Q2 2026 Hertz Global Holdings Inc Earnings Call

August 6, 2026

Operator 2: Welcome to Hertz Global Holdings Q1 2026 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 Bill Kucovsky, Senior Vice President of Finance. Please go ahead.

Operator: Welcome to Hertz Global Holdings Q1 2026 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 Bill Kocovski, Senior Vice President of Finance. 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 Bill Kukawski, Senior Vice President of Finance.

Speaker #1: Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information. We've also provided slides to accompany our conference call, and these can be accessed through the Investor Relations section of our website.

Bill Kucovsky: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information. We've also provided slides to accompany our conference call, and 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, and the company undertakes no obligation to update that information to reflect changed circumstances.

Bill Kocovski: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information. We've also provided slides to accompany our conference call, and 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, and the company undertakes no obligation to update that information to reflect changed circumstances.

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 in 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. Earnings presentation and in the risk factors and forward-looking statements sections in the SEC filings we make with the Securities and Exchange Commission.

Bill Kucovsky: Additional information concerning these statements, including factors that could cause our actual results to differ, is contained in our earnings press release, earnings presentation, and in the Risk Factors and Forward-Looking Statements sections in the SEC filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and in 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 and earnings presentation 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.

Bill Kocovski: Additional information concerning these statements, including factors that could cause our actual results to differ, is contained in our earnings press release, earnings presentation, and in the Risk Factors and Forward-Looking Statements sections in the SEC filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and in 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 and earnings presentation 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.

Speaker #2: Our filings are available on the SEC's website and in 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 and earnings presentation available on our website.

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.

Bill Kucovsky: 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.

Bill Kocovski: 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: Followed by Scott Harrelson, our Chief Financial Officer, who will discuss our financial performance. I'll now turn the call over to Gil.

Speaker #3: Thanks, Bill. Nice work. Good morning, everyone, and thank you for joining us. I want to begin by saying thanks to the HERTZ team. Quarter after quarter, their discipline and execution are what turn strategy into results.

Gil West: Thanks, Bill. Nice work. Good morning, everyone, and thank you for joining us. I want to begin by saying thanks to the Hertz team. Quarter after quarter, their discipline and execution are what turn strategy into results. We are halfway through 2026, and it's been more than two years since I stepped into this role. In that time, I had the chance to get into the detail of every part of this business, the fleet, the operations, and the economics that drive them. What's become clear is that this transformation is about both fixing what wasn't working and building for what's next. We've done that under real pressure. Over these two years, we've navigated tariffs, vehicle recalls, inflation, partial government shutdown, elevated TSA wait lines, and storm disruptions on top of the normal volatility of the rental car industry. None of it has changed our approach.

Speaker #3: We are halfway through 2026, and it's been more than two years since I stepped into this role. In that time, I had the chance to get into the detail of every part of this business: the fleet, the operations, and the economics that drive them.

Speaker #3: What's become clear is that this transformation is about both fixing what wasn't working and building for what's next. We've done that under real pressure.

Speaker #3: Over these two years, we've navigated tariffs, vehicle recalls, inflation, parcel government shutdown, elevated TSA wait lines, and storm disruptions on top of the normal volatility of the rental car industry.

Speaker #3: None of it has changed our approach. We're staying focused on what we can control: our fleet, our cost, our revenue performance, and the customer experience we deliver.

Gil West: We're staying focused on what we can control, our fleet, our cost, our revenue performance, and the customer experience we deliver. Through disciplined execution, we're building a financial footing strong enough to withstand whatever pressures today and tomorrow bring. We're both running our core rental business better and building a platform spanning rent a car, fleet, service, and mobility that diversifies and strengthens Hertz for the future. This quarter is more proof of that progress, where our disciplined execution is showing up in our results, led by our continued commercial momentum. Revenue was up that year-over-year with a 1% smaller fleet and came in ahead of both consensus and our latest guidance. By continuing to sweat the assets and increasing total fleet utilization by 80 basis points to 79%, we achieved this despite elevated recalls compared to the year before.

Speaker #3: Through disciplined execution, we're building a financial footing strong enough to withstand whatever pressures today and tomorrow bring. We're both running our core rental business better and building a platform spanning rental car, fleet, service, and mobility that diversifies and strengthens HERTZ for the future.

Speaker #3: This quarter is more proof of that progress. Where our disciplined execution is showing up in our results. Led by our continued commercial momentum, revenue was up year over year with a 1% smaller fleet.

Speaker #3: And came in ahead of both consensus in our latest guidance. By continuing to sweat the assets and increasing total fleet utilization by 80 basis points to 79%, we achieved this despite elevated recalls compared to the year before.

Speaker #3: This performance was driven by our strongest second-quarter RPD on record, excluding the peak COVID year of 2022. RPD was up 9%, and RPU was up 8% versus last year, coming in at 1,542 dollars.

Gil West: This performance was driven by our strongest Q2 RPD on record, excluding the peak COVID year of 2022. RPD was up 9%, and RPU was up 8% versus last year, coming in at $1,542. RPU exceeded our North Star target, and we saw sequential improvements in both throughout the quarter. Adjusted corporate EBITDA came in at $81 million, a $63 million year-over-year improvement and above our latest guidance, driven primarily by an even stronger RPD in June than we anticipated. We continue to execute on our annual DPU North Star target through our disciplined rotation strategy that is defined by our buy right, hold right, and sell right approach. At $302, DPU remains in line with target. However, we did experience three quarter-specific items that caused the total gain on sale to be lower than originally expected.

Speaker #3: RPU exceeded our North Star target, and we saw a sequential improvements in both throughout the quarter. Adjusted corporate EBITDA came in at 81 million dollars, a 63 million dollar year-over-year guidance, driven primarily by an even stronger RPD in June than we anticipated.

Speaker #3: We continue to execute on our annual DPU North Star target. Through our disciplined rotation strategy, that is defined by our buy right, hold right, and sell right approach.

Speaker #3: At 302 dollars, DPU remains in line with target. However, we did experience three quarter-specific items that caused the total gain on sale to be lower than originally expected.

Speaker #3: First, the seasonal decline was more pronounced than we anticipated, as wholesale volume temporarily outpaced channels were not as optimal as we would like, given the volume of cars we sold.

Gil West: First, the seasonal decline was more pronounced than we anticipated as wholesale volume temporarily outpaced demand. Second, our disposition channels were not as optimal as we would like given the volume of cars we sold, and third, during the quarter, we altered the mix of vehicles and prioritized older and certain models. These dynamics temporarily drove down the proceeds from sale, resulting in a lower gain on sale. However, this didn't impact our go-forward view. The seasonally adjusted Manheim Rental Index increased 3.5% month over month in July, recovering from the declines experienced during Q2 and remaining strong, up 6.1% year over year. The used car market is good, and we're set up well for it. At the end of Q2, our model year 2025 and 2026 units made up nearly 94% of our US core fleet.

Speaker #3: And third, during the quarter, we altered the mix of vehicles and prioritized older and certain models. These dynamics temporarily drove down the proceeds from sale, resulting in a lower gain on sale, however, this didn't impact our go-forward view.

Speaker #3: The seasonally adjusted Mannheim Rental Index increased 3.5% month over month in July, recovering from the declines experienced during the second quarter. And remaining strong up 6.1% year over year.

Speaker #3: The used car market is good, and we're set up well for it. At the end of Q2, our model year 25 and 26 units made up nearly 94% of our U.S.

Speaker #3: core fleet. We believe we have an exceptionally healthy fleet and we expect DPU will benefit as we rotate out of those vehicles over the coming quarters.

Gil West: We believe we have an exceptionally healthy fleet, and we expect DPU will benefit as we rotate out of those vehicles over the coming quarters. Turning to cost, total DOE per day increased slightly, primarily driven by costs that were both revenue related and were margin accretive, associated with stronger RPD performance. Now, this brings me to a broader point. The North Star metrics have given our teams a steady compass over the last two years, but as the business evolves, it's important to recognize that these metrics do not operate in isolation. As revenue grows, a portion of our DOE naturally grows alongside it, and many of those costs are tied to higher revenue and stronger profitability. As a result, we're also increasingly focused on the relationship between those metrics, and we expect our performance framework to evolve as our transformation continues.

Speaker #3: Turning to cost, total DOE per day increased slightly, primarily driven by costs that were both revenue-related and were margin-accretive. Associated with stronger RPD performance.

Speaker #3: Now, this brings me to a broader point. The North Star metrics have given our teams a steady compass over the last two years, but as the business evolves, it's important to recognize that these metrics do not operate in isolation.

Speaker #3: As revenue grows, a portion of our DOE naturally grows alongside it, and many of those costs are tied to higher revenue and stronger profitability.

Speaker #3: As a result, we're also increasingly focused on the relationship between those metrics. And we expect our performance framework to evolve as our transformation continues.

Speaker #3: So while DOE was higher, our RPD-to-DOE per day spread improved by 17% year over year. And it was our third consecutive quarter of year over year spread expansion.

Gil West: While DOE was higher, our RPD to DOE per day spread improved by 17% year over year, and it was our third consecutive quarter of year over year spread expansion. We remain extremely focused on managing core operating costs, and the improvements we're seeing are the result of productivity initiatives encompassing people, processes, and technology. One of our biggest levers we have is labor productivity. Supported by Palantir, our new labor planning model aligns staffing with real time, reducing overtime, third-party labor, and improving workforce planning. We're also leveraging technology and AI-driven data insights to improve throughput and productivity across our operations to reduce our vehicle turnaround time. Additionally, we're making progress in leveraging our supply chain network, expanding part-out capabilities, strengthening collections recovery, and improving maintenance processes, all to drive greater productivity with existing resources while lowering unit costs.

Speaker #3: We remained extremely focused on managing core operating cost and the improvements we're seeing are the result of productivity initiatives, encompassing people, processes, and technology.

Speaker #3: One of our biggest levers we have is labor productivity. Supported by Palantir, our new labor planning model aligns staffing with real-time reducing overtime third-party labor and improving workforce planning.

Speaker #3: We're also leveraging technology and AI-driven data insights to improve throughput and productivity across our operations to reduce our vehicle turnaround time. Additionally, we're making progress in leveraging our supply chain network, expanding part-out capabilities, strengthening collections recovery, and improving maintenance processes, all to drive greater productivity with existing resources while lowering unit costs.

Speaker #3: Although these results demonstrate the progress we've made in strengthening the economics of the business, recalls remain a significant headwind. Recall volume was up 300% in Q2 from the year prior.

Gil West: Although these results demonstrate the progress we've made in strengthening the economics of the business, recalls remain a significant headwind. Recall volume was up 300% in Q2 from the year prior, impacting an average of 15,000 vehicles per month across H1 2026. Recalls represented more than a $55 million EBITDA impact, and we're pursuing regulatory, operational, and contractual solutions to address this issue. More importantly, our ability to deliver this level of performance despite that headwind reinforces our confidence in the path to our long-term targets. That said, while 2027 and $1 billion of adjusted corporate EBITDA are important milestones, they're not the final destination. As we shared, we focused on something bigger. We are applying our commercial, operational, and fleet management capabilities across the four strategic areas of our platform to drive greater efficiency, create diversified growth engines, and strengthen the company for the future.

Speaker #3: Impacting an average of 15,000 vehicles per month across the first half of 2026, recalls represented more than a 55 million dollar EBITDA impact. And we're pursuing regulatory operational and contractual solutions to address this issue.

Speaker #3: More importantly, our ability to deliver this level of performance despite that headwind reinforces our confidence in the path to our long-term targets. That said, while 2027 and 1 billion of adjusted corporate EBITDA are important milestones, they're not the final destination.

Speaker #3: As we've shared, we focused on something bigger: we are applying our commercial, operational, and fleet management capabilities across the four strategic areas of our platform to drive greater efficiency, create diversified growth engines, and strengthen the company for the future.

Speaker #3: Our platform is the unlock to the next phase of value creation. Deleveraging the balance sheet and growth. And one of the greatest opportunities to grow is by more effectively leveraging the power of the HERTZ brand.

Gil West: Our platform is the unlock to the next phase of value creation, deleveraging the balance sheet and growth. One of the greatest opportunities to grow is by more effectively leveraging the power of the Hertz brand. Hertz is an iconic century-old brand recognized the world over. It is one of the most valuable assets with a strong reputation that we believe is under-monetized today. One way that we think we can use the power of our brand is in franchising. It is a strong asset like capital efficient part of our business with attractive and predictable economics. It is not new either. Today, more than 25% of the Hertz-branded revenue is generated by franchises. However, we have not grown it in years, and it has not received the level of focus necessary to realize its full potential.

Speaker #3: HERTZ is an iconic, century-old brand recognized the world over. It's one of the most valuable assets with a strong reputation that we believe is under-monetized today.

Speaker #3: One way that we think we can use the power of our brand is in franchising. It is a strong asset-like capital-efficient part of our business with attractive and predictable economics.

Speaker #3: It's not new either. Today, more than 25% of the HERTZ-branded revenue is generated by franchises. However, we haven't grown it in years, and it hasn't received the level of focus necessary to realize its full potential.

Speaker #3: We're now changing that, and we're evaluating near-term opportunities across global footprint through both whitespace expansion and conversion activity, and thinking strategically about whether HERTZ should look more like our partners in the hotel industry.

Gil West: We are now changing that, we are evaluating near-term opportunities across the global footprint through both white space expansion and conversion activity and thinking strategically about whether Hertz should look more like our partners in the hotel industry. If our goal is to achieve higher quality earnings, stronger free cash flow conversion, more durable shareholder returns, and improved balance sheet, franchising is there. In the next area of our platform fleet, we are building on our unique competitive advantage of one of the largest used car dealers in the country, enhancing the capabilities of our used car factory. We are continuing our journey of moving from primarily wholesale disposition towards more lucrative channels. We expect that expanding our ability to move additional car sales volume through these higher-yielding channels will have a significant effect on net DPU, we are working to unlock those opportunities.

Speaker #3: If our goal is to achieve higher quality earnings, stronger free cash flow conversion, more durable shareholder returns, and improved balance sheet, franchising is there.

Speaker #3: In the next area of our platform, fleet, we are building on our unique competitive advantage of one of the largest used car dealers in the country: enhancing the capabilities of our used car factory.

Speaker #3: We're continuing our journey of moving from primarily wholesale disposition towards more lucrative channels. We expect that expanding our ability to move additional car sales volume through these higher-yielding channels will have a significant effect on net DPU and we're working to unlock those opportunities.

Speaker #3: We're exploring how we build strategic relationships with the leading used car companies, creating more mutual value and structurally reducing our cost of sale, alongside new partnerships with best-in-class retailers.

Gil West: We are exploring how we build strategic relationships with the leading used car companies, creating more mutual value and structurally reducing our cost of sale alongside new partnerships with best-in-class retailers. We also continue to make progress on our direct retail channel. Wins this quarter included growing direct retail sales volumes, reducing reconditioning costs, delivering strong F&I performance. In mobility, Oro is gaining momentum. For over a century, Hertz has mastered the ability to operate complex fleets reliably, efficiently, and at scale. Today, Oro is extending those capabilities to a new era of mobility, filling a critical gap in the industry's transition towards commercially operated, driver-led, and autonomous fleets. The capabilities we built, from acquisition and financing to efficient fleet management and maintenance, would be incredibly difficult and costly to replicate from scratch today.

Speaker #3: We also continue to make progress on our direct retail channel. Wins this quarter included growing direct retail sales volumes, reducing reconditioning cost, delivering strong F&I performance.

Speaker #3: In mobility, Oro is gaining momentum. For over a century, HERTZ has mastered the ability to operate complex fleets reliably, efficiently, and at scale. Today, Oro is extending those capabilities to a new era of mobility.

Speaker #3: Filling a critical gap in the industry's transition towards commercially operated driver-led and autonomous fleets. The capabilities we built from acquisition and financing to efficient fleet management and maintenance would be incredibly difficult and costly to replicate from scratch today.

Speaker #3: We're putting those capabilities to work through Oro's driver-led business model, where we own, maintain, and operate vehicles on rideshare platforms. Oro is now active on the Uber platform in four markets.

Gil West: We are putting those capabilities to work through Oro's driver-led business model, where we own, maintain, and operate vehicles on rideshare platforms. Oro is now active on the Uber platform in four markets, Atlanta, Los Angeles, San Francisco, and Northern New Jersey. We have expanded into these new offerings on the app, including Uber Black in New Jersey and Uber Team in San Francisco and Los Angeles. Our drivers have logged more than 6 million miles to date. This business validates our ability to deliver high quality and turnkey fleet solutions safely and at scale, supporting an enhanced customer experience. At the same time, we are developing the operations, processes, systems, and infrastructure that directly translate to operating AVs at scale. Earlier this year, we announced our first AV partnership with Uber's Robotaxi program, supporting Lucid vehicles equipped with Nuro autonomous technology.

Speaker #3: Atlanta, Los Angeles, San Francisco, and Northern New Jersey. We've expanded into these new offerings on the app, including Uber Black in New Jersey and Uber Team in San Francisco and Los Angeles.

Speaker #3: And our drivers have logged more than 6 million miles to date. This business validates our ability to deliver high-quality and turnkey fleet solutions safely and at scale, supporting an enhanced customer experience.

Speaker #3: At the same time, we're developing the operations processes, systems, and infrastructure that directly translate to operating AVs at scale. Earlier this year, we announced our first AV partnership with Uber's RoboTaxi program, supporting Lucid vehicles equipped with neuroautonomous technology.

Speaker #3: We're on track to begin operations later this year in the San Francisco Bay Area. We continue to see encouraging traction as we scale this part of the business.

Gil West: We're on track to begin operations later this year in the San Francisco Bay Area. We continue to see encouraging traction as we scale this part of the business. Oro already has meaningful scale and momentum. Through these offerings and the existing rideshare rental business, we expect it to generate more than $600 million in total revenue this year, with the ability to grow dramatically over the next decade. Opportunities for expanding capabilities, new partnerships, and new avenues for value creation are emerging, and we're focusing our resources on unlocking that growth. This quarter is an exciting proof point in Hertz transformation. We're making tangible progress across the business, and we're focused on execution and accelerating the improvements ahead of us. As I look at the quarter, there are four key takeaways I'd highlight. First, our core rental car business continues to improve, and our commercial momentum is strong.

Speaker #3: Oro already has meaningful scale and momentum. Through these offerings and the existing rideshare rental business, we expect it to generate more than 600 million in total revenue this year, with the ability to grow dramatically over the next decade.

Speaker #3: Opportunities for expanding capabilities, new partnerships, and new avenues for value creation are emerging. And we're focusing our resources on unlocking that growth. This quarter is an exciting proof point in HERTZ's transformation.

Speaker #3: We're making tangible progress across the business, and we're focused on execution and accelerating the improvements ahead of us. As I look at the quarter, there are four key takeaways I'd highlight.

Speaker #3: First, our core rental car business continues to improve. And our commercial momentum is strong. The actions we've taken over the last two years are driving better unit economics, creating a clearer path to stronger margins, and potentially more than $1 billion of adjusted corporate EBITDA run rate in 2027 and beyond.

Gil West: The actions we've taken over the last 2 years are driving better unit economics, creating a clearer path to stronger margins, and potentially more than $1 billion of adjusted corporate EBITDA run rate in 2027 and beyond. Second, our fleet buy right, hold right, sell right strategy should continue to yield strong near-term results and solidify our ability to deliver net DPU below $300 per month. Third, our strategy to expand the franchise portion of the rental car business has the potential to accelerate that progress. We see it as a way to generate consistent earnings, strengthen free cash flow, unlock liquidity for growth initiatives, and ultimately create a more durable value for shareholders whilst also supporting deleveraging. Finally, Oro. Maybe new, but it is rapidly emerging as a meaningful growth platform.

Speaker #3: Second, our fleet, by right, hold right, sell right strategy should continue to yield strong near-term results and solidify our ability to deliver net DPU below $300 per month.

Speaker #3: Third, our strategy to expand the franchise portion of the rental car business has the potential to accelerate that progress. We see it as a way to generate consistent earnings, strengthen free cash flow, unlock liquidity for growth initiatives, and ultimately create a more durable value for shareholders while also supporting deleveraging.

Speaker #3: Finally, Oro, maybe new, but it is rapidly emerging as a meaningful growth platform. We believe it will continue to scale in revenue this year, across all of its business lines, and we have a plan in place that we think can reshape HERTZ's growth trajectory for years to come.

Gil West: We believe it will continue to scale in revenue this year across all of its business lines, and we have a plan in place that we think can reshape Hertz growth trajectory for years to come. The opportunities in front of us are significant. We're encouraged by the momentum across the business and the opportunities ahead. Ultimately, results speak louder than words, and we're focused on continuing to execute and demonstrating that progress quarter after quarter. With that, I'll turn it over to Sandeep.

Speaker #3: The opportunities in front of us are significant, we're encouraged by the momentum across the business, and the opportunities ahead. Ultimately, results, speak louder than words.

Speaker #3: And we're focused on continuing to execute and demonstrating that progress quarter after quarter. With that, I'll turn it over to Sandeep.

Speaker #2: Thanks, Gil. And good morning, everyone. In Q2, we delivered revenue of $2.4 billion. A 10% increase from the year before. Our PO increased 8% from the prior year, even when factoring in elevated recalls.

Sandeep Dube: Thanks, Gil, and good morning, everyone. In Q2, we delivered revenue of $2.4 billion, a 10% increase from the year before. RPU increased 8% from the prior year, even when factoring in elevated recalls. RPD increased 9% year-over-year, our highest Q2 RPD per our records, excluding the peak COVID year of 2022. The result was even better in the United States. US airports car rental RPD increased 12% year-over-year. This was the Q2 in a row where we achieved double-digit year-over-year revenue growth globally, coupled with year-over-year RPU and RPD improvements in the mid to high single-digit percentage range. Let’s detail our RPD improvement a bit. The majority of the improvement, roughly 6 to 7 percentage points, came from our commercial actions.

Speaker #2: RPD increased 9% year over year. Our highest second quarter RPD per our records, excluding the peak COVID year of 2022. The result was even better in the United States.

Speaker #2: US airports' car rental RPD increased 12% year over year. This was the second quarter in a row where we achieved double-digit year-over-year revenue growth globally, coupled with year-over-year RPU and RPD improvements in the mid to high single-digit percentage range.

Speaker #2: Let's detail our RPD improvement a bit. The majority of the improvement, roughly 6 to 7 percentage points, came from our commercial actions. Of the remainder, roughly 2 to 3 percentage points came from positive industry pricing.

Sandeep Dube: Of the remainder, roughly 2 to 3 percentage points came from positive industry pricing, and roughly less than half a percentage point came from the World Cup. Our commercial strategy is gaining momentum based on the initiatives we have been executing over the last several quarters, and the results of which are now clearly evident. Each quarter, we are getting more value from the same levers we have discussed previously. Let me break those down. First, improving our customer experience. Our pursuit of a more consistent, convenient, and caring customer experience is tangible across each area of the business as teams work together to develop more precise alignment between demand and available supply, enhance customer communication throughout the entire rental journey, expand the capabilities of our mobile app, and more. One aspect to highlight is service recovery.

Speaker #2: And roughly less than half a percentage point came from the World Cup. Our commercial strategy is gaining momentum based on the initiatives we have been executing over the last several quarters.

Speaker #2: And the results of which are now clearly evident. Each quarter, we're getting more value from the same levers we have discussed previously. Let me break those down.

Speaker #2: First, improving our customer experience. Our pursuit of a more consistent, convenient, and caring customer experience is tangible across each area of the business. As teams work together to develop more precise alignment between demand and available supply.

Speaker #2: Enhanced customer communication throughout the entire rental journey, expand the capabilities of our mobile app, and more. One aspect to highlight is service recovery. Even when we fall short of customer expectations, we have significantly strengthened our service recovery capabilities over the past year.

Sandeep Dube: Even when we fall short of customer expectations, we have significantly strengthened our service recovery capabilities over the past year. Now, overall, customers who go through our service recovery process have a positive Net Promoter Score. Second, generating greater durable demand from higher margin channels. We continue to invest in the brand to drive further direct channel growth, while also making meaningful gains with corporate and government customers. Partnerships remain a key priority, and Q2 wins include our strongest year-over-year performance in the AAA partnership in more than 4 years. At the same time, we continue to drive consistent growth in our off-airport and rideshare rental businesses. Third, improving our pricing tactics and strategies. Our key commercial objective is to drive +RPD for comparable asset classes.

Speaker #2: Now, overall, customers who go through our service recovery process have a positive net promoter score. Second, generating greater durable demand from higher margin channels.

Speaker #2: We continue to invest in the brand. To drive further direct channel growth, while also making meaningful gains with corporate and government customers. Partnerships remain a key priority.

Speaker #2: And Q2 wins include our strongest year-over-year performance in the AAA partnership in more than four years. At the same time, we continue to drive consistent growth in our off-airport and rideshare rental businesses.

Speaker #2: Third, improving our pricing tactics and strategies. Our key commercial objective is to drive positive RPD for comparable asset classes. And so far, the actions we have taken to implement and refine our pricing matrix continue to bring greater precision to the way we price demand.

Sandeep Dube: So far, the actions we have taken to implement and refine our pricing matrix continue to bring greater precision to the way we price demand, playing a part in this quarter's strong RPD results. Fourth, improved monetization of our higher RPU assets. With our new fleet management tools in place, our team is better equipped to get the right vehicle in the right location at the right time, supporting more refined pricing. Fifth, better value-added product sales. We have grown sales of our value-added products by improving both conversion and pricing while providing customers with greater clarity and consistency in their experience. Finally, local-level profitability and optimization. We continue to manage our business with increased granularity, enabling greater profitability in each of our markets.

Speaker #2: Playing a part in this quarter's strong RPD results. Fourth, improved monetization of our higher RPU assets. With our new fleet management tools in place, our team is better equipped to get the right vehicle in the right location at the right time, supporting more refined pricing.

Speaker #2: Fifth, better value-added product sales. We have grown sales of our value-added products by improving both conversion and pricing, while providing customers with greater clarity and consistency in their experience.

Speaker #2: And finally, local-level profitability and optimization. We continue to manage our business with increased granularity, enabling greater profitability in each of our markets. Taken together, these actions are driving stronger demand for our brands and creating conditions for more durable pricing performance, enabling us to achieve a primary commercial objective which is driving RPD gains beyond the industry pricing environment.

Sandeep Dube: Taken together, these actions are driving stronger demand for our brands and creating conditions for more durable pricing performance, enabling us to achieve a primary commercial objective, which is driving RPD gains beyond the industry pricing environment. Talking about the industry pricing environment, it has been quite constructive. Some context might be helpful here. Over the past few years, industry costs, including fleet financing, depreciation, and operating expenses, moved materially higher, while pricing did not fully keep pace. However, more recently, the industry has just started recapturing ground lost over many years, rather than simply keeping pace with current inflation. In the last 3 quarters, we started to see the beginning of a reversal of the pricing declines that characterized much of the post-COVID period.

Speaker #2: Talking about the industry pricing environment, it has been quite constructive. Some context might be helpful here. Over the past few years, industry costs including fleet financing, depreciation, and operating expenses moved materially higher while pricing did not fully keep pace.

Speaker #2: However, more recently, the industry has just started recapturing ground lost over many years rather than simply keeping pace with current inflation. In the last three quarters, we started to see the beginning of a reversal of the pricing declines that characterize much of the post-COVID period.

Speaker #2: Before the industry reaches a more mature level of profitability, where pricing primarily offsets ongoing cost inflation, there remains an opportunity for pricing to continue normalizing towards levels that better reflect the economics of the business.

Sandeep Dube: Before the industry reaches a more mature level of profitability, where pricing primarily offsets ongoing cost inflation, there remains an opportunity for pricing to continue normalizing towards levels that better reflect the economics of the business. In Q2, consumer demand and willingness to pay was greater than what TSA numbers would imply, and that, combined with a more disciplined industry supply environment, supported positive pricing trends. Early Q3 results indicate that we are on track to deliver meaningful RPD gains again. In July, we hit a major achievement, 200 consecutive days of positive year-over-year RPD, a milestone which reinforces that our growing commercial acumen, coupled with consistent execution, is translating into consistent commercial performance. Looking ahead at the rest of the quarter, the industry pricing environment, as we sit here today, continues to be supportive. Demand for our brands is healthy.

Speaker #2: In Q2, consumer demand and willingness to pay was greater than what TSA numbers would imply. And that combined with a more disciplined industry supply environment supported positive pricing trends.

Speaker #2: Early Q3 results indicate that we are on track to deliver meaningful RPD gains again. In July, we hit a major achievement. 200 consecutive days of positive year-over-year RPD.

Speaker #2: A milestone which reinforces that our growing commercial acumen coupled with consistent execution is translating into consistent commercial performance. Looking ahead at the rest of the quarter, the industry pricing environment, as we sit here today, continues to be supportive.

Speaker #2: Demand for our brands is healthy. Our fleet mix is expected to be a positive factor going forward. Most importantly, we have a long list of meaningful initiatives slated to come live in the next few quarters, which will be a rising tide for our customer experience, our demand generation, and our pricing capabilities.

Sandeep Dube: Our fleet mix is expected to be a positive factor going forward. Most importantly, we have a long list of meaningful initiatives slated to come live in the next few quarters, which will be a rising tide for our customer experience, our demand generation, and our pricing capabilities, thereby improving our ability to continue delivering strong RPD outcomes, enabling us to better control our destiny. In summary, our commercial strategy is translating into strong revenue performance, importantly, those results are driven by deliberate actions. We are seeing clear proof points that these actions are gaining traction, with a strong pipeline of initiatives in front of us, we expect commercial performance to be a continued tailwind for the business. Given the positive trajectory for full-year 2026, we now expect RPU to trend above our North Star target of $1,500.

Speaker #2: Thereby, improving our ability to continue delivering strong RPD outcomes enabling us to better control our destiny. In summary, our commercial strategy is translating into strong revenue performance.

Speaker #2: An importantly, those results are driven by deliberate actions. We are seeing clear proof points that these actions are gaining traction. And with a strong pipeline of initiatives in front of us, we expect commercial performance to be a continued tailwind for the business.

Speaker #2: And given the positive trajectory, for full year 2026, we now expect RPU to trend above our North Star target of 1,500 dollars. Now, I'll hand it over to Scott to walk through our financial performance.

Sandeep Dube: Now I'll hand it over to Scott to walk through our financial performance.

Speaker #3: Thanks, Sandeep. Good morning, everyone. And thanks for joining. Before I get into the financial results, I'd like to step back for a moment. In any transformation, it's easy to become consumed by the next quarter, the next milestone, or the next challenge.

Scott Haralson: Thanks, Sandeep. Good morning, everyone, and thanks for joining. Before I get into the financial results, I'd like to step back for a moment. In any transformation, it's easy to become consumed by the next quarter, the next milestone, or the next challenge, and lose sight of how much has already changed. While we're not declaring victory today, we are seeing a business that is executing with increasing consistency, operationally, commercially, and financially. Every successful transformation reaches an inflection point where the conversation begins to change. Early on, the question is: Can this company recover? Eventually, through consistent and disciplined execution, the question becomes: How do they do that? We believe that shift comes through consistent execution over time.

Speaker #3: And lose sight of how much has already changed. While we're not declaring victory today, we are seeing a business that is executing with increasing consistency.

Speaker #3: Operationally, commercially, and financially. Every successful transformation reaches an inflection point where the conversation begins to change. Early on, the question is, can this company recover?

Speaker #3: Eventually, through consistent and disciplined execution, the question becomes, how did they do that? We believe that shift comes through consistent execution over time. We believe we are doing that, and this quarter represents another meaningful step in that journey.

Scott Haralson: We believe we are doing that, and this quarter represents another meaningful step in that journey, not because of any one single metric, but because the underlying economics of the business continue to improve. We recognize that it is hard for the market to fully reflect the progress we believe is occurring inside the business. That is understandable. We recognize that investors remain focused on our capital structure and upcoming debt maturities. That is appropriate. Strengthening the balance sheet remains one of our highest priorities. What gives us confidence is that the business supporting our capital structure today is fundamentally different from the business of two years ago. We have continued to improve our fleet, the customer experience, and operating efficiency, which has resulted in better operating performance and strengthened free cash flow. Plus, we continue to create additional strategic options.

Speaker #3: Not because of any one single metric, but because the underlying economics of the business continue to improve. We recognize that it's hard for the market to fully reflect the progress we believe is occurring inside the business.

Speaker #3: That's understandable. We recognize that investors remain focused on our capital structure and upcoming debt maturities. That's appropriate. Strengthening the balance sheet remains one of our highest priorities.

Speaker #3: What gives us confidence is that the business supporting our capital structure today is fundamentally different from the business of two years ago. We have continued to improve our fleet, the customer experience, and operating efficiency, which has resulted in better operating performance and strengthened free cash flow.

Speaker #3: Plus, we continue to create additional strategic options. Our focus remains on continuing that progress while thoughtfully addressing our capital structure in a disciplined manner.

Scott Haralson: Our focus remains on continuing that progress while thoughtfully addressing our capital structure in a disciplined manner. While this quarter's results are a really good outcome, and they are important, we believe the more significant story is the trajectory of the business and the strategic initiatives that are beginning to reshape our earnings profile. Gil outlined the takeaways for where we are today. I would like to spend a minute discussing one on his list, and that is franchising, because I believe it represents one of the most underappreciated value creation opportunities within our business. I believe that our business today is ripe for an increasing level of franchising. It is already a consistent contributor to our adjusted corporate EBITDA results, and we haven't capitalized on this side of the business in the way that we should and will.

Speaker #3: And while this quarter's results are really are a really good outcome, and they are important, we believe the more significant story is the trajectory of the business and the strategic initiatives that are beginning to reshape our earnings profile.

Speaker #3: You'll outline the takeaways for where we are today. I'd like to spend a minute discussing one on his list, and that's franchising. Because I believe it represents one of the most underappreciated value creation opportunities within our business.

Speaker #3: I believe that our business today is ripe for an increasing level of franchising. It's already a consistent contributor to our adjusted corporate EBITDA results, and we haven't capitalized on this side of the business in the way that we should and will.

Speaker #3: Over the last two years, much of our work has been focused on transforming the operations. Increasingly, the next phase of our strategy is about transforming the quality of our earnings.

Scott Haralson: Over the last two years, much of our work has been focused on transforming the operations. Increasingly, the next phase of our strategy is about transforming the quality of our earnings. Franchising has the potential to accelerate that evolution through a more capital-light model that enhances margins, free cash flow generation, returns on invested capital, and financial flexibility. It could give us more flexibility to allocate capital toward higher return opportunities across the platform, while also providing meaningful deleveraging benefits. We have already started down this path and will likely start to see evidence of this progression in the near future.

Speaker #3: Franchising has the potential to accelerate that evolution through a more capitalized model that enhances margins, free cash flow generation, returns on invested capital, and financial flexibility.

Speaker #3: It could give us more flexibility to allocate capital, toward higher return opportunities, across the platform. While also providing meaningful deleveraging benefits. We have already started down this path, and will likely start to see evidence of this progression in the near future.

Speaker #3: Taken together, the near-term benefits of a more focused franchise strategy plus the opportunities in our fleet business for retail car sales, as well as the longer-term potential in ORO, on top of a consistently improving rental car business, gives us a broader set of levers to improve margins, strengthen returns on capital, and enhance how Hertz creates value over time.

Scott Haralson: Taken together, the near-term benefits of a more focused franchise strategy, plus the opportunities in our fleet business for retail car sales, as well as the longer-term potential in ORO, on top of a consistently improving rental car business, gives us a broader set of levers to improve margins, strengthen returns on capital, and enhance how Hertz creates value over time. We recognize there is significant work ahead, but we have been building towards this for some time, and we expect to share more as these initiatives progress. With that, let me pivot back to the Q2 results. I will also cover liquidity and insights into Q3, the full year, and a bit on 2027. For Q2, we generated revenue of $2.4 billion, up 10% year over year, notably with a 1% smaller fleet.

Speaker #3: We recognize there is significant work ahead, but we have been building towards this for some time, and we expect to share more as these initiatives progress.

Speaker #3: With that, let me pivot back to the Q2 results, I'll also cover liquidity and insights into Q3, the full year, and a bit on 2027.

Speaker #3: For Q2, we generated revenue of $2.4 billion, up 10% year over year, notably with a 1% smaller fleet. This was driven by strong pricing performance, with RPD up 9% year over year. Total fleet utilization was 79%, up 80 basis points, even with a nearly 200 basis point headwind on utilization due to continued elevated recalls.

Scott Haralson: This was driven by strong pricing performance, with RPD up 9% year over year, total fleet utilization was 79%, up 80 basis points, even with a nearly 200 basis point headwind on utilization due to continued elevated recalls. This utilization increase allowed us to keep transaction days at prior year levels, even with less available vehicles for rent. Despite elevated recalls, RPU surpassed our expectations, reaching $1,542, up 8% year over year. GAAP net income for the quarter was $64 million, and diluted GAAP EPS was $0.05, with an adjusted net loss of $47 million. GAAP net income benefited from gains on the sale of real estate locations on which we completed sell leaseback transactions, as well as revaluations of other exchangeable notes and warrants issued in prior years.

Speaker #3: This utilization increase allowed us to keep transaction days at prior year levels, even with less available vehicles for rent. Also, despite elevated recalls, RP used to pass our expectations, reaching 1,542 dollars, up 8% year over year.

Speaker #3: Yet net income for the quarter was 64 million dollars, and diluted gap EPS was 5 cents, with an adjusted net loss of 47 million dollars.

Speaker #3: Gap net income benefited from gains on the sale of real estate locations, on which we completed sale-leaseback transactions, as well as revaluations of other exchangeable notes and warrants issued in prior years.

Speaker #3: Adjusted corporate EBITDA was 81 million dollars. Representing a 63 million dollar year over year improvement, and coming in at the top of our most recent guidance.

Scott Haralson: Adjusted corporate EBITDA was $81 million, representing a $63 million year over year improvement, coming in at the top of our most recent guidance. Adjusted corporate EBITDA margin improved by 260 basis points to 3.4%, from 0.8% in Q2 of last year, in line with our guidance expectations. These results included a total impact of recalls of approximately $55 million on revenue and $30 million in EBITDA. Despite this, we have still produced a strong year-over-year improvement in EBITDA. Turning to cost, adjusted DOE per transaction day was $37.49, slightly higher than our expectations and higher year over year, primarily due to higher revenue-related variable cost and higher expenses related to sell leaseback transactions. When normalizing for these factors and the day's impact of recalls, adjusted DOE per day improved approximately 2% year over year.

Speaker #3: Adjusted corporate EBITDA margin improved by 260 basis points, to 3.4%. From 0.8% in the second quarter of last year, and in line with our guidance expectations.

Speaker #3: These results included a total impact of recalls of approximately 55 million dollars on revenue, and 30 million dollars in EBITDA. Despite this, we still produced a strong year over year improvement in EBITDA.

Speaker #3: Turning to cost, adjusted DOE per transaction day was 37 dollars and 49 cents. Slightly higher than our expectations and higher year over year, primarily due to higher revenue related variable cost, and higher expenses related to selly spec transactions.

Speaker #3: When normalizing for these factors and the day's impact of recalls, adjusted DOE per day improved approximately 2% year over year. While these dynamics can make DOE appear less favorable in isolation, a large portion is tied to revenue growth and our adjusted corporate EBITDA accretive.

Scott Haralson: While these dynamics can make DOE appear less favorable in isolation, a large portion is tied to revenue growth and our adjusted corporate EBITDA accretive. In fact, approximately 25% of our DOE cost structure is influenced by RPD movements, including airport facility costs, concessions, commissions, credit card processing fees, and fuel-related expenses. Because of this, the spread between RPD and DOE per day is a key measure of the value we create from each vehicle day and the effectiveness of our commercial and operational execution. This quarter, our RPD to DOE per day spread was approximately $24.36, up 17% year over year, and it is the third consecutive quarter that spread has increased. SG&A increased slightly year over year, driven primarily by investments in sales and advertising, which contributed to this quarter's strong RPD growth. As a percentage of revenue, SG&A declined from 11.3% to 10.8%, reflecting improved operating leverage.

Speaker #3: In fact, approximately 25% of our DOE cost structure is influenced by RPD movements. Including airport facility costs or concessions, commissions, credit card processing fees, and fuel related expenses.

Speaker #3: Because of this, the spread between RPD and DOE per day is a key measure of the value we create each from each vehicle day, and the effectiveness of our commercial and operational execution.

Speaker #3: This quarter, our RPD to DOE per day spread was approximately 24 dollars and 36 cents. Up 17% year over year. And it's the third consecutive quarter that spread has increased.

Speaker #3: SG&A increased slightly year over year driven primarily by investments in sales and advertising, which contributed to this quarter strong RPD growth. As a percentage of revenue, SG&A declined from 11.3% to 10.8%, reflecting improved operating leverage.

Speaker #3: Gross depreciation per unit per month was 298 dollars during the quarter, net DPU was 302 dollars, reflecting an incremental 4 dollars per unit per month driven by the loss on sale of a concentrated mix of older vehicles, and pressure on the wholesale dynamic market dynamics that have since normalized.

Scott Haralson: Gross depreciation per unit per month was $298 during the quarter. Net DPU was $302, reflecting an incremental $4 per unit per month, driven by the loss on sale of a concentrated mix of older vehicles and pressure on the wholesale market dynamics that has since normalized. With that said, we have seen the overall used car index and rental car index both show positive signs of stability. Year to date, gross DPU has been fairly stable. We now have our youngest rental car fleet in over a dozen years at just under nine months, and believe those vehicles are well-positioned for good economics over their life cycle. Our 2027 fleet acquisitions have been picking up steam, and while total volumes are still an unknown at this point, what we have secured to date are at similar economics to the 2026 model year vehicles.

Speaker #3: With that said, we've seen the overall used car index and rental car index both show positive signs of stability. In year to date, gross DPU has been fairly stable.

Speaker #3: We now have our youngest rental car fleet in over a dozen years, at just under 9 months, and believe those vehicles are well positioned for good economics over their life cycle.

Speaker #3: Our 2027 fleet acquisitions have been picking up steam, and while total volumes are still an unknown at this point, what we have secured to date are at similar economics to the 2026 model year vehicles.

Speaker #3: Our young fleet gives us a lot of flexibility to be picky about model year 2027 vehicles, and consider growth, given we can extend the life of vehicles a little further or sell during peak periods to monetize gains.

Scott Haralson: Our young fleet gives us a lot of flexibility to be picky about model year 2027 vehicles and consider growth, given we can extend the life of vehicles a little further or sell during peak periods to monetize gains. This could be a useful lever going into 2027. Turning to liquidity, we ended the quarter with $984 million of liquidity, which includes cash and cash equivalents and the available capacity under our revolving credit facility. This was in line with guidance of just under $1 billion. In June, we completed an exchangeable senior first lien secured notes offering for a total of $350 million, which used capacity created through expiring revolving commitments as well as from term loan amortization.

Speaker #3: This could be a useful lever going into 2027. Turning to liquidity, we ended the quarter with 984 million dollars of liquidity, which includes cash and cash equivalents, and the available capacity under our revolving credit facility.

Speaker #3: This was in line with guidance of just under 1 billion dollars. And in June, we completed an exchangeable senior first lane secured notes offering for a total of 350 million dollars, which used capacity created through expiring revolving commitments, as well as from term loan amortization.

Speaker #3: In addition, we added another 30 million dollars of notes offering in July as part of the exercising of the green shoe, which would bring our pro forma liquidity post transaction to slightly over 1 billion dollars.

Scott Haralson: We added another $30 million of notes offering in July as part of the exercising of the Green Shoe, which would bring our pro forma liquidity post-transaction to slightly over $1 billion. As mentioned on prior calls, we had anticipated refinancing the first lien capacity that was being freed up from the reduction in revolver capacity at the end of June. With that in mind, let's discuss guidance. For liquidity, we expect to end the year between $1.0 to $1.4 billion, with sufficient levers to fund strategic growth initiatives. This contemplates some amount of free cash flow generation in the back half of the year as we enter the peak Q3 period, balanced with a somewhat off-peak Q4 period. The broad range contemplates the potential for strategic transactions, including franchise-related agreements, that could take place during the back end of the year.

Speaker #3: As mentioned on prior calls, we had anticipated refinancing the first lane capacity that was being freed up from the reduction in revolver capacity at the end of June.

Speaker #3: With that in mind, let's discuss guidance. For liquidity, we expect to end the year between 1.0 and 1.4 billion dollars. With sufficient levers to fund strategic growth initiatives.

Speaker #3: This contemplates some amount of free cash flow generation in the back half of the year, as we enter the peak Q3 period, balanced with a somewhat off peak Q4 period.

Speaker #3: To broad range, contemplates the potential for strategic transactions including franchise related agreements, that could take place during the back end of the year. It also includes the payment of the remaining 200 million dollar sub portion of our December 2026 maturity in cash.

Scott Haralson: It also includes the payment of the remaining $200 million subportion of our December 2026 maturity in cash. This is also slightly lower than our previous guidance due to the fact that we removed proceeds from the ATM program from our forecast. It will remain available should that become a viable option in the future. An additional potential benefit to 2027 liquidity, we are also evaluating the seasonality of our fleet moves. As we reflect on what we are seeing throughout 2026 across the supply, demand, rental car pricing, and used vehicle pricing, we are taking a fresh look at the timing of our fleet investments and how we manage fleet levels throughout the year, particularly as it pertains to working capital, recognizing that decisions around fleet timing and seasonality can have a nine-figure impact to the timing of cash flows in the year.

Speaker #3: This is also slightly lower than our previous guidance, due to the fact that we removed proceeds from the ATM program from our forecast. However, it will remain available should that become a viable option in the future.

Speaker #3: An additional potential benefit to 2027 liquidity, y, we're also evaluating the seasonality of our fleet moves. As we reflect on what we're seeing throughout 2026 across the supply demand rental car pricing and used vehicle pricing, we're taking a fresh look at the timing of our fleet and investments, and how we manage fleet levels throughout the year particularly as it pertains to working capital.

Speaker #3: Recognizing net decisions around fleet timing and seasonality, can have a nine figure impact to the timing of cash flows in the year. This analysis balances the fact that peak demand for rental cars overlaps heavily with the peak periods to sell vehicles.

Scott Haralson: This analysis balances the fact that peak demand for rental cars overlaps heavily with the peak periods to sell vehicles. For profitability, we expect Q3 adjusted corporate EBITDA production to be between $275 to 325 million, with positive earnings per share for the quarter. Transaction days should be up approximately 1% year over year, and net DPU is expected to be in the $285 to 295 per unit per month range. For the full year, we expect EBITDA to be in the $225 to 275 million range, with net DPU at approximately $300 and transaction days up approximately 2% year over year. For 2027, we continue to target $1 billion of adjusted corporate EBITDA, but we will need some scale for that number to be within a reasonable reach.

Speaker #3: For profitability, we expect Q3 adjusted corporate EBITDA production to be between 275 and 325 million dollars, with positive earnings per share for the quarter.

Speaker #3: Transaction days should be up approximately 1% year over year, and net DPU is expected to be in the 285 to 295 dollars per unit per month range.

Speaker #3: Also, for the full year, we expect EBITDA to be in the $225 to $275 million range, with net DPU at approximately $300, and transaction days up approximately 2% year over year.

Speaker #3: For 2027, we continue to target $1 billion of adjusted corporate EBITDA, but we will need some scale for that number to be within reasonable reach.

Speaker #3: However, at a minimum, we do expect that in 2027 we will finally reach full-year net income profitability, and we will be free cash flow positive for the full year.

Scott Haralson: However, at a minimum, we do expect that in 2027, we will finally reach full-year net income profitability, and we will be free cash flow positive for the full year. We expect our year-end cash balance, together with our projected 2027 profitability, to provide the liquidity necessary to support some modest growth in 2027. Any liquidity above the midpoint of our guidance range could be deployed toward additional growth investments. This highlights perhaps the most meaningful change in our business. We are increasingly shifting our conversations from how we finance the business to how we allocate capital to create the greatest long-term value. This is an important distinction, and it's one that we believe reflects the progress the business has made. I'll leave you with one final thought. Every quarter tells part of the story, but transformations aren't defined by individual quarters.

Speaker #3: We expect our year end cash balance, together with our projected 2027 profitability, to provide the liquidity necessary to support some modest growth in 2027.

Speaker #3: Any liquidity above the midpoint of our guidance range could be deployed toward additional growth investments. This highlights perhaps the most meaningful change in our business.

Speaker #3: We are increasingly shifting our conversations from how we finance the business, to how we allocate capital to create the greatest long-term value. This is an important distinction and it's one that we believe reflects the progress the business has made.

Speaker #3: I'll leave you with one final thought. Every quarter tells part of the story. But transformations aren't defined by individual quarters. They're defined by the accumulation of hundreds of operational decisions, disciplined and smart capital allocation, consistent execution, and an organization committed to improving every day.

Scott Haralson: They're defined by the accumulation of hundreds of operational decisions, disciplined and smart capital allocation, consistent execution, and an organization committed to improving every day. That is exactly what we believe we are building here at Hertz. I'll now turn it back to Gil for closing remarks.

Speaker #3: That is exactly what we believe we are building here at HERTZ. I'll now turn it back to Gail for closing remarks.

Speaker #1: Yeah, thanks Scott. We're proud of the progress we've made in our transformation to date. We've made great strides ensuring up our core rental car business.

Gil West: Yeah. Thanks, Scott. We're proud of the progress we've made in our transformation to date. We've made great strides in shoring up our core rental car business. Adjusted corporate EBITDA improved $1.2 billion in 2025 and another $200 million in H1 2026. We are on track to deliver more than $500 million of year-over-year adjusted corporate EBITDA improvement and + margins this year. That would represent nearly 2,000 basis points of margin expansion in just two years, with more to come in 2027. This quarter, our commercial momentum and operational initiatives continue to translate into results. Looking forward, we know exactly where the work is: revenue, depreciation, cost, and customer experience. Sustaining our progress means executing with discipline across all of these, and we're encouraged by the momentum building across the business by what we're seeing in the opportunities ahead and by the actions already in motion.

Speaker #1: Adjusted corporate EBITDA improved 1.2 billion dollars in 2025, and another 200 million dollars in the first half of 2026. We are on track to deliver more than 500 million of year over year adjusted corporate EBITDA improvement and positive margins this year.

Speaker #1: That would represent nearly 2,000 basis points of margin expansion in just two years, with more to come in 2027. This quarter, our commercial momentum and operational initiatives continue to translate into results.

Speaker #1: Looking forward, we know exactly where the work is. Revenue, depreciation, cost, and customer experience. Sustaining our progress means executing with discipline across all of these and we're encouraged by the momentum building across the business by what we're seeing in the opportunities ahead and by the actions already in motion.

Speaker #1: With that, let's open it up to questions. Back to you, operator.

Gil West: With that, let's open it up to questions. Back to you, operator.

Speaker #2: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator 2: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Stephanie Moore with Jefferies. Your line is open. Please go ahead.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Stephanie Moore with Jefferies. Your line is open. Please go ahead.

Speaker #2: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #2: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Stephanie Moore with Jefferies.

Speaker #2: Your line is open. Please go ahead.

Speaker #3: Hi, good morning. Thank you. So, you know, it looks like a good hi there. So, you know, honestly, it looks like a good print and it sounds like you guys feel pretty confident about where the business is going.

Stephanie Moore: Hi. Good morning. Thank you.

Gil West: Hey, Stephanie.

Stephanie Moore: Hi there. Honestly, it looks like a good print, and it sounds like you guys feel pretty confident about where the business is going. In your eyes, what do you view investors are missing here? Because it feels like the drop in market cap just over the past 45 days or so is disconnected from the story you guys are telling and the confidence you have in the direction of the business. Any insight there would be helpful.

Speaker #3: So, you know, in your eyes, what do you view investors are missing here? Because it feels like the drop in market cap just over the past 45 days or so, is disconnected from the story you guys are telling and the confidence you have in the direction of the business.

Speaker #3: So, any insight there would be helpful.

Speaker #1: Yeah, thanks Stephanie. This is Gail. I'll try me and I'm sure Scott will want to add. Well, I mean, great question. Certainly keeping this up at night.

Gil West: Yeah. Thanks, Stephanie. This is Gil. I'll chime in. I am sure Scott will want to add. Well, great question. Certainly keeping us up at night. Candidly, the valuation of the business today is tough to understand. It is hard not to be distracted by the stock price. Of course, we remain focused on the long game, there really does appear to be a disconnect between how the equity markets view Hertz over the last quarter. The way I think about it is at the end of Q1, we set at roughly $1.5 billion in market cap, which we felt at the time was undervalued. During Q2, we refinanced the debt that fell off the revolver.

Speaker #1: Candidly, the valuation of the business today is tough to understand. You know, it's hard not to be distracted by the stock price, and of course, we remain focused on the long game.

Speaker #1: But there really does appear to be a disconnect between how the equity markets view HERTZ over the last quarter. And the way I think about it is, at the end of the first quarter, we said it roughly a billion and a half in market cap, which we felt at the time was undervalued.

Speaker #1: And then during Q2, we refinanced the debt that fell off the revolver. Just prior to the earnings announcement today for the third quarter, we were only at about a third of that market cap that we had 90 days ago.

Gil West: Just prior to the earnings announcement today for Q3, we were only at about a third of that market cap that we were 90 days ago. I would argue we are in a much better position than we were 90 days ago, and there is clear evidence of the momentum that we have been talking about. The core business is performing again. First on liquidity, we have navigated the seasonal low point with liquidity and came out, as Scott mentioned, at roughly $1 billion, which was consistent with what we had guided. We expect to build liquidity throughout the year and to be free cash flow positive in 2027. As we talked about, we are exploring franchising that not only can add liquidity, but also a path to de-lever the business.

Speaker #1: So I would argue we're in a much better position than we were 90 days ago and there's clear evidence of the momentum that we've been talking about.

Speaker #1: The core business is performing again. And then first on liquidity, we've navigated the seasonal low point with liquidity and came out of Scott mentioned it roughly a billion dollars, which was consistent with what we'd guided.

Speaker #1: And we expect to build liquidity throughout the year and to be free cash flow positive in 2027. And as we talked about, we're exploring franchising that not only can add liquidity, but also a path to deliver the business.

Speaker #1: And then I think the EBITDA results as well, right, for the quarter and year over year improvements, despite some headwinds. And the commercial momentum, revenue that Sandeep talked about, you know, really doing more with less.

Gil West: I think the EBITDA results as well for the quarter and year-over-year improvements despite some headwinds. The commercial momentum revenue that Sandeep talked about, really doing more with less. Revenue up 10% with a 1% smaller fleet. The strategies and the hard work the team has been doing is paying off, and we expect more ahead. Depreciation as well effectively hit our North Star target. Even though we accelerated the rotation of older vehicles, we got a really healthy fleet, and that ought to bode well for DPU as we sell those through more lucrative channels. I think the other upside we see is the platform. Scott and I both talked about that is all upside, it is building momentum. Oro is an example, the valuation of Oro by itself could be very material in the mix as well.

Speaker #1: Revenue up 10% with a 1% smaller fleet. So the strategies and the hard work the team's been doing is paying off. You know, and we expect more ahead.

Speaker #1: And then depreciation as well, right? That effectively hit our north star target. And even though we accelerated the rotation of older vehicles, we've got a really healthy fleet.

Speaker #1: And that ought to bode well for DPU as we sell those through more lucrative channels. So I think the other upside we see is the platform.

Speaker #1: You know, Scott and I both talked about that. But, you know, that's all upside, but it's building momentum. Oro is an example. You know, and then the valuation of Oro by itself, you know, could be very material.

Speaker #1: In the mix as well. So, look, I think we're focused on executing the strategies that we have. We know that, ultimately, the stock price will take care of itself.

Gil West: Look, I think we are focused on executing the strategies that we have. We know ultimately the stock price will take care of itself. That is really key for us to stay focused and keep moving.

Speaker #1: So you know, that's really key for us to stay focused and keep moving.

Speaker #4: Yeah, he's definitely—look, I think Gail outlined it well. I think the point is, the fundamentals of the business are different than they were two years ago.

Scott Haralson: Hey, Stephanie. I think Gil outlined it well. I think the point is the fundamentals of the business are different than they were two years ago. How we're talking about the business today is different. The traditional rental car portion of our business is strong. Foundational elements of RPD and DPU are in a good position if not improving. That platform, coupled with the strategic plan that we've outlined, I think the feeling in the building is really a lot different than what we're seeing in the marketplace. That's understandable. I talked about in the prepared remarks, we recognize that our investors are focused on the capital structure and the upcoming debt maturities, and that's okay. Our job is to continue to execute over and over again, all that stuff will play out over time.

Speaker #4: How we're talking about the business today is different. You know, the traditional rental car portion of our business is strong. Foundational elements of RPD and DPU are in a good position, if not improving.

Speaker #4: So that platform coupled with the strategic plan that we've outlined I think the feeling and the building is really a lot different than what we're seeing you know in the marketplace.

Speaker #4: But and that's understandable. Look, I mean, I talked about the prepared marks. You know, we recognize that our investors are focused on the capital structure and the upcoming debt maturities and that's okay.

Speaker #4: You know, our job is to continue to execute over and over again, and all that stuff will play out over time.

Speaker #3: Thank you. I appreciate the appreciate the insight there. Just a follow-up for me. I mean, I agree. I do think investors are focused on the liquidity profile and the capital structure.

Stephanie Moore: Thank you. I appreciate the insight there. Just a follow-up for me. I agree, I do think investors are focused on the liquidity profile and the capital structure, it sounds like you have a plan in place. It's kind of a two-part question. Do you have to do some of these franchise deals from a liquidity standpoint, or is that just more so another option that you have? Secondly, as you think about what keeps you up at night, Gil, as you think about just your liquidity profile, what could go wrong? At this point, it does sound like you've made a lot of actions on your own within your own control. If I'm an investor and I'm concerned about overall liquidity, is it mostly just a weaker deteriorating macro? Help me alleviate maybe that downside scenario. That's it for me. Thank you.

Speaker #3: So it sounds like you have a plan in place. So kind of two-part question. Are you do you have to do some of these franchise deals for liquidity standpoint or is that just more so you know another option that you have?

Speaker #3: And then secondly, as you think about what keeps you up at night, Gail, you know, as you think about just your liquidity profile, you know, what could go wrong?

Speaker #3: I mean, at this point it does sound like you've made a lot of actions on your own within your own control, but if I'm an investor and I'm concerned about overall liquidity, you know, is it mostly just a weaker deteriorating macro?

Speaker #3: You know, help me alleviate, you know, maybe that downside scenario. That's it for me. Thank you.

Speaker #1: No, I appreciate it. I'll start and I think Scott you can talk more about the liquidity and the franchising piece. But yeah, look, I mean, we're as I said, earlier in the prepared remarks, you know, we've been facing a lot of headwinds, right, for different reasons.

Gil West: I appreciate it. I'll start, I think, Scott, you can talk more about the liquidity and the franchising piece. As I said earlier in the prepared remarks, we've been facing a lot of headwinds, right? For different reasons. Some are some macros that I mentioned. Others are just working through issues historically. Not to relitigate some of the fleet discussions, we had to rotate the fleet for a variety of reasons. That was hard to do, especially with the liquidity we had, we've come out the other side. I think we've been facing headwinds and attacking them head-on. We know things can continue to change and happen.

Speaker #1: You know, some are some macros, you know, that I mentioned. Others are just working through issues, you know, historically. And you know, not to re-litigate some of the fleet, discussions, but you know, we had to rotate the fleet for a variety of reasons.

Speaker #1: That was hard to do, especially with the liquidity headwinds we had, but we've come out the other side. So, look, I think we've been facing headwinds and attacking them head on.

Speaker #1: You know, we know things can happen. But I think, given our starting point and the headwinds that we have faced, and the things that could go wrong—and did—you know, we managed through that and then came out in a much better place.

Gil West: I think given our starting point and the headwinds that we have faced and the things that could go wrong and did, we managed through that, come out in a much better place. We've got, what I would say, the momentum, the team, candidly, and the more durable strategies, especially in fleet and revenue, that can sustain us. We're eyes wide open, we'll manage all the variables as we see them materialize.

Speaker #1: So we've got what I would say, you know, the momentum, the team candidly, and the more durable strategies, especially in fleet and revenue, that can sustain us.

Speaker #1: So we're eyes wide open and we'll manage all the variables as we see them materialize.

Speaker #4: Yeah, hey, Stephanie, real quick on liquidity and maybe a little on franchise. Look, I think, you know, over the last two years, much of our discussion has centered around capital structure and really centered on liquidity.

Scott Haralson: Yeah. Hey, Stephanie, real quick on liquidity and maybe a little on franchise. Look, I think, over the last two years, much of our discussion has centered around capital structure and really centered on liquidity, ensuring that we had the right resources and needed to support the business, rightfully so. Today, the conversation is increasingly different because the underlying economics of the business are materially stronger than they were two years ago. As a result of all that, our focus is expanding beyond financing the business to thinking about capital allocation and long-term value. We believe our current liquidity provides us with a lot of flexibility to execute our operational and strategic plans while continuing to evaluate the opportunities to further strengthen the balance sheet. As we think about liquidity, we think we're in a good spot to fund the business.

Speaker #4: Ensuring that we had the right resources and needed to support the business. And rightfully so. But today, the conversation is increasingly different because the underlying economics of the business are materially stronger than they were two years ago.

Speaker #4: So as a result of all that, our focus is expanding beyond financing the business to thinking about capital allocation and long-term value. So we believe our current liquidity provides us with a lot of flexibility to execute our operational and strategic plans while continuing to evaluate the opportunities to further strengthen the balance sheet.

Speaker #4: So as we think about liquidity, we think we're in a good spot to fund the business. The idea of franchise is we think that is a tremendous idea.

Scott Haralson: The idea of franchise is we think that is a tremendous idea regardless of our capital structure. It's the right move for the business at this time, particularly with the strategic options around ORO and our fleet. These are capital allocation decisions, not capital structure decisions. We think it's the right move for Hertz today.

Speaker #4: Regardless of our capital structure, it's the right move for the business at this time, particularly with the strategic options around Oro and our fleet.

Speaker #4: These are capital allocation decisions, not capital structure decisions. So, we think it's the right move for Hertz today.

Speaker #3: Thank you guys. Really appreciate it.

Stephanie Moore: Thank you, guys. Really appreciate it.

Speaker #2: The next question is from the line of Chris Weronka with Deutsche Bank. Your line is now open. Please go ahead.

Operator 2: The next question is from the line of Chris Woronka with Deutsche Bank. Your line is now open. Please go ahead.

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

Speaker #5: Hey, good morning guys. Thanks for taking the questions and for all the details. Yeah, morning. So I was hoping we could maybe unpack the residual issue a little bit.

Chris Woronka: Hey, good morning, guys. Thanks for taking the questions and for all the details.

Gil West: Chris.

Chris Woronka: Yeah, morning. I was hoping we could maybe unpack the residual issue a little bit, and you guys covered a lot of ground for Q2, so maybe we can just focus more on the forward-looking. Relative to what you thought maybe three or six months ago, is this more an issue of the market temporarily moved against you for a specific kind of model or something, or is this really about channel mix not being quite what you thought or hoped? If it's the latter, if it's channel mix, how confident are you, and what are some of the steps you're taking to get the mix more favorable going forward? I'll have a follow-up. Thanks.

Speaker #5: And you guys covered a lot of ground for Q2. So maybe we can just focus more on the forward-looking aspects relative to what you thought maybe three or six months ago.

Speaker #5: Is this more an issue of the market temporarily moved against you for a specific kind of, you know, model or something? Or is this really about channel mix?

Speaker #5: Not being quite what you thought or hoped. And if it's, you know, if it's the latter, if it's channel mix, how confident are you in, you know, what are some of the steps you're taking to get the mix more favorable going forward?

Speaker #5: And then I'll have a follow-up. Thanks.

Speaker #1: Yeah, sure. Chris, thanks good to hear from you. Good question. Yeah, what I would say on residuals you know, and I tried to cover it in the prepared remarks, but I think we saw some things that were unique to the quarter that affected us.

Gil West: Yeah, sure. Chris, thanks. Good to hear from you. Good question. Yeah. What I would say on residuals, and I tried to cover it in the prepared remarks, but I think we saw some things that were unique to the quarter that affected us. Keep in mind the backdrop of the dynamics, right? We saw record tax refunds. We saw that and forecasted that the market would go up. It did. It ran up strong in Q1, right? February, March, up 7%, 9% in the rental car index. I think what we saw in Q2, again, is those kind of elevated levels on a year-over-year basis started to normalize in the 1% to 2% year-over-year range. You saw a monthly kind of fall off, and I think part of it might have been the pull forward for tax refund.

Speaker #1: Keep in mind the broader outlook and the backdrop of the dynamics, right? We saw record tax refunds. We saw that and forecasted that the market would go up.

Speaker #1: It did. It ran up strong in the first quarter, right? And you know, February March up, I don't know, seven, nine percent, you know, in the rental car index.

Speaker #1: So, I think what we saw in the second quarter, again, is, you know, those kind of elevated levels on a year-over-year basis started to normalize in the 1% to 2% year-over-year range.

Speaker #1: So you saw a monthly kind of fall-off, and I think part of that might have been the pull-forward with tax refunds. Keep in mind, this is principally the wholesale market.

Gil West: Keep in mind, this is principally the wholesale market. The other dynamic there was volume, right? I think what we saw was a lot of volume. We played a part in that. The rest of the industry did. There were a lot of lease returns coming back as well. That supply-demand imbalance, I think price is the lever there, and especially on the wholesale side. We saw all that play out. I think ideally in a perfect world, we would use more lucrative channels that aren't exposed to that. The challenge that ultimately we're trying to solve is, one, to build additional capacity in those more lucrative markets. Periodically we have volume to move, and we need the capacity to do that. The channel mix side is a problem we've been focused on. We're obviously driving towards higher yielding channels there.

Speaker #1: And then the other dynamic there was volume, right? I think what we saw was a lot of volume. You know, we played a part in that.

Speaker #1: The rest of the industry did. There were a lot of lease returns coming back as well. So that supply-demand imbalance, I think just, you know, prices the lever there and especially on the wholesale side.

Speaker #1: So we saw all that play out. You know, I think ideally, in a perfect world, we would use more lucrative channels that aren't exposed to that.

Speaker #1: But, you know, the challenge that ultimately we're trying to solve is one, to build additional capacity in those more lucrative markets, but then you know, periodically we have volume to move and we need to capacity to do that.

Speaker #1: So you know, the channel mix side is, you know, is a problem we've been focused on. We're obviously driving towards higher yielding channels there.

Speaker #1: A variety of strategies to do that. We're, you know, our direct retail, both physical and digital, area we focused on. Partnerships are another area.

Gil West: A variety of strategies to do that. Our direct retail, both physical and digital area, we focused on. Partnerships are another area. Just know we continue to iterate and figure out how do we move from call it 70% to 80% plus wholesale volume into flipping that equation to more lucrative channels. It's a big area of our focus and it has the opportunity to create a lot of value for us.

Speaker #1: But just know we continue to iterate and figure out how do we move from, you know, kind of, you know, call it 70 to 80, you know, plus percent wholesale volume into flipping that equation to more lucrative channels.

Speaker #1: So it's a big area of our focus. And it has the opportunity to create a lot of value for us.

Speaker #5: Okay. Thanks, Gil. Appreciate that. And then on the franchising, just to kind of follow up there, and I don't want to put the cart before the horse.

Chris Woronka: Okay. Thanks, Gil. Appreciate that. Then, on the franchising, just to kind of follow up there, I don't want to put the cart before the horse. I know it's still very early days of what you might do there. At a very high level, do you envision that you would have some kind of requirements or standards for franchisees on the liquidity side so that they would remain in good health? Is that something you think you would consider if you go forward on this? Just in general, how much regulation do you want to put out there for franchisees?

Speaker #5: I know it's still very early days of what you might do there, but at a very high level, do you envision that you would have some kind of requirements or standards for franchisees on the liquidity side so that they, you know, so that they would remain in good health?

Speaker #5: Is that something you think you would consider if you go forward on this and, you know, just in general how much regulation do you want to put out there for franchisees?

Speaker #4: Yeah, hey Chris, this is Scott. I'll start. Look, I think it's probably a little early, you know, in the process to talk, you know, a lot of specifics around this.

Scott Haralson: Yeah. Hey, Chris Woronka, this is Scott. I'll start. Look, I think it's probably a little early in the process to talk a lot of specifics around this, I think a couple of things. One is this isn't new for us. We've been doing this for a long time. We just haven't fed that business the way it should. We think it's an interesting option for us to expand that percentage. Today, we're north of 25% for branded revenues franchise. We think that number could be directionally higher. We're not going to today tell you where we think it could end up, because we're not sure yet. We do think it's a very interesting channel. We have very high-quality franchisees today. We'll continue to look for high-quality franchisees that can operate this complex business. We're excited about where it goes, especially from a capital perspective.

Speaker #4: But I think a couple of things. One, this isn't new for us. We've been doing this for a long time. We just haven't fed that business the way it should be.

Speaker #4: And we think it's an interesting option for us to expand that percentage. Today we're north of 25 percent for branded revenue as franchise. We think that number could be directionally higher.

Speaker #4: You know, we're not going to today tell you where we think it could end up because we're not sure yet. But we do think it's a very interesting channel.

Speaker #4: And we have very high quality franchisees today. And we'll continue to look for high quality franchisees that can operate this complex business. But, you know, we're excited about where it goes, especially from a capital perspective.

Speaker #4: I think it's a much more efficient use of our capital and creates a consistent level of EBITDA. We'll give you more as we go down the path on this.

Scott Haralson: I think it's much more efficient use of our capital, and creates a consistent level of EBITDA. We'll give you more as we go down the path on this, we're excited where this can go.

Speaker #4: But we're excited where this can go.

Speaker #5: Okay. Thanks, guys. Appreciate it.

Chris Woronka: Okay. Thanks, guys. Appreciate it.

Speaker #3: The next question is from Rajat Gupta of JP Morgan. Your line is now open. Please go ahead.

Operator 2: The next question is from Rajat Gupta of JP Morgan. Your line is now open. Please go ahead.

Operator: The next question is from Rajat Gupta of J.P. Morgan. Your line is now open. Please go ahead.

Speaker #6: Hi, good morning. This is Josh Bhatwa on for Rajat Gupta. Thanks for taking our questions. I just wanted to start on the retail disposition mix, and if we could get an update where that stood in Q2.

Josh Patva: Hi. Good morning. This is Josh Patva on for Rajat Gupta. Thanks for taking our questions. I just wanted to start on the retail disposition mix and if we could get an update where that stood in Q2. How should we think about the runway to expand it? Is there a natural ceiling or a clear path toward that higher aspiration? It'll also be helpful to understand how the partnerships you've built over the past couple of years with Amazon, eBay, Cox, how are those factoring into your retail disposition channels. Thanks, I have a quick follow-up.

Jash Patwa: Hi. Good morning. This is Jash Patwa on for Rajat Gupta. Thanks for taking our questions. I just wanted to start on the retail disposition mix and if we could get an update where that stood in Q2. How should we think about the runway to expand it? Is there a natural ceiling or a clear path toward that higher aspiration? It'll also be helpful to understand how the partnerships you've built over the past couple of years with Amazon, eBay, Cox, how are those factoring into your retail disposition channels. Thanks, I have a quick follow-up.

Speaker #6: And how should we think about the runway to expand it from your, is there a natural ceiling or a clear path toward that higher aspiration?

Speaker #6: It'll also be helpful to understand how the partnerships you've built over the past couple of years with Amazon, eBay, Cox, how are those factoring into your retail disposition channels?

Speaker #6: Thanks, and I have a quick follow-up.

Speaker #1: Yeah, sure. Comments, in some of this may be repetitive, but again, you know, I think it's obvious why we want to try to lean excuse me, heavier into the higher margin.

Gil West: Yeah, sure. Comments in some of this may be repetitive, again, I think it's obvious why we want to try to lean heavier into the higher margin channels. We think of it as any process. It's how do we increase throughput in those and net yield. So we've taken a multi-pronged approach as we've talked about, our do it ourselves model, direct and physical approach, or digital and direct retail approach. We've also got partnerships now with a number of the larger used car dealerships. I think the point I would make there is as we look at this with those partnerships, it's how do we move from more a transactional type relationship to a more strategic relationship, right? Because ultimately that approach can create a lot more mutual value between us, which then we can each share in, right?

Speaker #1: Channels. And we think of it as any process, it's how do we increase throughput in those? And that yield and so we've taken a multi-pronged approach as we've talked about, you know, our do-it-yourself model, direct and physical approach or digital and direct retail approach.

Speaker #1: We've also got partnerships now with a number of the larger used car dealerships. And I think the point I would make there is, you know, as we look at this, with those partnerships, it's how do we move from more a transactional type relationship to a more strategic relationship, right?

Speaker #1: Because ultimately that, you know, that approach can create a lot more mutual value between us, which then we can each share in, right? Right now it's, you know, it's been more transactional, if you will.

Gil West: Right now, it's been more transactional, if you will. There's value to create, certainly on the price, certainly on the back end, F&I, reconditioning cost. Also our, what I would call work in process of our cars sitting there waiting to sell, right? We would like to be able to operate those and leverage the working capital with that. I think there's a number of opportunities to create a lot of value between us. Scale matters in that environment. Then we partnered with other retailers Amazon, eBay, and others, for really to leverage, and Cox as well, to leverage our own direct retail car sales. Progress is being made. I don't want to indicate otherwise.

Speaker #1: And there's some, you know, value to create certainly on the price, certainly on the backend F&I, reconditioning cost, also kind of our what I would call work in process of our cars sitting there, waiting to sell, right?

Speaker #1: We would like to be able to operate those and leverage the working capital with that. So, I think there's a number of opportunities to create a lot of value between us. Scale matters in that environment.

Speaker #1: And then, you know, we've partnered with other retailers, you know, Amazon, eBay, and others, right, for really to leverage and Cox as well to leverage our own direct retail car sales and progress is being made.

Speaker #1: I don't want to indicate otherwise, but, you know, as I said earlier, as we think about kind of flipping the volume model from wholesale to the more lucrative channels—right, from, call it, I don't know, 70% to 80%, 80-ish percent wholesale now, depending on, you know, seasonally, in the month and the volume we're moving—to more of a, yeah, we want to see, you know, 70% to 80% moving through the more lucrative channels.

Gil West: As I said earlier, as we think about flipping the volume model from wholesale to the more lucrative channels, from, call it, I don't know, 70% to 80ish% wholesale now, depending on seasonally and the month and the volume we're moving, to more of a We want to see 70% to 80% moving through the more lucrative channels. That's been the approach.

Speaker #1: So that's been, you know, that's been the approach.

Speaker #6: That's very helpful. Thank you for the color. Just as a quick follow-up on auto, I was curious—what's the magnitude and nature of the investment going into the San Francisco autonomous ramp?

Josh Patva: That's very helpful. Thank you for the color. Just as a quick follow-up on Oro. I was curious, what's the magnitude and nature of the investment going into the San Francisco autonomous ramp? How fungible should we think about the infrastructure? Is it built to flex across a range of autonomous players as the ecosystem shakes out, or is it purpose-built to this one specific partner? Thank you.

Jash Patwa: That's very helpful. Thank you for the color. Just as a quick follow-up on Oro. I was curious, what's the magnitude and nature of the investment going into the San Francisco autonomous ramp? How fungible should we think about the infrastructure? Is it built to flex across a range of autonomous players as the ecosystem shakes out, or is it purpose-built to this one specific partner? Thank you.

Speaker #6: And how fungible should we think about the infrastructure? Is it built to flex across a range of, you know, autonomous players as the ecosystem shakes out, or is it purpose-built to this one specific partner?

Speaker #6: Thank you.

Speaker #1: Yeah, no, thanks. Great question. Yeah. You know, as I mentioned earlier, we're really excited about where Oro's heading and the capabilities, and kind of our rightful place in AVs.

Gil West: Yeah. No, thanks. Great question. As I mentioned earlier, we're really excited about where Oro's heading and the capabilities and our rightful place in AVs. What I would say about the infrastructure, this is really the benefit of Hertz as a background, is we have a lot of infrastructure footprint. We're operating on it, we can pivot and adapt into AVs with that. From an investment standpoint, a lot of that's already there. The biggest item to make sure we have the capability, of course, is EV charging networks in that distributed footprint. As you know, we've got a lot of EV experience, we have charging networks across the system. It's another infrastructure investment that we've made in prior years that help play out with Oro as well.

Speaker #1: You know, what I would say about the infrastructure—and this is really the benefit of Hertz as a background—is, you know, we have a lot of infrastructure footprint.

Speaker #1: We're operating on it. We can pivot, you know, and adapt into AVs with that. From an investment standpoint, a lot of that's already there.

Speaker #1: The biggest item to make sure we have the capability, of course, is EV charging networks in that foot distributed footprint. As you know, we've got a lot of EV experience and we have charging networks across the system.

Speaker #1: So, it's another infrastructure investment that we've made in prior years that helps play out with Oro as well. So, and I think, as I said earlier, you know, if you think about kind of the infrastructure that we have—the ability to operate fleets at scale, own and finance vehicles—you know, trying to replicate all that would take a whole lot of time and a lot of money.

Gil West: I think, as I said earlier, if you think about the infrastructure that we have, the ability to operate fleets at scale, own and finance vehicles. Trying to replicate all that would take a whole lot of time and a lot of money. That's the going-in foundation with Oro that we have, and we're excited about the role we will play in AVs. We see it as that operating layer. The way I look at this, candidly, is the analogy is what data centers are to AI, the operating layer is that we play a role in, is to AVs. I think it's required, and we've got a big running start on it.

Speaker #1: So that's kind of the going in foundation with Oro that we have. And, you know, we're excited about the role we will play in AVs.

Speaker #1: We see it as kind of that operating layer. And I mean, the way I look at this, candidly, is the analogy is, well, data centers are to AI.

Speaker #1: The operating layer that we play a role in is to AVs. So I think, you know, it's required, and we've got a big running start on it.

Speaker #1: So.

Speaker #6: That's great, Carlo. Thank you and good luck.

Josh Patva: That's a good color. Thank you, and good luck.

Jash Patwa: That's a good color. Thank you, and good luck.

Speaker #1: Thank you.

Scott Haralson: Thank you.

Speaker #2: Thank you.

Scott Haralson: Thank you. The next question is from Dan Levy from Barclays. Your line is now open.

Gil West: Thank you.

Speaker #3: The next question is from Dan Levy from Barclays. Your line is now open.

Operator: The next question is from Dan Levy from Barclays. Your line is now open.

Speaker #4: Great, good morning. Thank you for taking the questions. I wanted to start first with a question on the DOE. And I think you referenced this before that, you know, the challenge with the DOE is that as you are tight on your fleet, you're not getting the scale that you need to drive that DOE per day down to that low 30 North Star metric.

Dan Levy: Great. Good morning. Thank you for taking the questions. I think you referenced this before, that the challenge with the DOE is that as you are tight on your fleet, you're not getting the scale that you need to drive that DOE per day down to that low $30 North Star metric. Can you just give us a sense of the path to drive it lower if the intention is to keep the fleet levels tight?

Speaker #4: So can you just give us a sense of the path to drive it lower if the intention is to keep the fleet levels tight?

Speaker #2: Yeah, hey Dan, this is Scott. And also apologize to everyone too. We're going to be close on time here given the extended remarks and some of the answers were a bit extended as well.

Scott Haralson: Yeah. Hey, Dan, this is Scott. I'll also apologize to everyone, too. We're going to be close on time here, given the extended remarks and some of the answers were a bit extended as well. Yeah, to DOE, look, I think scale is one of the components we've talked about, not the only one, obviously. We think that a lot of the initiatives that we have in place are obviously moving in the right direction. We talked about core operating expenses down 2% year over year on basically flat days. That's an important baseline to start from. Obviously, we have headwinds thinking about RPD-related costs and sale leasebacks, financing costs. The core business is getting more efficient every year, and we haven't even hit all the levers that we think are available. There is room to run on unit cost efficiency. Now, mathematically, scale is important.

Speaker #2: But yeah, to DOE, look, I mean, I think scale is one of the components we've talked about, not the only one, obviously. You know, we think that a lot of the initiatives that we have in place, we're obviously moving in the right direction.

Speaker #2: We talked about core operating expenses down 2% year over year. On basically flat days, like that's an important baseline to start from. I mean, obviously we have headwinds thinking about RPD-related costs and sell leasebacks, financing costs, but the core business is getting more efficient every year.

Speaker #2: And we haven't even hit all the levers that we think are available. So there is room to run on unit cost efficiency. Now, mathematically, scale is important.

Speaker #2: No doubt that it is important. So it's a combination of all those things. But one thing I do want to add to, we talk about North Stars, and the ability to get to a billion or beyond.

Scott Haralson: No doubt that it is important. It's a combination of all those things. One thing I do want to add, too. We talk about North Stars and the ability to get to $1 billion or beyond. Cost is not our only lever here. Let's make it stated that's the case. We do think there is room to run on DOE per day and unit cost, but it's one of multiple levers, including RPD, RPU, DPU. All of those things are going to be contributors. There is room to run, but it's not the only lever that we have.

Speaker #2: Cost is not our only lever here. It's make it, you know, stated, that's the case. We do think there is room to run on DOE per day and unit cost, but it's one of multiple levers, including RPD, RPU, DPU, all of those things are going to be contributors.

Speaker #2: So there is room to run, but it's not the only lever that we have.

Speaker #4: Okay, great. Thank you. As a follow-up, I wanted to ask about the liquidity dynamics. And just maybe you can talk about, you know, what change in the liquidity guidance you previously said ending the year with in excess of a billion and a half, now you're saying 1 to 1.4.

Dan Levy: Okay, great. Thank you. As a follow-up, wanted to ask about the liquidity dynamics. Just, A, maybe you can talk about what change in the liquidity guidance you previously said, ending the year with in excess of $1.5 billion. Now you're saying $1 billion to $1.4 billion. As you're looking at these maturities on the debt side in 2028 and 2029, $2.5 billion a year, what is the confidence that those maturities can be addressed? I'm assuming you're already thinking about the different options for those right now.

Speaker #4: But as you're looking at this at these maturities on the debt side in '28 and '29, 2 and a half billion dollars, a year, what is the confidence that those maturities can be addressed?

Speaker #4: Because I'm assuming you're already thinking about the different options for those right now.

Speaker #2: Yeah. Hey Dan, just to clarify on the liquidity, yeah, previous guide was about 1.5. And I outlined in the prepared remarks that we removed ATM proceeds from that forecast.

Scott Haralson: Hey, Dan. Just to clarify on the liquidity. Previous guide was about $1.5, and I outlined in the prepared remarks that we removed ATM proceeds from that forecast. That's naturally going to bring it down. We did say that, look, we're going to have the ATM in place, and it remains available, and it's a viable option, but it's not in the forecast, really given where stock prices are. Look, we think we have the right amount of liquidity to fund the strategic plans and a little bit of modest growth into 2027. We feel good where that is. On the debt maturities, look, we know we have a number of debt maturities starting in the front half of 2028, and it's an important topic to investors.

Speaker #2: So that's naturally going to bring it down. And, but we did say that, look, we're going to have the ATM in place and it remains available, you know, and it's a viable option, but it's not in the forecast, you know, really given where stock prices are.

Speaker #2: But look, we think we have the right amount of liquidity to fund the strategic plans in a little bit of modest growth into '27.

Speaker #2: So we feel good where that is. On the debt maturities, look, I mean, we know we have a number of debt maturities starting in the front half of 2028.

Speaker #2: And it's an important topic to investors. But we're not going to give specific views on the process today. Or even think about probabilities and confidence levels and all these things.

Scott Haralson: We're not going to give specific views on the process today, or even think about probabilities and confidence levels and all these things. I think as you've heard in our prepared remarks and have seen over the last 2 years, the underlying business is strong and the economics are improving. Plus, we have a good strategic plan that we're executing to, and talked about Oro Mobility, franchising, fleet management, retail car sales, and service initiatives, all those things. Liquidity is good. We intend to pay those 2026 debt maturities in cash. Maybe most importantly, though, to reiterate, with our views on free cash flow production for the remainder of this year and next year means that we're expecting that we're no longer going to be funding operating losses with debt or other outside capital. It's an important distinction of where we have been historically.

Speaker #2: I think as you've heard in our prepared remarks, and have seen over the last two years, the underlying business is strong and the economics are improving.

Speaker #2: You know, plus, we have a good strategic plan that we're executing to and talked about Oro and franchising and fleet management, retail car sales, service initiatives, all those things.

Speaker #2: So liquidity is good. We intend to pay this 2026 debt maturities in cash. And maybe most importantly, though, to reiterate, with our views on free cash flow production, for the remainder of this year, and next year, means that we're expecting that we're no longer going to be funding operating losses with debt or other outside capital.

Speaker #2: So you know, it's an important distinction of where we have been historically. And we also have a number of levers to pull to generate growth capital.

Scott Haralson: We also have a number of levers to pull to generate growth capital. A number of those levers line up with our strategic initiatives around franchising and Oro Mobility. We feel good about where we are and where the business is headed, and we'll deal with the maturities in due course.

Speaker #2: And, you know, a number of those levers line up with our strategic initiatives around franchising and Oro. So, we feel good about where we are and where the business is headed.

Speaker #2: And we'll deal with the maturities in due course.

Speaker #4: Great. Thank you.

Dan Levy: Great. Thank you.

Speaker #2: Mm-hmm.

Speaker #3: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Operator 2: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Operator 1: This event has now concluded. Access The Hertz Corporation IR website for more information. This line will now disconnect.

Operator: This event has now concluded. Access The Hertz Corporation IR website for more information. This line will now disconnect.

Q2 2026 Hertz Global Holdings Inc Earnings Call

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