Hertz Says Travel Demand Returning After 33% Revenue Decline
(Bloomberg) -- Hertz Global Holdings Inc. said it’s seeing a boost in travel demand despite reporting a 33% drop in revenue in the three months through March 31.
The company reiterated that it’s on track to emerge from bankruptcy in June. It’s weighing plans from two sets of suiters to take the company out of Chapter 11. As the nation emerges from Covid-19 restrictions, travel demand has come back and more consumers are seeking car rentals.
Hertz is in talks with potential bankruptcy plan sponsors and said in a regulatory filing Friday that a group including Centerbridge Partners, Warburg Pincus and Dundon Capital Partners intends to counter a proposal from Knighthead Capital Management and Certares Management that the car renter had deemed superior. An auction to determine the highest bidder between the dueling groups is scheduled for May 10, with a hearing to approve the final result set for May 14.
“This quarter we realized the first effects of the leisure travel rebound and capitalized on strong demand-driven pricing in destination markets that exceeded 2019 levels,” Paul Stone, Hertz’s president and chief executive officer, said in a statement. “We’re continuing to see improved demand and are optimistic about a sustained recovery.”
Hertz reported first-quarter revenue of $1.3 billion, down 32% from a year ago. Net income was $190 million and adjusted earnings before interest, taxes, depreciation, and amortization were $2 million. Liquidity at the end of the quarter was $1.1 billion. On an adjusted basis, Hertz lost 33 cents a share, or $52 million.
In the first quarter, the company also closed the sale of its Donlen commercial leasing business for $891 million in cash.
Hertz said its vehicle utilization rate was 75%, which is close to normal levels and up from 67% a year ago when the Covid-19 pandemic starting crimping travel. The company’s revenue per day rose 11% to almost $48, as a shortage of cars and boosted travel demand helped the rental firm get better rates. Depreciation per vehicle per month decreased 21% to $234, driven by strength in used-car values.
Both investor groups have submitted multiple rounds of proposals to buy the company. The latest plans from each side offer lenders and bondholders full repayment and a partial recovery for shareholders, a relative rarity in bankruptcy proceedings. The Knighthead and Certares plan assigned Hertz an enterprise value of around $6.2 billion and offered shareholders a mix of cash and warrants worth around $2.25 a share, Bloomberg reported.
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