Hertz Global Holdings Reports First Quarter 2020 Financial Results

ESTERO, Fla., May 11, 2020 /PRNewswire/ --Hertz Global Holdings, Inc. (NYSE: HTZ) ("Hertz Global" or the "Company") today reported results for its first quarter 2020.

• Financial results significantly impacted by COVID-19 pandemic
• Consolidated revenue of $1.9 billion, U.S. RAC revenue of $1.4 billion
• Hertz Global net loss of $356 million, Adjusted Corporate EBITDA of negative $243 million
• Approximately $1.0 billion of unrestricted cash and cash equivalents at March 31, 2020

"We started the year with positive momentum, extending the strong growth trajectory of the past three years, reflecting consistent increases in both price and volume, productivity improvements and best-in-class fleet management," said CEO and President, Kathryn V. Marinello. "Yet in just two months, the outbreak of the coronavirus created a major business disruption as global travel demand dropped to almost zero and the U.S. used-car market effectively shut down. We immediately shifted our business priorities to focus on employee and customer safety, expense mitigation and preserving liquidity."

The Company began implementing stringent measures in line with U.S. CDC guidelines to safeguard personnel and customers. In addition to following social distancing best practices at its locations, every vehicle now is being sealed and certified 'Hertz Gold Standard Clean' after undergoing a 15-point cleaning and sanitization process that follows U.S. CDC guidelines and uses EPA-approved products.

While ensuring the safety of its people, the Company aggressively managed costs and liquidity by right-sizing its staffing and operations to reflect the current market realities, significantly reducing capital spending, canceling new fleet orders and disposing of excess fleet through multiple disposition channels before the shut down of the used-car market. The Company believes these actions will result in approximately $2.5 billion in annualized cost savings.

"As a responsible management team, we have to be pragmatic about the timing of an economic recovery, so we are doing absolutely everything we can to preserve liquidity. At the same time, from an operating perspective, we are continuing to service customers at the highest levels, with a safe fleet, in the manner they've come to trust from our iconic brand."

U.S. RENTAL CAR ("U.S. RAC") SUMMARY
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NM - Not meaningful

Year-to-date February 2020 revenue for the segment was up 8% from the same period in 2019 on both higher price and volume. Travel bans and shelter-in-place orders throughout the country severely impacted volume in March which drove an 11% decline in transaction days for the quarter. All three brands contributed to a 2% increase in Total RPD in the first quarter, which partially offset the volume impact to revenue.

Depreciation Per Unit Per Month was impacted by residual values on certain vehicle models and lower year over year retail sales volume as a result of the COVID-19 shut-down of retail lots.

Adjusted EBITDA was negative $199 million as the timing of the sharp decline in revenue outpaced the Company's ability to reduce costs during the quarter.

INTERNATIONAL RENTAL CAR ("INTERNATIONAL RAC") SUMMARY
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NM - Not meaningful

Year-to-date February 2020 revenue for the segment was up 1% on a constant currency basis from the same period in 2019 on both higher price and volume. Travel bans and shelter-in-place orders severely impacted March volume. As a result, first quarter International RAC revenue decreased 12% year-over-year on a constant currency basis.

The timing of the sharp decline in revenue outpaced the Company's ability to reduce costs during the quarter resulting in Adjusted EBITDA of negative $45 million.

ALL OTHER OPERATIONS SUMMARY
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All Other Operations primarily is comprised of the Company's Donlen leasing operations. Higher leasing volume drove double-digit growth in revenue and Adjusted EBITDA for the quarter.

LIQUIDITY CONSIDERATIONS RELATED TO COVID-19
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During the quarter the Company drew down $595 million from its Senior Revolving Credit Facility and ended the quarter with approximately $1.0 billion of liquidity, substantially in the form of unrestricted cash and cash equivalents. To mitigate the impact of the COVID-19 shutdowns on its operations, the Company took measures to adjust fleet levels, reduce staffing levels, reduce discretionary spending, renegotiate key contracts and commitments, and slash capital expenditures.  At this time, neither the duration nor magnitude of the market disruption of COVID-19 can be predicted, therefore, the Company is unable to reasonably estimate the ultimate impact to the business. As such, in addition to the above measures to preserve liquidity, in April the Company did not make certain operating lease payments for its U.S. rental car fleet. In May, the Company entered into forbearance and limited waivers with certain of its corporate lenders and holders of its asset-backed vehicle debt. These provide the Company with additional time through May 22, 2020 to engage in discussions with its key stakeholders to develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic and considers the Company's ongoing operating and financing requirements.

As more fully disclosed in its First Quarter 2020 Quarterly Report on Form 10-Q filed on May 11, 2020, the Company is reviewing all available options to preserve liquidity, however, there can be no assurance that the Company will be able to successfully negotiate any relief past May 22, 2020.

EARNINGS WEBCAST INFORMATION
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Hertz will host a webcast and conference call on May 12, 2020 at 8:30 a.m. Eastern Time. Management will present prepared remarks. There will not be a question and answer session. This webcast and conference call can be accessed through a link on the Investor Relations section of the Hertz website, IR.Hertz.com, or by dialing (877) 692-8955 and providing passcode 4386207. Investors are encouraged to dial-in approximately 10 minutes prior to the call. A web replay will remain available for approximately one year. A telephone replay will be available one hour following the conclusion of the call for one year at (866) 207-1041 with pass code 4740780.

An accompanying presentation, the earnings release and related supplemental schedules containing the reconciliations of non-GAAP measures will be available on the Hertz website, IR.Hertz.com.

RIGHTS OFFERING
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In June 2019, the Company distributed transferable subscription rights to its shareholders to purchase up to an aggregate of 57,915,055 new shares (the "Rights Offering"). The Rights Offering, which was fully subscribed, was consummated in July 2019. As a result of the timing of the subscription period, the rights generated a dilutive impact to the Company's 2019 basic and diluted earnings per share. The three month period ended March 31, 2019 has been adjusted to reflect the impact of the Rights Offering.

RESULTS OF THE HERTZ CORPORATION
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The GAAP and non-GAAP profitability metrics for Hertz Global's operating subsidiary, The Hertz Corporation ("Hertz"), are materially the same as those for Hertz Global.

SELECTED FINANCIAL DATA, SUPPLEMENTAL SCHEDULES, NON-GAAP MEASURES AND DEFINITIONS
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Following are tables that present selected financial data of Hertz Global. 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 earnings release and provides the usefulness of non-GAAP measures to investors and additional purposes for which management uses such measures.

ABOUT HERTZ
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The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. The Hertz Corporation is one of the largest worldwide vehicle rental companies, and the Hertz brand is one of the most recognized globally. Product and service initiatives such as Hertz Gold Plus Rewards, Ultimate Choice, Carfirmations, Mobile Wi-Fi and unique vehicles offered through its specialty collections set Hertz apart from the competition. Additionally, The Hertz Corporation owns the vehicle leasing and fleet management leader Donlen Corporation, operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets and sells vehicles through Hertz Car Sales. For more information about The Hertz Corporation, visit: www.hertz.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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Certain statements contained or incorporated by reference 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 filed or furnished to the Securities and Exchange Commission ("SEC"). Among other items, such factors could include: levels of travel demand, particularly with respect to business and leisure travel in the United States and in global markets; the length and severity of the COVID-19 pandemic and the impact on the Company's vehicle rental business as a result of travel restrictions and business closures or disruptions; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic factors; general economic uncertainty and the pace of economic recovery, including in key global markets, when the COVID-19 pandemic subsides; the Company's ability to successfully restructure the Company's substantial indebtedness, obtain further waivers or forbearance or raise additional capital; the recoverability of the Company's goodwill and indefinite-lived intangible assets when performing impairment analysis; the Company's ability to dispose of vehicles in the used-vehicle market, use the proceeds of such sales to acquire new vehicles and to reduce exposure to residual risk; actions creditors may take with respect to the vehicles used in the rental car operations; significant changes in the competitive environment and the effect of competition in the Company's markets on rental volume and pricing, including on the Company's pricing policies or use of incentives; occurrences that disrupt rental activity during the Company's peak periods; the Company's ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in the Company's rental operations accordingly; increased vehicle costs due to declining value of the Company's non-program vehicles; the Company's ability to maintain sufficient liquidity and the availability to it of additional or continued sources of financing for the Company's revenue earning vehicles and to refinance its existing indebtedness; risks related to the Company's indebtedness, including its substantial amount of debt, its ability to incur substantially more debt, the fact that substantially all of the Company's consolidated assets secure certain of its outstanding indebtedness and increases in interest rates or in its borrowing margins; the Company's ability to meet the financial and other covenants contained in its senior credit facilities and letter of credit facilities, its outstanding unsecured senior notes, its outstanding senior second priority secured notes and certain asset-backed and asset-based arrangements; the Company's ability to access financial markets, including the financing of its vehicle fleet through the issuance of asset-backed securities; fluctuations in interest rates, foreign currency exchange rates and commodity prices; the Company's ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease); the Company's ability to prevent the misuse or theft of information it possesses, including as a result of cyber security breaches and other security threats; the Company's ability to adequately respond to changes in technology, customer demands and market competition; the Company's ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles it purchases; the Company's recognition of previously deferred tax gains on the disposition of revenue earning vehicles; financial instability of the manufacturers of the Company's vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs; an increase in the Company's vehicle costs or disruption to the Company's rental activity, particularly during peak periods, due to safety recalls by the manufacturers of the Company's vehicles; the Company's ability to execute a business continuity plan; the Company's access to third-party distribution channels and related prices, commission structures and transaction volumes; the Company's ability to retain customer loyalty and market share; risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws, the Company's ability to repatriate cash from non-U.S. affiliates without adverse tax consequences, the Company's exposure to fluctuations in foreign currency exchange rates and the Company's ability to effectively manage its international operations after the United Kingdom's withdrawal from the European Union; a major disruption in the Company's communication or centralized information networks; a failure to maintain, upgrade and consolidate the Company's information technology systems; costs and risks associated with litigation and investigations or any failure or inability to comply with laws and regulations or any changes in the legal and regulatory environment, including laws and regulations relating to environmental matters and consumer privacy and data security; the Company's ability to maintain its network of leases and vehicle rental concessions at airports in the U.S. and internationally; the Company's ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy; the Company's ability to maintain an effective employee retention and talent management strategy and resulting changes in personnel and employee relations; 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 the Company's operations, the cost thereof or applicable tax rates; risks relating to the Company's deferred tax assets, including the risk of an "ownership change" under the Internal Revenue Code of 1986, as amended; the Company's exposure to uninsured claims in excess of historical levels; risks relating to the Company's participation in multiemployer pension plans; shortages of fuel and increases or volatility in fuel costs; changes in accounting principles, or their application or interpretation, and the Company's ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results and other risks and uncertainties described from time to time in periodic and current reports that the Company files with the SEC.

Additional information concerning these and other factors can be found in the Company's filings with the SEC, including its Annual Reports 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.

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FINANCIAL INFORMATION AND OPERATING DATA
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SELECTED UNAUDITED CONSOLIDATED INCOME STATEMENT DATA