Hertz Global Holdings, Inc. Q1 FY2025 earnings call

• Fleet: Established a disciplined end-to-end fleet management strategy, with over 70% of core U.S. RAC fleet 12 months or newer. Model year 2025 fleet has DPU sub-300. Guided by buy right, hold right, sell right strategy.
• Commercial Strategy: Focus on revenue management systems transformation with Amadeus, optimizing off-airport and mobility business units for better utilization and margins, improving durable segments, and driving customer preference (net promoter scores up 11% year-over-year).
• Cost Management: Nearly $100 million year-over-year improvement in total direct operating expense. Sequential improvement in BOE per day despite lower volumes.
• Technology Partnerships: Leveraging Palintir, UVI, Amadeus, Decagon for fleet management, vehicle inspections, revenue management, and customer service enhancements.

The financial performance includes revenue of $1.8 billion for the quarter. Adjusted EBITDA was a loss of $325 million versus a loss of $567 million in the prior year period, with a 9% year-over-year improvement in margin. The fleet is a key economic lever: over 70% of the core U.S. RAC fleet is now 12 months old or newer. Q1 depreciation expense decreased 45% year-over-year, with DPU for the quarter at $353 per month, and expecting DPU below $300 in Q2. Revenue contribution is dominated by the fleet segment, which is the largest economic lever.

Q2 EBITDA expected to be breakeven, Q3 to be a sizable profit, Q4 positive EBITDA. Full year EBITDA margin in low single digits. Target DPU below 300, RPU above 1,500, BOE per day in low 30s. Expect fleet growth in line with demand growth, improved unit economics, aiming for EBITDA over $1 billion by 2027.

• Macroeconomic headwinds and uncertainty affecting the operating environment.
• Potential tariff impacts on vehicle parts and maintenance costs.
• Uncertainty in model year 2026 vehicle supply and pricing.

Q: About fleet overfleeting and residuals A: Gil and Sandeep discuss local overfleeting at market level and rising residuals in retail and wholesale, with analyst projections showing residual value increases.

Q: On fleet strategy and RPD A: Gil and Sandeep talk about off-airport mobility and diversifying revenue streams to improve utilization and RPD, with focus on durable segments and customer mix.

Q: On depreciation and liquidity A: Scott discusses Q2 liquidity position, fleet depreciation gains, and expected EBITDA trends throughout the year