Q4 2025 Hertz Global Holdings Inc Earnings Call

February 26, 2026

Speaker #1: Welcome to the HERTZ GLOBAL HOLDINGS, fourth quarter and full year 2025 earnings call. Currently, all lines are in listen-only mode. Following management's commentary, we will conduct a question-and-answer session.

Operator: Welcome to the Hertz Global Holdings Q4 and full year 2025 Earnings Call. Currently, all lines are in listen-only mode. Following management's commentary, we will conduct a question-and-answer session. I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to our host, Johann Rawlinson, Vice President of Investor Relations. Please go ahead.

Speaker #1: I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to our host, Rohan Rawlinson, Vice President of Investor Relations, please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us. Right now, you should have our earnings press release and associated financial information, and these can be accessed through the investor relations section of our website.

Johann Rawlinson: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information. These can be accessed through the investor relations section of our website. I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not a guarantee of performance and, by their nature, are subject to inherent risks and uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of today's date. The company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements, including factors that could cause our actual results to differ, is contained in our earnings press release and in the Risk Factors and Forward-Looking Statement section in the filings we make with the Securities and Exchange Commission.

Speaker #2: I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not a guarantee of performance, and by their nature are subject to inherent risks and uncertainties.

Speaker #2: Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of today's date, and the company undertakes no obligation to update that information to reflect changed circumstances.

Speaker #2: Additional information concerning these statements—including factors that could cause our actual results to differ—is contained in our earnings press release and in the risk factors and forward-looking statement section in the filings we make with the securities and exchange commission.

Johann Rawlinson: Additional information concerning these statements, including factors that could cause our actual results to differ, is contained in our earnings press release and in the Risk Factors and Forward-Looking Statement section in the filings we make with the Securities and Exchange Commission.

Speaker #2: Our filings are available on the SEC's website, and the investor relations section of the HERTZ website. Today, we'll use certain non-GAAP financial measures, which are reconciled with GAAP numbers in our earnings press release, available on our website.

Johann Rawlinson: Our filings are available on the SEC's website and the Investor Relations section of the Hertz website. Today, we will use certain non-GAAP financial measures, which are reconciled with GAAP numbers in our earnings press release, available on our website. We believe that these non-GAAP measures provide additional useful information about our operations, allowing better evaluation of our profitability and performance. Unless otherwise noted, our discussion today focuses on our global business. On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss strategy, operational highlights, and our fleet. Our Chief Commercial Officer, Sandeep Dube, will share insights into our commercial strategy, followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance. I'll now turn the call over to Gil.

Speaker #2: We believe that these non-GAAP measures provide additional, useful information about our operations. Allowing better evaluation of our profitability and performance. Unless otherwise noted, our discussion today focuses on our global business.

Speaker #2: On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss strategy, operational highlights, and our fleet. Our Chief Commercial Officer, Sandeep Dube, will share insights into our commercial strategy, followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance.

Speaker #2: I'll now turn the call over to Gil.

Speaker #3: Thanks, Rohan. Good morning. Everyone, and thank you for joining us. I want to start by thanking the HERTZ team. Their focus, discipline, and resilience—especially those serving our customers in the field—was evident throughout the year, but particularly during the fourth quarter holidays, travel season, which is historically one of our most operationally intensive periods.

Gil West: Thanks, Johann. Good morning, everyone, and thank you for joining us. I want to start by thanking the Hertz team. Their focus, discipline, and resilience, especially those serving our customers in the field, was evident throughout the year, but particularly during the Q4 holidays travel season, which is historically one of our most operationally intensive periods. Together, they executed consistently against our goals and made real progress, building momentum for the year ahead. 2025 marked the first full year operating under the Back-to-Basics strategy. Guided by our North Star metrics, we brought greater discipline to fleet management, revenue optimization, rigorous cost control, and improving the customer experience. The work is far from finished, but the progress we made this year materially strengthened the foundation of our business for the long term.

Speaker #3: Together, they executed consistently against our goals and made real progress, building momentum for the year ahead. 2025 marked the first full year operating under the back-to-basic strategy, guided by our North Star metrics, we brought greater discipline to fleet management, revenue optimization, rigorous cost control, and improving the customer experience.

Speaker #3: The work is far from finished, but the progress we made this year materially strengthened the foundation of our business for the long term. In 2025, we achieved a full year adjusted EBITDA improvement of more than $1 billion year over year.

Gil West: In 2025, we achieved a full year adjusted EBITDA improvement of more than $1 billion year-over-year. We drove sequential improvements in revenue, RPU, and RPD, and improved utilization by sweating our assets and drove DPU down in line with our North Star target. We brought DOE per transaction day down despite lower volumes. We also completed our fleet rotation and successfully secured our model year 26 buys at our target prices and volumes. That allowed us to begin selling model year 25s through our enhanced retail channels, continue our short hold strategy, introduce a more optimized mix of car classes, and achieve our lowest average fleet age in almost a decade. We delivered a nearly 50% improvement in customer satisfaction.

Speaker #3: We drove sequential improvements in revenue, RPU, and RPD, and improved utilization by sweating our assets and drove DPU down in line with our North Star target.

Speaker #3: We brought DOE per transaction day down despite lower volumes. We also completed our fleet rotation, and successfully secured our model year 26 buys at our target prices and volumes.

Speaker #3: That allowed us to begin selling model year 25s through our enhanced retail channels. Continue our short hold strategy, introduce a more optimized mix of car classes, and achieve our lowest average fleet age in almost a decade.

Speaker #3: And we delivered a nearly 50% improvement in customer satisfaction. As we turn to the fourth quarter, a typically challenging seasonal environment was amplified by a number of external headwinds.

Gil West: As we turn to Q4, a typically challenging seasonal environment was amplified by a number of external headwinds that were primarily isolated to the quarter. From government shutdown, coupled with FAA cancellations, multiple technology vendor outages, and unfavorable residual value environment to elevated recall volumes. Taken together, these created outsized pressure of well over $100 million on our business and kept us from hitting some of our targets. Even within that environment, we made progress. In Q4, adjusted EBITDA improved $150 million year-over-year. Our strongest result this quarter was revenue. In fact, it was our strongest revenue result in nearly two years. If you remember, we entered 2025 with revenue down double digits year-over-year, and by the end of Q4, we were nearly flat revenue with a 3% smaller fleet.

Speaker #3: These were primarily isolated to the quarter. From the government shutdown, coupled with FAA cancellations, multiple technology vendor outages, and an unfavorable residual value environment, to elevated recall volumes—taken together, these created outsized pressure of well over $100 million on our business and kept us from hitting some of our targets.

Speaker #3: But even within that environment, we made progress. In the fourth quarter, adjusted EBITDA improved 150 million year over year. But our strongest result this quarter was revenue.

Speaker #3: In fact, it was our strongest revenue result in nearly two years. If you remember, we entered 2025 with the revenue down double digits year over year, and by the end of the fourth quarter, we were nearly flat revenue with a 3% smaller fleet.

Speaker #3: Significant accomplishment, driven by our ability to sequentially improve RPU and RPD. And sustained utilization in transaction days all with a smaller fleet. We also saw a more stable industry pricing backdrop throughout the quarter.

Gil West: Significant accomplishment, driven by our ability to sequentially improve RPU and RPD and sustain utilization and transaction days, all with a smaller fleet. We also saw a more stable industry pricing backdrop throughout the quarter, which is especially noteworthy, given the very polarizing peak and off-peak dynamic that plays out during this period every year. This is evidence that both our commercial investments in pricing and demand generation are paying off, and that the industry setup is more positive than in prior periods. While DPU, as I mentioned, was in line with our North Star target for the year, in Q4, it moved above our North Star target due to a revised Black Book residual value forecast and lower than expected wholesale prices from heavy OEM and rental car company deflating during the car market seasonal low period.

Speaker #3: Which is especially noteworthy given the very polarizing peak and off-peak dynamic that plays out during this period every year. This is evidence that both our commercial investments in pricing and demand generation are paying off.

Speaker #3: And that the industry setup is more positive than in prior periods. While DPU, as I mentioned, was in line with our North Star target for the year, in the fourth quarter, it moved above our North Star target due to a revised Black Book residual value forecast.

Speaker #3: And lower than expected wholesale prices from heavy OEM and rental car company defleeting during the car market seasonal low period. While we monitor multiple market trend sources, we have historically indexed heavily on Black Book forecast.

Gil West: While we monitor multiple market trend sources, we have historically indexed heavily on Black Book forecast, which tends to be more seasonally volatile. As of the end of the year, it was down nearly 5% year-over-year, resulting in a $60 million non-cash charge to depreciation. By contrast, Manheim average rental vehicle prices in December were up 2.85% year-over-year. As we look ahead, updated projections from our partners at Cox Automotive show that their Manheim Used Vehicle Value Index is expected to end the year roughly 2% higher than in December 2025. While our forecast is not predicated on such a positive outlook, our internal analysis is encouraging, and we've seen early signs of recovery in Q1 in line with these Manheim values, which in January were up 2.4% year-over-year.

Speaker #3: Which tends to be more seasonally volatile. As of the end of the year, it was down nearly 5% year over year, resulting in a $60 million non-cash charge to depreciation.

Speaker #3: By contrast, Manheim average rental vehicle prices in December were up 2.85% year over year. And as we look ahead, updated projections from our partners at Cox Automotive show that their Manheim used vehicle value index is expected to end the year roughly 2% higher than in December 2025.

Speaker #3: While our forecast is not predicated on such a positive outlook, our internal analysis is encouraging and we've seen early signs of recovery in Q1 in line with these Manheim values, which in January were up 2.4% year over year.

Speaker #3: On the cost side, we brought adjusted DOE per transaction day down 6% year on year. This moved us closer to our North Star target in the low 30s.

Gil West: On the cost side, we brought adjusted DOE per transaction day down 6% year-on-year. This moved us closer to our North Star target in the low 30s. Recall volumes peaked in mid-November and December, taking over 20,000 cars out of service, which is almost 3 times higher than the normal rate. This resulted in us having to carry more fleet than we had planned and limited our performance, which had ripple effects across the business, impacting our fleet utilization, particularly for our rideshare business. We have strategically managed through this by redeploying available fleet where it would have the most impact, and as a vast majority of these recalls lack available fixes and restrict us from renting and selling vehicles, we are actively working with our OEM partners to find solutions to minimize fleet downtime.

Speaker #3: Recall volumes peaked in mid-November and December, taking over 20,000 cars out of service, which is almost three times higher than the normal rate. This resulted in us having to carry more fleet than we had planned and limited our performance which had ripple effects across the business.

Speaker #3: Impacting our fleet utilization, particularly for our rideshare business. We have strategically available fleet where it would have the most impact. And as a vast majority of the recalls lack available fixes and restrict us from renting and selling vehicles, we are actively working with our OEM partners to find solutions to minimize fleet downtime.

Speaker #3: Recall volumes have moderated slightly throughout the first quarter, but remain elevated. With this in mind, we're staying disciplined in our capacity planning to ensure our rentable fleet stays well utilized and in line with demand.

Gil West: Recall volumes have moderated slightly throughout Q1, but remain elevated. With this in mind, we're staying disciplined in our capacity planning to ensure our rentable fleet stays well utilized and inside of demand. It's clear Q4 presented real challenges, but the decisions we made throughout 2025 held up under pressure and reinforced that our strategy is the right one. Today, Hertz stands on a meaningfully stronger foundation than it did a year ago. A healthier fleet, improved unit economics, a more disciplined operating model, a better customer experience. What I want to be clear about is this: the improvements we're seeing in the business are structural. They're permanent. The headwinds we faced and continue to navigate are transitory. That difference matters, and it's what gives me confidence in the trajectory ahead.

Speaker #3: It's clear Q4 presented real challenges. But the decisions we made throughout 2025 held up under pressure. And reinforced that our strategy is the right one.

Speaker #3: Today, HERTZ stands on a meaningfully stronger foundation than it did a year ago. A healthier fleet, improved unit economics, a more disciplined operating model, a better customer experience.

Speaker #3: And what I want to be clear about is this. The improvements we're seeing in the business are structural. They're permanent. The headwinds we faced and continue to navigate are transitory.

Speaker #3: That difference matters and it's what gives me confidence in the trajectory ahead. That confidence is already being validated in as 2026 is off to a good start.

Gil West: That confidence is already being validated as 2026 is off to a good start. Q1 trends in both revenue and RPD are positive year-over-year. A particularly encouraging sign, given that this is typically a seasonal trough period for the industry. This means we're entering the upcoming peak period from a position of strength. Looking ahead to the rest of the year, we remain focused on accelerating revenue, RPD, and RPU growth while staying disciplined on cost, putting core rental business firmly on the path to profitability. While rent a car remains our core business today, this transformation is about becoming more than a single line of business. We're executing with discipline in the business that powers us now, but we're intentionally building the capabilities that will power what's next.

Speaker #3: Q1 trends in both revenue and RPD are positive year over year. A particularly encouraging sign given that this is typically a seasonal trough period for the industry.

Speaker #3: This means we're entering the upcoming peak period from a position of strength. Looking ahead to the rest of the year, we remain focused on accelerating revenue, RPD, and RPU growth while staying disciplined on cost, putting core rental business firmly on the path to profitability.

Speaker #3: While rent-a-car remains our core business today, this transformation is about becoming more than a single line of business. We're executing with discipline in the business that powers us now.

Speaker #3: But we're intentionally building the capabilities that will power what's next. We're laying the groundwork for a diversified value-creating platform that will unlock value beyond the core.

Gil West: We're laying the groundwork for a diversified, value-creating platform that will unlock value beyond the core. The Hertz platform spans rent a car, service, fleet, and mobility. It's still early days. While the areas of our platform sit at different maturity levels, each presents meaningful upside, both near and long term. In rent a car, we'll maintain steady momentum in our mature airport locations by driving pricing, utilization, demand generation, and asset management. We see real near-term upside from growth in our off-airport locations in areas like insurance replacement, local commercial agreements, and small business. We're also sharpening our focus to unlock additional value in our franchise footprint while piloting new offerings in service.

Speaker #3: The HERTZ platform spans rent-a-car, service, fleet, and mobility. It's still early days and while the areas of our platform sit at different maturity levels, each presents meaningful upside both near and long term.

Speaker #3: In rent-a-car, we'll maintain steady momentum in our mature airport locations by driving pricing, utilization, demand generation, and asset management. We see real near-term upside from growth in our off-airport locations in areas like insurance replacement, local commercial agreements, and small business.

Speaker #3: We're also sharpening our focus to unlock additional value in our franchise footprint while piloting new offerings in service. We see a particularly strong runway in fleet through HERTZ car sales and in mobility where the long-term opportunity has the potential to become as, if not more, meaningful than our core rent-a-car business.

Gil West: We see a particularly strong runway in fleet through Hertz Car Sales and in mobility, where the long-term opportunity has the potential to become as, if not more, meaningful than our core rent-a-car business. We're transforming Hertz Car Sales into a truly omni-channel experience, meeting customers where they are, online, in person, through Rent2Buy, and delivery right to their door. The opportunity here is significant. We are a used car factory with a building customer base. We're building the shopping experience to match. One that can ultimately rival the largest used car dealers in the country. We have a constant supply of pre-owned vehicles and sales volume that already puts us in the top five used car dealerships in the country. Our improved website has a wide variety of vehicles for sale, an intuitive interface, enhanced imagery, and more detailed descriptions to help customers shop more confidently.

Speaker #3: We're transforming HERTZ car sales into a truly omnichannel experience. Meeting customers where they are online, in person, through rent-to-buy, and delivery right to their door.

Speaker #3: The opportunity here is significant. We are a used car factory with a built-in customer base and we're building the shopping experience to match. One that can ultimately rival the largest used car dealers in the country.

Speaker #3: We have a constant supply of pre-owned vehicles and sales volume that already puts us in the top five used car dealerships in the country.

Speaker #3: Our improved website has a wide variety of vehicles for sale, an intuitive interface, enhanced imagery, and more detailed descriptions to help customers shop more confidently.

Speaker #3: We already have scale and shifting our primary sales channel to retail as a major unlock. We also have established key partnerships with Cox Automotive, Amazon, and Palantir that gives us the capability to scale this business profitably.

Gil West: We already have scale. Shifting our primary sales channel to retail is a major unlock. We also have established key partnerships with Cox Automotive, Amazon, and Palantir. That gives us the capability to scale this business profitably. Hertz Car Sales value proposition has never been more compelling, as new cars are increasingly out of reach for many buyers, with prices topping $50,000 on average. With our short hold strategy, we deliver the best bang for the buck, as consumers can get a nearly new car for around half the cost. This is an important differentiator as we head into spring, typically a peak buying season, which will be bolstered this year by record-high tax returns. Now to mobility. Hertz owns and manages fleets at scale, with core strengths in fleet ownership, large-scale operations, world-class maintenance, and vehicle fleet financing.

Speaker #3: HERTZ car sales value proposition has never been more compelling as new cars are increasingly out of reach for many buyers with prices topping $50,000 on average.

Speaker #3: With our short-hold strategy, we deliver the best bang for the buck as consumers can get a nearly new car for around half the cost.

Speaker #3: This is an important differentiator as we head into spring typically a peak buying season which will be bolstered this year by record high tax returns.

Speaker #3: Now to mobility. HERTZ owns and manages fleets at scale with core strengths and fleet ownership, large-scale operations, world-class maintenance, and vehicle fleet financing. Along our physical infrastructure, operating capacity, and leadership experience, this business is evolving to meet the mobility needs of tomorrow.

Gil West: Along our physical infrastructure, operating capacity, and leadership experience, this business is evolving to meet the mobility needs of tomorrow, whether driver-led or autonomous. Our journey in mobility began in rideshare by renting cars to Uber and Lyft drivers. Today, we operate the largest rideshare rental fleet in the world, and it has become one of our highest growth potential businesses, with double-digit revenue opportunities. In the background, we're developing and testing new approaches in this space with strategic partners. While it's difficult to quantify the full growth potential of our mobility business at this stage, the opportunity undoubtedly is significant. For context, Uber's CEO has described autonomous vehicles as potentially a multi-trillion-dollar market. We're building the capabilities now to ensure Hertz is positioned to play a significant role in that ecosystem. Today, our rental car business remains the largest consumer of our time and operational focus.

Speaker #3: Whether driver-led or autonomous. Our journey in mobility began in Rideshare by renting cars to Uber and Lyft drivers. Today, we operate the largest rideshare rental fleet in the world.

Speaker #3: And it has become one of our highest growth potential businesses with double-digit revenue opportunities. And in the background, we're developing and testing new approaches in this space with strategic partners.

Speaker #3: While it's difficult to quantify the full growth potential of our mobility business at this stage, the opportunity undoubtedly is significant. For context, Uber CEO has described autonomous vehicles as potentially a multi-trillion-dollar market.

Speaker #3: We're building the capabilities now to ensure HERTZ's position to play a significant role in that ecosystem. Today, our rental car business remains the largest consumer of our time and operational focus.

Gil West: We're building the capabilities now to ensure Hertz is positioned to play a significant role in that ecosystem. Today, our rental car business remains the largest consumer of our time and operational focus.

Speaker #3: But as we scale the broader platform across rent-a-car, service, fleet, and mobility, the mix will evolve. Rental will become one part of a more diversified value-creating enterprise.

Gil West: As we scale the broader platform across rent-a-car, service, fleet, and mobility, the mix will evolve. Rental will become one part of a more diversified value-creating enterprise. With that, I'll turn it over to Sandeep.

Speaker #3: With that, I'll turn it over to Sandeep.

Speaker #2: Thanks, Gil. And good morning, everyone. I want to jump right into the headlines on revenue this morning. The fourth quarter the industry's typical trough period with volatile seasonal demand.

Sandeep Dube: Thanks, Gil, and good morning, everyone. I want to jump right into the headlines on revenue this morning. Q4, the industry's typical trough period with volatile seasonal demand, represented Hertz's strongest year-over-year revenue result since Q1 2024. After adjusting for Q4 2024's one-time loyalty gains, in Q4 2025, we drove year-over-year revenue growth, with the primary driver being RPD, which was nearly flat on a year-over-year basis. Most importantly, RPD for the airports in the Americas, our largest segment, was positive year-over-year for the quarter. We achieved this meaningful sequential improvement despite several headwinds, including a lower car class mix, the extended government shutdown, and elevated recalls. In Q4, we achieved a difficult feat by improving both year-over-year pricing and days sequentially, primarily driven by Hertz's commercial strategies. Our revenue metrics showed good sequential progression.

Speaker #2: Represented HERTZ's strongest year-over-year revenue result. Since Q1 2024. After adjusting for Q4 2024's one-time loyalty gains, in Q4 2025, we drove year-over-year revenue growth.

Speaker #2: With the primary driver being RPD. Which was nearly flat on a year-over-year basis. Most importantly, RPD for the airports in the Americas our largest segment was positive year-over-year for the quarter.

Speaker #2: We achieved this meaningful sequential improvement despite several headwinds, including a lower car class mix, the extended government shutdown, and elevated recalls. In Q4, we achieved a difficult feat by improving both year-over-year pricing and days sequentially.

Sandeep Dube: In Q4, we achieved a difficult feat by improving both year-over-year pricing and days sequentially, primarily driven by Hertz's commercial strategies. Our revenue metrics showed good sequential progression.

Speaker #2: Primarily driven by HERTZ's commercial strategies. Our revenue metrics showed good sequential progression. Q4 2025 adjusted revenue was sequentially 4 points better going from down 4% to about flat.

Sandeep Dube: Q4 2025 adjusted revenue was sequentially 4 points better, going from down 4% to about flat. RPD mirrored the same sequential improvement on a loyalty-adjusted basis as well. The driving factors of these improvements were the same as detailed in our Q3 earnings call. Let's dive deeper into the details a bit. First, driving a better customer experience. Our Net Promoter Score grew by nearly 50% year-over-year, and it is driving better organic demand for our brands. Second, generating greater durable demand from higher-margin channels. Direct website demand is showing strong growth. Our corporate business is gaining ground. We are now driving consistent growth in our off-airport business, and our mobility business is growing revenue double digits. Third, improving our pricing tactics and strategies....

Speaker #2: RPD mirrored the same sequential improvement on a loyalty adjusted basis as well. The driving factors of these improvements were the same as detailed in our Q3 earnings call.

Speaker #2: Let's dive deeper into the details a bit. First, driving a better customer experience. Our net promoter score grew by nearly 50% year-over-year. And it is driving better organic demand for our brands.

Speaker #2: Second, generating greater durable demand from higher margin channels. Direct website demand is showing business is gaining ground. We are now driving consistent growth in our off-airport business.

Speaker #2: And our mobility business is growing revenue double digits. Third, improving our pricing tactics and strategies. We are on a multi-phase approach to bring more sophistication in the way we drive demand.

Sandeep Dube: We are on a multi-phase approach to bring more sophistication in the way we drive demand, with a focus on driving positive RPD for comparable asset class. Mid-quarter in Q4, we executed a totally new pricing matrix. We saw immediate results from that change in driving positive RPD. Our next iteration is going into test mode in a few weeks. I expect phase improvements in the sophistication of our pricing approach. Fourth, better monetization of our higher RPU assets. This was achieved by improved asset deployment, having the right vehicle at the right location, ensuring that higher RPU assets are effectively monetized. Fifth, better value-added product sales. We drove better sales of our value-added products through improved operational performance and pricing sophistication. Lastly, local level profitability and optimization. We continue to manage our business at a more granular level for profitability.

Speaker #2: With a focus on driving positive RPD for comparable asset class. Mid-quarter and Q4, we executed a totally new pricing matrix. And we saw immediate results from that change in driving positive RPD.

Speaker #2: Our next iteration is going into test mode in a few weeks. I expect phase improvements in the sophistication of our pricing approach. Fourth, better monetization of our higher RPU assets.

Speaker #2: This was achieved by improved asset deployment. Having the right vehicle at the right location ensuring that higher RPU assets are effectively monetized. Fifth, better value-added product sales.

Speaker #2: We drove better sales of our value-added products through improved operational performance and pricing sophistication. Lastly, local-level profitability and optimization. We continue to manage our business at a more granular level for profitability.

Speaker #2: These commercial strategies and tactics primarily drove the positive momentum in Q4 2025. Most importantly, these foundational changes raised the baseline productivity of our revenue and RPD production.

Sandeep Dube: These commercial strategies and tactics primarily drove the positive momentum in Q4 2025. Most importantly, these foundational changes raised the baseline productivity of our revenue and RPD production, and we expect these gains to largely persist irrespective of the macroeconomic environment. Just a reminder, we are still in the early innings of a transformation of our commercial strategies, and we expect more foundational improvements in the coming quarters. If we step back even further, the takeaway here is a sequential improvement through 2025 as a result of our Back-to-Basics strategy. We started 2025 down double-digits year-over-year on revenue and down mid-single digits year-over-year on RPD. This narrowed to near parity on both metrics by the end of the year, and they have both turned positive in the early part of 2026.

Speaker #2: And we expect these gains to largely persist irrespective of the macroeconomic environment. And just a reminder, we are still in the early innings of a transformation of our commercial strategies.

Speaker #2: And we expect more foundational improvements in the coming quarters. If we step back even further, the takeaway here is a sequential improvement through 2025 as a result of our back-to-basic strategy.

Speaker #2: We started 2025 down double digits year-over-year on revenue. And down mid-single digits year-over-year on RPD. This narrowed to near parity on both metrics by the end of the year.

Speaker #2: And they have both turned positive in the early part of 2026. We also delivered improvements in utilization across our total fleet. In each of the quarters in 2025.

Sandeep Dube: We also delivered improvements in utilization across our total fleet in each of the quarters in 2025, including Q4, where we were able to offset the impact of high rate of recalls and delivered an improvement of 200 basis points year-over-year. Total fleet includes all vehicles, irrespective of operating status, whether in service, out of service, or in our car sales inventory. We are delivering clear results and building momentum for the year ahead. 2026 is off to a strong start, as the strength we saw at the end of December for the holidays carried forward into the new year. In January, we are seeing year-on-year positive revenue and unit revenue growth, mostly driven by a couple of percentage points increase in global RPD, reflecting pricing growth in both our Americas and our international segments.

Speaker #2: Including Q4. Where we were able to offset the impact of high rate of recalls and delivered an improvement of 200 basis points year-over-year. Total fleet includes all vehicles irrespective of operating status.

Speaker #2: Whether in service, out of service, or in our car sales inventory. Looking we are delivering clear results and building momentum for the year ahead.

Speaker #2: 2026 is off to a strong start. As the strength we saw at the end of December for the holidays carried forward into the new year.

Speaker #2: In January, we are seeing year-on-year positive revenue. And unit revenue growth. Mostly driven by a couple of percentage points increase in global RPD. Reflecting pricing growth in both our Americas and our international segments.

Speaker #2: February is trending even more positively. And March looks to continue on that trajectory. As a result, we expect Q1 2026 revenue to be up mid-single digits year-over-year.

Sandeep Dube: February is trending even more positively. March looks to continue on that trajectory. As a result, we expect Q1 2026 revenue to be up mid-single digits year-over-year, with fleet growth of only low single digits. Q1 2026 is also supported by a more constructive industry environment compared to Q4 2025, with the industry demand environment looking better. For the rest of 2026, we will manage our growth in a disciplined manner. This means holding airport growth at or below TSA levels while pursuing off-airport and mobility opportunities. At the same time, we are focused on doing more for our customers. The improvements we have seen in our Net Promoter Score is a clear indicator that our work to create a more consistent, convenient, and caring customer experience are resonating.

Speaker #2: With fleet growth of only low single digits. Q1 2026 is also supported by a more constructive industry environment compared to Q4 2025. With the industry demand environment looking better.

Speaker #2: For the rest of 2026, we will manage our growth in a disciplined manner. This means holding airport growth at or below TSA levels. While pursuing off-airport and mobility opportunities.

Speaker #2: At the same time, we are focused on doing more for our customers. The improvements we have seen in our net promoter score is a clear indicator that our work to create a more consistent convenient and caring customer experience are resonating.

Speaker #2: We are deeply grateful to the millions of customers who choose HERTZ. And we have recently lowered the threshold for achieving five-star status to reward them even more for their loyalty.

Sandeep Dube: We are deeply grateful to the millions of customers who choose Hertz, and we have recently lowered the threshold for achieving five-star status to reward them even more for their loyalty. At a time when status across the travel industry feels harder to earn than ever, we are offering a faster, more transparent path, providing more value with every booking, and one more reason to continue choosing Hertz. In summary, our commercial playbook is working, and the results are starting to prove it. With that, I'll hand it over to Scott to walk through our financial performance.

Speaker #2: At a time when status across the travel industry feels harder to earn than ever, we are offering a faster, more transparent path. Providing more value with every booking and one more reason to continue choosing HERTZ.

Speaker #2: So in summary, our commercial playbook is working. And the results are starting to prove it. With that, I'll hand it over to Scott to walk through our financial performance.

Speaker #3: Thanks, Sandeep. And good morning, everyone. Thanks for joining us. As you heard from Gill and Sandeep, the fourth quarter had a number of items that cloud the results.

Scott Haralson: Thanks, Sandeep. Good morning, everyone, and thanks for joining us. As you heard from Gil and Sandeep, the Q4 had a number of items that clouded the results. Once you get past the transitory impacts in the quarter, you can see some interesting foundational elements. The revenue trends are improving, our fleet is rotated, and model year 2026 buys have been secured at prices and volumes we expected. In spite of a richer fleet mix in 2026, which will provide a tailwind to RPD, we still expect to keep DPU for the year below $300 per unit. NPS took a big leap forward in 2025, that's primed to continue in 2026. Our digital customer experience, operational consistency, and customer-focused initiatives are being recognized by our customers.

Speaker #3: But once you get past the transitory impacts in the quarter, you can see some interesting foundational elements. The revenue trends are improving. Our fleet is rotated, and model year 2026 buys have been secured at prices and volumes we expected.

Speaker #3: In spite of a richer fleet mix in 2026, which will provide a tailwind to RPD, we still expect to keep DPU for the year below $300 per unit.

Speaker #3: NPS took a big leap forward in 2025. And that's primed to continue in 2026. Our digital customer experience, operational consistency, and customer-focused initiatives are being recognized by our customers.

Speaker #3: We have found a good balance between utilization and NPS scores. But have our eyes set on improving both at the same time. The moves we made last year to create a rental car fleet with an average age of less than 10 months which is the youngest it's been in almost a decade.

Scott Haralson: We have found a good balance between utilization and NPS scores, but have our eyes set on improving both at the same time. The moves we made last year to create a rental car fleet with an average age of less than 10 months, which is the youngest it's been in almost a decade, and to drive record-setting utilization, are now strategic tailwinds. The cost and efficiency actions pay dividends and will get even better in 2026. Throughout 2025, we pulled off a difficult task. We lowered unit cost while also reducing units. That's difficult to do in a heavy fixed cost and operationally complex business like ours. We have real opportunities for growth in 2026. The focus of that growth will be at our off-airport locations and in our mobility business. Our expansion of the platform outside of traditional rental car is progressing nicely.

Speaker #3: And to drive record-setting utilization, are now strategic tailwinds. The cost and efficiency actions paid dividends and will get even better in 2026. Throughout 2025, we pulled off a difficult task.

Speaker #3: We lowered unit cost while also reducing units. That's difficult to do in a heavy fixed cost and operationally complex business like ours. We have real opportunities for growth in 2026.

Speaker #3: The focus of that growth will be at our off-airport locations and in our mobility business. Our expansion of the platform outside of traditional rental cars is progressing nicely.

Speaker #3: Our digital car sales business has made some important technological advancements on both the back-end website and the merchandising capabilities. As well as the digital transformation of the car sales process.

Scott Haralson: Our digital car sales business has made some important technological advancements on both the back-end website and the merchandising capabilities, as well as the digital transformation of the car sales process. While early, we think 2026 digital expansion could produce a meaningful progression in the percentage of our car sales that will be transacted through retail channels. On mobility, while we are the industry leader in rental rideshare, we are growing and developing the business to meet evolving needs. We also have been actively building in the background a substantial set of capabilities, that we will be leveraging to position Hertz to be a significant player in the aggregation of the supply of mobility in the future, whether that is driver-led or autonomous.

Speaker #3: While early, we think 2026 digital expansion could produce a meaningful progression in the percentage of our car sales that will be transacted through retail channels.

Speaker #3: On mobility, while we are the industry leader in rental rideshare we are growing and developing the business to meet evolving needs. We also have been actively building in the background a substantial set of capabilities that we will be leveraging to position HERTZ to be a significant player in the aggregation of the supply of mobility in the future.

Speaker #3: Whether that is driver-led or autonomous. This will ultimately be the future of HERTZ. But we are balancing the current optimization of the mature part of our business while building the platform for the future.

Scott Haralson: This will ultimately be the future of Hertz. We are balancing the current optimization of the mature part of our business while building the platform for the future. Even though the absolute financial results are not where we want them to be yet, the actions we have taken over the past year or so are showing real sustainable results, the opportunity in front of us is exciting. With that preamble, I do want to quickly walk through some details in the quarter, where we are with liquidity, and cover a bit of our 2026 outlook. Starting with the quarter. For Q4, we reported revenue of $2.0 billion, which came in ahead of consensus expectations, with RPD broadly in line and down approximately 1% year-over-year.

Speaker #3: Even though the absolute financial results are not where we want them to be yet, the actions we have taken over the past year or so are showing real sustainable results and the opportunity in front of us is exciting.

Speaker #3: So with that preamble, I do want to quickly walk through some details in the quarter where we are with liquidity and cover a bit of our 2026 outlook.

Speaker #3: Starting with the quarter, for Q4, we reported revenue of $2.0 billion. Which came in ahead of consensus expectations with RPD broadly in line and down approximately 1% year over year.

Speaker #3: Importantly, excluding the prior year loyalty adjustment, revenue growth was up year on year with RPD nearly flat. Adjusted EBITDA for the quarter was a negative approximately $200 million.

Scott Haralson: Importantly, excluding the prior year loyalty adjustment, revenue growth was up year-on-year, with RPD nearly flat. Adjusted EBITDA for the quarter was a negative approximately $200 million. While this is a $150 million year-over-year improvement, it was still about $100 million off of our target. This was entirely in our vehicle carrying cost. We incurred about $20 million of additional costs resulting from the additional fleet to compensate for the elevated recalls. We also had a $20 million loss in the sale of assets due to the large number of cars available in the marketplace that weighed on residuals in the quarter. We also took a non-cash depreciation expense of approximately $60 million due to the late in the quarter residual value adjustment by Black Book.

Speaker #3: While this is a $150 million year-over-year improvement, it will still about $100 million off of our target. This was entirely in our vehicle carrying cost.

Speaker #3: We incurred about $20 million of additional cost resulting from the additional fleet to compensate for the elevated recalls. We also had a $20 million loss in the sale of assets due to the large number of cars available in the marketplace that weighed unresiduals in the quarter.

Speaker #3: We also took a non-cash depreciation expense of approximately $60 million. Due to the late in the quarter residual value adjustment by Blackbook. While we do believe the adjustment on the forward view of residuals to be a bit conservative, we did take the entire impact to the P&L.

Scott Haralson: While we do believe the adjustment on the forward view of residuals to be a bit conservative, we did take the entire impact to the P&L. We view these items as mostly isolated to Q4, albeit recalls will likely remain elevated throughout Q1. We expect the residual value market to improve as we head into the peak car sale cycle, starting in Q1 into Q2. The government shutdown duration and timing also weighed on results. It did come in more off-peak days production since the shutdown came in what was becoming an improving October with positive demand and pricing momentum.

Speaker #3: We view these items as mostly isolated to the fourth quarter, albeit recalls will likely remain elevated throughout the first quarter. We expect the residual value market to improve as we head into the peak car sale cycle, starting in Q1 into Q2.

Speaker #3: The government shutdown duration and timing also weighed on results. We were able to recoup most of the days lost in the period. But it did come in more off-peak days production since the shutdown came in what was becoming an improving October with positive demand and pricing momentum.

Speaker #3: While difficult to quantify, and while the revenue for the quarter was still positive, we estimate the government shutdown cost us an additional $10 to $20 million of adjusted EBITDA in the quarter.

Scott Haralson: While difficult to quantify, and while the revenue for the quarter was still positive, we estimate the government shutdown cost us an additional $10 to 20 million of adjusted EBITDA in the quarter. In total, the underlying business performed better than the reported adjusted EBITDA would suggest, as we performed well on the items within our control. Transaction days were almost flat year-over-year, as we kept the higher fleet to mitigate the recall issues and recoup some of the days lost due to the transitory events. Utilization remained solid, and even with the additional fleet, the global fleet was 3% lower than prior year. Adjusted DOE per day was another positive story. It improved 6% year-over-year, coming in at $36.39, as our cost initiatives are taking hold.

Speaker #3: In total, the underlying business performed better than the reported adjusted EBITDA would suggest as we performed well on the items within our control. Transaction days were almost flat year over year as we kept the higher fleet to mitigate the recall issues and recoup some of the days lost due to the transitory events.

Speaker #3: Utilization remained solid and even with the additional fleet, the global fleet was 3% lower than prior year. Adjusted DOE per day was another positive story.

Speaker #3: It improved 6% year over year $36.39 as our cost initiatives are taking hold. It did, however, reflect higher collision severity and repair cost and ongoing elevated insurance costs.

Scott Haralson: It did, however, reflect higher collision severity and repair costs and ongoing elevated insurance costs. We still have more to do, but have done good work on addressing operating expenses in our big three categories: labor, facilities, and vehicle maintenance and repair. With further work to be done in growth in transaction days in 2026, we do expect lower unit costs this year. Core SG&A remained flat, with total year-over-year variances primarily stemming from the timing of expenses in 2024, with 2025 being a more normalized expense level. Turning to depreciation in DPU. For 2025, we produced a full year net DPU of $300 per month. While this is right at our North Star metric, we were certainly not happy that we had to take a late charge to depreciation due to the move from Black Book.

Speaker #3: We still have more to do. But have done good work on addressing operating expenses and our big three categories: labor, facilities, and vehicle maintenance and repair.

Speaker #3: With further work to be done in growth and transaction days in 2026, we do expect lower unit costs this year. Core SG&A remained flat with total year-over-year variances primarily stemming from the timing of expenses in 2024 with 2025 being a more normalized expense level.

Speaker #3: Turning to depreciation and DPU, for 2025, we produced a full-year net DPU of $300 per month. While this is right at our North Star metric, we were certainly not happy that we had to take a late charge to depreciation due to the move from Blackbook.

Speaker #3: We were expecting to be below $300 per unit. However, if residual values end up where we think they will in 2026, this will prove to be timing of the expense and will benefit us with less depreciation this year.

Scott Haralson: We were expecting to be below $300 per unit. However, if residual values end up where we think they will in 2026, this will prove to be timing of the expense and will benefit us with less depreciation this year. The Q4 ended at $330 per unit, down 21% year-over-year, but nonetheless higher than we expected. Now let's talk liquidity. We ended the quarter with approximately $1.5 billion of total liquidity, including revolver capacity. This reflects the impact of the partial redemption of $300 million of the 2026 notes in Q4, leaving $200 million outstanding. The Wells Fargo make-whole liability, which had been reserved for some time, was primarily concluded with the $346 million payment made in late January.

Speaker #3: The fourth quarter ended at $330 per unit down 21% year over year. But nonetheless higher than we expected. Now let's talk liquidity. We ended the quarter with approximately $1.5 billion of total liquidity.

Speaker #3: Including revolver capacity. This reflects the impact of the partial redemption of $300 million of the 2026 notes in Q4 leaving $200 million outstanding. The Wells Fargo Makes Whole Liability, which had been reserved for some time, was primarily concluded with the $346 million payment made in late January.

Speaker #3: This reduced our available liquidity to just under $1.2 billion. This number was about $100 million lower than expected due to the timing of vehicle dispositions that were delayed and the early acceptance of vehicles in Q4 due to the large number of recalls.

Scott Haralson: This reduced our available liquidity to just under $1.2 billion. This number was about $100 million lower than expected due to the timing of vehicle dispositions that were delayed and the early acceptance of vehicles in Q4, due to the large number of recalls and the impact of the government shutdown. Other than the cost to carry the additional vehicles in the quarter, the timing of the vehicles in and out of the fleet is not expected to have any meaningful, positive or negative impact on our expected liquidity at the end of Q2. Our ABS programs remain healthy, with ABS vehicle fair values comfortably above net book values, and market access is solid. We recently entered into financing transactions that we expect will result in an increase in our liquidity by approximately $200 million at an attractive cost of capital.

Speaker #3: And the impact of the government shutdown. Other than the cost to carry the additional vehicles in the quarter, the timing of the vehicles in and out of the fleet is not expected to have any meaningful positive or negative impact on our expected liquidity at the end of the second quarter.

Speaker #3: Also, our ABS programs remain healthy with ABS vehicle fair values comfortably above net book values. And market access is solid. We recently entered into financing transactions that we expect will result in an increase in our liquidity by approximately $200 million.

Speaker #3: At an attractive cost of capital. We also have several other liquidity enhancement opportunities that will be evaluating in the coming months that could total more than $500 million.

Scott Haralson: We also have several other liquidity enhancement opportunities that we'll be evaluating in the coming months that could total more than $500 million. In addition, we also have approximately $400 million of first lien capacity to refinance the expiring revolving credit facility commitments in June of this year. With the disciplined growth that we have planned for 2026, we have access to the liquidity capacity to make that happen. We expect to reach the low point of liquidity at the end of Q2 at something likely below $1 billion as we invest in the fleet in the first half of the year, and then expect to end the year well north of $1 billion as free cash flow generation improves after Q1 and from the return of capital that happens in the fleet rotation cycle in the back half of the year.

Speaker #3: In addition, we also have approximately $400 million of first-line capacity to refinance the expiring revolving credit facility commitments in June of this year. With the discipline growth that we have planned for 2026, we have access to the liquidity capacity to make that happen.

Speaker #3: We expect to reach the low point of liquidity at the end of Q2 at something likely below $1 billion. As we invest in the fleet and the first half of the year, and then expect to end the year well north of $1 billion as free cash flow generation improves after Q1 and from the return of capital that happens in the fleet rotation cycle and the back half of the year.

Speaker #3: To be clear, this assumes we action some of the liquidity enhancements we have available to us. Finally, let's turn to guidance for the year.

Scott Haralson: To be clear, this assumes we action some of the liquidity enhancements we have available to us. Let's turn to guidance for the year. For Q1, we expect transaction days and fleet to increase low single digits year-over-year. Total fleet utilization will likely be flat in Q1 year-over-year, due to the impact from the heavy winter storms and continued elevated fleet recalls, which should decline throughout the quarter. On the revenue front, as Gil and Sandeep noted, January saw positive year-over-year RPD and revenue growth, with February trending even better and March bookings to date showing a similar trend. Q1 is still an off-peak quarter for us, and the recall levels are still going to impact our results.

Speaker #3: For Q1, we expect transaction days and fleet to increase low single digits year over year. Total fleet utilization will likely be flat in Q1 year over year due to the impact from the heavy winter storms and continued elevated fleet recalls.

Speaker #3: Which should decline throughout the quarter. On the revenue front, as Gill and Sandeep noted, January saw positive year-over-year RPD and revenue growth. With February trending even better and March bookings to date showing a similar trend.

Speaker #3: However, Q1 is still an off-peak quarter for us. And the recall levels are still going to impact our results. Given this, our Q1 expected margin range is in the negative high single digit to low double digit range.

Scott Haralson: Given this, our Q1 expected margin range is in the negative high single digit to low double-digit range, which is a year-over-year improvement of approximately 600 to 800 basis points, assuming DPU at around $300 per unit. For the full year, we previously communicated an outlook of a 3% to 6% adjusted EBITDA margin range. While the revenue trends are positive and the internal expectations for DPU are in line with prior expectations, it is early in the year, and we would like to see more game film before we revise the guidance upward. Thus, we are maintaining the guidance for the year in the 3% to 6% margin range. We continue to target $1 billion of adjusted EBITDA in 2027. With that, I'll turn it back to Gil for closing remarks.

Speaker #3: Which is a year-over-year improvement of approximately $600 to $800 basis points. Assuming DPU at around $300 per unit. For the full year, we previously communicated an outlook of a three to six percent adjusted EBITDA margin range.

Speaker #3: While the revenue trends are positive, and the internal expectations for DPU are in line with prior expectations, it is early in the year and we would like to see more game film before we revise the guidance upward.

Speaker #3: Thus, we are maintaining the guidance for the year in the three to six percent margin range. We continue to target $1 billion of adjusted EBITDA in 2027.

Speaker #3: With that, I'll turn it back to Gill for closing remarks.

Speaker #1: Thank you, Scott. 2025 was the year of back-to-basics. Focused on rebuilding the core and transforming HERTZ for the long term. We first tackled our fleet, the biggest problem to solve, along with cost and revenue.

Gil West: Thank you, Scott. 2025 was a year of Back-to-Basics, focused on rebuilding the core and transforming Hertz for the long term. We first tackled our fleet, the biggest problem to solve, along with cost and revenue, all while elevating our customer experience. Through our fleet strategy and rotation, we operated as an asset management company. The team turned our fleet, which was once a massive headwind, into a competitive advantage, positioning us well for 2026 and beyond. We delivered year-over-year improvements in unit cost, even with a smaller fleet. We see a long runway of cost and productivity initiatives that cut across all aspects of our business. This, along with operating leverage from growth, should help propel us forward. Unit revenue growth has been a key area of focus.

Speaker #1: All while elevating our customer experience. Through our fleet strategy and rotation, we operated as an asset management company. And the team turned our fleet which was once a massive headwind into a competitive advantage positioning us well for 2026 and beyond.

Speaker #1: We delivered year-over-year improvements in unit cost, even with a smaller fleet. And we see a long runway of cost and productivity initiatives that cut across all aspects of our business.

Speaker #1: This, along with operating leverage from growth, should help propel us forward. Unit revenue growth has been a key area of focus. The team's work around customer service demand generation in the right segments revenue management strategies and initiatives are paying off.

Gil West: The team's work around customer service, demand generation in the right segments, revenue management strategies, and initiatives are paying off, and we have the talent, tools, and technology to continue this momentum, return Hertz to solid profitability this year, and achieve over $1 billion in adjusted EBITDA in 2027. Our transformation does not stop there. We're both pragmatic and ambitious, focused on what's in front of us while also planning for the future. We're making progress in developing our platform to unlock value beyond our core business, leveraging the same operational discipline, rigorous cost control, and revenue optimization that would define this turnaround. With that, let's open it up for questions. Back to you, operator.

Speaker #1: And we have the talent, tools, and technology to continue this momentum. Return HERTZ to solid profitability this year and achieve over $1 billion in adjusted EBITDA in 2027.

Speaker #1: But our transformation does not stop there. We're both pragmatic and ambitious, focused on what's in front of us while also planning for the future.

Speaker #1: We're making progress in developing our platform to unlock value. Beyond our core business, leveraging the same operational discipline, rigorous cost control, and revenue optimization.

Speaker #1: That would define this turnaround. With that, let's open it up for questions back to you, operator.

Speaker #3: We will now open the line for questions. Please limit your questions to one question per speaker and one follow-up if needed. To ask a question, please dial star one on your phone.

Scott Haralson: We will now open the line for questions. Please limit your questions to one question per speaker and one follow-up if needed. To ask a question, please dial star one on your phone. If you wish to cancel your question, dial star one again.

Operator: We will now open the line for questions. Please limit your questions to one question per speaker and one follow-up if needed. To ask a question, please dial star one on your phone. If you wish to cancel your question, dial star one again.

Speaker #3: If you wish to cancel your again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device.

Operator: Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from the line of Chris Woronka with Deutsche Bank. Your line is now open. Please go ahead.

Speaker #3: Please stand by while we compile the Q&A roster. Our first question comes from the line of Chris Rawlinson with Deutsche Bank. Your line is now open.

Speaker #3: Please go ahead.

Speaker #4: Hey, good morning, guys. Thanks for taking the questions. I guess Gill, hey, morning. I guess Gill, to start off, one of your competitors recently took about a $500 million write-down related to EVs.

Chris Woronka: Hey, good morning, guys. Thanks for taking the questions. I guess, Gil, good morning. I guess, Gil, to start off, you know, one of your competitors recently took about a $500 million write-down related to EVs. You know, obviously, Hertz went through a process a couple of years back that I think is, you know, complete or largely complete. Can you maybe give us a re-refresh on where you guys are on EVs, whether your strategy has changed or evolved at all recently? Thanks.

Speaker #4: And obviously, Hertz went through a process a couple of years back that I think is complete or largely complete. Can you maybe give us a refresh on where you guys are on EVs, and if your strategy has changed or evolved at all recently?

Speaker #4: Thanks.

Speaker #1: Yeah, hey, Chris. Thanks for the question. Yeah, I think a lot of headlines across all the automotive industry on EVs. Of course, of late.

Gil West: Yeah. Hey, Chris, thanks for the question. Yeah, I think, you know, a lot of headlines across all the automotive industry on EVs, of course, of late. I think, you know, we're probably a little further down the road than most. We do have a bit of a different strategy now in that, you know, I'd just start with some context. We're the largest fleet supplier to rideshare in the world, as I mentioned. It's really important to get that fleet right because the rideshare, you know, just has different fleet needs than our traditional rack business. EVs remain central to rideshare and remain a long-lived asset in that fleet. We're just probably more experienced than anyone as an EV fleet operator at scale.

Speaker #1: And I think we're probably a little further down the road than most. And we do have a bit of a different strategy now. In that, I just start with some context.

Speaker #1: We're the largest fleet supplier to rideshare in the world, as I mentioned. It's really important to get that fleet right because the rideshare just has different fleet needs than our traditional rack business.

Speaker #1: And EVs remain central to rideshare and remain a long-lived asset in that fleet. So we're just probably more experienced than anyone as an EV fleet operator at scale.

Speaker #1: We've been building a lot of operational muscle around EVs over the years. And that includes the technical expertise as well as operating infrastructure. So kind of as part of our transformation, as you well know, we've gone through and right-sized our EV fleet based on what the natural demand is for EVs.

Gil West: We've been building a lot of operational muscle around EVs over the years, and that includes the technical expertise as well as operating infrastructure. As part of our transformation, you know, as you well know, we've gone through and right-sized our EV fleet based on what the natural demand is for EVs. Essentially, we redeployed that fleet in the right channels, with the majority of that fleet moving towards rideshare business. That puts EVs into real high intensive operating environments, and that helps us accelerate our learning curve. Kind of specifically with our Tesla fleet, just to give you an example, you know, we're in the process of doing an interior refresh on that fleet. You know, it's really given the wear we've encountered on the interiors over the last several years.

Speaker #1: So essentially, we've redeployed that fleet in the right channels with the majority of that fleet moving towards rideshare business. And that puts EVs into a real high-intensive operating environments.

Speaker #1: And that helps us accelerate our learning curve. So kind of specifically with our Tesla fleet, just to give you an example, we're in the process of doing an interior refresh on that fleet.

Speaker #1: So, it's really given where we've encountered on the interiors over the last several years. So this is a low-cost investment per vehicle for us.

Gil West: This is a low-cost investment per vehicle for us, and then the vehicle condition comes out looking nearly new, and then extends the useful life of that asset, and then, of course, has considerable economic benefits for us on that fleet. We got a world-class maintenance and tech ops team, and they've done this all their life, really, on older generation aircraft, applying a similar approach, you know, where we refurbish the interiors and do it at a low cost. It's what's happening with our Tesla fleet. Ultimately then, I think with that fleet, the limiting life factor will be battery life at this point, kind of given the current battery replacement costs. You know, even that could change in the future. We got to remain agile with our EV fleet.

Speaker #1: And then the vehicle condition comes out looking nearly new, and then extends the life of the useful life of that asset. And then, of course, has considerable economic benefits for us on that fleet.

Speaker #1: So we got a world-class maintenance and tech ops team. And they've done this all their life, really, on older generation aircraft, applying a similar approach where we refurbish the interiors and do it at a low cost.

Speaker #1: So it's what's happening with our Tesla fleet. And ultimately then, I think with that fleet, the limiting life factor will be battery life at this point, kind of given the current battery replacement costs.

Speaker #1: But even that could change in the future. But we got to remain agile with our EV fleet. It's really set us up well, though.

Gil West: You know, it's really set us up well, though, in our rideshare position. It's probably worth noting that experience we've been building with EVs really sets us up well in the future for AVs, because, you know, I think the, you know, every future autonomous vehicle will likely be an EV, all that'll bode well for us in the future.

Speaker #1: And our rideshare position. And then it's probably worth noting that that experience we've been building with EVs really sets us up well in the future for AVs because I think every future autonomous vehicle will likely be an EV.

Speaker #1: So all that will bode well for us in the future.

Speaker #3: Our next question comes from the line of Chris Stapelopoulos with Susquehanna International Group. Your line is open.

Operator: Our next question comes from the line of Christopher Stathoulopoulos with Susquehanna International Group. Your line is now open. Please go ahead.

Speaker #1: Is now open . Please go ahead

Speaker #2: So , Gil , if a lot of comments commentary here on the mobility business , your prepared remarks , I think you said mobility has the potential to more than surpass rental car .

Christopher Stathoulopoulos: Gil, it's a lot of comments, commentary here on the mobility business, your prepared remarks. I think you said mobility has the potential to more than surpass rent a car. Could you dig into a little bit more here on the future potential of the mobility business for Hertz? What does that look like? What is the plan for the next year, 1 to 3, 5 years, if you could? Just want a little bit more detail on how you're thinking about that. Thank you.

Speaker #2: So could you dig into a little bit more here on the future potential of mobility business for Hertz What does that look like ?

Speaker #2: What is the plan for the next year ? One . Three . Five years ? If you could just want a little bit more detail on how you're thinking about that .

Speaker #2: Thank you .

Speaker #3: No thanks Chris . I mean , obviously , as we mentioned in the call , you know , the potential significant here and we continue to position , you know , Hertz for the future .

Gil West: No, thanks, Chris. I mean, obviously, as we mentioned in the call, you know, the potential significant here, and we continue to position, you know, Hertz for the future of mobility. I think we'll be a big part of that because we've got, we've already got, you know, great partnerships in the rideshare space. As you think about kind of the next step of mobility, it's really the evolution of rideshare, you know, into autonomous. We've been piloting some innovative new models with a strategic partner, and we're starting to scale some of those. We'll talk about those in the future. You know, I think we're a natural player in mobility and ultimately the AV space as it continues to evolve.

Speaker #3: And mobility . And I think we'll be a big part of that because we've got we've already got , you know , a great partnerships in the rideshare space .

Speaker #3: So as you think about kind of the next step of mobility , it's really the evolution of rideshare . You know , into autonomous .

Speaker #3: So we've been we've been piloting some innovative new models with a strategic partner . And we're starting to scale some of those . We'll talk about those in the future .

Speaker #3: But you know , I think we're a natural player in mobility . And ultimately the AV space as it continues to evolve . So we've got really an incredible team leading our mobility business .

Gil West: We've got really an incredible team leading our mobility business. I'm extremely bullish about, you know, what that future looks like. Maybe just to recap, as I see it at least, how the space plays out. First of all, it'll be a huge TAM, if you will. You know, we had some comments in the script about that, and it's not a winner-take-all game. It's very big. And I think Hertz is really one of just a limited number of companies that have all the necessary ingredients to be a major player in AVs, right? Our, you know, our core business is owning and operating large fleets of vehicles, and that's a foundational requirement in AVs and the model for mobility going forward.

Speaker #3: I'm extremely bullish about , you know , what that future looks like . So maybe just to recap , as I see it , at least how the space plays out , first of all , it'll be a it'll be a huge Tam if you will .

Speaker #3: You know , we had some comments in the script about that and it's not a winner take all game . It's very big .

Speaker #3: And I think we're Hertz is really one of just a limited number of companies that have all the necessary ingredients to be a major player in Avs , right ?

Speaker #3: Our , you know , our core business is owning and operating large fleets of vehicles . And that that's a foundational requirement in Avs .

Speaker #3: And the model for mobility going forward . So you know , we've got an iconic brand . We've got a global footprint . We got operational excellence .

Gil West: You know, we've got an iconic brand, we got a global footprint, we got operational excellence, we got really advanced maintenance capabilities, and then, of course, large fleet management skills, and as I mentioned, just mentioned, experience managing EVs. Again, I'll just reiterate, you know, I think in the future, almost all AVs will be EVs, so that experience will be a big stepping stone for us. We've got rideshare experience, the infrastructure. We're an asset-heavy business, but we've got the vehicle financing capability, and then we've got a team literally with years of direct AV operating experience. I mean, in sum, I think we've got the right ingredients to do it.

Speaker #3: We got really advanced maintenance capabilities . And then of course , large fleet management skills . And as I mentioned , just mentioned experience managing EVs .

Speaker #3: And again , I'll just reiterate , you know , I think in the future , almost all Avs will be EVs . So that experience will be a big stepping stone for us .

Speaker #3: But we've got rideshare experience . The infrastructure , we're an asset heavy business , but we've got the vehicle financing capability and then we've got a team literally with years of direct AV operating experience .

Speaker #3: So I mean , in sum , I think we've got the right ingredients to do it . We're focused on it . But you know , be remiss if I also didn't say we're also focused on making sure the core business , you know , is turning , heading the right direction .

Gil West: We're focused on it, but, you know, be remiss if I also didn't say we're also focused on making sure the core business, you know, is turning, heading in the right direction, and we're not gonna be distracted by anything around that. We can do more than one thing, and we are, and mobility is a big part of our future.

Speaker #3: And we're not going to we're not going to be distracted by anything around that . But we can do more than one thing .

Speaker #3: And we are . And mobility is a big part of our future

Speaker #1: Our next question comes from the line of Dan Levy with Barclays Oh , please hold

Operator: Our next question comes from the line of Dan Levy with Barclays. Oh, please hold.

Speaker #4: Hi . Good morning . Thank you for taking the questions . I wanted to go back to the question of DPU , and I know your North Star metric is the $300 , but perhaps you could just walk us through again the path to how you can sustainably be at that $300 .

Dan Levy: Hi. Good morning. Thank you for taking the questions. I know your North Star metric is the $300, perhaps you could just walk us through again, the path to how you can sustainably be at that $300, given some of the vehicle inflation that we've seen. What offsets do you have? Because just mathematically, if you're holding a car for 18 months and the price is going up, that DPU is going to just increase above $300. What offsets do you have to get it to that $300, and what's the confidence on that?

Speaker #4: Given some of the vehicle inflation that we've seen , what offsets do you have ? Because just mathematically , if you're holding a car for 18 months and the price is going up , that DPU is going to just increase above $300 , so what offsets do you have to get it to that $300 ?

Speaker #4: And what's the confidence on that .

Speaker #3: Yeah , thanks , Dan . Appreciate the question . I'll start . And Scott , feel free to feel free to add . But yeah we've got confidence that kind of our end to end fleet strategy that we've talked about in the past will work in any environment .

Gil West: Yeah, thanks, Dan. Appreciate the question. I'll start, and Scott, feel free to add. Yeah, I, we've got confidence that kind of our end-to-end fleet strategy that we've talked about in the past, will work in any environment, first of all, and we can maintain the sub-$300 DPU this year and beyond. Although, as we noted, there's some seasonality in the trends and some volatility. You know, we've rotated the fleet. We've got, you know, we got model year 25, 26 vehicles to sustain our depreciation North Star and the used car market set up well this year as we move forward.

Speaker #3: First of all , we can maintain the the sub 300 DPU this year and beyond . So although as we noted , there's some seasonality in the trends and some volatility , but you know , we've rotated the fleet .

Speaker #3: We've got you know , we've got model year 2526 vehicles to sustain our depreciation . North star and the used car market set up well this year as we move forward .

Speaker #3: We've also pivoting into heavier retail car sales along with shorter hold periods . And I think both of those will be tailwinds for us as we go forward .

Gil West: We've also pivoting in to heavier retail car sales along with shorter hold periods, and I think both of those will be tailwinds for us as we go forward. Ultimately, it's about managing the right buy, hold, and sell at a make, model, trim level to in order to maximize the retention value over that hold period. It's not necessarily the cap cost, it's the retention value from what we buy it for, the net purchase price, and what we sell it for. That retention value then over that hold period is the key. Managing that really gives us the ability to hit our DPU targets.

Speaker #3: But ultimately it's about managing the right buy , hold and sell at a make model . Trim level to in order to retention value over that whole period .

Speaker #3: It's not necessarily the cap cost , it's the retention value from what we buy it for . The net purchase price and what we sell it for .

Speaker #3: And that retention value , then over that whole period is the key . So and and managing that really gives us the ability to hit our DPU targets .

Speaker #5: Yeah . Hey Dan this is Scott . I'll just add an important sort of mathematical component here . You know , obviously we buy a ton of vehicles , you know , and it's a large volumes that are significantly below MSRP .

Scott Haralson: Yeah. Hey, Dan, it's Scott, too. I'll just add an important sort of mathematical component here. you know, obviously, we buy a ton of vehicles, you know, at large volumes that are significantly below MSRP, and at that sort of discount level, I mean, ideally, you turn around and sell the vehicle the next day, obviously, to monetize that discount. Obviously, we can't do that, and we rent the car for a period of time. To Gil's point, you know, the idea of a short hold has significant mathematical components, albeit operationally complex, because you do need, you know, a large inflow of vehicles, you need the piping to be able to exit vehicles at that volume.

Speaker #5: And , and at that sort of discount level , I mean , ideally you'd turn around and sell the vehicle the next day , obviously , to monetize that discount .

Speaker #5: But obviously we can't do that . And we rent the car for a period of time . But to Gil's point , you know , the idea of a short hold has significant mathematical components , albeit operationally complex , because you do need , you know , a large inflow of vehicles .

Speaker #5: You need the piping to be able to exit vehicles at that volume . So the combination of all those things create , you know , the ability to optimize DPU that we think will will be below 300 .

Scott Haralson: The combination of all those things create, you know, the ability to optimize DPU that we think will be below $300, and we have the capabilities to drive it a good bit further, you know, once all of the components sort of start humming. I think mathematically, you could easily get to that point. Historically, the rental car business has been well below $300. I don't think we're charting new territory here, you know, respectively, but I think, you know, there's a lot of components that we've definitely gotten good at, and we'll continue to do that. I think mathematically, it's important to sort of think of around those factors.

Speaker #5: And we have the capabilities to drive it a good bit further . You know , once all of the the components sort of start humming .

Speaker #5: So I think mathematically you could easily get to that point and historically , the rental car business has been well below 300 . So I don't think we're charting new territory here .

Speaker #5: You know , respectively . But I think , you know , there's there's a lot of components that we've we've definitely gotten good at .

Speaker #5: And we'll continue to do that . But I think mathematically it's important to sort of think of it around those factors

Speaker #4: Great, thank you. And if I could just ask a follow-up on the liquidity standpoint — so, appreciate the commentary on QRC being the trough and some other liquidity actions.

Dan Levy: Great. Thank you. If I could just ask a follow-up on the liquidity sampling. Appreciate the commentary on Q2 being the trough and some other liquidity actions. Just given you're still gonna be a ways away from being free cash flow positive, maybe you could just comment on the free cash flow dynamics. You know, in the absence of that, what other capital raise options do you have to keep the liquidity in line until you hit free cash flow positive?

Speaker #4: But just given you're still going to be a ways away from being free cash flow positive , maybe you could just comment on the free cash flow dynamics , but you know , in the absence of of that , what other capital raise options you have to keep the liquidity in line until you hit free cash flow positive .

Speaker #5: Yeah . Let me let me touch on a couple of points there . Dan , I think , you know , we make we'll make , you know , pretty sizable strides in free cash flow generation in 26 .

Scott Haralson: Yeah, let me touch on a couple of points there, Dan. I think, you know, we'll make pretty sizable strides in free cash flow generation in 2026. You know, obviously, post Q1, if you sort of look at the margin profile, we'll be somewhat, you know, cash flow neutral in the year post Q1. obviously, we got to drive the business, you know, in 2027 to the point where we become cash flow positive, you know, covering all of the components within our working capital needs. You know, we talked about a few things that we have in the pipeline. You know, the $200 million initiative that we created, which was an alternative letter of credit facility that reduces the need for those funds to be taken out of the RCF.

Speaker #5: You know obviously post Q1 if you sort of look at the margin profile , we'll be somewhat , you know , cash flow neutral in the year post Q1 .

Speaker #5: And so the obviously , we got to drive the business , you know , in 27 to the point where we become cash flow positive .

Speaker #5: You know , covering all of the components within our working capital needs . But you know , we talked about a few things that we have in the pipeline .

Speaker #5: You know , the $200 million initiative that that we created , which was an alternative letter of credit facility that that reduces the need for those funds to be taken out of the RCF .

Speaker #5: We have a large number of of initiatives , you know , that that are not your typical sort of first lean offering , which we have as well , that talk about things like more capacity within our ABS structure .

Scott Haralson: We have a large number of initiatives, you know, that are not your typical sort of first lien offering, which we have as well, that talk about things like more capacity within our ABS structure. We have real estate assets that are both locations we no longer need. I mean, we're a 100-year-old company, so we have, you know, some excess assets that we need to monetize, as we optimize our facility footprints. We also have other locations where we do operate and want to continue that, you know, we may do sell leaseback transactions on at a, you know, very good cost of capital. That's a better capital allocation than owning real estate across the entire network.

Speaker #5: We have real estate assets that are both locations we no longer need . I mean , we're a 100 year old company , so we have , you know , some excess assets that that we need to monetize as we optimize our facility footprints .

Speaker #5: But we also have other locations where we do operate and want to continue that , you know , we may do sale leaseback transactions on at a , you know , very good cost of capital .

Speaker #5: That's a better capital allocation than owning real estate across the entire network . We also have a number of strategic initiatives to grow our franchise base , including new geographies where we don't operate today .

Scott Haralson: We also have a number of strategic initiatives to grow our franchise base, including new geographies where we don't operate today, plus some locations that are corporate-owned and operated, which are desirable franchise opportunities that are both strategically interesting, but also create an upfront capital infusion opportunity. There's a whole host of items here that give us a good bit of flexibility, including the first lien capacity that we have, which is roughly $400 million. A lot of that comes from the rolling off of some of the RCF capacity that we can refinance in the year.

Speaker #5: Plus some locations that are corporate owned and operated , which are desirable franchise opportunities that are both strategically interesting , but also create an upfront capital infusion opportunity .

Speaker #5: So there's a whole host of of items here that that give us a good bit of flexibility , including the first lean capacity that we have , which is roughly $400 million .

Speaker #5: A lot of that comes from the rolling off of some of the RCF capacity that we can refinance in the year

Speaker #4: Great . Thank you

Chris Woronka: Great. Thank you.

Dan Levy: Great. Thank you.

Speaker #1: Your next question comes from the line of John Healy with Northcoast Research. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of John Healy with Northcoast Research. Your line is now open. Please go ahead.

Speaker #6: Thank you for taking the question. I wanted to go to a comment that you kind of weaved into the prepared remarks a few times.

John Healy: Thanks for taking the question. Phil, I wanted to go to a comment that you kind of weaved into the prepared remarks a few times. You used the word off-airport, and you seemed to use it in separation with the word mobility. Would just love to, you know, get your view on the word off-airport, what you guys are doing there, if it is separate than the mobility business, and is it related to maybe a desire to get back into the insurance business that the company was in, you know, a while ago? Thanks.

Speaker #6: You used the word off airport and you seem to use it in separation with the word mobility . So we'd just love to , you know , get your view on the word off airport .

Speaker #6: What are you guys doing there? Is it separate from the mobility business? And is it related to maybe a desire to get back into the insurance business that the company was in?

Speaker #6: You know, a while ago? Thanks.

Speaker #3: Yeah . Thanks , John . Yeah , yeah . Just to clarify , I appreciate that question . The way we were using it , the term off airport was in in respect to our rental car business , not for mobility .

Gil West: Thanks, John. Just to clarify, I appreciate that question. The way we were using it, the term off-airport, was in respect to our rental car business, not for mobility. It's a separate and included part of our rental car business. We consider, of course, on-airport and our, what we call Hertz Local Edition off-airport volume in that mix. Maybe just for context, that growth in that, we do see the growth, and it's profitable growth for us, and we're disciplined about that. If you recall, as we rotated the fleet, we had to shrink our fleet in order to accelerate the rotation of the fleet.

Speaker #3: So it's a separate and included part of our rental car business . And we consider , of course , on airport and our what we call Hertz local additions off airport volume in that mix and maybe just for context , that growth in that we do see the growth and it's profitable growth for us .

Speaker #3: And we're disciplined about that . But if you recall , as we rotated the fleet , we had to shrink our fleet in order to accelerate the rotation of the fleet .

Gil West: You know, we were managing capital, we're managing vehicle availability, we're managing, you know, working our way through depreciation, all those things. We had to shrink to accelerate the fleet rotation. Essentially, we kept our airport capacity, you know, more or less flat during that period, and we shrank in our off-airport HLE location and, to some degree, our mobility business. As we think about off-airport and growing that business in 26, it's really just kind of going back to where we were in prior years, you know, is certainly the first step of that. The demand's there, again, in various segments. That's really the context of our off-airport. Mobility is separate, right? We're growing that business, and it's even at a much faster rate than off-airport.

Speaker #3: You know , we're managing capital . We're managing vehicle availability , we're managing , you know , working our way through depreciation . All those things .

Speaker #3: So we had to accelerate the fleet rotation . Essentially , we kept our airport capacity , you know , more or less flat during that period .

Speaker #3: And we we shrank in our off airport hell location and to some degree , our mobility business . So as we think about all fair port and growing that business in 26 , it's really just going of going back to where we were in prior years , you know , is certainly the first step of that .

Speaker #3: The demands there again , in various segments . And so that's the that's really the context of our off airport mobility . Separate .

Speaker #3: Right . We're growing that business . It's even at a much faster rate than off airport . And it's through the partnerships , you know , and again that that's got we think a long runway .

Gil West: It's through the partnerships, you know, and again, that's got, we think, a long runway.

Speaker #5: Yeah . Hey John this got to just a quick comment . I think we we view those businesses differently too . By the way the the the airport has different demand profiles .

Scott Haralson: Yeah. Hey, John, it's Scott, too. Just a quick comment. I think we view those businesses differently too, by the way.

Gil West: Yeah.

Scott Haralson: The airport has different demand profiles, obviously driven by, you know, airlines and TSA demand. Our off-airport business has a different cycle to it, obviously related to insurance replacement, and even some of the leisure demand and commercial components operate on a different cyclical component. As we think about growth profiles, profitability profiles, we do view those a bit differently, which is why when we talk about growth, we segment it out into the sort of airport, off-airport, you know, rideshare components, just because they behave differently.

Speaker #5: Obviously driven by , you know , airlines and TSA demand our all fair port business has a different cycle to it . Obviously related to insurance replacement and even some of the leisure demand and commercial components operate on a different cyclical component .

Speaker #5: So as we think about growth profiles , profitability profiles , we do view those a bit differently , which is why when we talk about growth , we segment it out into those sort of airport off airport , you know , rideshare components .

Speaker #5: Just because they behave differently

Speaker #6: Great . Thank you . And then just just one question on cap structure and balance sheet . You know , you guys have said that I believe 3 to 600 basis points of EBITDA margin this year .

John Healy: Great. Thank you. Just one question on cap structure and balance sheet. You know, you guys have said the, I believe, 300 to 600 basis points of EBITDA margin this year. If you're at the high end of that range, does that get you towards kind of cash flow break even for the year? Just longer term, any thoughts about the approach to deleveraging here? I mean, even on the 2027 goal of $1 billion in EBITDA, even if we earmark a lot of that improvement to debt repayment, we're still an off-leverage company, so just wanted to get your thoughts about.

Speaker #6: If you're at the high end of that range , does that get you towards kind of cash flow breakeven for the year and just the longer term , any thoughts about the the the approach to deleveraging here ?

Speaker #6: I mean , even on the 27 goal of $1 billion in EBITDA , even if we earmark a lot of that improvement to debt repayment , we're still awfully levered company .

Speaker #6: So just wanted to get your thoughts about how we bring down leverage . And I know you talked about sale leaseback and some of those things , but you know , just love to get your view on ideal cap structure .

John Healy: how we bring down leverage, and, you know, I know you talked about sale lease back and some of those things, but, you know, just love to get your view on ideal cap structure and, you know, hypothetically, like, you know, maybe, you know, when we could be below certain leverage levels. Thanks.

Speaker #6: And , you know , hypothetically , maybe , you know , when we could be below certain levers levels . Thanks .

Speaker #5: Yeah . Hey , Don , it's a good question . You know , obviously the business has to get to the point where it can cover its debt servicing and working capital needs .

Scott Haralson: Yeah. Hey, John. No, it's a good question. You know, obviously the business has to get to the point where it can cover its debt servicing and working capital needs. I mean, you could probably do the math within our balance sheet, but the sort of free cash flow break even number sits in that sort of 6% to 7%. Yeah, at the high end of that, we're going to be pretty close to sort of free cash flow break even, you know, for the year. I've said this before, you know, obviously the business has to get to the point where it's producing free cash flow to start thinking about using those funds to delever.

Speaker #5: I mean , you could probably do the math within our balance sheet , but the the sort of free , free cash flow break even number sits in that sort of 6 to 7% .

Speaker #5: So yeah , at the high end of that , we're going to be pretty close to sort of free cash flow break even .

Speaker #5: You know , for the year . And , and I and I've said this before , you know , obviously the business has to get to the point where it's producing free cash flow to start thinking about using those funds to deliver .

Speaker #5: There are other components that will take place in the future as well as we refinance . You know , we may have the the capability within our our stock price to use equity at some point in the future that we've talked about that , you know , we're definitely price sensitive to that because we are you know , so optimistic about where the where the business goes .

Scott Haralson: There are other components that will take place in the future as well as we refinance. You know, we may have the capability within our stock price to use equity at some point in the future that we've talked about, that, you know, we're definitely price sensitive to that because we are, you know, so optimistic about where the business goes. And the other components of that we think through are how the platform and the initiatives will play out in forming the ability to delever.

Speaker #5: And then the other components of that that we think through are how the platform and the initiatives will play out in forming the ability to to deliver .

Speaker #5: We think the components of mobility and fleet car sales will both drive , you know , operating profits to the business as well as an infusion of equity capital that that may also participate in all the holistic views of capitalizing those components necessary to grow , those businesses , but also helping the cap structure at the same time .

Scott Haralson: We think the components of mobility and fleet car sales will both drive, you know, operating profits to the business, as well as an infusion of equity capital that may also participate in all the holistic views of capitalizing those components and necessary to grow those businesses, but also helping the cap structure at the same time. There's a lot of moving pieces, and this is going to happen over time, but the first step is getting the business on solid profitable footing.

Speaker #5: So there's a lot of moving pieces . And and this is going to happen over time . But the first step is getting the business on solid , profitable , profitable footing .

Speaker #6: Understood . Thank you

John Healy: Understood. Thank you.

Speaker #1: Our next question comes from the line of Ryan Brinkman with J.P. Morgan . Your line is now open . Please go ahead .

Operator: Our next question comes from the line of Ryan Brinkman with J.P. Morgan. Your line is now open. Please go ahead.

Speaker #2: Hi . Thanks for taking .

[Analyst] (J.P. Morgan): Hi, thanks for taking my question. With regard to the Hertz Car Sales strategy, what are you expecting in terms of the percentage of vehicles disposed of via various channels in 2026 relative to 2025? Maybe looking beyond this year also, what is assumed already in your North Star target for per unit depreciation of under $300 per month or $1 billion of EBITDA in 2027, versus, you know, what level of disposition performance would be incremental to those targets?

Ryan Brinkman: Hi, thanks for taking my question. With regard to the Hertz Car Sales strategy, what are you expecting in terms of the percentage of vehicles disposed of via various channels in 2026 relative to 2025? Maybe looking beyond this year also, what is assumed already in your North Star target for per unit depreciation of under $300 per month or $1 billion of EBITDA in 2027, versus, you know, what level of disposition performance would be incremental to those targets?

Speaker #7: My question: With regard to the Hertz car sales strategy, what are you expecting in terms of the percentage of vehicles disposed of via various channels in 2026 relative to 2025?

Speaker #7: And and maybe looking beyond this year ? Also , what is assumed already in your North Star target for per unit depreciation of under $300 per month , or $1 billion of EBITDA in 27 , versus , you know , what level of disposition , performance would be incremental to those targets .

Speaker #3: Yeah , I'll start with the latter point , Ryan . Nothing , right ? We're not assuming that Hertz car sales factors into the billion of EBITDA in 27 or really anything material this year .

Gil West: Yeah, I'll start with the latter point, Ryan. Nothing, right? We're not assuming that Hertz Car Sales factors into the $1 billion of EBITDA in 2027 or really anything material this year. The real key from a growth standpoint, there's two points I would make here on Hertz Car Sales, because we do want to grow the percent of car sales that we have into retail. Keep in mind, historically, what we've done is to move volume through the rental car seasonal periods and do it through wholesale channels in order to match the timing of kind of the ins and outs of that. We're shifting our strategy to move the bulk of that volume through retail channels and shorten our sales time to do that.

Speaker #3: The the real key from a growth standpoint , there's two points I would make here on Hertz car sales , because we do want to grow The percent of car sales that we have into retail .

Speaker #3: Keep in mind , historically , what we've done is to move volume through the rental car , seasonal periods and do it through a wholesale channels in order to to match the timing of kind of the ins and outs of that .

Speaker #3: So we're shifting our strategy to move the bulk of that volume through retail channels . And shorten our sales time to do that Today , we're we're roughly at call it about a , about a third of our cars move through retail channels today .

Gil West: Today, we're roughly at, call it about a third of our cars move through retail channels today. That's both Hertz Car Sales, our direct sales, along with retail partners that we have established to move volume through. Aspirationally, we want to grow that to about 80%, you know, so there's a path there, and we're pushing hard to do that. If you peel that back, you know, as I think we tried to cover a little bit of this in the script, but we see kind of a couple of pieces of that, right? We've got a physical footprint today. We've been investing in our digital channels, and e-commerce as well, and the combination of those creates a really good model for us, right?

Speaker #3: That's both Hertz car sales . Our direct sales along with retail partners that we have established to move volume through Aspirationally . We want to grow that to about 80% , you know , so there's a path there .

Speaker #3: And we're pushing hard to do that . And then if you peel that back , you know , as I think we we tried to cover a little bit of this in the script , but but we see kind of a couple of pieces to that .

Speaker #3: Right . We've got a physical footprint today . We've been investing in our digital channels and e-commerce as well . And . The combination of those creates a really good model for us .

Speaker #3: Right . So we can meet our customers where ultimately they want to be . Right , rather than just relying either either or on a physical channel or a digital channel .

Gil West: We can meet our customers where ultimately they want to be, right, rather than just relying either on a physical channel or a digital channel. That combination's really important for us. We've got a lot of great ingredients to drive this, of course. We've got a building customer base. People are test driving our cars every day. We've done Rent2Buy. You know, we partnered with Cox to revamp our website. Again, I would encourage you guys to go see it. It's really impressive. I would also just mention, you know, on a customer basis, the cars we sell to customers, the Net Promoter Scores of those buyers are as high as anything I've ever seen anywhere. They're over 90% Net Promoter Scores. You know, that's almost impossible achievement, candidly. The experience is already good.

Speaker #3: So that combination is really important for us . We've got a lot of great ingredients to drive this . Of course , we've got a building , customer base .

Speaker #3: People are test driving our cars every day . We've done rent to buy . We've , you know , we partnered with Cox to revamp our website .

Speaker #3: Again , I would encourage you guys to go see it . It's really impressive . I would also just mention , you know , on a customer basis , the cars we sell to customers , the net promoter scores of those buyers are as high as anything I've ever seen anywhere .

Speaker #3: There . Over 90% net promoter scores . You know , that's almost impossible achievement . Candidly . So the experience is already good .

Speaker #3: We've got a great trusted brand and then it's a matter of , you know , top of funnel demand . We've got big partnerships that drive that .

Gil West: We've got a great trusted brand, then it's a matter of, you know, top of funnel demand. We've got big partnerships that drive that. Then the real problems for us to solve are distilling that into qualified leads and conversion rates. The team's really focused on that. We've got some great people helping us, and those are the real keys, along with driving up our net margin per sale. It's not just about volume. Ultimately, it's about adding a few thousand dollars to the net here, selling hundreds of thousands of cars where we have the material impact. The net margin's key in the equation. We've been focusing really hard on reconditioning cost. Along with capturing F&I, that, on the back end of the transaction that we've never had.

Speaker #3: And then the real problems for us to solve are distilling that into qualified leads and conversion rates . And the teams really focused on that .

Speaker #3: We've got some great people helping us , and those are the real keys . Along with driving up our net margin per sale .

Speaker #3: It's not just about volume. Ultimately, it's about adding a few thousand dollars to the net here, selling hundreds of thousands of cars where we have the material impact.

Speaker #3: So the net margins key in the equation . We've been focusing really hard on reconditioning costs , along with capturing fact that on the back end of the transaction that we've never had .

Speaker #3: So combination of those two plus selling more digitally reduces the overall selling expenses . So and we're seeing the margin side , you know , heading the right way on a per car basis .

Gil West: Combination of those two, plus selling more digitally, reduces the overall selling expenses. We're seeing the margin side, you know, heading the right way on a per-car basis, and then it's about increasing volume. We're, you know, look, it's, you know, this isn't easy, obviously, but we got the ability to, you know, again, we've already got the scale. It's just a matter of channel shift in the way we're selling. Big opportunity for us.

Speaker #3: And then it's about increasing volume . We're you know look it's you know this isn't easy . Obviously . But we got the ability to , you know , again , we've already got the scale .

Speaker #3: It's just a matter of channel shift in the way we're selling so big opportunity for us

Speaker #7: Okay . Thanks . And then lastly , with regards , the more sophisticated approach to pricing that you referenced in your prepared remarks is leading to higher revenue per unit .

[Analyst] (J.P. Morgan): Okay, thanks. Lastly, with regards to the more sophisticated approach to pricing that you referenced in your prepared remarks as leading to higher revenue per unit, you expect to contribute more, are you utilizing or refining a new or existing software system? What would you say are the drivers of the progress so far and the catalysts for further improvement?

Ryan Brinkman: Okay, thanks. Lastly, with regards to the more sophisticated approach to pricing that you referenced in your prepared remarks as leading to higher revenue per unit, you expect to contribute more, are you utilizing or refining a new or existing software system? What would you say are the drivers of the progress so far and the catalysts for further improvement?

Speaker #7: And you expect to contribute more . Are you utilizing or refining a new or existing software system , or what would you say are the the drivers of the progress so far in the catalyst for further improvement ?

Speaker #3: And just to clarify, are you talking about the car sales or rental business, rental car business?

Gil West: Just to clarify, are you talking about the car sales or our rental business, rental car business?

Speaker #7: Now , the rental business , the pricing that's open to the RPG .

[Analyst] (J.P. Morgan): Now, the rental business...

Ryan Brinkman: Now, the rental business...

Gil West: Make sure.

[Analyst] (J.P. Morgan): The pricing.

Ryan Brinkman: The pricing.

Gil West: Okay, got it.

[Analyst] (J.P. Morgan): leading to the RPD.

Ryan Brinkman: leading to the RPD.

Speaker #3: Because we're doing the same , by the way , on the cars . But go ahead , Sandy .

Gil West: Yeah, because we're doing the same, by the way, on the cars. Go ahead, Sandeep.

Speaker #8: Yeah , yeah . Thanks for the question there . On pricing sophistication . So see , we are relooking broad scale how we price demand overall .

Sandeep Dube: Yeah, this is Sandeep here. Yep, thanks for the question there on pricing sophistication. See, we are relooking, broad scale, how we price, demand overall, right? It's a combination of improved systems, and we've talked about this in prior earnings calls, around our work around there, and that's a longer term, and we are well on that journey. On top of that, you have to always relook, how you structure, your pricing and the approach that you use within the systems, right? That's the piece that I referred to when I talked about Q4, where, you know, we've infused the revenue management team with some new talent.

Speaker #8: Right . And it's a combination of improved systems . And we've talked about this in prior earnings calls around our work around there .

Speaker #8: And that's a longer term . And we are well on that journey . On top of that you have to always relook how you structure your pricing and the approach that you use within within the systems .

Speaker #8: Right . And that's the piece that I referred to when I talked about Q4 , where , you know , we've infused the revenue management team with some some new talent .

Speaker #8: There's some really good thinking that's going on there . And we've applied different theories into how we actually price for demand . And that's that's leading to a different outcome there .

Sandeep Dube: There's some really good thinking that's going on there, and we've applied different theories into how we actually price for demand, and that's leading to a different outcome there. I think it's a combination of systems and different thinking. By the way, this is still in the early innings of how we kind of go about on this. This is a journey, and I expect continuous improvement on this front.

Speaker #8: So I think it's a combination of systems and different thinking . And by the way , this is still an the early innings of how we kind of go about on this .

Speaker #8: This is a journey . And I expect continuous improvement on this front .

Speaker #7: All right . Thank you

[Analyst] (J.P. Morgan): Great. Thank you.

Ryan Brinkman: Great. Thank you.

Speaker #1: Our next question comes from the line of Chris Ronca with Deutsche Bank . Your line is now open . Please go ahead .

Operator: Our next question comes from the line of Chris Woronka with Deutsche Bank. Your line is now open. Please go ahead.

Speaker #9: Hey guys . Thanks for getting me back into the queue . The second question . Yeah . No thanks . So second question is going to be kind of as we think about the billion dollar target for next year on EBITDA .

Chris Woronka: Hey, guys. Thanks for getting me back into the queue.

Gil West: Sure.

Chris Woronka: The second question. Yeah, no, thanks. The second question is going to be kind of, as we think about the billion-dollar target for next year on EBITDA, we know what the North Star targets are kind of numerically, but if I think about, you know, how much fleet maybe that requires, and then also on the more importantly, on the revenue side, maybe you can high level directionally bucket for us, where you think is this market share on corporate? Is it market share on leisure? Is it more rideshare, where you don't maybe have quite as much direct competition? If you can maybe at some high level, bucket those out for us, what you think drives it or everything equal, that would be super helpful. Thanks.

Gil West: The second question.

Chris Woronka: Yeah, no, thanks. The second question is going to be kind of, as we think about the billion-dollar target for next year on EBITDA, we know what the North Star targets are kind of numerically, but if I think about, you know, how much fleet maybe that requires, and then also on the more importantly, on the revenue side, maybe you can high level directionally bucket for us, where you think is this market share on corporate? Is it market share on leisure? Is it more rideshare, where you don't maybe have quite as much direct competition? If you can maybe at some high level, bucket those out for us, what you think drives it or everything equal, that would be super helpful. Thanks.

Speaker #9: We know that the North Star targets are kind of numerically . But if I if I think about how much fleet maybe that that requires .

Speaker #9: And then also on the more importantly on the revenue side , maybe you can at a high level directionally bucket for us where you think , is this market share on corporate , is it market share on leisure ?

Speaker #9: Is it more ride share where you don't maybe have quite as much direct competition ? If you could maybe at some high level bucket those out for us .

Speaker #9: What you think drives that are that would be super helpful . Thanks

Speaker #3: Okay well I'll start and I would encourage Scott and Sandeep to dive in . Thanks , Chris . Yeah . First of all , I think in terms of the billion dollar EBITDA in 27 , I mean , a little bit of context , at least from my view .

Gil West: Okay, well, I'll start. I would encourage Scott and Sandeep to dive in. Thanks, Chris. Yeah, first of all, I think in terms of the billion-dollar EBITDA in 2027, I mean, a little bit of context, at least from my view, I mean, these aren't uncharted waters, right? We've been in there in the past. Others in the industry are there now and achieve that level of performance. It's clearly achievable. I think the North Star financial targets, you know, that we've given on DPU, RPU, and DOE, along with some just modest growth, get us there conceptually, and we can talk about, you know, any of those assumptions. Then, of course, you know, the approach we've taken on Back-to-Basics, lay the foundation to get there, the trajectory of all those metrics are heading that way, right?

Speaker #3: I mean , these aren't uncharted waters , right ? We we've been in there in the past , others in the industry are there now and achieve that level of performance .

Speaker #3: So it's clearly achievable . I think the North Star financial targets , you know , that we've given on purpose and do , along with some just modest growth , get us there conceptually and we can talk about , you know , any of those assumptions .

Speaker #3: And then of course , you know , the approach we've taken on back to basics later foundation to to get their their trajectory of all those metrics are heading that way .

Speaker #3: Right . They've turned they're heading that direction . I think the biggest the biggest economic lever , as you know , is the fleet , which we've addressed .

Gil West: They've turned, they're heading that direction. I think, the biggest economic leverage, you know, is the fleet, which we've addressed, and that's the economic engine. We're tracking, really with all the North Star metrics directionally, where we want to go. You know, we'll never be satisfied with the timing, and we'll keep pushing hard. That is the one variable that's always a little difficult to gauge, given the, you know, kind of nature of the significant transformation we've been doing. There's a strong sense of urgency at the team. Everybody's full throttle, the needles are moving. You know, I know we talked about depth some, maybe the revenue piece-

Speaker #3: And that's the economic engine . And we're tracking really with all the North Star metrics directionally where we want to go . You know , we'll never be satisfied with the timing and we'll keep pushing hard .

Speaker #3: That is the one variable that's always little difficult to gauge given the , you know , kind of nature of the significant transformation we've been doing .

Speaker #3: But there's a big there's a strong sense of urgency of the team . Everybody's full throttle . The needles are moving . So , you know , I we talked about depth .

Speaker #3: So maybe the revenue piece—you know, you want to touch on.

Sandeep Dube: Yeah.

Gil West: You know, you want to touch on?

Speaker #8: Yeah . On the revenue piece I think again it's going to be very , very disciplined growth . Right . And going back to our business lines right on the airport side , we're going to be very clear that our growth is going to be at or below TSA levels .

Sandeep Dube: Yeah, on the revenue piece, I think, again, it's going to be very, very disciplined growth, right. Going back to our business lines, right. On the airport side, we're going to be very clear that our growth is going to be at or below TSA levels. The beauty in there is we're going to keep refining the segments that we the segment mix there, so that we generate a higher and higher margin out of our airports. For the off-airport business, again, there's more growth there, and we'll keep working on that. I think Gil alluded to that earlier on. By the way, there's a segment mix play within the off-airport segment business line as well, which would help us enhance the margins there.

Speaker #8: And the beauty in there is we're going to keep refining the segments that we the segment mix there so that we generate a higher and higher margin out of out of our airports .

Speaker #8: And for the off airport business , again , there's there's more growth there and we'll keep working on that , I think Gil alluded to that earlier on , by the way .

Speaker #8: There's a segment mix at play within the airport segment business line as well, which will help us enhance the margins there. And then lastly, mobility.

Sandeep Dube: Lastly, mobility. Again, we've talked about that. There's more growth there. We're growing that business at a pretty good clip, and we'll continue on that journey. I would say discipline in where we grow and discipline on how we fleet is the answer there.

Speaker #8: Again , we've talked about that . There's there's more growth there . We're growing that business at a pretty good clip . And we'll continue on that journey .

Speaker #8: But I would say discipline and where we grow and discipline on how we fleet is is the answer . There ?

Speaker #5: Yeah . I think just real quick , before we wrap up the call here , Chris , is that I think mathematically all three levers of the North Star get you well above a billion .

Scott Haralson: Yeah, I think just real quick before we wrap up the call here, Chris, is that I think mathematically, all 3 levels of the North Star get you well above $1 billion.

Sandeep Dube: Yep.

Speaker #5: I think the point here is that there's a number of ways to get there that all don't have to hit to hit a billion .

Scott Haralson: I think the point here is that there's a number of ways to get there. They all don't have to hit $1 billion. Plus, you've got the fourth dimension of scale, which plays into here, and then we really haven't even talked about the platform component that adds onto it. Gil talked about timing, but I think the takeaway is there's multiple ways to get there.

Speaker #5: Plus, you get the fourth dimension of scale, which plays into here. And then we really haven't even talked about the platform component that adds on to it.

Speaker #5: So Gil talked about timing , but I think the takeaway is there's multiple ways to get there .

Speaker #3: Yeah . Well said . Okay .

Gil West: Yep. Well said. Okay.

Speaker #9: Okay . Thanks a lot guys . Very helpful .

Chris Woronka: Okay. Thanks a lot, guys. Very, very helpful.

Speaker #5: Yeah . Thanks , Chris .

Scott Haralson: Yeah. Thanks, Chris.

Speaker #10: Thanks

Gil West: Thanks.

Speaker #1: There are no further questions at this time . This concludes the Hertz Global Holdings fourth quarter and full year 2025 earnings conference call .

Operator: There are no further questions at this time. This concludes the Hertz Global Holdings Q4 and full year 2025 Earnings Conference Call. Thank you for your participation.

Speaker #1: Thank you for your participation

Gil West: Thanks. I guess it's not bad that we went over, but still.

Chris Woronka: Right. Yeah.

Q4 2025 Hertz Global Holdings Inc Earnings Call

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