Sixt:Quarterly Results/2024 Q2: Difference between revisions

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 ==== '''Earnings call insights''' ====
+===== Pricing =====
 * CCO Sandeep Dube said  in the earnings call<ref>https://seekingalpha.com/article/4709242-hertz-global-holdings-inc-htz-q2-2024-earnings-call-transcript</ref> that during the quarter they prioritized rate over demand.
+* '''The company said it prioritized rate over volume during the quarter and that they saw signs that y/y decline in pricing is narrowing.''' "During the quarter, we deliberately prioritized rate over volume. This is especially true in the Americas segment. Collectively, our revenue initiatives are showing early promise and global RPD, while down year-over-year as we guided, was up 5% sequentially. June RPD is marginally down year-over-year by 2%, an encouraging exit rate for the quarter and consistent with our expectations that year-over-year declines are narrowing,"  Sandeep Dube said.
+* '''Scott said they expect RPD to be flat or up 1% in Q3'''. " For Q3, demand is strong, but we're intentionally culling low RPD business, so we don't expect days to grow materially year-over-year and we expect RPD to be flat to slightly up 1%," he said.
-* Hertz was able to negotiate lower pricing with OEMs. "...and the purchase prices recently negotiated with OEMs already reflect our targeted DPU," CEO Gil West said.
+===== Depreciation =====
-* The company said it prioritized rate over volume during the quarter and that they saw signs that y/y decline in pricing is narrowing. "During the quarter, we deliberately prioritized rate over volume. This is especially true in the Americas segment. Collectively, our revenue initiatives are showing early promise and global RPD, while down year-over-year as we guided, was up 5% sequentially. June RPD is marginally down year-over-year by 2%, an encouraging exit rate for the quarter and consistent with our expectations that year-over-year declines are narrowing,"  Sandeep Dube said.
+* '''Hertz was able to negotiate lower pricing with OEMs.''' "...and the purchase prices recently negotiated with OEMs already reflect our targeted DPU," CEO Gil West said.
 * CFO Scott Haralson said its fleet rotation process will result in non-cash depreciation of over $1 billion from Q3 2024 to the end of 2025. He pointed out that this could be higher or less depending on where residual values will be.
 * Scott said the fleet rotation process will result in fleet with DPU of less than $300 by the end of 2025, adding that at the end of Q2 more than 30% of their fleet had DPU of $325 or less and the rest at $600. He pointed out that the deals recently negotiated with automakers will bring in vehicles with DPU rates below $325 later this year and through 2025.
 * Scott said the expected depreciation of over $1 billion through 2025 will not have a cash impact on P&L since when they sell the vehicles they unlock the initial equity invested in the ABS facility. He pointed out that majority of the cash impact has already been felt and that they are left with more than $1.5 billion which they will invest to acquire new vehicles at lower purchase prices.
+* '''Scott pointed out that residual values have declined at a higher rate than expected in 2024. "In June, the Mannheim rental risk index dropped by 5%," he said.'''
+* '''Scott added that they expect DPU to remain elevated throughout 2024.''' "We expect DPU to be elevated through 2024 before sequentially improving through 2025 until we near the end of the rotation," he said.
+===== Liquidity =====
 * Scott pointed out that they now have strong liquidity (liquidity at the end of Q2 was $1.8 billion). "The good news is that we believe we have plenty of liquidity to handle this. With our recent capital raise, we have bolstered liquidity to a place where we are comfortable that we can complete the transformation, even if residuals decline at a faster rate than we have conservatively forecasted," Scott said.
 * Scott said they don't have any meaningful non-vehicle debt maturities until mid-2026 and that the fair market values of their vehicles currently exceed ABS facility.
-* Scott pointed out that residual values have declined at a higher rate than expect in 2024. "In June, the Mannheim rental risk index dropped by 5%," he said.
-* Scott said demand in Q3 is strong. "Global travel demand remains strong and inflation is tempering," CEO Gil West reiterated Scott's comments. "With global RPD rate parity expected in the third quarter year-over-year, the demand and revenue outlook remains strong," Sandeep said.
+===== Demand =====
+* '''Scott said demand in Q3 is strong'''. "Global travel demand remains strong and inflation is tempering," CEO Gil West reiterated Scott's comments. "With global RPD rate parity expected in the third quarter year-over-year, the demand and revenue outlook remains strong," Sandeep said.
+===== CrowdStrike software outage =====
 * Gil West said disruptions to the business during CrowdStrike software outage was minimal.
+===== EV fleet =====
 * Gil West said EVs now make up less than 10% of their fleet.
-* Scott said they expect RPD to be flat or up 1% in Q3. " For Q3, demand is strong, but we're intentionally culling low RPD business, so we don't expect days to grow materially year-over-year and we expect RPD to be flat to slightly up 1%," he said.
-* Scott added that they expect DPU to remain elevated throughout 2024. "We expect DPU to be elevated through 2024 before sequentially improving through 2025 until we near the end of the rotation," he said.
 == References ==