Hertz Global Holdings (HTZ)
Q4 2011 Earnings Call
February 23, 2012 10:00 am ET
Leslie Hunziker - Staff Vice President of Investor Relations
Previous Statements by HTZ
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Elyse Douglas - Chief Financial Officer, Executive Vice President and Treasurer of Hertz Corp
Unknown Executive -
Scott P. Sider - Executive Vice President and President of Car Rental & Leasing The Americas
Brian Arthur Johnson - Barclays Capital, Research Division
Michael Millman - Millman Research Associates
Richard M. Kwas - Wells Fargo Securities, LLC, Research Division
Christopher Agnew - MKM Partners LLC, Research Division
Emily E. Shanks - Barclays Capital, Research Division
John M. Healy - Northcoast Research
Fred T. Lowrance - Avondale Partners, LLC, Research Division
Yilma Abebe - JP Morgan Chase & Co, Research Division
Ladies and gentlemen, thank you for standing by. Welcome to Hertz Global Holdings 2011 Fourth Quarter and Full Year Conference Call. The company has asked me to remind you that certain statements made on this call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance and, by their nature, are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of the date -- as of this date, and the company undertakes no obligation to update that information to reflect changed circumstances.
Additional information concerning these statements is contained in the company's press release regarding its fourth quarter and full year results issued yesterday, and in the risk factors and forward-looking statements section of the company's 2010 Form 10-K and quarterly reports. Copies of these filings are available from the SEC, the Hertz website or the company's Investor Relations department.
I would like to remind you that today's call is being recorded by the company and is also being made available for replay starting today at 12:30 p.m. Eastern Time and running through March 8, 2012. I would now like to turn the call over to our host, Leslie Hunziker. Please go ahead.
Good morning. You should all have our press release and associated financial information. We've also provided slides to accompany our conference call that can be accessed on our website at www.hertz.com Investor Relations. Today, we'll use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers in our press release and at the back of the slide presentation, both of which are posted on our website. We believe that our profitability and performance is better demonstrated using these non-GAAP metrics.
Our call today focuses on Hertz Global Holdings Incorporated, a publicly traded company. Results for the Hertz Corporation differed only slightly, as explained in our press release. With regard to our Investor Relations calendar over the next couple of months, we'll be presenting at the JPMorgan High-Yield Conference on February 29, the Auto Rental News Show in Las Vegas on March 12 and the BofA auto summit on April 4.
This morning, in addition to Mark Frissora, Hertz' Chairman and CEO; and Elyse Douglas, our Chief Financial Officer; on the call, we have Scott Sider, Executive Vice President and President of Vehicle Renting and Leasing in the Americas; Michel Taride, Executive Vice President and President, Hertz International; and Lois Boyd, Executive Vice President and President of Hertz Equipment Rental Corporation. They'll be on hand for the Q&A. Now, I'll turn the call over to Mark.
Mark P. Frissora
Good morning, everyone, and thanks for joining us. I'm sure I'm preaching to the choir when I say the stock's performance over the last week has been extremely disappointing, especially when you consider that 2011 was a great year for Hertz.
Let's start on Slide 6, and I'll show you what I mean. As you can see, records were set on many fronts. We achieved the highest full year consolidated adjusted pretax income and margin in the company's history at $680.5 million and 8.2%, respectively. This exceeds the previous peak in 2007 of $656.4 million and 7.6%.
While our record earnings were supported by the early-stage recovery in the equipment rental market, the contribution was most evident in our worldwide rental car business. To be specific, in the worldwide rental car, we achieved the highest volume level and record volume growth year-over-year for both the fourth quarter and for 2011.
On the earnings front, on both a GAAP and adjusted basis, worldwide rent a car reported record pretax income and margin for the fourth quarter and full year. On an annual basis, the new peak for rental car adjusted pretax margin is 12%, up from 9.9% in 2010, the previous peak, and even the prerecession level of 8.7% in 2007. Corporate EBITDA for global rental car also set new historical highs from both an actual dollar and a margin perspective in 2011.
Moving to Slide 7. Clearly, our year-over-year performance was significant. The incremental upside to earnings came from the successful execution of our strategic initiatives to grow and diversify our revenue streams, increase efficiency and productivity and improve our capital structure. We made substantial progress on the actions we outlined last year to build out our value brand, expand our insurance replacement network and further penetrate equipment rental end markets for incremental organic growth. We also completed several strategic acquisitions that enhance our product and service portfolio. These assets position us as a new entrant in the leasing market, they expand our geographic coverage and increase our exposure in the fastest-growing markets for industrial equipment rentals.