Photo courtesy of The Hertz Corp.
For the first quarter 2016, Hertz Global Holdings Inc. has reported its total revenues as $2.3 billion, a 6% decline versus the first quarter of 2015, according to Hertz. Adjusted earnings for Q1 was $155 million versus $226 million in the same period last year, a decline of $71 million.
In Q1, Hertz’s worldwide car rental revenues of $1.8 billion declined approximately 6% compared to a year ago, according to the company. Excluding the impact of foreign currency, revenues declined 5% resulting from a 7% decrease in total revenue per day (RPD) — partially offset by a 2% increase in transaction days.
Hertz has reported a net loss of $51 million compared to a net loss of $70 million during the same period last year. On an adjusted basis, Hertz reported a net loss for Q1 2016 of $52 million compared with net income of $2 million in Q1 2015.
Unit revenues — as defined by revenue per available car day (RACD) — declined 2% versus Q1 2015, primarily as a result of a 3.3% decline in the U.S. Car Rental segment due to weak industry pricing. The 3.3% decline was in line with the range that Hertz provided in its April 11, 2016, business update, says the company.
Hertz’s worldwide car rental average fleet declined 4% compared to a year ago but fleet efficiency rose to 77%, a 400 basis point increase versus Q1 2015. The improvement in fleet efficiency was the result of actions Hertz took to reduce capacity and improve efficiency in the U.S. market, according to the company.
Worldwide customer satisfaction, as measured by Net Promoter Score, rose for the Hertz, Dollar, and Thrifty brands in the first quarter of 2016 — up more than 5 points year-over-year.
In the first quarter, a worldwide cost savings of approximately $70 million was achieved, reflecting continued progress as part of Hertz’s three-to-five year margin improvement plan, according to the company. Unit costs for Hertz’s worldwide rental car business — defined as direct operating and selling, general, and administrative expenses per transaction day — declined 5% year-over-year.
"During the first quarter, we followed through on our plans to bring fleet levels in line with expected demand in the U.S. market and saw a significant improvement in our fleet efficiency as a result,” said John Tague, president and CEO. “Though industry pricing decreased more than we anticipated, we mitigated the impact on our performance by continuing to lower our costs, which resulted in a 5% reduction in unit cost in our worldwide rental car business in the quarter. We are encouraged by recent pricing trends as we move into the peak season as well as by rising customer satisfaction across the Hertz, Dollar, and Thrifty brands year-over-year. The improvement was led by the Hertz brand, which reached a record for customer satisfaction on a worldwide basis.”
Hertz expects cost savings to accelerate in the second half of 2016 due to the timing of cost-reduction initiatives and is on pace to achieve its previously announced target of $350 million of full-year 2016 cost savings, according to the company.
"By continuing to lower our costs and improve overall quality in our business as part of our three-to-five year margin improvement plan, we remain on track to deliver on our adjusted corporate EBITDA target for 2016 despite the first-quarter pricing decline," added Tague.