Hertz's (HTZ) Q4 Loss Narrower Than Expected, Revenues Miss

Hertz Global Holdings (NYSE:HTZ) incurred a loss (excluding 59 cents from non-recurring items) of 24 cents per share in the fourth quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of 25 cents. Moreover, the amount of loss decreased year over year.

Quarterly revenues of $2,326 million fell short of the Zacks Consensus Estimate of $2,340.6 million. However, the top line inched up 1.4% year over year, driven by an impressive performance of the U.S. Rental Car segment.

Segmental Performance

In the quarter under review, the U.S. Rental Car segment generated revenues of $1,673 million, up 6.2% year over year. This upside can be attributed to favorable pricing and higher volumes.

Vehicle utilization decreased to 79% from 81% a year ago. Transaction days improved 2% year over year on the back of robust demand from growth initiatives in TNC and delivery rentals. Total revenue per transaction day (RPD) increased 4%. Adjusted EBITDA for the segment was flat year over year at $48 million.

Segmental direct vehicle operating expenses rose 2.1% to $1,019 million. Meanwhile, interest expenses jumped 15.2%. Also, selling, general and administrative expenses climbed 3.3% year over year.

Hertz Global Holdings, Inc Price, Consensus and EPS Surprise

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

The International Rental Car segment generated revenues of $474 million, down 3% year over year. This downside was due to decreased volumes as a result of persistent weakness in the European market. Meanwhile, segmental revenues were flat on constant currency basis. Vehicle utilization was flat at 72%. Segmental RPD rose 1%.

Segmental direct vehicle operating costs were up 4% year over year to $312 million. However, interest expenses decreased 8%. Selling, general and administrative expenses also declined 16.4% year over year. Adjusted EBITDA for the segment came in at a loss of $10 million against profit of $8 million in the year-ago period. Meanwhile, revenues from all other operations plunged 23% to $179 million.

Balance Sheet Highlights

The company exited the fourth quarter with cash and cash equivalents of $865 million compared with $1.13 billion at the end of 2018. Restricted cash and cash equivalents at the end of the period came in at $495 million compared with $283 million at 2018 end. As of Dec 31, 2019, total debt amounted to $17.09 billion compared with $16.32 billion as of Dec 31, 2018.

Zacks Rank & Key Picks

Hertz carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are GATX Corporation (NYSE:GATX) , Azul SA (NYSE:AZUL) and Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

GATX has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 21%.

Shares of Azul and Controladora Vuela have rallied more than 18% and 42%, respectively, in a year’s time.

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