HERTZ GLOBAL HOLDINGS, INC. Annual Report: Unpacking This Year's Performance

Hertz Global Holdings, Inc. navigated a pivotal year. This summary provides a clear, jargon-free look at the company's financial health, strategic decisions, and future prospects, helping you understand its investment potential.

Executive Summary

Hertz Global Holdings demonstrated resilience in its core rental car operations during fiscal year 2025, even as it made significant strategic shifts. The company reported total revenues of $9.8 billion for 2025, a 5% increase from $9.3 billion in 2024, primarily driven by strong demand in its Americas Rental Car segment. However, a strategic fleet optimization, specifically the major sale of Electric Vehicles (EVs) in 2024, impacted profitability. While this generated a one-time charge of approximately $290 million in 2024, Hertz expects it to enhance long-term fleet efficiency and profitability. The company ended 2025 with net income of $150 million, recovering from a net loss of $50 million in 2024.

Business Overview

Hertz Global Holdings, Inc. is one of the largest global vehicle rental companies. It primarily rents vehicles through its Hertz, Dollar, and Thrifty brands for short-term daily rentals or longer-term arrangements. Serving both leisure and business travelers, Hertz offers a wide range of vehicles and additional services. The company segments its operations geographically into Americas Rental Car and International Car Rental, providing comprehensive mobility solutions across numerous countries.

Financial Performance & Key Business Areas

Hertz's financial reporting details performance across three fiscal years (2025, 2024, and 2023), enabling clear trend analysis.

• Revenue Breakdown:
  • Vehicle-Related Services: This core segment, which includes car rentals, generated $8.5 billion in 2025 (up from $8.0 billion in 2024 and $7.5 billion in 2023), representing approximately 87% of total revenue. Increased rental volumes and improved pricing strategies, particularly in the leisure travel sector, drove this growth.
  • Non-Vehicle-Related Services: This segment, which includes insurance, fuel charges, and additional services, contributed $1.3 billion in 2025 (up from $1.2 billion in 2024 and $1.0 billion in 2023). This reflects successful efforts to diversify revenue streams and enhance customer value.
• Segment Performance:
  • Americas Rental Car: This segment drove growth, with revenues increasing by 7% to $7.2 billion in 2025. Strong domestic travel demand and effective fleet management fueled its robust performance.
  • International Car Rental: This segment experienced more moderate growth, with revenues reaching $2.6 billion in 2025, a 2% increase. Varying economic conditions and competitive landscapes across different regions influenced its performance.
• Profitability: While 2024's operating income dipped due to the EV fleet restructuring, it rebounded to $400 million in 2025 from $100 million in 2024. This demonstrates the core business's underlying strength after restructuring.

Strategic Fleet Management & EV Divestment (MD&A Highlights)

In 2024, Hertz made a pivotal strategic move: selling a significant portion of its Electric Vehicle (EV) fleet. The company initially classified these vehicles as "held for sale" and later sold them across both its Americas and International segments. Hertz made this decision due to several factors:

• Higher-than-anticipated depreciation: EVs depreciated faster than initially projected.
• Increased maintenance costs: Specialized EV maintenance proved more costly and complex.
• Lower customer demand: EV rental demand did not meet initial expectations in certain markets. While this strategic pivot generated a one-time charge of $290 million in 2024, Hertz expects it to improve future fleet resale values, reduce operational complexities, and optimize the overall fleet mix. This better aligns the fleet with customer preferences and cost efficiency. The company plans to maintain a flexible fleet strategy, mixing traditional gasoline-powered vehicles with a smaller, more targeted EV presence. Management believes these actions will position the company for improved long-term profitability and operational efficiency by better matching fleet composition to market demand and cost structures.

Financial Health

Hertz supports its financial health with a diversified debt structure and evolving shareholder equity.

• Cash and Liquidity: Hertz maintains Revolving Credit Facilities that provide flexible liquidity, with $500 million available as of December 31, 2025. Beyond credit facilities, the company manages its liquidity through operating cash flows and access to public markets to maintain sufficient resources for operations, capital expenditures, and debt obligations.
• Debt: Hertz uses various financing instruments, including:
  • Term Loans: This includes a $1.5 billion term loan due in 2028.
  • Senior Notes: These have various maturities, such as $1.0 billion due in 2027 at an average interest rate of 6.5%.
  • Vehicle Financing Arrangements (e.g., HVFIII series): These specialized facilities are crucial for funding the rental fleet, with $6.0 billion outstanding as of year-end 2025.
  • The company's Debt-to-EBITDA ratio improved to 3.5x in 2025 from 4.2x in 2024, reflecting improved operational performance and debt management.
• Shareholder Equity: Common stock, additional paid-in capital, retained earnings, and other comprehensive income changed, reflecting the year's financial results and capital allocation decisions. Total shareholder equity stood at $2.5 billion as of December 31, 2025, an increase from $2.3 billion in 2024.

Competitive Position

Hertz operates in a highly competitive global vehicle rental market. It competes with large national and international rental companies (e.g., Enterprise Holdings, Avis Budget Group), smaller regional players, and increasingly, ride-sharing and car-sharing services. The company's competitive advantages stem from its strong global brand recognition, extensive network of airport and off-airport locations, diverse fleet offerings, and technology investments that enhance the customer experience. Hertz differentiates itself through operational efficiency, customer service, and strategic partnerships. It leverages its scale to negotiate favorable terms with vehicle manufacturers and maintain competitive pricing. Adapting its fleet mix and technology offerings to evolving customer preferences and market dynamics is crucial for maintaining its market position.

Risks and Future Outlook

Hertz faces several risks that could impact future performance:

• Economic Downturns: A significant slowdown in travel or consumer spending could reduce rental demand.
• Interest Rate Fluctuations: Rising interest rates could increase the cost of its substantial vehicle financing and other debt.
• Vehicle Supply Chain & Resale Values: Disruptions in new vehicle production or unexpected declines in used car values could impact fleet costs.
• Competition: The rental car market remains highly competitive, requiring continuous innovation and efficient operations.
• Future Legal Matter: A pending litigation involving Wells Fargo Bank National Association and The Hertz Corporation, identified as an event occurring after the reporting period in January 2026, could impact the company's vehicle financing arrangements or liquidity. The dispute involves certain terms in their vehicle financing agreements. While the potential financial impact is currently being assessed, it represents a material risk to monitor.
• Pension Plans: The company maintains both U.S. and foreign employee pension plans, which market fluctuations and regulatory changes could affect, potentially impacting funding obligations.

For the coming year, Hertz will focus on optimizing its fleet mix, enhancing customer experience through technology investments, and maintaining disciplined cost management. It aims to leverage its strong brand and global presence to capitalize on sustained travel demand, while prudently managing financial leverage and operational risks. Management expects to continue streamlining operations and improving fleet utilization to drive long-term shareholder value.