Hertz 2012 Annual Report Download - page 29

ITEM 1. BUSINESS (Continued)
We provide commercial fleet leasing and management services to national corporate customers
throughout the United States and Canada through Donlen, a wholly owned subsidiary of Hertz. Donlen is
a fully integrated fleet management services provider with a comprehensive suite of product offerings
ranging from leasing and managing vehicle fleets to providing other fleet management services to
reduce fleet operating costs.
Worldwide Equipment Rental
We estimate the size of the U.S. equipment rental industry, which is highly fragmented with few national
competitors and many regional and local operators, increased to approximately $31 billion in annual
revenues for 2012, but the part of the rental industry dealing with equipment of the type HERC rents is
somewhat smaller than that. We believe that the industry is expected to grow at a 10.6% compound
annual growth rate between 2013 and 2016. Other market data indicates that the equipment rental
industries in China, France, Spain and Saudi Arabia generate approximately $5.1 billion, $4.5 billion,
$2.5 billion and $0.5 billion in annual revenues, respectively, although the portions of those markets in
which HERC competes are smaller.
The equipment rental industry serves a broad range of customers from small local contractors to large
industrial national accounts and encompasses a wide range of rental equipment from small tools to
heavy earthmoving equipment. We believe U.S. non-residential construction spending declined at an
annual rate of approximately 7% in 2012 but is projected to increase at an annual rate of 6% in 2013. We
also believe that rental equipment will account for approximately 50% of all equipment sold into the U.S.
construction industry in 2012, up from approximately 5% in 1993. In addition, we believe that the trend
toward rental instead of ownership of equipment in the U.S. construction industry will continue and that
as much as 50% of the equipment used in the industry could be rental equipment by 2015.
Our Business Segments
Our business consists of two reportable segments: rental and leasing of cars, crossovers and light
trucks, or ‘‘car rental,’’ and rental of industrial, construction and material handling equipment, or
‘‘equipment rental.’’ General corporate expenses, certain interest expense (including net interest on
corporate debt), as well as other business activities, such as fees and certain cost reimbursements from
our licensees are included as ‘‘other reconciling items.’’
Car Rental: Our ‘‘company-operated’’ rental locations are those through which we, or an agent of ours,
rent cars that we own or lease. We maintain a substantial network of company-operated car rental
locations both in the United States and internationally, and what we believe to be the largest number of
company-operated airport car rental locations in the world, enabling us to provide consistent quality and
service worldwide. Our licensees and associates also operate rental locations in approximately 145
countries and jurisdictions, including most of the countries in which we have company-operated rental
locations.
Equipment Rental: We believe, based on an article in Rental Equipment Register published in May 2012,
that HERC is one of the largest equipment rental companies in the United States and Canada combined.
HERC rents a broad range of earthmoving equipment, material handling equipment, aerial and electrical
equipment, air compressors, generators, pumps, small tools, compaction equipment and construction-
related trucks. HERC also derives revenues from the sale of new equipment and consumables as well as
through its Hertz Entertainment Services division, which rents lighting and related aerial products used
primarily in the U.S. entertainment industry.
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