Hertz Global Holdings, Inc. Q4 FY2025 earnings call

• Strategy: 2025 was the first full year under the back to basic strategy, focusing on fleet management, revenue optimization, cost control, and customer experience improvement. - Fleet: Completed fleet rotation, secured model year 26 buys, achieved lowest average fleet age in nearly a decade. - Revenue: Fourth quarter revenue was strongest in nearly two years, driven by sequential improvements in RPU, RPD, and utilization with a smaller fleet. - Customer Experience: Net promoter score grew by nearly 50% year over year, driving organic demand. - Commercial Strategies: Focus on better customer experience, durable demand from higher margin channels, improved pricing tactics, better monetization of higher RPU assets, and local level profitability optimization. - Mobility and Fleet Car Sales: Mobility business has double-digit revenue growth potential, Hertz car sales transforming into omni-channel experience with scale and partnerships.

In 2025, Hertz achieved a full year adjusted EBITDA improvement of more than $1 billion year over year. In the fourth quarter, despite external headwinds, revenue was the strongest in nearly two years. Revenue metrics showed sequential progression with improvements in RPD, especially in the Americas airports segment. Adjusted DOE per transaction day was down 6% year on year. Fleet rotation was completed, model year 26 buys secured, average fleet age was the lowest in almost a decade, and customer satisfaction improved nearly 50%.

• Q1 2026: Expect transaction days and fleet to increase low single digits year over year, total fleet utilization likely flat due to winter storms and recalls, revenue expected mid single digits year over year with fleet growth low single digits, margin range negative high single digit to low double digit. - Full Year 2026: Maintaining 3% to 6% adjusted EBITDA margin range as revenue trends are positive but early in the year to revise guidance upward, targeting $1 billion of adjusted EBITDA in 2027.

• External headwinds in fourth quarter including government shutdown, FAA cancellations, technology vendor outages, unfavorable residual value environment, elevated recall volumes which created over $100 million pressure on business. - Recall volumes remained elevated in first quarter, impacting fleet utilization and performance with ripple effects across the business. - Residual value market volatility and seasonality could impact financial results.

Q: One of Hertz's competitors recently took a $500 million write-down related to EVs, can you refresh on Hertz's EV strategy?

A: Hertz is a large fleet supplier to rideshare, right-sized EV fleet based on demand, redeployed to rideshare business, doing interior refresh on Tesla fleet, experience with EVs sets up well for AVs in future.

Q: Could you dig into more detail on the future potential of the mobility business for Hertz?

A: Mobility has significant potential, Hertz is positioned for future of mobility, piloting innovative models with strategic partner, has ingredients to be major player in AVs with core business strengths, rideshare experience, etc.

Q: Walk through the path to sustainably be at $300 DPU given vehicle inflation?

A: Rotated fleet, model year 25/26 vehicles, pivoting into heavier retail car sales and shorter hold periods, managing buy, hold, sell at right level to maximize retention value, combination of fleet strategy and used car market setup will help hit DPU targets.

Q: What are expectations for the percentage of vehicles disposed of various channels in 2026 relative to 2025 for Hertz car sales?

A: Historically about a third of cars move through retail channels, aspirationally want to grow to about 80%, pushing to shift bulk of volume through retail channels and shorten sales time, with investment in digital channels and e-commerce.