Hertz executives on a Thursday morning earnings call cited "particular strength" in the company's domestic business during the third quarter and noted "softness" in the international segment.
"Our core U.S. business—that gave us steady demand and pricing strength all quarter," Hertz CEO Gil West said, with chief commercial officer Sandeep Dube adding that the U.S. segment performed especially well at airports, with revenue per day there increasing approximately 8 percent year over year despite lower Q3 Transportation Security Administration volumes.
"These gains were partially offset by the softer revenue environment in international," Dube said. "The improvement in our core U.S. business was primarily a result of our work done in prior quarters to increase quality durable demand. Improved pricing sophistication was a secondary factor, too."
While the company progressed on revenue optimization and disciplined fleet management, two of its three strategy priorities, the third, cost control, "is where most of the work remains," West noted. "Revenue growth matters, but ultimately, it's about margin. That is why we are focused on increasing the spread between RPD and [direct operating expense] per day, which is our best measure of operating efficiency and drives margin expansion."
Hertz's strategy also is to "move more of the network toward a capital-light franchise model," CFO Scott Haralson said. West added that last week the company signed an agreement with its existing Baltic franchise partner to transition company-owned locations in the Czech Republic and Slovakia to management under a new franchise agreement.
"We expect to see the liquidity benefits of our franchise conversions likely beginning in late Q1 or early Q2," Haralson said.
Hertz Q3 Metrics
Hertz's third-quarter revenue increased 6 percent year over year to more than $2.6 billion on what Gil called "flat capacity."
The company's third-quarter net income was $116 million compared with $184 million a year prior.
Hertz's total average rentable vehicles for the third quarter increased 1 percent year over year to about 533,750. Transaction days remained flat at 41 million. Total revenue per day increased 5 percent to $64.06 as DOE per day was up 6 percent to $37.76.
The Americas reported third-quarter revenue of more than $2 billion, up 7 percent year over year. Average rentable vehicles for the segment increased 1 percent to 412,900. Transaction days held steady at 31.9 million from prior-year levels, and total revenue per day increased 7 percent to $64.21, while DOE per day also increased 7 percent to $38.84.
Third-quarter international revenue increased 1 percent year over year as did average rentable vehicles (120,850). Transaction days were up 1 percent to nearly 9.1 million. RPD declined 1 percent to $63.55, while DOE per day for the segment was relatively flat at $33.36.
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