Hertz Global (NASDAQ:HTZ) reported a challenging first quarter of 2024, with financial results falling short of analyst expectations, leading to a 1.7% decline in its stock price. The car rental giant posted an adjusted net loss of $392 million, or -$1.28 per diluted share, which was significantly below the analysts' estimate of -$0.45 per share. Despite a 2% increase in revenue to $2.1 billion, surpassing the consensus estimate of $2.04 billion, the company's earnings were heavily impacted by increased vehicle depreciation and operating costs.
The company's CEO, Gil West, acknowledged the headwinds faced in the quarter, citing fleet and direct operating costs as major factors affecting performance. West outlined a strategy focusing on optimizing vehicle supply, improving productivity, and enhancing customer experience to leverage the strong travel demand anticipated in the transition year.
Hertz's first quarter saw a modest revenue increase from $2.06 billion in the first quarter of 2023, driven by a 9% rise in transaction days, particularly from leisure and rideshare customer channels. However, rental price per day (RPD) dropped by 7% YoY, a decline that moderated to 3% in March. The company also took a substantial $195 million charge related to the depreciation of electric vehicles (EVs) intended for sale.
The adjusted Corporate EBITDA for the quarter was negative $567 million, with vehicle depreciation increasing by $588 million compared to the same period last year. This included the aforementioned EV-related charge and was primarily driven by a downturn in estimated residual values and losses on internal combustion engine vehicle sales, contrasting with gains in the prior year.
Hertz's total corporate liquidity stood at $1.3 billion as of March 31, 2024. Despite the earnings miss and the stock's subsequent negative movement, the company is implementing revenue and cost initiatives aimed at bolstering future profitability.
The company's focus on fleet optimization and operational efficiency, as well as its approach to navigating the evolving travel landscape, reflects its commitment to improving shareholder returns. Hertz's management remains confident in the strategy set forth to navigate current challenges and capitalize on market opportunities.