Business Context and Reporting Period
Company: Hertz Global Holdings, Inc. (Hertz Global) and The Hertz Corporation (Hertz).
Reporting Period: Quarterly period ended June 30, 2025 (Q2 2025).
Business Overview: Global vehicle rental and leasing business operating primarily through Hertz, Dollar, and Thrifty brands. The company operates in two reportable segments: Americas RAC and International RAC.
Key Financial Metrics (Six Months Ended June 30, 2025)
| Metric | Amount (in millions) |
|---|---|
| Total Revenues | $3,998 |
| Net Income (Loss) (Hertz Global) | $(737) |
| Net Income (Loss) (Hertz Corp) | $(613) |
| Adjusted Corporate EBITDA | $(324) |
| Operating Cash Flow | $597 |
| Total Debt | $17,636 |
| Cash and Restricted Cash | $1,129 |
| Corporate Liquidity (Cash + RCF Availability) | $1,449 |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 10% ($435 million) compared to the first half of 2024, driven primarily by lower volume and pricing in the Americas RAC segment.
- Depreciation Reduction: Depreciation of revenue earning vehicles and lease charges decreased 53% ($1.1 billion) year-over-year. This improvement is attributed to fleet refresh strategies, stronger residual values, and per-unit gains on vehicle dispositions compared to losses in 2024.
- Interest Expense Increase: Non-vehicle interest expense increased significantly ($196 million) due to unrealized losses on the fair value of Exchange Features embedded in Exchangeable Notes, higher debt levels, and higher average interest rates.
- Segment Performance:
- Americas RAC: Adjusted EBITDA improved to a loss of $(196) million from $(891) million in the prior year, though still negative.
- International RAC: Adjusted EBITDA turned positive at $25 million, compared to a loss of $(33) million in the prior year.
- Asset Sales: Recognized an $89 million pre-tax gain on the sale of non-vehicle capital assets (real estate sale-leasebacks) in Q2 2025.
Guidance, Outlook, Risks, and Unusual Items
- Unusual Items:
- Exchangeable Notes: Significant non-cash interest expense ($126 million for six months) driven by the fair value adjustment of the "Exchange Feature" derivative liability.
- Public Warrants: Hertz Global recorded a loss of $124 million on the change in fair value of Public Warrants for the six months ended June 30, 2025.
- Legal Contingencies:
- Wells Fargo Litigation: The company has accrued approximately $330 million related to the Third Circuit's decision on make-whole premiums and post-petition interest. The company has petitioned the U.S. Supreme Court for review.
- Data Breach: Multiple class action complaints filed regarding a data breach at a third-party vendor (Cleo Communications) in late 2024.
- Tax Legislation: The "One Big Beautiful Bill Act" (OBBBA) was enacted on July 4, 2025. Key impacts include the restoration of 100% bonus depreciation for vehicle purchases but the elimination of EV tax credits for vehicles purchased after September 30, 2025. The company is assessing the financial impact.
- Debt Covenants: The company remains in compliance with the First Lien Ratio and minimum liquidity covenants under its credit agreements.
Investor Verification Checklist
- EV Tax Credit Impact: Verify the financial impact of the OBBBA eliminating EV tax credits for purchases after September 30, 2025, given Hertz's historical EV fleet strategy.
- Wells Fargo Litigation Outcome: Monitor the U.S. Supreme Court's decision on the petition for writ of certiorari regarding the $330 million accrued liability.
- Exchangeable Notes Volatility: Assess the sensitivity of non-vehicle interest expense to fluctuations in Hertz's stock price, which drives the fair value of the Exchange Features.
- Vehicle Disposition Gains: Confirm the sustainability of the improved per-unit gains on vehicle dispositions compared to the losses experienced in 2024.
- Liquidity Position: Review the utilization of the First Lien RCF and the impact of the new minimum liquidity covenants introduced in Amendment No. 10.