PARK RIDGE, NJ, Apr 26, 2011 (MARKETWIRE via COMTEX) --
Hertz Global Holdings, Inc. (NYSE: HTZ)
-- 2011 guidance increased for all metrics; adjusted diluted EPS up from
$0.81 to $0.90 at the high end of the guidance range.
-- Worldwide revenues for the quarter up 7.2%, year-over-year, including
worldwide equipment rental revenues up 13.2%.
-- Adjusted pre-tax loss(1) of $16.0 million for the quarter, compared with
a $69.2 million loss in the prior year period.
-- Worldwide car rental adjusted pre-tax income for the first quarter up
126.2% over the prior year period, representing a 220 basis point
margin improvement.
-- GAAP pre-tax loss for the first quarter of $158.9 million, including
more than $90 million of debt refinancing costs, versus a loss of
$157.8 million in the first quarter of 2010.
-- GAAP diluted loss per share for the quarter of $0.32 versus a loss per
share of $0.37 in the prior year. Adjusted diluted loss per share(1) for
the quarter of $0.03 versus a loss per share of $0.12 in the prior year
period.
Hertz Global Holdings, Inc. (NYSE: HTZ) (with its subsidiaries, the
"Company" or "we") reported first quarter 2011 worldwide revenues of
$1.8 billion, an increase of 7.2% year-over-year (a 6.1% increase
excluding the effects of foreign currency). Worldwide car rental
revenues for the quarter increased 6.2% year-over-year (a 5.1%
increase excluding the effects of foreign currency) to $1.5 billion.
Revenues from worldwide equipment rental for the first quarter were
$268.2 million, up 13.2% year-over-year (an 11.9% increase excluding
the effects of foreign currency).
First quarter 2011 adjusted pre-tax loss was $16.0 million, versus a
loss of $69.2 million in the same period in 2010, and loss before
income taxes ("pre-tax loss"), on a GAAP basis, was $158.9 million,
including more than $90 million of debt refinancing costs, versus a
loss of $157.8 million in the first quarter of 2010. Corporate
EBITDA(1) for the first quarter of 2011 was $166.4 million, an
increase of 37.1% from the same period in 2010.
First quarter 2011 adjusted net loss(1) was $14.2 million, versus a
loss of $49.3 million in the same period of 2010, resulting in
adjusted diluted loss per share for the quarter of $0.03, compared
with a loss per share $0.12 for the first quarter of 2010. First
quarter 2011 net loss attributable to Hertz Global Holdings, Inc. and
Subsidiaries' common stockholders, or "net loss," on a GAAP basis,
was $132.6 million or $0.32 per share on a diluted basis, compared
with a net loss of $150.4 million, or $0.37 per share on a diluted
basis, for the first quarter of 2010.
Mark P. Frissora, the Company's Chairman and Chief Executive Officer,
said, "We continued to make significant operational progress and
balance sheet improvements in the first quarter of 2011. U.S. car
rental delivered record first quarter adjusted pre-tax income results
despite unusually severe winter weather in January and February, and
Europe car rental performed well again despite an unsettled economic
environment. Both businesses achieved their highest customer service
ratings since we began measuring in 2007. HERC continued to rebound
from a three-year recession, generating double digit revenue growth
in a quarter for the first time since the last quarter of 2006. In
addition to almost $6 billion of debt refinancings in 2010, we
executed transactions that refinanced over $4 billion of corporate
debt in the first quarter. Looking ahead, we are encouraged by a
currently favorable outlook for the peak summer travel season in our
major car rental markets, by increases in used car residual values,
and by general improvement in overall macro conditions which bodes
well for HERC's ongoing recovery," Frissora concluded.
INCOME MEASUREMENTS, FIRST QUARTER 2011 & 2010
Q1 2011 Q1 2010
-------------------------- --------------------------
Diluted Diluted
(in millions, Pre-tax Net Earnings Pre-tax Net Earnings
except per share Income Income (Loss) Income Income (Loss)
amounts) (Loss) (Loss) Per Share (Loss) (Loss) Per Share
------- ------- -------- ------- ------- --------
Earnings Measures, as
reported (EPS based
on 414.1M and 410.7M
diluted shares,
respectively) $(158.9) $(132.6) $ (0.32) $(157.8) $(150.4) $ (0.37)
======= ======== ======= ========
Adjustments:
Purchase
accounting 20.6 22.1
Non-cash debt
charges 59.9 48.8
Restructuring and
related charges 5.4 16.0
Acquisition
related costs 2.8 -
Management
transition costs 2.5 -
Premiums paid on
debt 51.7 -
Derivative losses - 1.7
------- -------
Adjusted pre-tax
loss (16.0) (16.0) (69.2) (69.2)
Assumed benefit for
income taxes at 34% 5.5 23.5
Noncontrolling
interest (3.7) (3.6)
------- ------- ------- -------
Earnings Measures, as
adjusted (EPS based
on 413.0M and 410.0M
diluted shares,
respectively) $ (16.0) $ (14.2) $ (0.03) $ (69.2) $ (49.3) $ (0.12)
======= ======= ======== ======= ======= ========
The Company ended the first quarter of 2011 with total debt of $10.75
billion and net corporate debt(1) of $3.76 billion, compared with
total debt of $11.3 billion and net corporate debt of $3.36 billion
as of December 31, 2010. Total debt decreased in the first quarter of
2011 primarily due to the redemption of our 10.5% Senior Subordinated
Notes and a portion of our 8.875% Senior Notes, partly offset by the
issuance of $500 million of 6.75% Senior Notes in March 2011, which
were used during the current quarter to redeem an additional portion
of our 8.875% Senior Notes, and an increase in fleet debt related to
seasonality. Net corporate debt increased primarily due to the
timing of issuances and redemptions of corporate debt which had a net
impact of decreasing cash and cash equivalents and decreasing
corporate debt during the quarter. Net cash provided by operating
activities was $165.6 million in the first quarter of 2011, compared
to $284.7 million in the same period last year, a decrease of $119.1
million primarily related to the premiums paid to redeem debt in 2011,
timing of interest payments, the increased cost of gasoline and parts
inventory and, in 2010, a reimbursement received from a fleet
supplier which was not repeated this year.
WORLDWIDE CAR RENTAL
Worldwide car rental revenues were $1.5 billion for the first quarter
of 2011, an increase of 6.2% (a 5.1% increase excluding the effects of
foreign currency) from the prior year period. Transaction days for the
quarter increased 5.4% over first quarter 2010 [4.4% U.S.; 8.0%
International]. U.S. off-airport total revenues for the first quarter
increased 13.1% year-over-year, and transaction days increased 11.5%
from the prior year period. Rental rate revenue per transaction
day(1) ("RPD") for the quarter decreased 1.0% [(1.5)% U.S.; (0.2)%
International] from the prior year period.
Worldwide car rental adjusted pre-tax income for the first quarter of
2011 was $61.3 million, an increase of $34.2 million from $27.1
million in the prior year period. The result was driven by increased
volume and strong cost management performance. As a result, worldwide
car rental achieved an adjusted pre-tax margin of 4.1% for the
quarter, versus 1.9% in the prior year period.
The worldwide average number of Company-operated cars for the first
quarter of 2011 was 427,400, an increase of 2.3% over the prior year
period.
WORLDWIDE EQUIPMENT RENTAL
Worldwide equipment rental revenues were $268.2 million for the first
quarter of 2011, a 13.2% increase (an 11.9% 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 2011 was $10.2 million, an improvement of $15.2 million
from a loss of $5.0 million in the prior year period, primarily
attributable to the effects of increased volume and cost management
initiatives. Worldwide equipment rental achieved an adjusted pre-tax
margin of 3.8%, and a Corporate EBITDA margin of 34.1% for the
quarter.
The average acquisition cost of rental equipment operated during the
first quarter of 2011 decreased by 0.8% year-over-year and net revenue
earning equipment as of March 31, 2011 was $1,687.1 million, a 1.0%
decrease from December 31, 2010.
OUTLOOK
The Company has increased its full year 2011 guidance for revenues,
Corporate EBITDA, adjusted pre-tax income and adjusted net income
as
follows:
Revised Guidance Prior Guidance
------------------------ ------------------------
Revenues $8.1 to $8.2 billion $7.95 to $8.1 billion
Corporate EBITDA(2) $1.320 to $1.360 billion $1.265 to $1.305 billion
Adjusted Pre-Tax
Income(2) $595 to $625 million $525 to $565 million
Adjusted Net Income(2) $375 to $395 million $330 to $355 million
Adjusted Diluted
Earnings Per Share(2) $0.85 to $0.90 N/A
The adjusted diluted number of shares outstanding is estimated to
fluctuate within a range of 413 million to 450 million through the
year. For example, based on 440 million adjusted diluted shares
outstanding, the Company's full year 2011 guidance for adjusted
diluted earnings per share is $0.90 at the upper end of the guidance
range. The Company will continue to provide an estimate of
forecasted adjusted diluted shares outstanding on a quarterly basis.
The Company noted that, consistent with past practices, its current
guidance is conservative due to ongoing uncertainty regarding future
macro-economic conditions. The Company also noted that variations as
small as 1% in transactions or pricing can have a substantial impact
on financial results.
RESULTS OF THE HERTZ CORPORATION
The Company's operating subsidiary, The Hertz Corporation ("Hertz"),
posted the same revenues for the first quarter of 2011 as the Company.
Hertz's first quarter 2011 pre-tax loss was $146.7 million versus
the Company's pre-tax loss of $158.9 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 June 2009.
(1) Adjusted pre-tax income/loss, Corporate EBITDA, adjusted net income,
adjusted diluted earnings/loss per share, 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 indentified above.
CONFERENCE CALL INFORMATION
The Company's first quarter 2011 earnings conference call will be
held on Wednesday, April 27, 2011, at 10:00 a.m. (EDT). To access the
conference call live, dial 800-288-8967 in the U.S. and 612-332-0342
for international callers using the passcode: 199009 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 11, 2011 by calling 800-475-6701 in the U.S. or
320-365-3844 for international callers with the passcode: 199099.
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 world's largest general use car rental brand, operating
from approximately 8,500 locations in approximately 150 countries
worldwide. Hertz is the number one airport car rental brand in the
U.S. and at 83 major airports in Europe, operating both corporate and
licensee locations in cities and airports in North America, Europe,
Latin America, Asia, Australia and New Zealand. In addition, the
Company has licensee locations in cities and airports in Africa and
the Middle East. Product and service initiatives such as Hertz #1
Club Gold(R), NeverLost(R) customized, onboard navigation systems,
SIRIUS XM Satellite Radio, and unique cars and SUVs offered through
the Company's Adrenaline, and Green Traveler Collections, set Hertz
apart from the competition. In 2008, the Company launched Connect by
Hertz, entering the global car sharing market in London, New York
City and Paris. Hertz also operates one of the world's largest
equipment rental businesses, Hertz Equipment Rental Corporation,
offering a diverse line of equipment, including tools and supplies,
as well as new and used equipment for sale, to customers ranging from
major industrial companies to local contractors and consumers from
approximately 320 branches in the United States, Canada, China,
France, Spain and Italy.
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: 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
future acquisitions and complete future 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, 2011 and 2010
Table 2: Condensed Consolidated Statements of Operations As Reported and
As Adjusted for the Three Months Ended March 31, 2011 and 2010
Table 3: Segment and Other Information for the Three Months Ended March
31, 2011 and 2010
Table 4: Selected Operating and Financial Data as of or for the Three
Months Ended March 31, 2011 compared to March 31, 2010 and
Selected Balance Sheet Data as of March 31, 2011 and December
31, 2010
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, 2011 and 2010
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, 2011 and 2010
Table 7: Non-GAAP Reconciliations of Operating Cash Flows to EBITDA for
Three Months Ended March 31, 2011 and 2010, Net Corporate Debt,
Net Fleet Debt and Total Net Debt as of March 31, 2011, 2010 and
2009 and December 31, 2010 and 2009, Car Rental Rate Revenue per
Transaction Day and Equipment Rental and Rental Related Revenue
for the Three Months Ended March 31, 2011 and 2010
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
-------------------- -------------------
2011 2010 2011 2010
--------- --------- -------- --------
Total revenues $ 1,780.0 $ 1,660.9 100.0 % 100.0 %
--------- --------- -------- --------
Expenses:
Direct operating 1,073.7 1,013.0 60.3 % 61.0 %
Depreciation of revenue
earning equipment and
lease charges 436.1 459.2 24.5 % 27.6 %
Selling, general and
administrative 182.2 167.7 10.2 % 10.1 %
Interest expense 196.9 181.1 11.1 % 10.9 %
Interest income (1.9) (2.3) (0.1)% (0.1)%
Other (income) expense, net 51.9 - 2.9 % - %
--------- --------- -------- --------
Total expenses 1,938.9 1,818.7 108.9 % 109.5 %
--------- --------- -------- --------
Loss before income taxes (158.9) (157.8) (8.9)% (9.5)%
Benefit for taxes on income 30.0 11.0 1.7 % 0.6 %
--------- --------- -------- --------
Net loss (128.9) (146.8) (7.2)% (8.9)%
Less: Net income attributable
to noncontrolling interest (3.7) (3.6) (0.2)% (0.2)%
--------- --------- -------- --------
Net loss attributable to Hertz
Global Holdings, Inc. and
Subsidiaries' common
stockholders $ (132.6) $ (150.4) (7.4)% (9.1)%
========= ========= ======== ========
Weighted average number of
shares outstanding:
Basic 414.1 410.7
Diluted 414.1 410.7
Loss per share attributable to
Hertz Global Holdings, Inc.
and Subsidiaries' common
stockholders:
Basic $ (0.32) $ (0.37)
Diluted $ (0.32) $ (0.37)
Table 2
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
Unaudited
Three Months Ended March 31, 2011
-------------------------------------
As As
Reported Adjustments Adjusted
--------- ----------- ---------
Total revenues $ 1,780.0 $ - $ 1,780.0
--------- ----------- ---------
Expenses:
Direct operating 1,073.7 (22.8) (a) 1,050.9
Depreciation of revenue earning
equipment and lease charges 436.1 (2.3) (b) 433.8
Selling, general and administrative 182.2 (6.2) (c) 176.0
Interest expense 196.9 (59.9) (d) 137.0
Interest income (1.9) - (1.9)
Other (income) expense, net 51.9 (51.7) (e) 0.2
--------- ----------- ---------
Total expenses 1,938.9 (142.9) 1,796.0
--------- ----------- ---------
Income (loss) before income taxes (158.9) 142.9 (16.0)
Benefit (provision) for taxes on
income 30.0 (24.5) (f) 5.5
--------- ----------- ---------
Net income (loss) (128.9) 118.4 (10.5)
Less: Net income attributable to
noncontrolling interest (3.7) - (3.7)
--------- ----------- ---------
Net income (loss) attributable to
Hertz Global Holdings, Inc. and
Subsidiaries' common stockholders $ (132.6) $ 118.4 $ (14.2)
========= =========== =========
Three Months Ended March 31, 2010
-------------------------------------
As As
Reported Adjustments Adjusted
--------- ----------- ---------
Total revenues $ 1,660.9 $ - $ 1,660.9
--------- ----------- ---------
Expenses:
Direct operating 1,013.0 (30.8) (a) 982.2
Depreciation of revenue earning
equipment and lease charges 459.2 (2.7) (b) 456.5
Selling, general and administrative 167.7 (6.3) (c) 161.4
Interest expense 181.1 (48.8) (d) 132.3
Interest income (2.3) - (2.3)
--------- ----------- ---------
Total expenses 1,818.7 (88.6) 1,730.1
--------- ----------- ---------
Income (loss) before income taxes (157.8) 88.6 (69.2)
Benefit (provision) for taxes on
income 11.0 12.5 (f) 23.5
--------- ----------- ---------
Net income (loss) (146.8) 101.1 (45.7)
Less: Net income attributable to
noncontrolling interest (3.6) - (3.6)
--------- ----------- ---------
Net income (loss) attributable to
Hertz Global Holdings, Inc. and
Subsidiaries' common stockholders $ (150.4) $ 101.1 $ (49.3)
========= =========== =========
(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, 2011 and 2010, also includes
restructuring and restructuring related charges of $4.5 million and
$11.4 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, 2011and 2010, also includes restructuring and restructuring
related charges of $0.8 million and $4.6 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. For the three
months ended March 31, 2010, also includes $20.9 million associated
with the amortization of amounts pertaining to the de-designation of
our interest rate swaps as effective hedging instruments.
(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 2011 and 2010).
Table 3
HERTZ GLOBAL HOLDINGS, INC.
SEGMENT AND OTHER INFORMATION
(In millions, except per share amounts)
Unaudited
Three Months Ended
March 31,
--------------------
2011 2010
--------- ---------
Revenues:
Car Rental $ 1,510.3 $ 1,421.7
Equipment Rental 268.2 237.0
Other reconciling items 1.5 2.2
--------- ---------
$ 1,780.0 $ 1,660.9
========= =========
Depreciation of property and equipment:
Car Rental $ 27.5 $ 29.2
Equipment Rental 8.3 8.9
Other reconciling items 1.9 1.5
--------- ---------
$ 37.7 $ 39.6
========= =========
Amortization of other intangible assets:
Car Rental $ 7.6 $ 7.8
Equipment Rental 8.9 8.3
Other reconciling items 0.3 0.3
--------- ---------
$ 16.8 $ 16.4
========= =========
Income (loss) before income taxes:
Car Rental $ 41.0 $ (30.1)
Equipment Rental (7.8) (23.4)
Other reconciling items (192.1) (104.3)
--------- ---------
$ (158.9) $ (157.8)
========= =========
Corporate EBITDA (a):
Car Rental $ 92.6 $ 54.4
Equipment Rental 91.5 80.0
Other reconciling items (17.7) (13.0)
--------- ---------
$ 166.4 $ 121.4
========= =========
Adjusted pre-tax income (loss) (a):
Car Rental $ 61.3 $ 27.1
Equipment Rental 10.2 (5.0)
Other reconciling items (87.5) (91.3)
--------- ---------
$ (16.0) $ (69.2)
========= =========
Adjusted net income (loss) (a):
Car Rental $ 40.5 $ 17.9
Equipment Rental 6.7 (3.3)
Other reconciling items (61.4) (63.9)
--------- ---------
$ (14.2) $ (49.3)
========= =========
Adjusted diluted number of shares outstanding (a) 413.0 410.0
Adjusted diluted loss per share (a) $ (0.03) $ (0.12)
(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
2011 period
------------- ------------
Selected Car Rental Operating Data
Worldwide number of transactions
(in thousands) 6,028 2.9 %
U.S. 4,479 1.8 %
International 1,549 6.2 %
Worldwide transaction days (in thousands) 29,648 5.4 %
U.S. 20,821 4.4 %
International 8,827 8.0 %
Worldwide rental rate revenue per
transaction day (a) $ 42.26 (1.0)%
U.S. $ 41.34 (1.5)%
International (b) $ 44.41 (0.2)%
Worldwide average number of company-operated
cars during period 427,400 2.3 %
U.S. 295,700 0.7 %
International 131,700 6.2 %
Worldwide revenue earning equipment, net
(in millions) $ 7,714.2 3.3 %
Selected Worldwide Equipment Rental
Operating Data
Rental and rental related revenue
(in millions) (a) (b) $ 243.1 12.8 %
Same store revenue growth (decline),
including initiatives (a) (b) 10.6% N/M
Average acquisition cost of revenue earning
equipment operated
during period (in millions) $ 2,756.8 (0.8)%
Worldwide revenue earning equipment, net
(in millions) $ 1,687.1 (3.2)%
Other Financial Data (in millions)
Cash flows provided by operating activities $ 165.6 (41.8)%
Corporate cash flow (a) (353.6) (118.5)%
EBITDA (a) 523.6 (1.9)%
Corporate EBITDA (a) 166.4 37.1 %
Selected Balance Sheet Data (in millions)
March 31, December 31,
2011 2010
------------- ------------
Cash and cash equivalents $ 1,365.8 $ 2,374.2
Total revenue earning equipment, net 9,401.3 8,939.4
Total assets 16,827.6 17,332.2
Total debt 10,750.0 11,306.4
Net corporate debt (a) 3,755.7 3,364.5
Net fleet debt (a) 5,437.6 5,360.1
Total net debt (a) 9,193.3 8,724.6
Total equity 2,034.7 2,131.3
(a) Represents a non-GAAP measure, see the accompanying reconciliations
and definitions.
(b) Based on 12/31/10 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, 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 (gains)
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)
Three Months Ended March 31, 2010
--------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
--------- --------- ----------- ---------
Total revenues: $ 1,421.7 $ 237.0 $ 2.2 $ 1,660.9
--------- --------- ----------- ---------
Expenses:
Direct operating and
selling, general and
administrative 976.3 179.3 25.1 1,180.7
Depreciation of revenue
earning equipment and
lease charges 388.3 70.9 - 459.2
Interest expense 89.3 10.2 81.6 181.1
Interest income (2.1) - (0.2) (2.3)
--------- --------- ----------- ---------
Total expenses 1,451.8 260.4 106.5 1,818.7
--------- --------- ----------- ---------
Loss before income taxes (30.1) (23.4) (104.3) (157.8)
Adjustments:
Purchase accounting (a):
Direct operating and
selling, general and
administrative 9.8 8.8 0.8 19.4
Depreciation of revenue
earning equipment - 2.7 - 2.7
Non-cash debt charges (b) 37.0 1.9 9.9 48.8
Restructuring charges (c) 5.3 4.9 0.5 10.7
Restructuring related
charges (c) 5.1 0.1 0.1 5.3
Derivative losses (c) - - 1.7 1.7
--------- --------- ----------- ---------
Adjusted pre-tax income
(loss) 27.1 (5.0) (91.3) (69.2)
Assumed (provision) benefit
for income taxes of 34% (9.2) 1.7 31.0 23.5
Noncontrolling interest - - (3.6) (3.6)
--------- --------- ----------- ---------
Adjusted net income (loss) $ 17.9 $ (3.3) $ (63.9) $ (49.3)
========= ========= =========== =========
Adjusted diluted number of
shares outstanding 410.0
Adjusted diluted loss per
share $ (0.12)
(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 amortization of intangible
assets.
(b) Represents non-cash debt charges relating to the amortization of
deferred debt financing costs and debt discounts. For the three months
ended March 31, 2010, also includes $20.9 million associated with the
amortization of amounts pertaining to the de-designation of our
interest rate swaps as effective hedging instruments.
(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, 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)
=========
Three Months Ended March 31, 2010
--------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
--------- --------- ----------- ---------
Income (loss) before income
taxes $ (30.1) $ (23.4) $ (104.3) $ (157.8)
Depreciation, amortization
and other purchase
accounting 426.2 88.2 2.2 516.6
Interest, net of interest
income 87.2 10.2 81.4 178.8
Noncontrolling interest - - (3.6) (3.6)
--------- --------- ----------- ---------
EBITDA 483.3 75.0 (24.3) 534.0
Adjustments:
Car rental fleet interest (87.9) - - (87.9)
Car rental fleet
depreciation (388.3) - - (388.3)
Non-cash expenses and
charges (a) 36.9 - 10.7 47.6
Extraordinary, unusual or
non-recurring gains and
losses (b) 10.4 5.0 0.6 16.0
--------- --------- ----------- ---------
Corporate EBITDA $ 54.4 $ 80.0 $ (13.0) 121.4
========= ========= ===========
Non-fleet capital
expenditures, net (44.6)
Changes in working capital:
Receivables, excluding car
rental fleet receivables (37.9)
Accounts payable 456.9
Accrued liabilities and
other (78.8)
Acquisition and other
investing activities 3.7
Other financing activities,
excluding debt (8.2)
Foreign exchange impact on
cash and cash equivalents (32.7)
---------
Unlevered pre-tax cash flow 379.8
Corporate net cash interest (124.6)
Corporate cash taxes (24.6)
---------
Levered after-tax cash flow
before fleet growth 230.6
Equipment rental revenue
earning equipment
expenditures, net of
disposal proceeds 12.6
Car rental fleet equity
requirement (405.0)
---------
Corporate cash flow $ (161.8)
=========
(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, 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
========= ========= =========== =========
NON-CASH EXPENSES AND CHARGES Three Months Ended March 31, 2010
--------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
--------- --------- ----------- ---------
Non-cash amortization of debt
costs included
in car rental fleet interest $ 36.9 $ - $ - $ 36.9
Non-cash stock-based employee
compensation charges - - 9.0 9.0
Derivative losses - - 1.7 1.7
--------- --------- ----------- ---------
Total non-cash expenses and
charges $ 36.9 $ - $ 10.7 $ 47.6
========= ========= =========== =========
(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, 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
========= ========= =========== =========
EXTRAORDINARY, UNUSUAL OR
NON-RECURRING ITEMS Three Months Ended March 31, 2010
--------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
--------- --------- ----------- ---------
Restructuring charges $ 5.3 $ 4.9 $ 0.5 $ 10.7
Restructuring related charges 5.1 0.1 0.1 5.3
--------- --------- ----------- ---------
Total extraordinary, unusual
or non-recurring items $ 10.4 $ 5.0 $ 0.6 $ 16.0
========= ========= =========== =========
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: --------------------------
2011 2010
------------ ------------
Net cash provided by operating
activities $ 165.6 $ 284.7
Amortization of debt costs (59.9) (27.9)
Provision for losses on doubtful
accounts (6.4) (5.1)
Derivative gains (losses) 6.9 (9.8)
Gain (loss) on sale of property
and equipment 2.3 0.4
Amortization of cash flow hedges - (20.9)
Stock-based compensation charges (9.1) (9.0)
Asset writedowns (0.7) (0.7)
Lease charges 23.6 16.5
Noncontrolling interest (3.7) (3.6)
Deferred income taxes 26.5 (32.2)
Provision (benefit) for taxes on
income (30.0) (11.0)
Interest expense, net of
interest income 195.0 178.8
Changes in assets and
liabilities 213.5 173.8
------------ ------------
EBITDA $ 523.6 $ 534.0
============ ============
NET CORPORATE DEBT, NET FLEET March 31, December 31, March 31,
DEBT AND TOTAL NET DEBT 2011 2010 2010
------------ ------------ ------------
Total Corporate Debt $ 5,202.2 $ 5,830.7 $ 4,674.7
Total Fleet Debt 5,547.8 5,475.7 5,713.2
------------ ------------ ------------
Total Debt $ 10,750.0 $ 11,306.4 $ 10,387.9
============ ============ ============
Corporate Restricted Cash
Restricted Cash, less: $ 190.9 $ 207.6 $ 221.3
Restricted Cash Associated
with Fleet Debt (110.2) (115.6) (129.6)
------------ ------------ ------------
Corporate Restricted Cash $ 80.7 $ 92.0 $ 91.7
============ ============ ============
Net Corporate Debt
Corporate Debt, less: $ 5,202.2 $ 5,830.7 $ 4,674.7
Cash and Cash Equivalents (1,365.8) (2,374.2) (800.7)
Corporate Restricted Cash (80.7) (92.0) (91.7)
------------ ------------ ------------
Net Corporate Debt $ 3,755.7 $ 3,364.5 $ 3,782.3
============ ============ ============
Net Fleet Debt
Fleet Debt, less: $ 5,547.8 $ 5,475.7 $ 5,713.2
Restricted Cash Associated
with Fleet Debt (110.2) (115.6) (129.6)
------------ ------------ ------------
Net Fleet Debt $ 5,437.6 $ 5,360.1 $ 5,583.6
============ ============ ============
Total Net Debt $ 9,193.3 $ 8,724.6 $ 9,365.9
============ ============ ============
NET CORPORATE DEBT, NET FLEET December 31, March 31,
DEBT AND TOTAL NET DEBT 2009 2009
------------ ------------
Total Corporate Debt $ 4,689.4 $ 4,500.8
Total Fleet Debt 5,675.0 5,191.8
------------ ------------
Total Debt $ 10,364.4 $ 9,692.6
============ ============
Corporate Restricted Cash
Restricted Cash, less: $ 365.2 $ 323.4
Restricted Cash Associated
with Fleet Debt (295.0) (233.4)
------------ ------------
Corporate Restricted Cash $ 70.2 $ 90.0
============ ============
Net Corporate Debt
Corporate Debt, less: $ 4,689.4 $ 4,500.8
Cash and Cash Equivalents (985.6) (557.1)
Corporate Restricted Cash (70.2) (90.0)
------------ ------------
Net Corporate Debt $ 3,633.6 $ 3,853.7
============ ============
Net Fleet Debt
Fleet Debt, less: $ 5,675.0 $ 5,191.8
Restricted Cash Associated
with Fleet Debt (295.0) (233.4)
------------ ------------
Net Fleet Debt $ 5,380.0 $ 4,958.4
============ ============
Total Net Debt $ 9,013.6 $ 8,812.1
============ ============
Three Months Ended
CAR RENTAL RATE REVENUE PER March 31,
TRANSACTION DAY (a) --------------------------
2011 2010
------------ ------------
Car rental segment revenues (b) $ 1,510.3 $ 1,421.7
Non-rental rate revenue (248.0) (222.9)
Foreign currency adjustment (9.5) 1.5
------------ ------------
Rental rate revenue $ 1,252.8 $ 1,200.3
============ ============
Transactions days (in thousands) 29,648 28,116
Rental rate revenue per
transaction day (in whole
dollars) $ 42.26 $ 42.69
Three Months Ended
EQUIPMENT RENTAL AND RENTAL March 31,
RELATED REVENUE (a) --------------------------
2011 2010
------------ ------------
Equipment rental segment revenues $ 268.2 $ 237.0
Equipment sales and other revenue (23.4) (22.1)
Foreign currency adjustment (1.7) 0.7
------------ ------------
Rental and rental related revenue $ 243.1 $ 215.6
============ ============
(a) Based on 12/31/10 foreign exchange rates.
(b) Includes U.S. off-airport revenues of $262.1 million and $231.7
million for the three months ended March 31, 2011 and 2010,
respectively.
Exhibit 1
Non-GAAP Measures: Definitions and Use/Importance
Hertz Global Holdings, Inc. ("Hertz Holdings") is our top-level
holding company. The Hertz Corporation ("Hertz") is our primary
operating company. The term "GAAP" refers to accounting principles
generally accepted in the United States of America.
Definitions of non-GAAP measures utilized in Hertz Holdings' April
26, 2011 Press Release are set forth below. Also set forth below is a
summary of the reasons why management of Hertz Holdings and Hertz
believes that the presentation of the non-GAAP financial measures
included in the Press Release provide useful information regarding
Hertz Holdings' and Hertz's financial condition and results of
operations and additional purposes, if any, for which management of
Hertz Holdings and Hertz utilize the non-GAAP measures.
1. Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") and Corporate EBITDA
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 EBITDA as adjusted for car rental fleet interest, car
rental fleet depreciation and certain other items, as described in
more detail in the accompanying tables.
Management uses EBITDA and 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, 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 two 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 Corporate EBITDA as a supplemental measure because
such information is utilized in the calculation of financial
covenants under Hertz's senior credit facilities.
EBITDA and Corporate EBITDA are not recognized measurements under
GAAP. When evaluating our operating performance or liquidity,
investors should not consider EBITDA and 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.
2. Adjusted Pre-Tax Income
Adjusted pre-tax income is calculated as income before income taxes
plus non-cash purchase accounting charges, non-cash debt charges
relating to the amortization of debt financing costs and debt
discounts and certain one-time charges and non-operational items.
Adjusted pre-tax income 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 that 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.
3. Adjusted Net Income
Adjusted net income is calculated as adjusted pre-tax income less a
provision for income taxes derived utilizing a normalized income tax
rate (34% in 2011 and 2010) and noncontrolling interest. The
normalized income tax 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, non-cash debt charges,
one-time charges and items that are not operational in nature or
comparable to those of our competitors.
4. Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is calculated as adjusted net
income divided by, for 2011, 413.0 million which represents the
approximate number of shares outstanding at March 31, 2011 and for
2010, 410.0 million which represents the approximate number of shares
outstanding at December 31, 2009. Adjusted diluted earnings per share
is important to management and investors because it represents a
measure of our operational performance exclusive of the effects of
purchase accounting adjustments, non-cash debt charges, one-time
charges and items that are not operational in nature or comparable to
those of our competitors.
5. Transaction Days
Transaction days represent the total number of days that vehicles
were on rent in a given period.
6. Car Rental Rate Revenue, Rental Rate Revenue Per Transaction Day
and Rental Rate Revenue Per Transaction
Car rental rate revenue consists of all revenue, net of discounts,
associated with the rental of cars including charges for optional
insurance products, but excluding revenue derived from fueling and
concession and other expense pass-throughs, NeverLost units in the
U.S. and certain ancillary revenue. Rental rate revenue per
transaction day is calculated as total rental rate revenue, divided
by the total number of transaction days, with all periods adjusted to
eliminate the effect of fluctuations in foreign currency. Rental rate
revenue per transaction is calculated as total rental rate revenue,
divided by the total number of transactions, with all periods
adjusted to eliminate the effects 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. These statistics are
important to management and investors as they represent the best
measurements of the changes in underlying pricing in the car rental
business and encompass the elements in car rental pricing that
management has the ability to control. The optional insurance
products are packaged within certain negotiated corporate, government
and membership programs and within certain retail rates being
charged. Based upon these existing programs and rate packages,
management believes that these optional insurance products should be
consistently included in the daily pricing of car rental
transactions. On the other hand, non-rental rate revenue items such
as refueling and concession pass-through expense items are driven by
factors beyond the control of management (i.e. the price of fuel and
the concession fees charged by airports). Additionally, NeverLost
units are an optional revenue product which management does not
consider to be part of their daily pricing of car rental
transactions.
7. 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 is utilized in the
measurement of rental revenue generated per dollar invested in fleet
on an annualized basis and is comparable with the reporting of other
industry participants.
8. Same Store Revenue Growth/Decline
Same store revenue growth or decline 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.
9. Unlevered Pre-Tax Cash Flow
Unlevered pre-tax cash flow is calculated as Corporate EBITDA less
non-fleet capital expenditures, net of non-fleet disposals, plus
changes in working capital (receivables, excluding car rental
receivables, inventories, prepaid expenses, accounts payable and
accrued liabilities), cash used for acquisitions, cash used for /
provided by other investing activities, cash used / provided by
non-debt financing activities and the foreign exchange impact on
cash and cash equivalents. Unlevered pre-tax cash flow is important
to management and investors as it represents funds available to pay
corporate interest and taxes and to grow our fleet or reduce debt.
10. Levered After-Tax Cash Flow Before Fleet Growth
Levered after-tax cash flow before fleet growth is calculated as
Unlevered Pre-Tax Cash Flow less corporate net cash interest and
corporate cash taxes. Levered after-tax cash flow before fleet growth
is important to management and investors as it represents the funds
available to grow our fleet or reduce our debt.
11. Corporate Net Cash Interest (used in the calculation of Levered
After-Tax Cash Flow Before Fleet Growth)
Corporate net cash interest represents cash paid by the Company
during the period for interest expense relating to Corporate Debt.
Corporate net cash interest helps management and investors measure
the ongoing costs of financing the business exclusive of the costs
associated with the fleet financing.
12. Corporate Cash Taxes (used in the calculation of Levered
After-Tax Cash Flow Before Fleet Growth)
Corporate cash taxes represents cash paid by the Company during the
period for income taxes.
13. Corporate Cash Flow
Corporate cash flow is calculated as Levered After-Tax Cash Flow
Before Fleet Growth less equipment rental fleet growth capital
expenditures, net of disposal proceeds and less the car rental fleet
equity requirement. Corporate cash flow is important to management
and investors as it represents the cash available for the reduction
of corporate debt.
14. 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; Convertible Senior Notes; and certain other indebtedness of our
domestic and foreign subsidiaries. Net Corporate Debt is important to
management, investors and ratings agencies 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 fully
collateralized by assets not available to lenders under the non-fleet
debt facilities.
15. 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.
16. Net Fleet Debt
Net fleet debt is calculated as total fleet debt less restricted cash
associated with fleet debt. As of March 31, 2011, fleet debt
consists of U.S. Fleet Variable Funding Notes, U.S. Fleet Medium Term
Notes, U.S. Fleet Financing Facility, European Revolving Credit
Facility, European Fleet Notes, European Securitization, Canadian
Securitization, Australian Securitization Brazilian Fleet Financing
and Capitalized Leases relating to revenue earning equipment. This
measure is important to management, investors and ratings agencies as
it helps measure our leverage.
17. 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.
18. Total Net Debt
Total net debt is calculated as net corporate debt plus net fleet
debt. This measure is important to management, investors and ratings
agencies as it helps measure our leverage.
SOURCE: The Hertz Corporation
