by 2027 [36]. Q&A Session Summary Question: Can you unpack what becoming a value-creating mobility platform means in practice? - Management highlighted that while the rental car business remains core, there are additional growth opportunities in car sales, service, and mobility, leveraging their existing infrastructure and customer base [41][42]. Question: Are the economics on a smaller vehicle footprint better despite potential RPD headwinds? - Management acknowledged RPD headwinds but emphasized the dynamic nature of vehicle mix optimization based on customer demand and market conditions [46][48]. Question: What are the expectations for DPU and fleet mix for next year? - Management indicated that the broader fleet strategy and stable residuals would support achieving sub-$300 DPU targets, with a focus on optimizing vehicle sales channels [54][55]. Question: Can you provide insights on international demand and market performance? - Management noted substantial improvement in airport demand and positive trends in corporate demand, although inbound demand remains slightly down year-over-year [62][64].