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Hertz Global Holdings (HTZ)

Q1 2011 Earnings Call

April 27, 2011 10:00 am ET


Scott Sider - Executive Vice President and President of Car Rental & Leasing The Americas

Elyse Douglas - Chief Financial Officer and Executive Vice President

Lois Boyd - Senior Vice President Advantage Rent A Car

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Previous Statements by HTZ
» Hertz Global Holdings' CEO Discusses Q4 2010 Results - Earnings Call Transcript
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» Hertz Global Holdings Q2 2010 Earnings Call Transcript

Mark Frissora - Executive Chairman, Chief Executive Officer, Member of Executive & Governance Committee, Chairman of Hertz Corp and Chief Executive Officer of Hertz Corp

Leslie Hunziker - Staff Vice President of Investor Relations


Fred Lowrance - Avondale Partners, LLC

Richard Kwas - Wells Fargo Securities, LLC

Michael Millman - Millman Research Associates

Christopher Agnew - MKM Partners LLC

Brian Johnson - Barclays Capital

Michael Perez

John Healy - Northcoast Research

Himanshu Patel - JP Morgan Chase & Co

Neil Portus - Goldman Sachs Group Inc.

Jordon Hymowitz



Welcome to the Hertz Global Holdings 2011 First Quarter Conference Call. The company has asked me to remind you that certain statements made on this call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance and, by their nature, are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of this date and the company undertakes no obligation to update this information to reflect changed circumstances.

Additional information concerning these statements is contained in the company's press release regarding its first quarter results issued yesterday and in the Risk Factors and Forward-looking Statement sections of the company's 2010 Form 10-K. Copies of these filing are available from the SEC, the Hertz website or the company's Investor Relations department.

I would now like to remind you that today's call is being recorded by the company and is also being made available for replay starting today at 2 p.m. Eastern and running through May 11, 2011.

I would now like to turn the call over to our host, Leslie Hunziker. Please go ahead.

Leslie Hunziker

Good morning. You shall have our press and associated financial information. We've also provided slides to accompany our conference call that can be accessed on our website at\investorrelations.

Today we'll use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers in our press release and at the back of the slide presentation, both of which are posted on our website. We believe that our profitability and performance is better demonstrated using these non-GAAP metrics.

Our call today focuses on Hertz Global Holdings, Inc., the publicly traded company. Results for the Hertz Corporation differed only slightly as explained in our press release.

A quick note about our IR calendar. We'll be attending the Wells Fargo Industrial Conference in New York City on May 10, the Barclays Global Services Conference on May 11 in Boston and we'll be doing some investor marketing around Chicago with Barclays on May 17. So hopefully, we'll see some of you at one of those events.

This morning, in addition to Mark Frissora, Hertz's Chairman and CEO; and Elyse Douglas, our Chief Financial Officer, on the call we have Scott Sider, Executive Vice President and President of Vehicle Rental and Leasing, The Americas; Michelle Taride, Executive Vice President and President of Hertz International; and Lois Boyd, recently appointed Executive Vice President and President of Hertz Equipment Rental Corporation. They'll be on hand for the Q&A session. Now, I'll turn the call over to Mark.

Mark Frissora

Good morning, everyone, and thanks for joining us. As Leslie mentioned, I have appointed Lois Boyd who previously ran our Advantage business unit to head up our global equipment rental operation. After reviewing her background in the press release we issued, I'm sure you'll agree that Lois has the experience, credentials and track record to take Hertz's performance in the next level. Replacing Lois in an interim position at Advantage is Gary Fulena, who has more than 31 years experience in the rental car industry and has been an Operations Manager with Advantage since 2005. Permanent replacement will be named shortly.

Now in terms of our quarterly report, let's start on Slide 6. I was really pleased with our consolidated operating results in the first quarter after what started out to be a challenging year for U.S. Rental Car, our biggest operating unit. After three disruptive winter storms caused travelers in the Northeast to cancel their rental reservations in January and early February, the industry had too much supply and pricing had become competitive in key leisure markets. By mid-February, however, the fleets were right-sized. And as seasonal demand came back, we were able to increase Airport Leisure pricing year-over-year in March. In fact, Leisure Airport was up 4.5% in the U.S. excluding Advantage.

For all of the first quarter, U.S. Rental Car revenue was up 3.6% with fleet up less than 1%, volume was 4.4% higher and the March pricing contribution bringing RPD [revenue per day] near neutral. We estimate the storms had a $15 million negative impact on domestic revenue.

This inter-quarter rebound in U.S. Rental Car, along with improved pricing in European Rental Car and the as expected double-digit volume growth we generated in Equipment Rental all contributed to our strong top line performance of 7.2% revenue growth.

In particular, the U.S. Off-Airport business continues to be a bigger part of our revenue. You can see this on Slide 7. In the first quarter, Off-Airport made up nearly 26% of the total U.S. Rental Car revenue mix, up from 23.5% of the total a year ago. It's 13.1% year-over-year revenue increase in the latest 3 months represented 85% of U.S. Rental Car's total revenue increase. In the first quarter, Off-Airport same-store revenue was up 12.4% as our replacement segment grew more than 15%. We anticipate stronger growth through the remainder of the year due to our increasing share with insurance companies, fleet leasing providers and dealership accounts.

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