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Hertz narrows loss in boon to company’s turnaround effort
Results offer investors a measure of relief after a punishing stretch for rental company
A Hertz rental car location in Berkeley, Calif. (David Paul Morris/Bloomberg News)
Key Takeaways:
- Hertz reported a second-quarter adjusted loss of 11 cents a share Aug. 6, beating analysts’ expected 24-cent loss and exceeding Ebitda estimates.
- The results eased concerns after Hertz’s debt-and-stock fundraising maneuver and warning of used-car market softness, while depreciation per unit rose 18%.
- Hertz said revenue per day increased 9%, and investors responded by sending shares up 11% in premarket trading.
Hertz Global Holdings Inc. beat Wall Street’s earnings estimates, a boost for the struggling rental car company following an unusual debt-raise maneuver and a warning of weakness in the used-vehicle market.
Its adjusted loss narrowed to 11 cents a share in the second quarter, the company said Aug. 6 in a statement, compared with the 24-cent loss expected on average in analyst estimates compiled by Bloomberg. Adjusted corporate earnings before interest, taxes, depreciation and amortization was $81 million, better than expected.
The results offer investors a measure of relief after a punishing stretch for Hertz, which has contended with heavy depreciation costs, volatile finances and pressure on its stock. The company in June took an unusual step of raising money by issuing debt while simultaneously offering $100 million of shares designed to be shorted.
As part of the maneuver, which allowed buyers of the debt to hedge their investment, Hertz issued a regulatory filing warning of “unexpected softness in the used car market” that was raising its costs. The company also said then that adjusted Ebitda would be no more than $80 million, the low end of its expectations.
Hertz on Aug. 6 said depreciation per unit per month rose 18% in the quarter, while revenue per day climbed 9%.
Its shares jumped 11% before regular trading in New York. The stock had plunged 70% this year through the Aug. 5 close.
