Hertz Global Holdings, Inc

Welcome to the Hertz Global Holdings first quarter 2026 earnings call. Currently, all lines are in listen-only mode. Following management's commentary, we will conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. 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 Kokoski, Senior Vice President, Finance. Please, go ahead.

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. Additional information concerning these statements includes factors that could cause our actual results to differ. This is contained in our earnings press release and in the risk factors and forward-looking statement section in the SEC filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and the investor relations section of the Hertz website. Today, we'll use certain non-GAAP financial measures, which are reconciled with GAAP numbers in our earnings press release 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. Our Chief Commercial Officer, Sandeep Dube, will share insights into our commercial strategy, followed by Scott Harrelson, our Chief Financial Officer, who will discuss our financial performance. I'll now turn the call over to Gil.

Good morning, everyone, and thank you for joining us. I want to start by recognizing the Hertz team. The hard work, discipline, and resilience they bring quarter after quarter is what makes results like Q1 possible. When we laid out our transformation strategy, we framed it around three financial North Star metrics. Fleet management, measured by DPU below $300. revenue optimization measured by RPU over $1,500, and rigorous cost control measured by DOE per day in the low $30. These are our guideposts on a path to $1 billion EBITDA in 2027. Over the last two years, we fundamentally turned fleet from a headwind to a tailwind through our buy-right, hold-right, sell-right strategy with tangible, sequential improvements that have compounded over time. We hit our DPU North Star target last year and are tracking to hit it again this year. Over the last few quarters, we have also been building steady momentum on revenue, and we're tracking to hit our North Star RPU target for full year 2026. This quarter, the results show that our strategy is working, We set aggressive targets, and we hit them. Adjusted corporate EBITDA was up 141 million year-over-year, a nearly 50% improvement. Revenue was up 11% year-over-year, and both beat consensus. It was, in fact, our strongest year-over-year revenue growth in three years. We delivered our strongest year-over-year Q1 RPD improvement since the travel recovery and microchip-driven spike in 2022. We saw sequential improvements in both RPU and RPD throughout the quarter, a clear sign that the Hertz unique commercial strategies are paying off, along with broader market strength. These results are especially meaningful given the environmental impact we were operating in. The quarter brought headwinds, including elevated recalls, a partial government shutdown, higher TSA wait times, and storm disruptions across key markets. Amidst this environment, our performance underscores that this transformation is driving structural improvements. On fleet, while DPU is an annual North Star target, This quarter's gross DPU beat that metric, while net DPU, which fluctuates based on net car sales gains and losses, was in line with our expectations and supported by continued disciplined fleet rotation. With our youngest fleet in nearly a decade, we're seeing our strategy translate directly into better economics. After a slow start to the year, the residual values improved significantly through the quarter. With all this, we expect full-year net DPU to remain below our North Star target of $300 per month, even with an enriched fleet mix. Adjusted DOE per transaction day increased approximately 2% year-over-year, driven primarily by revenue-related costs. which are EBITDA accretive and real estate sale leaseback transactions executed last year. Normalizing for these impacts, core DOE per day continued to improve year over year. We still have work to do, and we need to continue to build scale to achieve our North Star target in the low 30s. The progress is there, and we have a variety of initiatives in flight. This quarter, recalls were up nearly 300%, temporarily shrinking our rentable fleet. That required us to carry more fleet than planned, impacting utilization by about 200 basis points year over year. Our team is strategically managing through this, making progress by working proactively upstream We're undertaking numerous initiatives to mitigate the impact, including working with OEMs and government officials for both tactical and structural improvements. While normalizing for the higher recalls, utilization was 140 basis points higher for the same period, showcasing our team's achievements in asset efficiency. Even with higher recalls, reported utilization was 90 basis points above where we were in Q1 of 23 and 2024. On the customer front, we're raising the bar to build on last year's 50% improvement in that promoter score to deliver a truly gold standard. That work recently earned us a spot as the only rental car company on USA Today's list the most trusted brands of 2026. We also saw the highest year-over-year improvement of any car rental company on Business Travel News Satisfaction Survey. As we discussed last quarter, Rent-A-Car remains the foundation of our business today. But our transformation is about building more than one single value stream. We're running today's business with discipline while deliberately investing in the capabilities that will define Hertz' future. That work is creating a more diversified platform spanning rent-a-car, service, fleet, and mobility. I'm pleased to share that we made progress across our highest priority areas this quarter. In rent-a-car business, we launched an advanced fleet planning engine which leverages NVIDIA's decision optimization engine and Palantir's foundry data operating system. This system will enable us to deliver the right car to the right place at the right time more efficiently than ever before, delivering positive impacts across the business from utilization to customer experience. By continuing to improve our operations and strengthen our customer trust and loyalty in our brands, we're delivering greater value to our franchise partners. At the same time, we're sharpening our focus on franchise with new leadership and a fresh look at how to unlock additional value by expanding and optimizing our franchise footprint. In fleet, Perch Car Sales continues its evolution into a truly omni-channel business. Building on our strengthened physical and digital channels, we're establishing a scalable sales model that expands the top of the funnel and drives volume through partnerships like Amazon Autos. This week, we also announced a new partnership with eBay, putting our near-new certified inventory in front of more customers than ever before. And as more leads come down the funnel, our partnerships with Cox Automotive is helping drive conversion through AI-generated pricing, revamped digital tools, and better upstream lead generation tools like AutoTrader. In addition, we've continued to make great progress on finance and insurance. As car sales volumes grow, F&I scales efficiently and enhances overall unit economics. This was our best quarter in three and a half years for F&I revenue, and we're building on this progress with more favorable financing partner arrangements. And finally, the breakthrough this quarter was in mobility, where our platform really came to life. We said that for some time that Hertz has a role in the future of mobility. And over the last few quarters, we've been building the skills and capabilities to make it real. Now we're coming out of stealth mode. Last week, we announced Oro, our mobility business, with an expanded Uber partnership. But here's the bigger picture. AV technology has the potential to unlock a multi-trillion dollar market, but it's As the industry transitions from personally owned vehicles to commercially operated fleets, whether driver-led or autonomous, the critical layer has been missing. Tech providers are focused on autonomous software and hardware. OEMs are focused on vehicles. App-based platforms are focused on aggregating demand. What is missing is the operations and orchestration layer. That's where ORO comes in. Oro is purpose-built to fill the gap between autonomous technology, vehicles, and demand platforms, managing and servicing fleets reliably, efficiently, safely, and at scale. Backed by Hertz' century of expertise in complex fleet management, Oro brings a distinct advantage to the market. Hertz operates one of the world's largest rideshare rental fleets, with over 40,000 vehicles and has deep experience with EVs and a management team with the direct AV operational experience. What's more, the company has a network of over 2,700 chargers, over 11,000 service locations and car washes, and thousands of maintenance technicians. Oro harnesses that scale with agility of an independent entity to deliver flexible, vertically integrated rideshare solutions for fleets of all sizes. Oro is partnering with Uber to provide rideshare fleet services across both driver and AV fleets, delivering capabilities directly relevant for the transition to scaled autonomy. Today, Oro owns, maintains, and operates a fleet of vehicles, employing and managing over 1,000 drivers under a high-quality turnkey operating structure. Oro creates value by optimizing pre-planned supply to meet growing rider demand on Uber's platform with an elevated customer experience and additional safety protocols. Oro is currently active on the Uber platform in Atlanta, Los Angeles, and San Francisco, and northern New Jersey just launched this week. Our drivers have logged over 4 million miles to date, and with Uber's nearly 200 million monthly active platform consumers, there's plenty of room to scale. Oro has also joined Uber's autonomous robo-taxi program, supporting Lucid vehicles equipped with neuro-aiding technology. Starting later this year, Oro will provide the program's orchestration and operation by leading charging, maintenance, repairs, cleaning, and depot staffing. By managing both driver-led and driverless operations, vehicles, we're widening our scope and deepening our experience with more complex and dynamic fleets, testing and refining economics, asset utilization and workforce models, so we'll be ready for the transition to scaled autonomy at whatever pace that occurs. While it's still early innings, Oro presents meaningful upside and reinforces the progress we've made thus far on our transformation, marking the beginning of a new chapter for Hertz. We're strengthening our core business and innovating for the future, all while furthering our mission to advance the way the world moves. With that, I'll turn it over to Sandy.