Hertz Global (HTZ) Cuts Q1 Outlook; Notes Excess Industry Capacity

Hertz Global Holdings, Inc. (NYSE: HTZ) said today that, due to what the company believes is excess industry capacity, it now expects its first quarter and full year 2016 U.S. car rental (U.S. RAC) revenue and consolidated first quarter adjusted earnings per share to be lower than previously expected. Despite this reduction, the company is affirming its full-year 2016 adjusted Corporate EBITDA* guidance within a range of $1.6 to $1.7 billion.

For the first quarter 2016, Hertz Global Holdings expects U.S. RAC revenue per available car day** (RACD) to decline between 2.5 to 3.5 percent versus the same period last year on low single-digit growth in transaction days. For the full year 2016, Hertz Global Holdings now expects U.S. RAC total revenue to be flat to 1.5 percent lower versus the company's previous guidance of 1.5 to 2.5 percent growth year over year. The company continues to expect modest U.S. RAC transaction day growth in 2016, primarily driven by its on-airport business. In addition to maintaining its 2016 adjusted Corporate EBITDA guidance, the company provided corresponding full-year adjusted earnings per share guidance of between $0.95 per share and $1.10 per share, which is based on an average of 424 million shares outstanding and a 37 percent effective tax rate.

"We are disappointed that the pricing pressure experienced late in 2015 further intensified in the first quarter of 2016. However, we believe that industry capacity will likely moderate as seasonal demand improves establishing the foundation for a relative improvement in pricing as we head into the peak summer season," said President and Chief Executive Officer John Tague.

Hertz Global Holdings continues to expect to achieve $350 million of incremental savings in 2016. Similar to 2015, the company expects a lower rate of savings realization during the first half of the year as targeted initiatives ramp up throughout 2016.

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