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Hertz Stock Plummets on Earnings Cut, Capital Raise
24 Jun
Summary
- Hertz lowered Q2 earnings forecast due to used car market weakness.
- The company is raising capital through stock and debt offerings.
- Net depreciation per vehicle unit is expected to reach $300 for Q2.
Hertz Global Holdings experienced a significant stock decline of over 20% in pre-market trading on Wednesday. This downturn followed the car rental company's announcement of a reduced second-quarter earnings forecast. The company cited unexpected weakness in the used car market as the primary reason for this downward revision.
In a preliminary filing, Hertz lowered its Adjusted Corporate EBITDA outlook for the second quarter to a range of $50 million to $80 million. This adjustment reflects challenges in vehicle sales, impacting net depreciation per unit per month, which is now projected to be around $300 for the second quarter.
Despite these headwinds, Hertz expects fleet size, revenue, and rental days to meet or slightly exceed previous expectations, with demand remaining healthy. To navigate the current financial landscape, Hertz is pursuing capital raises. It announced a proposed offering of $100 million of common stock and intends to issue $300 million in Exchangeable Senior First-Lien Secured PIK Notes due 2030.
The proceeds from these offerings are intended for general corporate purposes, potentially including debt repayment. Hertz operates over 11,000 rental locations across 160 countries, with its headquarters based in Estero, Florida.
