Hertz(US:HTZ)2024-04-25 17:17Financial Data and Key Metrics Changes - Revenue for the quarter was $2.1 billion, slightly up year-over-year, but the adjusted corporate EBITDA loss was $567 million, which was deemed unacceptable [34][122] - The direct operating expense (DOE) per transaction day was $37.08, flat compared to Q4 despite inflationary pressures, with March showing a sequential improvement to $35 [162][163] - The net corporate debt at the end of Q1 was $3.25 billion, above the long-term leverage ambition, with a plan to deleverage over time as operational initiatives yield improved profitability [37][166] Business Line Data and Key Metrics Changes - The core rental fleet was up only 2% year-over-year, indicating a tighter fleet management strategy [10][138] - The company plans to reduce vehicles with higher mileage by 75% and complete the rotation out of preowned vehicles by early 2025, which is expected to lower vehicle depreciation and direct operating expenses [11][20] - Value-added services (VAS) revenue saw double-digit year-over-year improvements through enhanced offerings, focusing on selling upgrades [15] Market Data and Key Metrics Changes - Volume for the quarter increased by 9% compared to 2023, driven by higher volume in leisure and rideshare [21] - The company noted that travel indicators, including airline data, are up in the mid-single-digit range, suggesting a positive outlook for demand [45] Company Strategy and Development Direction - The company is focused on operational excellence, cost management, and improving unit economics to drive profitability [7][120] - There is a strong emphasis on fleet management, ensuring that the fleet size remains below projected demand to optimize revenue per day (RPD) [23][175] - The company aims to grow premium revenues and improve customer experience through digital tools and partnerships, particularly in the rideshare segment [161][170] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q1 but expressed optimism about the company's potential and the ongoing initiatives to improve performance [34][168] - The company expects to see benefits from cost initiatives and fleet rotation, with a focus on achieving a competitive cost advantage [51][66] - Management highlighted the importance of customer loyalty and the need to enhance the customer experience to drive pricing power [91][108] Other Important Information - The company plans to reduce its EV fleet by 30,000 vehicles by the end of the year, which is expected to lower operating costs [32][30] - The available liquidity at March 31st was $1.3 billion, providing sufficient capacity to execute the planned fleet refresh [166] Q&A Session Summary Question: Overview of business direction - Management sees potential for growth and emphasizes the need to run leaner and improve fleet utilization while aligning fleet mix with core demand [172][173] Question: Fleet rotation and EV sales - The company plans to keep the fleet well below demand to optimize mix and yield opportunities [175] Question: Performance of ICE vs EV vehicles - EV residuals are declining at a more severe rate than ICE vehicles, impacting depreciation [183] Question: Liquidity management - Fleet management is a key tool for liquidity, with plans to rotate out higher cap cost vehicles [188] Question: Customer experience and brand strength - Management believes there is a strong correlation between customer experience and pricing power, with ongoing initiatives to improve service [107][108]