HTZ

• Core Business Transformation Progress • After two years of transformation, the company has navigated multiple external headwinds including tariffs, vehicle recalls, inflation, government shutdowns, travel disruptions, and industry volatility while maintaining disciplined execution. • Adjusted corporate EBITDA has improved by $1.2 billion in 2025 and an additional $200 million in H1 2026, with nearly 2,000 basis points of margin expansion achieved in two years, on track for over $500 million of full-year 2026 year-over-year EBITDA improvement. • The company now holds its youngest average fleet age (just under 9 months) in over a decade, with 94% of the U.S. core fleet consisting of 2025 and 2026 model year vehicles.

• Commercial Strategy Momentum • 6-7 percentage points of Q2 2026 RPD growth came from internal commercial initiatives, 2-3 percentage points from favorable industry pricing, and less than 0.5 percentage points from the World Cup. This marks the second consecutive quarter of double-digit global revenue growth, with 200 consecutive days of positive year-over-year RPD achieved through July 2026. • Key initiatives include improved customer experience (including a now positive NPS for service recovery), growth in higher-margin direct, corporate, government, and off-airport channels, more precise dynamic pricing, better placement of higher-RPU assets, growth in value-added product sales, and granular local profitability optimization. • Industry pricing is now recovering from post-COVID declines, creating a supportive pricing environment for ongoing RPD gains.

• Operational Efficiency Improvements • A new AI-powered Palantir labor planning model aligns staffing to real-time demand, reducing overtime and third-party labor costs. Additional efficiency initiatives include AI-driven vehicle turnaround time improvements, optimized supply chain and maintenance processes, expanded part-out capabilities, and improved collections recovery. • Adjusted core DOE per day improved 2% year-over-year after normalizing for variable revenue-related costs and recall impacts, and SG&A as a percentage of revenue declined to 10.8% from 11.3% year-over-year, reflecting improved operating leverage.

• Strategic Platform Expansion • Franchising: Management is prioritizing expansion of this under-monetized, asset-light business to drive higher-quality earnings, stronger free cash flow, deleveraging, and unlock capital for growth initiatives, similar to hotel industry models. Currently 25% of revenue is franchise-generated, with room to grow this share significantly. • Used Vehicle Sales: The company is shifting volume from primarily wholesale to higher-yield retail and partnership channels, including expanding direct retail, and exploring strategic partnerships with leading used vehicle retailers to reduce selling costs and improve net DPU. • Mobility (Oro): The rideshare fleet operation is gaining scale, with expansion to new markets and service offerings on Uber. The existing fleet operations infrastructure is already in place to support the upcoming launch of the Uber RoboTaxi program with Lucid/Neuro in the San Francisco Bay Area in late 2026, positioning Hertz as a critical operating layer for the autonomous vehicle industry.

• Q3 2026: Adjusted corporate EBITDA is expected between $275 and $325 million, with positive expected earnings per share. Transaction days are projected to be up approximately 1% year-over-year, and net DPU is expected between $285 and $295 per unit per month.
• Full-Year 2026: Adjusted corporate EBITDA is guided between $225 and $275 million, with full-year net DPU expected to hit the $300 North Star target, and transaction days up approximately 2% year-over-year. Full-year 2026 RPU is now expected to trend above the $1,500 North Star target. End-of-year 2026 liquidity is expected between $1.0 billion and $1.4 billion, down from prior guidance of over $1.5 billion due to the removal of ATM program proceeds from the forecast; the ATM remains available as an option if needed. Hertz expects to pay the remaining $200 million of its December 2026 debt maturity in cash.
• 2027: Management maintains its long-term target of $1 billion adjusted corporate EBITDA, though scale is required to reach this target. At a minimum, Hertz expects to achieve full-year net income profitability and full-year positive free cash flow in 2027. End-of-2026 liquidity and projected 2027 profitability are expected to support modest growth in 2027, with excess liquidity above guidance midpoint allocated to additional growth investments.

Hertz reports overall Q2 2026 revenue of $2.4 billion, a 10% year-over-year increase achieved with a 1% smaller total fleet. Core North American Airport Car Rental: Generated a 12% year-over-year increase in RPD (revenue per day), outperforming the global 9% year-over-year RPD growth. RPU (revenue per unit) reached $1,542, an 8% year-over-year increase that beat internal targets. Total fleet utilization hit 79%, up 80 basis points year-over-year, even with a 200 basis point utilization headwind from elevated vehicle recalls. Adjusted corporate EBITDA for the company was $81 million, a $63 million year-over-year improvement, representing 3.4% of total revenue (up 260 basis points from 0.8% in Q2 2025). Net DPU (depreciation per unit) was $302 per month, in line with the company's North Star target. The RPD to DOE (department of energy, operating expense per day) spread was $24.36, up 17% year-over-year, marking the third consecutive quarter of spread expansion. Franchise segment: Currently accounts for over 25% of total Hertz branded revenue, contributing consistent, stable adjusted corporate EBITDA with an asset-light, capital-efficient structure. Oro (Mobility segment): Currently active in 4 U.S. markets on the Uber platform, with drivers having logged over 6 million miles. Expected to generate over $600 million in total 2026 revenue, with significant long-term growth potential. Used Vehicle Sales segment: Q2 2026 faced temporary wholesale pricing headwinds that depressed sale proceeds, though the company is shifting volume to higher-margin direct retail and partnership channels, with Q2 2026 achieving growing retail volumes and lower reconditioning costs.

• Elevated vehicle recalls remain a significant ongoing headwind: Q2 2026 recall volume was 300% higher than year-ago levels, impacting an average of 15,000 vehicles per month in H1 2026, reducing EBITDA by approximately $30 million and total revenue by approximately $55 million. Management is working on regulatory, operational, and contractual solutions to mitigate this impact.
• Temporary wholesale used vehicle market weakness in Q2 2026 suppressed vehicle sale proceeds, driven by a larger-than-expected seasonal decline, temporary supply-demand imbalance from high industry sales volume, suboptimal disposition channel capacity, and the company's intentional rotation of older vehicle models, leading to a lower-than-planned gain on sale.
• Investors remain focused on the company's capital structure and upcoming debt maturities, with a significant perceived disconnect between operational progress and current equity market valuation. Over the 90 days prior to the call, Hertz's market capitalization fell to one-third of its prior level despite improved operational performance and liquidity.
• Scaling up higher-margin used vehicle retail sales channels requires additional capacity to absorb higher volume, which the company is still in the process of building, leaving the company exposed to wholesale market volatility in the near term.

Q: Management notes the business has improved operationally, but the market cap has dropped sharply over the past 45 days. What do you believe investors are missing about Hertz today? / A: Management agrees there is a clear disconnect: the business is in a much stronger position than 90 days ago, with proven core business momentum, 10% revenue growth on a 1% smaller fleet, liquidity that met guidance through the seasonal low point, on-target DPU, a much healthier young fleet, and emerging upside from the new platform strategy including Oro and franchising. The management team remains focused on executing its long-term strategy and trusts the stock price will reflect fundamentals over time.

Q: Franchising is framed as a strategic opportunity, but is it being pursued primarily for liquidity reasons, and what is the main downside risk to liquidity from an investor's perspective? / A: Management notes the conversation has shifted from just securing liquidity to capital allocation for long-term value, and current liquidity is sufficient to fund operations and strategic plans. Franchising is the right strategic move for Hertz regardless of capital structure, as it is a capital-light, high-return business that improves earnings quality, rather than just a liquidity solution. While a weaker macro environment is a potential risk, management has navigated significant prior headwinds and has built durable strategies to withstand future volatility.

Q: Recent residual value weakness for sold vehicles: is this temporary, or an ongoing channel mix issue, and what steps are you taking to improve channel mix? / A: The Q2 weakness was driven by temporary, quarter-specific factors: normalization after strong first-quarter price gains driven by tax refunds, and a temporary supply-demand imbalance from high industry wholesale volume from lease returns. The longer-term challenge is building enough capacity in higher-yield channels to absorb more volume, reducing exposure to wholesale volatility. Management is actively working to shift the mix from 70-80% wholesale to 70-80% higher-yield channels via direct retail expansion and strategic partnerships with large used vehicle retailers.

Q: What is the nature of infrastructure investment for the Oro autonomous vehicle launch in San Francisco, and is the infrastructure flexible for multiple future AV partners? / A: The core infrastructure for large-scale fleet operation, ownership, and maintenance already exists from Hertz's legacy business, requiring limited new incremental investment. This existing infrastructure is highly flexible, and Hertz is positioned as the essential operating layer for the autonomous vehicle industry (analogous to data centers for AI), capable of adapting to any future AV ecosystem development.