On August 1, 2024, Hertz Global Holdings Inc (HTZ, Financial) released its 8-K filing for the second quarter of 2024. Hertz Global Holdings Inc is engaged in the vehicle rental and leasing business and operates an automotive vehicle rental service through the Hertz, Dollar, Thrifty, and Firefly brands. The company offers cars, crossovers, and light trucks for rent; ancillary products and services; rental of industrial, construction, and other services. Its operating segments are organized based on the products and services provided and the geographic areas: Americas RAC, which derives maximum revenue, includes rental of vehicles, as well as sales of value-added services, in the U.S., Canada, Latin America, and the Caribbean; and International RAC, which includes rental of vehicles, as well as sales of value-added services, in locations other than the U.S., Canada, Latin America, and the Caribbean.
Performance and Challenges
Hertz Global Holdings Inc reported revenue of $2.4 billion for the second quarter, falling short of the analyst estimate of $2.8 billion. The company posted a GAAP net loss of $865 million, translating to a loss of $2.82 per diluted share. This is a significant decline compared to the net income of $139 million in the same quarter last year. The adjusted net loss stood at $440 million, or $1.44 per diluted share, missing the analyst estimate of $0.09 loss per share.
The company's performance was impacted by an increase in vehicle depreciation, which rose by $706 million compared to the prior year quarter. This was largely driven by the acceleration of the company's fleet refresh, which shortened the hold period on a substantial portion of its fleet. Direct operating expenses also increased by 7% year-over-year, driven by insurance, personnel, and collision and damage costs, as well as general inflationary pressure.
Financial Achievements
Despite the challenges, Hertz Global Holdings Inc raised $1 billion during the quarter to bolster liquidity and de-risk its fleet refresh. The company reported corporate liquidity of $1.8 billion as of June 30, 2024. The company’s GAAP operating cash flow was $546 million, although the adjusted operating cash outflow was $576 million, and the adjusted free cash outflow was $553 million.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Total Revenues | $2.4 billion | $2.4 billion | (3)% |
| Net Income (Loss) | $(865) million | $139 million | NM |
| Adjusted Net Income (Loss) | $(440) million | $227 million | NM |
| Adjusted Corporate EBITDA | $(460) million | $347 million | NM |
Balance Sheet and Cash Flow
As of June 30, 2024, Hertz Global Holdings Inc reported total assets of $25.2 billion, up from $24.6 billion at the end of 2023. The company’s total debt increased to $17.4 billion from $15.7 billion, reflecting the additional $1 billion raised during the quarter. Cash and cash equivalents stood at $568 million, down from $764 million at the end of 2023.
Analysis
The second quarter results highlight the significant challenges Hertz Global Holdings Inc faces in managing its fleet and controlling costs amid inflationary pressures. The increased vehicle depreciation and direct operating expenses have significantly impacted the company's profitability. However, the company's efforts to raise liquidity and expedite its fleet refresh are positive steps towards stabilizing its financial position.
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Explore the complete 8-K earnings release (here) from Hertz Global Holdings Inc for further details.
