Hertz Reports Q2 Revenue Growth and $81 Million Adjusted EBITDA

On Thursday, Hertz Global Holdings (NASDAQ: HTZ ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary Hertz Global Holdings reported a 10% increase in revenue year-over-year for Q2, with an adjusted corporate EBITDA of $81 million, marking a $63 million improvement from last year.

The company achieved a record-high Revenue Per Day (RPD) excluding the peak COVID year, with a strong focus on operational efficiency and fleet management to drive revenue growth despite a 1% smaller fleet. Hertz emphasized strategic initiatives including expanding franchising, enhancing used car sales channels, and growing its Oro mobility platform, which is expected to generate significant revenue and scale in the coming years. Management highlighted substantial progress in fleet management, achieving a young fleet age of under nine months, and efforts to improve labor productivity and customer service through technology and data insights.

The company is targeting $1 billion in adjusted corporate EBITDA by 2027, with a positive outlook on liquidity and strategic investments to support future growth and resilience. Full Transcript Gil West, Chief Executive Officer Good morning everyone and thank you for joining us. I want to begin by saying thanks to the Hertz team. Quarter after quarter, their discipline and execution are what turned strategy into results.

We are halfway through 2026 and it's been more than two years since I stepped into this role. In that time I had the chance to get into the detail of every part of this business, the fleet, the operations and the economics that drive them. What's become clear is that this transformation is about both fixing what wasn't working and building for what's next. We've done that under real pressure over these two years.

We've navigated tariffs, vehicle recalls, inflation, partial government shutdown, elevated TSA wait lines and storm disruptions on top of the normal volatility of the rental car industry. None of it has changed our approach. We're staying focused on what we can control, our fleet cost, our revenue performance and the customer experience we deliver through disciplined execution. We're building a financial footing strong enough to withstand whatever pressures today and tomorrow bring.

We're both running our core rental business better and building a platform spanning rent a car fleet, service and mobility that diversifies and strengthens Hertz for the future. This quarter is more proof of that progress where our disciplined execution is showing up in our results, led by our continued commercial momentum. Revenue was up year over year with a 1% smaller fleet and came in ahead of both consensus and our latest guidance. By continuing to sweat the assets and increasing total fleet utilization by 80 basis points to 79%, we achieved this despite elevated recalls compared to the year before.

This performance was driven by our strongest second quarter RPD on record. Excluding the peak COVID year of 2022, RPD was up 9% and RPU was up 8% versus last year, coming in at $1,542. RPU exceeded our North Star target and we saw sequential improvements in both throughout the quarter. Adjusted corporate EBITDA came in at $81 million, a $63 million year over year improvement and above our latest guidance, driven primarily by an even stronger RPD in June than we anticipated.

We continue to execute on our annual DPU North Star target through our disciplined rotation strategy that is defined by our buy right, hold right and sell right approach. At $302, DPU remains in line with target. However, we did experience three quarter-specific items that caused the total gain on sale to be lower than originally expected. First, the seasonal decline was more pronounced than we anticipated as wholesale volume temporarily outpaced demand.

Second, our disposition channels were not as optimal as we would like given the volume of cars we sold, and third, during the quarter, we altered the mix of vehicles and prioritized older and certain models. These dynamics temporarily drove down the proceeds from sale, resulting in a lower gain on sale. However, this didn't impact our go-forward view. 1% year over year.

The used car market is good and we're set up well for it. S. core fleet. We believe we have an exceptionally healthy fleet and we expect DPU will benefit as we rotate out of those vehicles over the coming quarters.

Turning to cost, total DOE per day increased slightly, primarily driven by costs that were both revenue related and were margin accretive associated with stronger RPD performance. Now this brings me to a broader point. The North Star metrics have given our teams a steady compass over the last two years, but as the business evolves, it's important to recognize that these metrics do not operate in isolation. As revenue grows, a portion of our DOE naturally grows alongside it, and many of those costs are tied to higher revenue and stronger profitability.

As a result, we're also increasingly focused on the relationship between those metrics and we expect our performance framework to evolve as our transformation continues. So while DOE was higher, our RPD to DOE per day spread improved by 17% year over year and it was our third consecutive quarter of year over year spread expansion. We remained extremely focused on managing core operating cost and the improvements we're seeing are the result of productivity initiatives encompassing people, processes and technology. One of our biggest levers we have is labor productivity.

Supported by Palantir, our new labor planning model aligns staffing with real time, reducing overtime, third party labor and improving workforce planning. We're also leveraging technology and AI-driven data insights to improve throughput and productivity across our operations to reduce our vehicle turnaround time. Additionally, we're making progress in leveraging our supply chain network, expanding part-out capabilities, strengthening collections recovery and improving maintenance processes, all to drive greater productivity with existing resources while lowering unit costs.

Although these results demonstrate the progress we've made in strengthening the economics of the business, recalls remain a significant headwind. Recall volume was up 300% in Q2 from the year prior, impacting an average of 15,000 vehicles per month across the first half of 2026. Recalls represented more than a $55 million EBITDA impact and we're pursuing regulatory, operational and contractual solutions to address this issue. More importantly, our ability to deliver this level of performance despite that headwind reinforces our confidence in the path to our long-term targets.

That said, while 2027 and $1 billion of adjusted corporate EBITDA are important milestones, they're not the final destination. As we've shared, we are focused on something bigger. We are applying our commercial, operational and fleet management capabilities across the four strategic areas of our platform to drive greater efficiency, create diversified growth engines and strengthen the company for the future. Our platform is the unlock to the next phase of value creation, deleveraging the balance sheet and growth.

And one of the greatest opportunities to grow is by more effectively leveraging the power of the Hertz brand. Hertz is an iconic, century-old brand recognized the world over. It's one of the most valuable assets with a strong reputation that we believe is under-monetized today. One way that we think we can use the power of our brand is in franchising.

It is a strong asset-light, capital-efficient part of our business with attractive and predictable economics. It's not new either. Today, more than 25% of the Hertz-branded revenue is generated by franchises. However, we haven't grown it in years and it hasn't received the level of focus necessary to realize its full potential.

We're now changing that and we're evaluating near-term opportunities across global footprint through both white space expansion and conversion activity and thinking strategically about whether Hertz should look more like our partners in the hotel industry. If our goal is to achieve higher quality earnings, stronger free cash flow conversion, more durable shareholder returns and improved balance sheet franchise there. In the next area of our platform, fleet, we are building on our unique competitive advantage of one of the largest used car dealers in the country, enhancing the capabilities of our used car factory.

We're continuing our journey of moving from primarily wholesale disposition towards more lucrative channels. We expect that expanding our ability to move additional car sales volume through these higher-yielding channels will have a significant effect on Net DPU and we're working to unlock those opportunities. We're exploring how we build strategic relationships with the leading used car companies, creating more mutual value and structurally reducing our cost of sale. Alongside new partnerships with best-in-class retailers, we also continue to make progress on our direct retail channel.

Wins this quarter included growing direct retail sales volumes, reducing reconditioning costs, delivering strong F and I performance. In mobility, Oro is gaining momentum. For over a century, Hertz has mastered the ability to operate complex fleets reliably, efficiently and at scale. Today, Oro is extending those capabilities to a new era of mobility, filling a critical gap in the industry's transition towards commercially operated driver-led and autonomous fleets.

The capabilities we built from acquisition and financing to efficient fleet management and maintenance would be incredibly difficult and costly to replicate from scratch. Today we're putting those capabilities to work through Oro's driver-led business model where we own, maintain and operate vehicles on rideshare platforms. Oro is now active on the Uber platform in four markets: Atlanta, Los Angeles, San Francisco and Northern New Jersey. We've expanded into these new offerings on the app, including Uber Black in New Jersey and Uber Teen in San Francisco and Los Angeles, and our drivers have logged more than 6 million miles today.

This business validates our ability to deliver high-quality and turnkey fleet solutions safely and at scale, supporting an enhanced customer experience. At the same time, we're developing the operations, processes, systems and infrastructure that directly translate to operating AVs at scale. Earlier this year, we announced our first AV partnership with Uber's Robo Taxi program supporting Lucid vehicles equipped with Neuro autonomous technology. We're on track to begin operations later this year in the San Francisco Bay Area.

We continue to see encouraging traction as we scale this part of the business. Oro already has meaningful scale and momentum through these offerings and the existing rideshare rental business. We expect it to generate more than $600 million in total revenue this year, with the ability to grow dramatically over the next decade. Opportunities for expanding capabilities, new partnerships and new avenues for value creation are emerging and we're focusing our resources on unlocking that growth.

This quarter is an exciting proof point in Hertz transformation. We're making tangible progress across the business and we're focused on execution and accelerating the improvements ahead of us. As I look at the quarter, there are four key takeaways I'd highlight. First, our core rental car business continues to improve and our commercial momentum is strong.

The actions we've taken over the last two years are driving better unit economics, creating a clearer path to stronger margins and potentially more than $1 billion of adjusted corporate EBITDA run rate in 2027 and beyond. Second, our fleet buy right, hold right, sell right strategy should continue to yield strong near-term results and solidify our ability to deliver Net DPU below $300 per month. Third, our strategy to expand the franchise portion of the rental car business has the potential to accelerate that progress.

We see it as a way to generate consistent earnings, strengthen free cash flow, unlock liquidity for growth initiatives and ultimately create a more durable value for shareholders whilst also supporting deleveraging. Finally, Oro may be new, but it is rapidly emerging as a meaningful growth platform. We believe it will continue to scale in revenue this year across all of its business lines and we have a plan in place that we think can reshape Hertz growth trajectory for years to come. The opportunities in front of us are significant.

We're encouraged by the momentum across the business and the opportunities ahead. Ultimately, results speak louder than words and we're focused on continuing to execute and demonstrating that progress quarter after quarter. With that, I'll turn it over to Sandeep. Scott Haralson, EVP& CFO Thanks, Andy.

Good morning, everyone, and thanks for joining. Before I get into the financial results, I'd like to step back for a moment. In any transformation, it's easy to become consumed by the next quarter, the next milestone, or the next challenge, and lose sight of how much has already changed. While we're not declaring victory today, we are seeing a business that is executing with increasing consistency operationally, commercially and financially.

Every successful transformation reaches an inflection point where the conversation begins to change early on. The question is, can this company recover? Eventually, through consistent and disciplined execution, the question becomes, how do they do that? We believe that shift comes through consistent execution over time.

We believe we are doing that, and this quarter represents another meaningful step in that journey, not because of any one single metric, but because the underlying economics of the business continue to improve. We recognize that it's hard for the market to fully reflect the progress we believe is occurring inside the business. That's understandable. We recognize that investors remain focused on our capital structure and upcoming debt maturities.

That's appropriate. Strengthening the balance sheet remains one of our highest priorities. What gives us confidence is that the business supporting our capital structure today is fundamentally different from the business of two years ago. We have continued to improve our fleet, the customer experience and operating efficiency, which has resulted in better operating performance and strength in free cash flow.

Plus, we continue to create additional strategic options. Our focus remains on continuing that progress while thoughtfully addressing our capital structure in a disciplined manner. And while this quarter's results are a really good outcome and they are important, we believe the more significant story is the trajectory of the business and the strategic initiatives that are beginning to reshape our earnings profile. Gil outlined the takeaways for where we are today.

I'd like to spend a minute discussing one on his list, and that's franchising, because I believe it represents one of the most underappreciated value creation opportunities within our business. I believe that our business today is ripe for an increasing level of franchising. It's already a consistent contributor to our adjusted corporate EBITDA results, and we haven't capitalized on this side of the business in the way that we should and will. Over the last two years, much of our work has been focused on transforming the operations.

Increasingly, the next phase of our strategy is about transforming the quality of our earnings. Franchising has the potential to accelerate that evolution through a more capital-light model that enhances margins, free cash flow generation, returns on invested capital and financial flexibility. It could give us more flexibility to allocate capital toward higher-return opportunities across the platform while also providing meaningful deleveraging benefits. We have already started down this path and will likely start to see evidence of this progression in the near future.

Taken together, the near-term benefits of a more focused franchise strategy plus the opportunities in our fleet business for retail car sales as well as the longer-term potential in ORO on top of a consistently improving rental car business gives us a broader set of levers to improve margins, strengthen returns on capital and enhance how Hertz creates value over time. We recognize there is significant work ahead, but we have been building towards this for some time and we expect to share more as these initiatives progress. With that, let me pivot back to the Q2 results. I'll also cover liquidity and insights into Q3, the full year and a bit on 2027.

4 billion, up 10% year over year, notably with a 1% smaller fleet. This was driven by strong pricing performance with RPD up 9% year over year and total fleet utilization was 79%, up 80 basis points even with a nearly 200 basis point headwind on utilization due to continued elevated recalls. This utilization increase allowed us to keep transaction days at prior-year levels even with less available vehicles for rent. Also, despite elevated recalls, RPU surpassed our expectations, reaching $1,542, up 8% year over year.

05 with an adjusted net loss of $47 million.