Hertz Global Holdings Reports 2015 Fourth Quarter And Full-Year Financial Results

ESTERO, Fla., Feb. 29, 2016 /PRNewswire/ -- Hertz Global Holdings, Inc. (NYSE: HTZ) ("HGH" or the "Company") today reported fourth quarter 2015 GAAP net income of $70 million, or $0.16 per diluted share, compared to a net loss of $234 million, or $0.51 per diluted share, during the fourth quarter of 2014. The Company also reported adjusted net income for the fourth quarter 2015 of $22 million, or $0.05 per diluted share, compared with an adjusted net loss of $101 million, or $0.22 per diluted share, for the same period last year. Total revenues for the fourth quarter 2015 were $2.41 billion, a 6% decline versus the fourth quarter of 2014. Adjusted corporate EBITDA for the 2015 fourth quarter was $266 million, compared to $76 million in the fourth quarter of 2014.

Foreign currency exchange rates had an unfavorable impact on Hertz Global Holdings' fourth quarter 2015 results as compared to the prior year period. The unfavorable impact of foreign currency exchange rates to total revenue in the quarter was approximately $75 million and the unfavorable impact to net income for the period was approximately $6 million, or $0.01 per diluted share.

For the full-year 2015, Hertz Global Holdings reported GAAP net income of $273 million, or $0.60 per diluted share, versus a loss of $82 million, or $0.18 per diluted share, for the full year 2014. Adjusted net income for 2015 was $360 million, or $0.79 per diluted share, compared with an adjusted net loss of $254 million, or $0.56 per diluted share, for 2014. Total revenues for 2015 of $10.5 billion represent a 5% year over year decline. Full year 2015 adjusted corporate EBITDA of $1,493 million represents a 12% improvement versus full year 2014.

Hertz Global Holdings ended 2015 with approximately $2.2 billion of corporate liquidity, which is its highest level since 2011.  As a result, the company reduced its year-end leverage ratio, which is defined as net corporate debt to adjusted corporate EBITDA, to 3.7 times at Dec. 31, 2015 versus 4.4 times at Sept. 30, 2015.

"By fundamentally improving our fleet management and reducing costs throughout the business, we delivered on our expected outcome for the fourth quarter and the full year, despite a highly competitive pricing environment," said John Tague, president and chief executive officer. "We are encouraged by rising customer satisfaction across our major brands, which reached record levels in the third and fourth quarters of 2015, as well as the pace of improvement in our cost structure. 

"Looking ahead, we continue to see soft pricing in the U.S. rental car market in the first quarter 2016 as well as continued weakness in upstream oil and gas markets affecting equipment rental, both of which are reflected in our outlook for 2016," Tague added.  "In this environment, we will continue to focus internally on improving cost and quality as part of our commitment to our three-to-five year margin improvement plan."

In the fourth quarter, effective fleet management and a focus and investment in customer service programs resulted in improvements in worldwide customer satisfaction for Hertz, Dollar and Thrifty.  Customer satisfaction levels reached record levels for these brands in the fourth quarter. For Hertz Global Holdings overall, customer satisfaction in the fourth quarter rose 4 points and 5 points in the U.S. and International segments, respectively.

Effective fleet management also drove a 3 percentage point year-over-year increase in Worldwide Car Rental fleet efficiency to 78%. In the U.S., Car Rental fleet efficiency rose to 79%, an increase of 4 percentage points versus the fourth quarter of 2014, driven by reduced out-of-service levels and better utilization or matching of demand to cars available to rent.  In the International segment, Car Rental fleet efficiency was 73%, a decrease of 1 percentage point from the fourth quarter of 2014.

Worldwide Revenue per Available Car Day (RACD) increased by 1%, as the improvement in fleet efficiency mitigated a 3% decrease in Total Revenue per Transaction Day (RPD) versus the fourth quarter of 2014.  In the U.S., RACD was unchanged as higher fleet efficiency offset a 5% decrease in RPD. The International region RACD increased 2%, as a 3% increase in Total RPD was slightly offset by a reduction in fleet efficiency.

Effective fleet management resulted in improved fleet condition, which contributed to the Company's lower out-of-service levels and lower maintenance costs during the fourth quarter versus the prior year.  This was accomplished while keeping 2015 fleet cost slightly below 2014 levels.

As part of its ongoing cost reduction program, Hertz Global Holdings achieved savings of approximately $75 million in the fourth quarter. For the full-year, the Company realized cost savings of approximately $230 million, exceeding its 2015 goal. In 2016, the Company expects to achieve an additional $350 million in cost savings.

Hertz Equipment Rental Corporation (HERC) continued to diversify its business, achieving a 42% increase in revenue from new accounts in North America on a constant currency basis in the fourth quarter. Hertz Global Holdings continues to expect that the planned separation of HERC as a public company is on track for mid-2016.

Fourth-quarter 2015 U.S. Car Rental revenues totaled $1,413 million, a decrease of 5% from the fourth quarter of 2014. For the quarter, the Company reported flat transaction days and a 5% decline in Total RPD.  The decline in pricing was the result of competitive pricing in airport rentals and negative off airport mix shift. Growth in leisure rental transaction days was offset by softness in corporate volumes and off airport location closures. Adjusted corporate EBITDA for the fourth quarter was $72 million, a $166 million improvement versus the same period last year, primarily driven by effective fleet management, improved productivity and strong cost controls.

Fourth-quarter 2015 International Car Rental revenues totaled $469 million, a decrease of 9% from the fourth quarter of 2014. Excluding the unfavorable foreign currency impact of $65 million, fourth-quarter revenues increased 3% driven by improved revenue mix. Fourth-quarter adjusted corporate EBITDA of $23 million was a $22 million improvement versus the same period last year primarily driven by a 3% increase in RPD, excluding currency effects on a constant rate basis, and strong fleet management.

Fourth-quarter 2015 Worldwide Equipment Rental revenues totaled $386 million, a decrease of 7% from the fourth quarter of 2014. Excluding the unfavorable foreign currency impact of $10 million, revenue decreased 5% driven by continued pressure in upstream oil and gas related markets and the Oct. 30, 2015, sale of Hertz Equipment Rental operations in France and Spain. Adjusted corporate EBITDA for the Worldwide Equipment Rental segment for the fourth quarter of 2015 was $166 million, a $12 million decrease versus the fourth quarter of 2014.

All Other Operations, which include Donlen Leasing and Hertz Claims Management, reported a 1% increase in revenues for the fourth quarter of 2015. Adjusted corporate EBITDA for the All Other Operations segment was $18 million, a 13% increase over the prior-year period.

SHARE REPURCHASE ACTIVITY

During the fourth quarter, the Company repurchased approximately 22 million shares totaling $343 million, including commissions. The share repurchases were funded primarily by cash flow from operations, proceeds from the sale of a portion of its holdings in CAR Inc. (China Auto Rental) and proceeds from the sale of HERC's businesses in France and Spain. For the full year, under the Company's previously announced $1 billion authorized share repurchase program, Hertz Global Holdings repurchased approximately 37 million shares at a total cost of approximately $605 million, including commissions.

HERTZ GLOBAL HOLDINGS GUIDANCE

For the full-year 2016, the Company forecasts the following:

For the full-year 2016, the Company has revised its previously issued preliminary 2016 adjusted corporate EBITDA guidance for both Consolidated Hertz Global Holdings and the Worldwide Equipment Rental segment. For Hertz Global Holdings, the guidance has been revised from a range of $1.7 billion to $1.8 billion to a range of $1.6 billion to $1.7 billion, reflecting lower U.S. RAC Total Revenue growth in the second half of the fourth quarter 2015 and the resulting impact to the first quarter of 2016, as well as continued pressure in the upstream oil and gas business in the Worldwide Equipment Rental segment. As a result, Worldwide Equipment Rental segment preliminary 2016 adjusted corporate EBITDA guidance has been revised from a range of $625 million to $675 million to a range of $600 million to $650 million.  In addition, the Company lowered its U.S. RAC revenue guidance from a range of 2.5% to 3.5% to a range of 1.5% to 2.5%.  Guidance for U.S. RAC capacity growth has been revised from a range of (0.5%) to 0.5% to a range of (3.0%) to (2.0%).  Non-fleet capex spending guidance has also been revised from a range of $250 million to $275 million to a range of $200 million to $225 million.  The guidance for U.S. RAC net depreciation per unit per month is unchanged.

RESULTS OF THE HERTZ CORPORATION

The GAAP and Non-GAAP profitability metrics for Hertz Global Holdings' operating subsidiary, The Hertz Corporation, are materially the same as those for Hertz Global Holdings.

(1) Adjusted pre-tax income, Adjusted pre-tax margin, Adjusted Corporate EBITDA, Adjusted Corporate EBITDA margin, adjusted net income, adjusted net income margin, adjusted diluted earnings per share, total revenue per transaction day, revenue per available car day and net depreciation per unit per month are non-GAAP measures. See the accompanying Supplemental Schedules and Definitions 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.

(2) Because of the forward-looking nature of the Company's Adjusted Corporate EBITDA forecast, specific quantifications of the amounts that would be required to reconcile a pre-tax income forecast 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 forecast of 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 Adjusted Corporate EBITDA would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.

EARNINGS WEBCAST INFORMATION

Hertz Global Holdings' fourth-quarter 2015 earnings webcast will be held on March 1, 2016, at 8:00 a.m. U.S. Eastern. The press release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on our website, IR.Hertz.com.

ANNUAL MEETING OF STOCKHOLDERS

The Company's Board of Directors has set the date of the annual meeting of stockholders for May 18, 2016, which will be held in Estero, Florida.  Holders of record at the close of business on March 25, 2016, will be entitled to vote at the meeting.  The time and exact location of the annual meeting will be announced in the Company's proxy materials, which it expects to file with the U.S. Securities and Exchange Commission in late March 2016.

SELECTED FINANCIAL AND OPERATING DATA, SUPPLEMENTAL SCHEDULES AND DEFINITIONS

Following are tables that present selected financial and operating data of Hertz Global Holdings. Also included are Supplemental Schedules which are provided to present segment results and reconciliations of non-GAAP measures to their most comparable GAAP measure. Following the Supplemental Schedules, the Company provides definitions for terminology used throughout this press release.

ABOUT HERTZ GLOBAL HOLDINGS

Hertz Global Holdings operates the Hertz, Dollar, Thrifty and Firefly car rental brands in approximately 9,980 corporate and licensee locations throughout approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings is the largest worldwide airport general use car rental company with approximately 1,635 airport locations in the U.S. and more than 1,320 airport locations internationally. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections set Hertz Global Holdings apart from the competition. Additionally, Hertz Global Holdings owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Hertz 24/7 hourly car rental business in international markets and sells vehicles through its Rent2Buy program. The Company also owns Hertz Equipment Rental Corporation ("HERC"), one of the largest equipment rental businesses with approximately 280 locations worldwide offering a diverse line of equipment and tools for rent and sale. HERC primarily serves the construction, industrial, oil, gas, entertainment and government sectors. For more information about Hertz Global Holdings, visit: www.hertz.com.

CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS

Certain statements contained in this release, and in related comments by the Company's management, include "forward-looking statements." Forward-looking statements include information concerning the Company's liquidity and its possible or assumed future results of operations, including descriptions of its business strategies. These statements often include words such as "believe," "expect," "project," "potential," "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 it believes are appropriate in these circumstances. The Company believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and the Company's actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on Forms 10-K, 10-Q and 8-K. Among other items, such factors could include: any claims, investigations or proceedings arising as a result of the restatement of our previously issued financial results; our ability to remediate the material weaknesses in our internal controls over financial reporting; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; the effect of our proposed separation of our equipment rental business and ability to obtain the expected benefits of any related transaction; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives; occurrences that disrupt rental activity during our peak periods; our ability to achieve and maintain 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 and mix 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; our ability to realize the operational efficiencies of the acquisition of Dollar Thrifty; our ability to maintain access to third-party distribution channels, including current or favorable prices, commission structures and transaction volumes; an increase in our fleet costs or disruption to our rental activity, particularly during our peak periods, due to 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, which could impact their ability to perform under agreements with us and/or their willingness or ability to make cars available to us or the car rental industry on commercially reasonable terms; any impact on us from the actions of our 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 and investigations; risks related to our indebtedness, including our substantial amount of debt, 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 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; our exposure to uninsured claims in excess of historical levels; 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.

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its 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.

NON-GAAP MEASURES AND KEY METRICS - DEFINITIONS AND USE

Hertz Global Holdings is the top-level holding company and The Hertz Corporation is Hertz Global Holding's primary operating company (together, the Company). The term "GAAP" refers to accounting principles generally accepted in the United States of America.

Definitions of non-GAAP measures are set forth below. Also set forth below is a summary of the reasons why management of the Company believes that the presentation of the non-GAAP financial measures included in the press release provide useful information regarding the Company's financial condition and results of operations and additional purposes, if any, for which management of the Company utilizes the non-GAAP measures.

Adjusted Pre-Tax Income (Loss) and Adjusted Pre-tax Margin

Adjusted pre-tax income (loss) is calculated as income before income taxes plus certain non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income (loss) is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes it is important to investors for the same reasons it is important to management and because it allows them to assess the operational performance of the Company on the same basis that management uses internally. When evaluating the Company's operating performance, investors should not consider adjusted pre-tax income (loss) in isolation of, or as a substitute for, measures of the Company's financial performance, such as net income (loss) or income (loss) before income taxes. Adjusted pre-tax margin is adjusted pre-tax income (loss) divided by total revenues.

Adjusted Net Income and Adjusted Net Income Margin

Adjusted net income is calculated as adjusted pre-tax income less a provision for income taxes derived utilizing a combined statutory rate of 37%. The combined statutory rate is management's estimate of our long-term tax rate. Adjusted net income is important to management and investors because it represents our operational performance exclusive of the effects of purchase accounting, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of our competitors. Adjusted net income margin is adjusted net income divided by total revenues.

Adjusted Net Income Per Diluted Share

Adjusted net income per diluted share is calculated as adjusted net income divided by the weighted average number of diluted shares outstanding for the period. Adjusted net income per diluted share is important to management and investors because it represents a measure of our operational performance exclusive of the effects of purchase accounting adjustments, debt-related charges, one-time charges and items that are not operational in nature or comparable to those of our competitors.

Available Car Days

Available Car Days is calculated as average fleet multiplied by the number of days in a period. Average fleet used to calculate available car days in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days.

Average Fleet

Average Fleet is determined using a simple average of the number of vehicles owned by the Company at the beginning and end of a given period. Among other things, average fleet is used to calculate our fleet efficiency which represents the portion of the Company's fleet that is being utilized to generate revenue.

Corporate Restricted Cash (used in the calculation of Net Corporate Debt)

Total restricted cash includes cash and cash equivalents that are not readily available for our normal disbursements. Total restricted cash and equivalents are restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities, our like-kind exchange programs and to satisfy certain of our self-insurance regulatory reserve requirements. Corporate restricted cash is calculated as total restricted cash less restricted cash associated with fleet debt.

Dollar Utilization

Dollar utilization means revenue derived from the rental of equipment divided by the original cost of the equipment including additional capitalized refurbishment costs (with the basis of refurbished assets at the refurbishment date).

Earnings Before Interest, Taxes, Depreciation and Amortization ("Gross EBITDA"), Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin

Gross EBITDA is defined as net income before net interest expense, income taxes and depreciation (which includes revenue earning equipment lease charges) and amortization. Corporate EBITDA, as presented herein, represents Gross EBITDA as adjusted for car rental fleet interest, car rental fleet depreciation and car rental debt-related charges. Adjusted Corporate EBITDA, as presented herein, represents Corporate EBITDA as adjusted for certain other items, as described in more detail in the accompanying schedules.

Management uses Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA as operating performance and liquidity metrics for internal monitoring and planning purposes, including the preparation of our annual operating budget and monthly operating reviews, as well as to facilitate analysis of investment decisions, profitability and performance trends. Further, Gross EBITDA enables management and investors to isolate the effects on profitability of operating metrics such as revenue, operating expenses and selling, general and administrative expenses, which enables management and investors to evaluate our business segments that are financed differently and have different depreciation characteristics and compare our performance against companies with different capital structures and depreciation policies. We also present Adjusted Corporate EBITDA as a supplemental measure because such information is utilized in the calculation of financial covenants under the Company's senior credit facilities and in the determination of certain executive compensation.

Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues and is used by the Compensation Committee to determine certain executive compensation, primarily in the form of PSUs.

Gross EBITDA, Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are not recognized measurements under U.S. GAAP. When evaluating our operating performance or liquidity, investors should not consider Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA  in isolation of, or as a substitute for, measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities.

Equipment Rental and Rental Related Revenue

Equipment rental and rental related revenue consists of all revenue, net of discounts, associated with the rental of equipment including charges for delivery, loss damage waivers and fueling, but excluding revenue arising from the sale of equipment, parts and supplies and certain other ancillary revenue. Rental and rental related revenue is adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management and to investors as it reflects time and mileage, ancillary charges for equipment on rent, and is comparable with the reporting of other industry participants.

Fleet Efficiency

Fleet efficiency is calculated by dividing total transaction days by the available car days. Average fleet used to calculate fleet efficiency in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days.

Fleet Growth

U.S. and International car rental fleet growth is defined as car rental fleet capital expenditures, net of proceeds from disposals, plus car rental fleet depreciation and net car rental fleet financing which includes borrowings, repayments and the change in fleet restricted cash. Worldwide equipment rental fleet growth is defined as worldwide equipment rental fleet expenditures, net of proceeds from disposals, plus depreciation.

Free Cash Flow

Free cash flow is calculated as net cash provided by operating activities, excluding depreciation of revenue earning equipment, net of car rental and equipment rental fleet growth and property and equipment net expenditures. Free cash flow is important to management and investors as it represents the cash available for acquisitions and the reduction of corporate debt.

Net Corporate Debt

Net corporate debt is calculated as total debt excluding fleet debt less cash and equivalents and corporate restricted cash. Corporate debt consists of our Senior Term Facility; Senior ABL Facility; Senior Notes; Promissory Notes; Convertible Senior Notes; and certain other indebtedness of our domestic and foreign subsidiaries.

Net corporate debt is important to management and investors as it helps measure our leverage. Net corporate debt also assists in the evaluation of our ability to service our non-fleet-related debt without reference to the expense associated with the fleet debt, which is collateralized by assets not available to lenders under the non-fleet debt facilities.

Net Depreciation Per Unit Per Month

Net depreciation per unit per month is calculated by dividing depreciation of revenue earning equipment and lease charges, net by the average fleet in each period and then dividing by the number of months in the period reported with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is useful in analyzing underlying trends. Average fleet used to calculate net depreciation per unit per month in our U.S. Car Rental segment includes Advantage sublease and Hertz 24/7 vehicles as these vehicles have associated lease charges. Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month.

Restricted Cash Associated with Fleet Debt (used in the calculation of Net Fleet Debt and Corporate Restricted Cash)

Restricted cash associated with fleet debt is restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities and our car rental like-kind exchange program.

Revenue Per Available Car Day ("RACD")

Revenue per available car day is calculated as total revenues less revenue from fleet subleases and ancillary revenue associated with retail car sales divided by available car days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management and investors as it represents a measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control and provides a measure of revenue production relative to overall capacity.

Same Store Revenue Growth/Decline

Same store revenue growth is calculated as the year-over-year change in revenue for locations that are open at the end of the period reported and have been operating under our direction for more than twelve months. The same-store revenue amounts are adjusted in all periods to eliminate the effect of fluctuations in foreign currency.

Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends.

Time Utilization

Time utilization means the percentage of time an equipment unit is on-rent during a given period.

Total Net Debt

Total net debt is calculated as total debt less total cash and cash equivalents and total restricted cash. This measure is important to management, investors and ratings agencies as it helps measure our gross leverage.

Total RPD

Total RPD is calculated as total revenue less ancillary revenue associated with retail car sales, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management and investors as it represents a measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control.

Transaction Days

Transaction days represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period. Late in the third quarter of 2015, the Company fully integrated the Dollar Thrifty and Hertz counter systems and, as a result, aligned the transaction day calculation in the Hertz system. As a result of this alignment, Hertz determined that there was an impact to the calculation. Hertz expects that transaction days for the U.S. Car Rental segment will increase by approximately 1%, prospectively relative to the historic calculation.

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SOURCE Hertz Global Holdings, Inc.