Hertz withdraws 2014 guidance
To the surprise of very few, Hertz Global Holdings, Inc. (NYSE:HTZ) announced earlier this week that it was withdrawing its prior guidance for corporate performance for 2014. The firm has also repeatedly delayed earnings reports and is having to restate three years of SEC filings due to accounting irregularities.
Millman estimates Hertz will only earn $.85 per share in 2014, but earnings will double to $1.71 in 2015.
Self-inflicted problems finally ending
In his report, Millman describes Hertz’s problems as self-inflicted, and notes it appears the company is making the right moves to get back on track. He also notes that the market backdrop should provide the company with some tailwind. “The good news is that the rental car market is (relatively) strong. Leisure prices have risen (even if Hertz didn’t have the capacity to take advantage). And “By mid-third quarter, usable fleet net of recalls has risen substantially” which should allow the company to benefit from good market conditions (as has Avis).”
However, Millman also points out that there is still no firm timetable for reporting past earnings. The company has hired several new accounting execs and support staff. On August 18th, Hertz Global Holdings, Inc. (NYSE:HTZ) also announced the retirement of Scott Sider, head of U.S. rental car operations, along with retirement of the Lead Director.
Possible Uber deal?
The Millman report also highlights that according to Reuters, Michel Taride (President Hertz Europe) has been having exploratory conversations regarding using a version of Uber’s app in Hertz car sharing business. A deal with Uber could significantly increase the potential market for Hertz car share rentals by increasing Hertz car share membership, which would also likely mean that rentals would increase appreciably.
These negotiations, however, are likely to be lengthy, as the legal and practical issues to be hashed out are numerous and complex.
