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Hertz Completes Financial Restatements

The restatements reduced Hertz’s profits by a cumulative $128 million for years 2011, 2012 and 2013, or nearly 20% of previously stated profits. Richard Broome resigns.

by Staff
July 16, 2015
Hertz Completes Financial Restatements

Photo courtesy of The Hertz Corp.

3 min to read


Photo courtesy of The Hertz Corp.

Hertz Global Holdings Inc. has filed its annual report on Form 10-K for the fiscal year ending Dec. 31, 2014, which includes the restated results for 2012 and 2013 as well as selected unaudited restated financial information for 2011.

Hertz is now up-to-date on all of its filings with the Securities and Exchange Commission (SEC), the company said.

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The restatements lower Hertz’s profits in each of the audited years. In 2011, Hertz’s GAAP net income was lowered an additional $19 million, for a total of $31 million in net income including previously disclosed misstatements. This represented 18% of total GAAP net income.

In 2012, the company’s net income was lowered an additional $58 million, for a total of $62 million in net income in that year, representing 26% of net income. In 2013, net income was lowered $51 million in total (15% of net income), as no misstatements were previously identified.

Hertz also announced progress on the planned separation of its equipment rental business (Hertz Equipment Rental Corp.) and its capital allocation, cost savings and fleet refresh, according to the company. The HERC separation is expected to be completed in second quarter 2016.

“Today's filings are an important step forward, and our attention is now on realizing Hertz's full potential,” said John Tague, Hertz’s president and CEO. “While much work remains, I thank the Hertz team for their efforts to bring our filings up to date while continuing to remain focused on our customers and our future.”

The Form 10-K filed today also contains quarterly information for the quarters in 2013, as restated, and 2014. Quarterly information for the first quarter of 2015 is contained in the Form 10-Q, which was also filed today.

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The 10-K form also announced that Richard Broome, senior vice president, Corporate Affairs and Communications at Hertz Global Holdings, has stepped down.

According to Hertz, the filing of its Form 10-K brings Hertz back into compliance with its New York Stock Exchange (NYSE) listing requirements.

"Going forward, we are committed to developing a differentiated customer experience and premium brand position for Hertz that is number one in the industry, while revitalizing Dollar and Thrifty into leading value brands,” said Tague.

By year-end 2015, Hertz now expects to achieve $300 million in annualized cost savings, up from a previously announced savings goal of $100 million. The cost savings are expected to come mainly from reductions in corporate and operations overhead, fleet management efficiency and marketing spending. According to Hertz, it expects to incur $30 million to $35 million of costs in 2015 in connection with these actions.

Hertz reported that its fleet fresh target has been realized. For full-year 2015, it anticipates U.S. fleet growth of 0.5% to 1.5% over 2014 — compared to its previous estimate of 1.5% to 2.5%. In part, this reduction is supported by improvements in fleet utilization, according to the company.

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For full-year 2015, Hertz forecasts its consolidated corporate EBITDA at $1.45 to $1.55 billion. For U.S. RAC monthly depreciation per unit, Hertz predicts $295 to $305.

"We indicated in May that the second quarter performance would be a continuation of the challenges we faced in the first three months of the year, which is consistent with our expectation," said Tague. "This is a transition year, and we are not going to be satisfied with the results quarter-by-quarter. Progress on our initiatives to reduce capacity, meet our fleet refresh targets and capture cost savings will be evident in the third quarter, which we believe will be an inflection point for the year. And of course, we expect those benefits to become progressively more visible in 2016."

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