Nearly a month after announcing the sale of one-third of its electric vehicle fleet and one day after reports of“paused” purchases of Polestar EVs, Hertz on Tuesday announced a fourth-quarter loss.
Hertz reported a fourth-quarter 2023 loss of $348 million compared with income of $116 million a year prior, on revenue of nearly $2.2 billion, a 7 percent increase year over year. Total revenue per day for the quarter was $58.09, a 4 percent decline from a year prior.
On a Tuesday quarterly earnings call, Hertz CEO Stephen Scherr noted cost challenges in the fourth quarter, “which were a continuation of the challenges we faced throughout 2023.” Some of those included elevated collision and damage, “largely driven by costs associated with running our EV fleet, and perhaps more significantly, the challenge of the EVs had an impact on our operational efficiency more generally, further supporting the advisability of our EV sales plan,” Scherr said.
“This bottom-line result is unacceptable,” Scherr said, but he added that he has “confidence” in the company’s trajectory. “We expect 2024 will be a transitional year for Hertz, and we expect to regain our operational cadence and improve our financial performance with increasing effect into 2025,” he said.
New COO Justin Keppy outlined five areas of focus in 2024 for productivity and cost benefits, with the aim of achieving $250 million in benefits over the course of the year. These include “right-sizing and reducing third-party spend” as well as reducing the company’s off-airport footprint from underperforming locations and redeploying those cars to airports and other locations.
Keppy also noted the company was “attacking” operating costs and improving field productivity, and highlighted new digital tools rolled out in the fourth quarter to “enable more real-time and simpler documentation of damage upon a vehicle’s return to the lot.” In addition, Hertz is centralizing and consolidating procurement spend, with the fifth area concerning exploring opportunities in technology, such as “modernizing our infrastructure, moving solutions to the cloud and retiring legacy software platforms.”
Hertz also expects that the planned reduction in its EV fleet will result in about $250 million to $300 million in incremental free cash flow over the course of the next two years.
Regarding the corporate segment, the company saw “meaningful growth” in volume for the year “across leisure, corporate and rideshare,” Hertz CFO Alexandra Brooks said. In January, “we’ve seen strong corporate growth, particularly in the Midwest, locations like Detroit and Chicago that are showing high volume,” Scherr added.
Full-year revenue was up 7.9 percent versus 2022 to nearly $9.4 billion. Net income for the year was $616 million, compared with 2022 net income of nearly $2.1 billion.
