Hertz Reports Significant Year-Over-Year First Quarter Improvement

- Company increases 2012 guidance to $1.38 Adjusted EPS and $1.66B Corporate EBITDA at the high end of the range.

May 02, 2012, 16:31 ET from Hertz Global Holdings, Inc.

PARK RIDGE, N.J., May 2, 2012 /PRNewswire/ --

  • Worldwide revenues for the quarter up 10.2% year-over-year ("YOY").
  • First quarter record worldwide car rental revenues of $1,658.2 million, on record transaction days; worldwide equipment rental revenues increased 12.6% YOY, U.S. equipment rental rate revenue increased 20%.
  • Record first quarter adjusted pre-tax income(1) of $29.4 million, compared with a $16.0 million adjusted pre-tax loss in the prior year period. GAAP pre-tax loss for the first quarter of $36.8 million, versus a loss of $158.9 million in the first quarter of 2011.
  • U.S. car rental adjusted pre-tax income for the first quarter up 34.9% YOY, on a margin improvement of 240 bps; worldwide equipment rental adjusted pre-tax income up 153.9% for the quarter, on a margin improvement of 480 bps.
  • Adjusted diluted earnings per share(1) for the quarter of $0.05 versus a loss per share of $0.03 in the first quarter of 2011. GAAP diluted loss per share for the quarter of $0.13 versus a loss of $0.32 in the first quarter of 2011.
  •  2012 guidance increased for revenues, corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share.

Hertz Global Holdings, Inc. (NYSE: HTZ) (with its subsidiaries, the "Company" or "we") reported first quarter 2012 worldwide revenues of $2.0 billion, an increase of 10.2% year-over-year (a 10.7% increase excluding the effects of foreign currency). Worldwide car rental revenues for the quarter increased 9.8% year-over-year (a 10.3% increase excluding the effects of foreign currency) to $1,658.2 million. Revenues from worldwide equipment rental for the first quarter were $302.1 million, up 12.6% year-over-year (a 13.4% increase excluding the effects of foreign currency).

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First quarter 2012 adjusted pre-tax income was $29.4 million, versus an adjusted pre-tax loss of $16.0 million in the same period in 2011, and loss before income taxes ("pre-tax loss"), on a GAAP basis, was $36.8 million, versus a pre-tax loss of $158.9 million in the first quarter of 2011. Corporate EBITDA(1) for the first quarter of 2012 was $208.0 million, an increase of 25.0% from the same period in 2011.

First quarter 2012 adjusted net income(1) was $19.4 million, versus a loss of $14.2 million in the same period of 2011, resulting in adjusted diluted earnings per share for the quarter of $0.05, compared with an adjusted diluted loss per share of $0.03 for the first quarter of 2011. First quarter 2012 net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, or "net loss," on a GAAP basis, was $56.3 million or $0.13 per share on a diluted basis, compared with a loss of $132.6 million, or $0.32 per share on a diluted basis, for the first quarter of 2011.

Mark P. Frissora, the Company's Chairman and Chief Executive Officer, said, "We are gratified by strong first quarter 2012 results, further validating our long-term, balanced approach to running global businesses, which generated double-digit revenue and profit growth despite difficult conditions in Europe."

INCOME MEASUREMENTS, FIRST QUARTER 2012 & 2011



Q1 2012


Q1 2011


(in millions, except per share amounts)


Pre-tax

Income (Loss)


Net

Income  (Loss)


Diluted

Earnings (Loss)

Per Share


Pre-tax

Income (Loss)



 Net

Income (Loss)


Diluted Earnings (Loss)

Per Share


Earnings Measures, as reported  (EPS   based on 418.1M and 414.1M diluted shares, respectively)


$

(36.8)


$

(56.3)


$

(0.13)


$

(158.9)


$

(132.6)


$

(0.32)


Adjustments:





















Purchase accounting                                                                               



24.1









20.6









Non-cash debt charges



25.2









59.9









Restructuring and related charges



10.0









5.4









Acquisition related costs



6.9









2.8









Management transition costs



-









2.5









Premiums paid on debt



-









51.7








Adjusted pre-tax income (loss)



29.4



29.4






(16.0)



(16.0)





Assumed (provision) benefit for income taxes at 34%






(10.0)









5.5





Noncontrolling interest






-









(3.7)





Earnings Measures, as adjusted (EPS based on 418.1M and 413.0M diluted shares, respectively)


$

29.4


$

19.4


$

0.05


$

(16.0)


$

(14.2)


$

(0.03)






















Net cash provided by operating activities was $492.0 million in the first quarter of 2012, compared to $165.6 million in the same period last year, an increase of $326.4 million. The increase was primarily due to the timing of interest and other corporate payments, as well as an increase in net income before depreciation and amortization. Additionally, corporate cash flow(1) improved by $73.4 million due to the reasons stated above, as well as due to favorable timing of fleet payables and lower financing costs, partially offset by cash used for acquisitions. The Company ended the first quarter of 2012 with total debt of $11.4 billion and net corporate debt (1) of $3.96 billion, compared with total debt of $11.3 billion and net corporate debt of $3.68 billion as of December 31, 2011.

WORLDWIDE CAR RENTAL

Worldwide car rental revenues were $1,658.2 million for the first quarter of 2012, an increase of 9.8% (a 10.3% increase excluding the effects of foreign currency) from the prior year period. The Company achieved record transaction days for the quarter which increased 6.8% over the first quarter of 2011 [9.6% U.S.; 0.2% International]. U.S. off-airport total revenues for the first quarter increased 8.2% year-over-year, and transaction days increased 10.9% from the prior year period. Worldwide rental rate revenue per transaction day(1) ("RPD") for the quarter decreased 3.9% [(4.4)% U.S.; (2.4)% International] from the prior year period. RPD continues to be impacted by the shift in our mix between airport and off-airport rentals. When adjusted for mix, first quarter U.S. total RPD decreased 3.0%, with the leisure business decreasing 2.4%. Growth in off-airport rentals, and specifically growth in replacement rentals, which have longer rental lengths, has a negative impact on RPD. However, it is important to note that off-airport's profit contribution is growing significantly.

Worldwide car rental adjusted pre-tax income for the first quarter of 2012 was $91.6 million, an increase of $30.3 million from $61.3 million in the prior year period. The result was driven by increased volume, robust residual values, and strong cost management performance, partially offset by a decrease in RPD. As a result, worldwide car rental achieved an adjusted pre-tax margin(1) of 5.5% for the quarter, versus 4.1% in the prior year period.

The worldwide average number of Company-operated cars for the first quarter of 2012 was 595,300, an increase of 39.3% over the prior year period, largely as a result of the Donlen acquisition, and a 6.2% increase year-over-year excluding the effects of the Donlen acquisition.

WORLDWIDE EQUIPMENT RENTAL

Worldwide equipment rental revenues were $302.1 million for the first quarter of 2012, a 12.6% increase (a 13.4% increase excluding the effects of foreign currency) from the prior year period.

Adjusted pre-tax income for worldwide equipment rental for the first quarter of 2012 was $25.9 million, an improvement of $15.7 million from $10.2 million in the prior year period, primarily attributable to the effects of increased volume and pricing and cost management initiatives. Worldwide equipment rental achieved an adjusted pre-tax margin of 8.6% and a Corporate EBITDA margin(1) of 35.6% for the quarter.

The average acquisition cost of rental equipment operated during the first quarter of 2012 increased by 5.3% year-over-year and net revenue earning equipment as of March 31, 2012 was $1,911.1 million, compared to $1,786.7 million as of December 31, 2011.

Commenting on the Company's business unit results for the first quarter of 2012, Mark Frissora said, "In addition to generating strong organic revenue and earnings growth, especially in the United States, HERC completed two acquisitions, Cinelease and Arpielle, last quarter which are already contributing profitable, incremental revenue growth to our equipment rental results. Donlen, acquired last September, is a key component of our 2012 vehicle and equipment leasing and fleet management strategies for HERC and car rental. The global car rental business continues to generate exceptional adjusted pre-tax income growth, which should further improve now that conditions in Europe have stabilized. We are especially pleased that Advantage continues to be a significant growth engine, with global revenues up about 56.5% in April and U.S. advance reservations almost double 2011 levels for all periods forward. Additionally, the installation of Hertz on Demand's car sharing technology throughout our rental fleet over the next 12-18 months will provide consumers more options and control, and improve our efficiency, as we put the power of Hertz into the hands of our customers 24/7."

OUTLOOK

Hertz has increased its full year 2012 guidance for revenues, Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share as follows:



Revised Guidance


Prior Guidance


2011 Actual

Revenues


$8.9B to $9.0 B


$8.85B to $8.95 B


$8.3B

Corporate EBITDA(2)


$1.60B to $1.66 B


$1.52B to $1.59 B


$1.39B

Adjusted Pre-Tax Income (2)


$870M to $940 M


$790M to $860 M


$680.5M

Adjusted Net Income(2)


$570M to $620 M


$520M to $570 M


$429.6M

Adjusted Diluted Earnings Per Share(2)


$1.28 to $1.38


$1.16 to $1.26


$0.97

Adjusted diluted earnings per share are based on 450 million adjusted diluted shares outstanding.

RESULTS OF THE HERTZ CORPORATION

The Company's operating subsidiary, The Hertz Corporation ("Hertz"), posted the same revenues for the first quarter of 2012 as the Company. Hertz's first quarter 2012 pre-tax loss was $24.0 million versus the Company's pre-tax loss of $36.8 million. The difference between Hertz's and the Company's results is primarily due to additional interest expense recognized by the Company on its 5.25% Convertible Senior Notes issued in May and September 2009.

(1) Adjusted pre-tax income, adjusted pre-tax margin, Corporate EBITDA, Corporate EBITDA margin, adjusted net income, adjusted diluted earnings per share, corporate cash flow, net corporate debt and rental rate revenue per transaction day are non-GAAP measures. See the accompanying Tables and Exhibit for the reconciliations and definitions for each of these non-GAAP measures and the reason the Company's management believes that these measures provide useful information to investors regarding the Company's financial condition and results of operations.

(2) Management believes that Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share are useful in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share are (i) pre-tax income and cash flows from operating activities, (ii) pre-tax income, (iii) net income, and (iv) diluted earnings per share, respectively. Because of the forward-looking nature of the Company's forecasted Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share, specific quantifications of the amounts that would be required to reconcile forecasted cash flows from operating activities, pre-tax income and net income are not available. The Company believes that there is a degree of volatility with respect to certain of the Company's GAAP measures, primarily related to fair value accounting for its financial assets (which includes the Company's derivative financial instruments), its income tax reporting and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude the Company from providing accurate forecasted GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share to forecasted cash flows from operating activities, pre-tax income, net income and diluted earnings per share would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.

CONFERENCE CALL INFORMATION

The Company's first quarter 2012 earnings conference call will be held on Thursday, May 3, 2012, at 10:00 a.m. (EDT). To access the conference call live, dial 800-288-8975 in the U.S. and 612-332-0430 for international callers using the passcode: 245862 or listen via webcast at www.hertz.com/investorrelations. The conference call will be available for replay one hour following the conclusion of the call until May 17, 2012 by calling 800-475-6701 in the U.S. or 320-365-3844 for international callers with the passcode: 245862. The press release and related tables containing the reconciliations of non-GAAP measures will be available on our website, www.hertz.com/investorrelations.

ABOUT THE COMPANY

Hertz is the largest worldwide airport general use car rental brand, operating from approximately 8,650 corporate and licensee locations in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz is the number one airport car rental brand in the U.S. and at 119 major airports in Europe. In addition, the Company has sales and marketing centers in 60 countries which promote Hertz business both within and outside such country. Product and service initiatives such as Hertz Gold Choice, Hertz #1 Club Gold®, NeverLost® customized, onboard navigation systems, Sirius XM Satellite Radio, and unique cars and SUVs offered through the Company's Adrenaline, Prestige and Green Traveler Collections, set Hertz apart from the competition. In 2008, the Company entered the global car sharing market with its service now referred to as Hertz On Demand which rents cars by the hour and/or by the day, at various locations in the U.S., Canada and Europe. Hertz also operates one of the world's largest equipment rental businesses, Hertz Equipment Rental Corporation, offering a diverse line of rental equipment, from small tools and supplies to earthmoving equipment, as well as new and used equipment for sale, to customers ranging from major industrial companies to local contractors and consumers, from approximately 325 branches in the United States, Canada, China, France, Spain and Saudi Arabia, as well as through its international licensees. Hertz also owns Donlen Corporation, based in Northbrook, Illinois, which is a leader in providing fleet leasing and management services.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release and in related comments by our management include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning the Company's outlook, anticipated revenues and results of operations, as well as any other statement that does not directly relate to any historical or current fact. These forward-looking statements often include words such as "believe," "expect," "project," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors that the Company believes are appropriate in these circumstances. We believe these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative.

Among other items, such factors could include: our ability to obtain regulatory approval for and to consummate an acquisition of Dollar Thrifty Automotive Group; the risk that expected synergies, operational efficiencies and cost savings from a Dollar Thrifty acquisition may not be fully realized or realized within the expected time frame; the operational and profitability impact of divestitures that may be required to be undertaken to secure regulatory approval for an acquisition of Dollar Thrifty; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets, including on our pricing policies or use of incentives; occurrences that disrupt rental activity during our peak periods; our ability to achieve cost savings and efficiencies and realize opportunities to increase productivity and profitability; an increase in our fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs; our ability to accurately estimate future levels of rental activity and adjust the size of our fleet accordingly; our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning equipment and to refinance our existing indebtedness; safety recalls by the manufacturers of our vehicles and equipment; a major disruption in our communication or centralized information networks; financial instability of the manufacturers of our vehicles and equipment; any impact on us from the actions of our licensees, franchisees, dealers and independent contractors; our ability to maintain profitability during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); shortages of fuel and increases or volatility in fuel costs; our ability to successfully integrate acquisitions and complete dispositions; our ability to maintain favorable brand recognition; costs and risks associated with litigation; risks related to our indebtedness, including our substantial amount of debt and our ability to incur substantially more debt and increases in interest rates or in our borrowing margins; our ability to meet the financial and other covenants contained in our senior credit facilities, our outstanding unsecured senior notes and certain asset-backed and asset-based funding arrangements; changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on earnings; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect our operations, the cost thereof or applicable tax rates; changes to our senior management team; the effect of tangible and intangible asset impairment charges; the impact of our derivative instruments, which can be affected by fluctuations in interest rates and commodity prices; and our exposure to fluctuations in foreign exchange rates. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

The Company therefore cautions you against relying on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Tables and Exhibit:

Table 1:

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011

Table 2:

Condensed Consolidated Statements of Operations As Reported and As Adjusted for the Three Months Ended March 31, 2012 and 2011

Table 3:

Segment and Other Information for the Three Months Ended March 31, 2012 and 2011

Table 4:

Selected Operating and Financial Data as of or for the Three Months Ended March 31, 2012 compared to March 31, 2011 and Selected Balance Sheet Data as of March 31, 2012 and March 31, 2011

Table 5:

Non-GAAP Reconciliations of Adjusted Pre-Tax Income (Loss), Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) per Share for the Three Months Ended March 31, 2012 and 2011

Table 6:

Non-GAAP Reconciliations of EBITDA, Corporate EBITDA, Unlevered Pre-Tax Cash Flow, Levered After-Tax Cash Flow Before Fleet Growth and Corporate Cash Flow for the Three Months Ended March 31, 2012 and 2011

Table 7:

Non-GAAP Reconciliations of Operating Cash Flows to EBITDA for Three Months Ended March 31, 2012 and 2011, Net Corporate Debt, Net Fleet Debt and Total Net Debt as of March 31, 2012, 2011 and 2010 and December 31, 2011 and 2010, Car Rental Rate Revenue per Transaction Day and Equipment Rental and Rental Related Revenue for the Three Months Ended March 31, 2012 and 2011

Exhibit 1: Non-GAAP Measures: Definitions and Use/Importance

Table 1

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

Unaudited



Three Months Ended  


As a Percentage


March 31, 


of Total Revenues


2012


2011


2012



2011


Total revenues

$    1,960.9


$    1,780.0


100.0

%


100.0

%











Expenses:










Direct operating

1,115.1


1,073.7


56.9

%


60.3

%

Depreciation of revenue earning










equipment and lease charges

514.1


436.1


26.2

%


24.5

%

Selling, general and administrative    

207.8


182.2


10.6

%


10.2

%

Interest expense

162.3


196.9


8.3

%


11.1

%

Interest income

(1.1)


(1.9)


(0.1)

%


(0.1)

%

Other (income) expense,  net

(0.5)


51.9


-

%


2.9

%

Total expenses

1,997.7


1,938.9


101.9

%


108.9

%

Loss before income taxes

(36.8)


(158.9)


(1.9)

%


(8.9)

%

(Provision) benefit for taxes on income

(19.5)


30.0


(1.0)

%


1.7

%

Net loss

(56.3)


(128.9)


(2.9)

%


(7.2)

%

Less: Net income attributable to noncontrolling interest

0.0


(3.7)


0.0

%


(0.2)

%

Net loss attributable to Hertz Global Holdings,










Inc. and Subsidiaries' common stockholders

$        (56.3)


$     (132.6)


(2.9)

%


(7.4)

%











Weighted average number of  










shares outstanding:










     Basic

418.1


414.1







     Diluted

418.1


414.1

















Loss per share attributable to Hertz Global










Holdings, Inc. and Subsidiaries' common stockholders:










     Basic

$        (0.13)


$       (0.32)







     Diluted

$        (0.13)


$       (0.32)





























Table 2

HERTZ GLOBAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions)

Unaudited
















Three Months Ended March 31, 2012


Three Months Ended March 31, 2011



As




As


As




As



Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted

Total revenues


$  1,960.9


$             -


$ 1,960.9


$  1,780.0


$                 -


$ 1,780.0














Expenses:













Direct operating


1,115.1


(28.7)

(a)

1,086.4


1,073.7


(22.8)

(a)

1,050.9

Depreciation of revenue













earning equipment and lease charges


514.1


(2.9)

(b)

511.2


436.1


(2.3)

(b)

433.8

Selling, general and administrative


207.8


(9.4)

(c)

198.4


182.2


(6.2)

(c)

176.0

Interest expense 


162.3


(25.2)

(d)

137.1


196.9


(59.9)

(d)

137.0

Interest income


(1.1)


-


(1.1)


(1.9)


-


(1.9)

Other (income) expense,  net


(0.5)


-


(0.5)


51.9


(51.7)

(e)

0.2

Total expenses


1,997.7


(66.2)


1,931.5


1,938.9


(142.9)


1,796.0

Income (loss) before income taxes


(36.8)


66.2


29.4


(158.9)


142.9


(16.0)

Benefit (provision) for taxes on income


(19.5)


9.5

(f)

(10.0)


30.0


(24.5)

(f)

5.5

Net income (loss)  


(56.3)


75.7


19.4


(128.9)


118.4


(10.5)

Less: Net income attributable to noncontrolling interest      


0.0


-


0.0


(3.7)


-


(3.7)

Net income (loss) attributable to Hertz Global Holdings, Inc. and













Subsidiaries' common stockholders      


$     (56.3)


$       75.7


$      19.4


$   (132.6)


$         118.4


$     (14.2)















(a)  Represents the increase in amortization of other intangible assets, depreciation of property and equipment and accretion of certain revalued liabilities relating to purchase accounting.  For the three months ended March 31, 2012 and 2011, also includes restructuring and restructuring related charges of $8.1 million and $4.5 million, respectively.   

(b)  Represents the increase in depreciation of revenue earning equipment based upon its revaluation relating to purchase accounting.

(c)  Represents an increase in depreciation of property and equipment relating to purchase accounting. For the three months ended March 31, 2012 and 2011, also includes restructuring and restructuring related charges of $1.9 million and $0.8 million, respectively.  For all periods presented, also includes other adjustments which are detailed in Table 5.     

(d)  Represents non-cash debt charges relating to the amortization of deferred debt financing costs and debt discounts.

(e)  Represents premiums paid to redeem our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes.  

(f)  Represents a provision for income taxes derived utilizing a normalized income tax rate (34% for 2012 and 2011).


 




Table 3

HERTZ GLOBAL HOLDINGS, INC.

SEGMENT AND OTHER  INFORMATION

(In millions, except per share amounts)

Unaudited










Three Months Ended


 March 31, 


2012


2011

Revenues:




Car Rental

$      1,658.2


$       1,510.3

Equipment Rental

302.1


268.2

Other reconciling items

0.6


1.5


$      1,960.9


$       1,780.0





Depreciation of property and equipment:




Car Rental

$           30.8


$            27.5

Equipment Rental

8.4


8.3

Other reconciling items

3.1


1.9


$           42.3


$            37.7





Amortization of other intangible assets:




Car Rental

$             9.3


$              7.6

Equipment Rental

9.5


8.9

Other reconciling items

0.4


0.3


$           19.2


$            16.8





Income (loss) before income taxes:




Car Rental

$           61.5


$            41.0

Equipment Rental

10.2


(7.8)

Other reconciling items

(108.5)


(192.1)


$          (36.8)


$        (158.9)





Corporate EBITDA (a):




Car Rental

$         122.4


$            92.6

Equipment Rental

107.4


91.5

Other reconciling items

(21.8)


(17.7)


$         208.0


$          166.4





Adjusted pre-tax income (loss) (a):

Car Rental

$           91.6


$            61.3

Equipment Rental

25.9


10.2

Other reconciling items

(88.1)


(87.5)


$           29.4


$          (16.0)





Adjusted net income (loss) (a):

Car Rental

$           60.4


$            40.5

Equipment Rental

17.1


6.7

Other reconciling items

(58.1)


(61.4)


$           19.4


$          (14.2)





Adjusted diluted number of shares outstanding (a)    

418.1


413.0





Adjusted diluted income (loss) per share (a)     

$           0.05


$          (0.03)










(a)  Represents a non-GAAP measure, see the accompanying reconciliations and definitions.

Note:  "Other Reconciling Items" includes general corporate expenses, certain interest expense  (including net interest on corporate debt), as well as other business activities such as our third-party claim management services.  See Tables 5 and 6.





Table 4


HERTZ GLOBAL HOLDINGS, INC.

SELECTED OPERATING AND FINANCIAL DATA

Unaudited












Three


Percent



Months


change



Ended, or as


from



of Mar. 31,


prior year 



2012


period












Selected Car Rental Operating Data






Worldwide number of transactions (in thousands)    

6,388


6.0

%

Domestic (Hertz)

4,837


8.0

%

International (Hertz)

1,551


0.1

%






Worldwide transaction days (in thousands)    

31,669


6.8

%

Domestic (Hertz)

22,825


9.6

%

International (Hertz)

8,844


0.2

%






Worldwide rental rate revenue per transaction day (a)     

$           40.36


(3.9)

%

Domestic (Hertz)

$           39.54


(4.4)

%

International (Hertz) (b)

$           42.48


(2.4)

%






Worldwide average number of cars during period     

595,300


39.3

%

Domestic (Hertz company-operated)

320,500


8.4

%

International (Hertz company-operated)

133,300


1.2

%

Donlen (under lease and maintenance)

141,500


N/A







Worldwide revenue earning equipment, net (in millions)     

$        9,354.1


21.3

%






Selected Worldwide Equipment Rental Operating Data






Rental and rental related revenue (in millions) (a) (b)    

$           274.3


13.6

%

Same store revenue growth, including initiatives (a) (b)    

8.9

%

N/M


Average acquisition cost of revenue earning equipment operated    





during period (in millions)    

$        2,902.0


5.3

%

Worldwide revenue earning equipment, net (in millions)     

$        1,911.1


13.3

%






Other Financial Data (in millions)    






Cash flows provided by operating activities

$           492.0


197.1

%

Corporate cash flow (a)   

(280.2)


20.8

%

EBITDA (a)   

700.2


33.7

%

Corporate EBITDA (a)   

208.0


25.0

%






Selected Balance Sheet Data(in millions)


March 31,


December 31,



2012


2011


Cash and cash equivalents   

$           594.7


$              931.8


Total revenue earning equipment, net    

11,265.2


10,105.4


Total assets   

18,280.1


17,673.5


Total debt    

11,425.7


11,317.1


Net corporate debt (a)    

3,965.1


3,678.6


Net fleet debt (a)    

6,654.0


6,398.7


Total net debt (a)    

10,619.1


10,077.3


Total equity    

2,205.5


2,234.7












(a)    Represents a non-GAAP measure, see the accompanying reconciliations and definitions.

(b)    Based on 12/31/11 foreign exchange rates.

N/M Percentage change not meaningful.

 








Table 5

HERTZ GLOBAL HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES

(In millions, except per share amounts)

Unaudited









ADJUSTED PRE-TAX INCOME (LOSS), ADJUSTED NET INCOME (LOSS) AND 

ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE









Three Months Ended March 31, 2012






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total

Total revenues:

$  1,658.2


$     302.1


$         0.6


$  1,960.9

Expenses:








Direct operating and selling, general and administrative

1,065.4


217.3


40.2


1,322.9

Depreciation of revenue earning equipment and lease charges

451.7


62.4


-


514.1

Interest expense

80.5


12.8


69.0


162.3

Interest income

(0.9)


(0.1)


(0.1)


(1.1)

Other (income) expense,  net

-


(0.5)


-


(0.5)

Total expenses

1,596.7


291.9


109.1


1,997.7

Income (loss) before income taxes

61.5


10.2


(108.5)


(36.8)

Adjustments:








Purchase accounting (a):








Direct operating and selling, general and administrative

10.2


10.0


1.0


21.2

Depreciation of revenue earning equipment

2.9


-


-


2.9

Non-cash debt charges (b)

11.2


1.5


12.5


25.2

Restructuring charges (c)

5.2


4.2


-


9.4

Restructuring related charges (c)

0.6


-


-


0.6

Derivative (gains) losses (c)

-


-


-


-

Acquisition related costs (d)

-


-


6.9


6.9

Adjusted pre-tax income (loss)

91.6


25.9


(88.1)


29.4

Assumed (provision) benefit for income taxes of 34%

(31.2)


(8.8)


30.0


(10.0)

Noncontrolling interest

-


-


-


-

Adjusted net income (loss)

$       60.4


$       17.1


$      (58.1)


$       19.4

Adjusted diluted number of shares outstanding







418.1









Adjusted diluted income per share







$       0.05










Three Months Ended March 31, 2011






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total

Total revenues:

$  1,510.3


$     268.2


$         1.5


$  1,780.0

Expenses:








Direct operating and selling, general and administrative

1,026.4


197.7


31.8


1,255.9

Depreciation of revenue earning equipment and lease charges

368.9


67.2


-


436.1

Interest expense

75.4


11.1


110.4


196.9

Interest income

(1.4)


(0.1)


(0.4)


(1.9)

Other (income) expense,  net

-


0.1


51.8


51.9

Total expenses

1,469.3


276.0


193.6


1,938.9

Income (loss) before income taxes

41.0


(7.8)


(192.1)


(158.9)

Adjustments:








Purchase accounting (a):








Direct operating and selling, general and administrative

8.1


9.4


0.9


18.4

Depreciation of revenue earning equipment

-


2.2


-


2.2

Non-cash debt charges (b)

10.2


2.5


47.2


59.9

Restructuring charges (c)

1.0


3.9


-


4.9

Restructuring related charges (c)

0.5


-


-


0.5

Derivative losses (c)

0.5


-


(0.5)


-

Acquisition related costs (d)

-


-


2.8


2.8

Management transition costs (d)

-


-


2.5


2.5

Premiums paid on debt (e)

-


-


51.7


51.7

Adjusted pre-tax income (loss)

61.3


10.2


(87.5)


(16.0)

Assumed (provision) benefit for income taxes of 34%

(20.8)


(3.5)


29.8


5.5

Noncontrolling interest

-


-


(3.7)


(3.7)

Adjusted net income (loss)

$       40.5


$         6.7


$      (61.4)


$      (14.2)

Adjusted diluted number of shares outstanding







413.0









Adjusted diluted loss per share







$      (0.03)









(a)  Represents the purchase accounting effects of the acquisition of all of Hertz's common stock on December 21, 2005 on our results of operations relating to increased depreciation and amortization of tangible and intangible assets and accretion of workers' compensation and public liability and property damage liabilities.  Also represents the purchase accounting effects of subsequent acquisitions on our results of operations relating to increased depreciation and amortization of intangible assets.

(b)  Represents non-cash debt charges relating to the amortization of deferred debt financing costs and debt discounts.

(c)  Amounts are included within direct operating and selling, general and administrative expense in our statement of operations.

(d)  Amounts are included within selling, general and administrative expense in our statement of operations.


(e)  Represents premiums paid to redeem our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes.  These costs are included within other (income) expense, net in our statement of operations.

 

 








Table 6

HERTZ GLOBAL HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES

(In millions)

Unaudited









EBITDA, CORPORATE EBITDA, UNLEVERED PRE-TAX CASH FLOW,

LEVERED AFTER-TAX CASH FLOW BEFORE  FLEET GROWTH AND CORPORATE CASH FLOW










Three Months Ended March 31, 2012






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total



Income (loss) before income taxes

$       61.5


$       10.2


$    (108.5)


$      (36.8)

Depreciation, amortization and other purchase accounting

492.0


80.3


3.5


575.8

Interest, net of interest income

79.6


12.7


68.9


161.2

Noncontrolling interest

-


-


-


-

EBITDA

633.1


103.2


(36.1)


700.2

Adjustments:








Car rental fleet interest

(75.8)


-


-


(75.8)

Car rental fleet depreciation

(451.7)


-


-


(451.7)

Non-cash expenses and charges (a)

11.0


-


7.4


18.4

Extraordinary, unusual or non-recurring gains and losses (b)

5.8


4.2


6.9


16.9

Corporate EBITDA

$     122.4


$     107.4


$      (21.8)


208.0

Non-fleet capital expenditures, net







(26.6)

Changes in working capital:








Receivables, excluding car rental fleet receivables







(53.0)

Accounts payable







459.3

Accrued liabilities and other







(60.3)

Acquisition and other investing activities







(147.5)

Other financing activities, excluding debt







(55.2)

Foreign exchange impact on cash and cash equivalents







8.0

Unlevered pre-tax cash flow







332.7

Corporate net cash interest







(59.1)

Corporate cash taxes







(22.4)

Levered after-tax cash flow before fleet growth







251.2

Equipment rental revenue earning equipment expenditures, net of disposal proceeds




(111.2)

Car rental fleet equity requirement







(420.2)

Corporate cash flow







$    (280.2)


















Three Months Ended March 31, 2011






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total



Income (loss) before income taxes

$       41.0


$        (7.8)


$    (192.1)


$    (158.9)

Depreciation, amortization and other purchase accounting

404.3


84.4


2.5


491.2

Interest, net of interest income

74.0


11.0


110.0


195.0

Noncontrolling interest

-


-


(3.7)


(3.7)

EBITDA

519.3


87.6


(83.3)


523.6

Adjustments:








Car rental fleet interest

(69.7)


-


-


(69.7)

Car rental fleet depreciation

(368.9)


-


-


(368.9)

Non-cash expenses and charges (a)

10.4


-


8.6


19.0

Extraordinary, unusual or non-recurring gains and losses (b)

1.5


3.9


57.0


62.4

Corporate EBITDA

$       92.6


$       91.5


$      (17.7)


166.4

Non-fleet capital expenditures, net







(42.3)

Changes in working capital:








Receivables, excluding car rental fleet receivables







(10.9)

Accounts payable







247.2

Accrued liabilities and other







(200.3)

Acquisition and other investing activities







(8.6)

Other financing activities, excluding debt







(72.2)

Foreign exchange impact on cash and cash equivalents







21.7

Unlevered pre-tax cash flow







101.0

Corporate net cash interest







(135.8)

Corporate cash taxes







(11.6)

Levered after-tax cash flow before fleet growth







(46.4)

Equipment rental revenue earning equipment expenditures, net of disposal proceeds




(34.1)

Car rental fleet equity requirement







(273.1)

Corporate cash flow







$    (353.6)

















(a) As defined in the credit agreements for the senior credit facilities, Corporate EBITDA excludes the impact of 

 certain non-cash expenses and charges.  The adjustments reflect the following:













NON-CASH EXPENSES AND CHARGES

Three Months Ended March 31, 2012






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total









Non-cash amortization of debt costs included








in car rental fleet interest

$       11.0


$            -


$            -


$       11.0

Non-cash stock-based employee








compensation charges

-


-


7.4


7.4

Total non-cash expenses and charges

$       11.0


$            -


$         7.4


$       18.4

















NON-CASH EXPENSES AND CHARGES

Three Months Ended March 31, 2011






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total









Non-cash amortization of debt costs included








in car rental fleet interest

$         9.9


$            -


$            -


$         9.9

Non-cash stock-based employee








compensation charges

-


-


9.1


9.1

Derivative (gains) losses

0.5


-


(0.5)


-

Total non-cash expenses and charges

$       10.4


$            -


$         8.6


$       19.0

















(b) As defined in the credit agreements for the senior credit facilities, Corporate EBITDA excludes the impact of extraordinary, unusual or non-recurring gains or losses or charges or credits.   The adjustments reflect the following:









EXTRAORDINARY, UNUSUAL OR








NON-RECURRING ITEMS

Three Months Ended March 31, 2012






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total









Restructuring charges

$         5.2


$         4.2


$            -


$         9.4

Restructuring related charges

0.6


-


-


0.6

Acquisition related costs 

-


-


6.9


6.9

Total extraordinary, unusual or non-recurring items

$         5.8


$         4.2


$         6.9


$       16.9

















EXTRAORDINARY, UNUSUAL OR








NON-RECURRING ITEMS

Three Months Ended March 31, 2011






Other




Car


Equipment


Reconciling




Rental


Rental


Items


Total









Restructuring charges

$         1.0


$         3.9


$            -


$         4.9

Restructuring related charges

0.5


-


-


0.5

Acquisition related costs 

-


-


2.8


2.8

Management transition costs

-


-


2.5


2.5

Premiums paid on debt

-


-


51.7


51.7

Total extraordinary, unusual or non-recurring items

$         1.5


$         3.9


$       57.0


$       62.4









 

 

 











Table 7

HERTZ GLOBAL HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES

(In millions, except as noted)

Unaudited










Three Months Ended 





RECONCILIATION FROM OPERATING 


March 31,





CASH FLOWS TO EBITDA:


2012


2011














Net cash provided by operating activities


$         492.0


$               165.6







Amortization of debt costs    


(24.9)


(59.9)







Provision for losses on doubtful accounts    


(6.9)


(6.4)







Derivative gains (losses)


3.0


6.9







Gain (loss) on sale of property and equipment    


0.2


2.3







Loss on revaluation of foreign denominated debt


(2.5)


-







Stock-based compensation charges    


(7.5)


(9.1)







Asset writedowns    


(2.7)


(0.7)







Lease charges


23.1


23.6







Noncontrolling interest    


-


(3.7)







Deferred income taxes    


(2.4)


26.5







Provision (benefit) for taxes on income    


19.5


(30.0)







Interest expense, net of interest income   


161.2


195.0







Changes in assets and liabilities   


48.1


213.5







EBITDA


$         700.2


$               523.6





























NET CORPORATE DEBT, NET FLEET DEBT


March 31,


December 31,


March 31,


December 31,


March 31,

AND TOTAL NET DEBT


2012


2011


2011


2010


2010












Total Corporate Debt


$      4,645.2


$            4,704.8


$     5,202.2


$         5,830.7


$     4,674.7

Total Fleet Debt


6,780.5


6,612.3


5,547.8


5,475.7


5,713.2

Total Debt


$    11,425.7


$          11,317.1


$   10,750.0


$       11,306.4


$   10,387.9












Corporate Restricted Cash











Restricted Cash, less:


$         211.9


$               308.0


$        190.9


$            207.6


$        221.3

Restricted Cash Associated with Fleet Debt    


(126.5)


(213.6)


(110.2)


(115.6)


(129.6)

Corporate Restricted Cash


$           85.4


$                 94.4


$          80.7


$              92.0


$          91.7












Net Corporate Debt











Corporate Debt, less:


$      4,645.2


$            4,704.8


$     5,202.2


$         5,830.7


$     4,674.7

Cash and Cash Equivalents


(594.7)


(931.8)


(1,365.8)


(2,374.2)


(800.7)

Corporate Restricted Cash


(85.4)


(94.4)


(80.7)


(92.0)


(91.7)

Net Corporate Debt


$      3,965.1


$            3,678.6


$     3,755.7


$         3,364.5


$     3,782.3












Net Fleet Debt











Fleet Debt, less:


$      6,780.5


$            6,612.3


$     5,547.8


$         5,475.7


$     5,713.2

Restricted Cash Associated with Fleet Debt    


(126.5)


(213.6)


(110.2)


(115.6)


(129.6)

Net Fleet Debt


$      6,654.0


$            6,398.7


$     5,437.6


$         5,360.1


$     5,583.6












Total Net Debt


$    10,619.1


$          10,077.3


$     9,193.3


$         8,724.6


$     9,365.9














Three Months Ended 





CAR RENTAL RATE REVENUE PER


March 31,





TRANSACTION DAY(a)


2012


2011


















Car rental segment revenues (b)


$       1,658.2


$             1,510.3







Non-rental rate revenue


(369.3)


(245.6)