Summary

The recent USD 1.65bn bond issuance by Hertz Global (HTZ) provided the company with much-needed liquidity at a critical time as it commences a broad fleet refresh that includes retrenching from its electric vehicles (EVs) strategy, and driving forward with new senior management focused on cost savings initiatives, revenue optimizing opportunities, and capitalizing on the Hertz and Dollar Thrifty brands. The surprisingly weak 1Q24 results, with a large negative adjusted EBITDA that badly missed the low-end of expectations, and guidance for negative adjusted EBITDA again in 2024, signals that 2024 will be a transitional year for the company. Based on our expectations for negative FY24 adjusted EBITDA, our waterfall valuation uses estimated FY25 adjusted EBITDA and finds that the company’s debt is covered with minimal equity value.