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Hertz (HTZ) Q2 Loss Wider Than Expected, Revenues Fall 67%

Zacks Equity Research
·4 mins read

Hertz Global Holdings HTZ incurred a loss (excluding $2.35 from non-recurring items) of $3.51 per share in second-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.33. In the year-ago period, the company reported earnings of 74 cents per share. Similar to the first quarter, second-quarter results were affected by decreased demand for rental cars amid coronavirus concerns. However, the impact in the second quarter is much greater.

Quarterly revenues of $832 million also missed the Zacks Consensus Estimate of $918.9 million. The top line declined 66.9% year over year due to weak performance by the U.S. and International Rental Car segments.

Segmental Performance

In the quarter under review, the U.S. Rental Car segment generated revenues of $533 million, down 70% year over year. While airport rental-car volumes declined 82% due to weakness in air-travel demand caused by coronavirus, off airport volumes decreased 47%.

Vehicle utilization declined to 28% from 82% a year ago. Transaction days fell 69% year over year. Total revenue per transaction day (“RPD”) decreased 10%. Adjusted EBITDA for the segment was ($470 million) in the second quarter against $156 million a year ago.

Segmental direct-vehicle and operating expenses dropped 47% to $561 million. Meanwhile, interest expenses climbed 8%. However, selling, general and administrative expenses declined 47% year over year. Costs reduced due to strict cost-control measures and low volumes.

The International Rental Car segment generated revenues of $135 million, down 76% year over year. Airport rental-car volumes plunged 84%, while off-airport volumes dropped 47%. Vehicle utilization fell to 36% from 77% in the year-ago quarter. Segmental RPD declined 24% year over year.

Segmental direct vehicle and operating costs fell 59% year over year to $136 million. While interest expenses contracted 3%, selling, general and administrative expenses fell 28% year over year. Adjusted EBITDA for the segment came in at ($127 million) compared with $56 million in second-quarter 2019.  Meanwhile, revenues from all other operations dipped 1% to $164 million.

Hertz Global Holdings, Inc Price, Consensus and EPS Surprise

Hertz Global Holdings, Inc Price, Consensus and EPS Surprise
Hertz Global Holdings, Inc Price, Consensus and EPS Surprise

Hertz Global Holdings, Inc price-consensus-eps-surprise-chart | Hertz Global Holdings, Inc Quote

Balance Sheet Highlights

The Zacks Rank #3 (Hold) company exited the second quarter with cash and cash equivalents of $1,366 million compared with $865 million at the end of 2019. Restricted cash and cash equivalents at the end of the period came in at $945 million compared with $495 million at 2019-end. As of Jun 30, 2020, total debt amounted to $12.98 billion compared with $17.09 billion as of Dec 31, 2019.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ second-quarter earnings results.

Kirby Corporation’s KEX second-quarter earnings of 42 cents per share were in line with the Zacks Consensus Estimate. The bottom line plunged 46.8% year over year. This Zacks Rank #5 (Strong Sell) company’s total revenues of $541.2 million lagged the Zacks Consensus Estimate of $618.4 million and declined 29.8% year over year.

United Parcel Service’s UPS earnings (excluding 10 cents from non-recurring items) per share of $2.13 surpassed the Zacks Consensus Estimate of $1.04. The bottom line also improved 8.7% year over year. The company, sporting a Zacks Rank #1 (Strong Buy), generated revenues worth $20,459 million in the quarter, outperforming the Zacks Consensus Estimate of $17,344.4 million. Moreover, the top line improved 13.4% on a year-over-year basis. You can see the complete list of today's Zacks #1 Rank stocks here.

Norfolk Southern Corporation’s NSC second-quarter earnings of $1.53 per share surpassed the Zacks Consensus Estimate of $1.39. However, the bottom line plunged 43% on a year-over-year basis. Railway operating revenues in the quarter under review came in at $2,085 million, edging past the Zacks Consensus Estimate of $2,061.5 million. This Zacks Rank #3 company’s top line however declined 29% year over year.

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Hertz Global Holdings, Inc (HTZ) : Free Stock Analysis Report
 
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