Hertz 2012 Annual Report Download - page 6

Putting it
All Together
In 2012, Hertz again delivered record financial perfor-
mance on a consolidated basis, and in the worldwide
car rental business. The equipment rental business
also delivered solid, improving results, despite weak
non-residential construction growth. We achieved
several critical objectives last year, as we put together
the pieces of our strategic puzzle, and we broke
customer and employee satisfaction records. We
expect to perform even better in 2013 and beyond
because of our:
• Diverse Global Portfolio
• Superior Growth Strategies
• Culture of Operational Excellence
• Leadership in Advanced Technology
• Commitment to Accelerating Cash Flow Generation
Diverse Global Portfolio
When 2012 began, Hertz was already the leading global
car rental brand with over 8,800 locations in approxi-
mately 150 countries. Upon completing the Dollar Thrifty
acquisition last November, the combined companies
have approximately 10,600 locations, and revenues
of almost $14 billion, including franchisees. Joining
forces with the Dollar and Thrifty brands enables Hertz
to compete on all fronts against the other multi-brand car
rental companies at major U.S. airports. We will also
deploy our new brands off-airport in the U.S., in Europe
and in other important global markets. Additionally,
Dollar and/or Thrifty will be offered as new options to
the customers and employees of our key travel and
corporate partners.
Superior Growth Strategies
Unlike most companies, Hertz has four $500 million-
plus businesses growing revenues at double-digit levels,
which are exceeding their industries’ growth levels as we
enter 2013. The first is the leisure brand of the U.S.
airport business, which, for Hertz, grew 25% last year.
Growth will accelerate with the addition of Dollar and
Thrifty, replacing the divested Advantage brand. Our
new brands have carved out a successful $1.5 billion-
plus business attracting cost-conscious weekend and
holiday travelers, especially in key travel markets such
as Florida and California.
The Hertz off-airport business in the U.S. continues to
expand rapidly, ending last year with more than 2,500
locations, while generating annual revenues of over
$1.3 billion. Its growth is attributable to several factors
including location expansion and our penetration into
the insurance replacement market, which grew 14% for
Hertz last year. Hertz continues to gain market share
in the $11 billion off-airport market.
Our fleet leasing and management company, Donlen,
which we acquired in 2011, grew revenues 16% in 2012.
Donlen is a leading fleet leasing option for mid to large
size U.S. businesses. Many companies also utilize
Donlen’s proprietary telematics and reporting capability
to measure and modify fleet performance in real time.
The equipment rental business (HERC) increased 2012
revenues more than 15% over 2011. Part of HERC’s rapid
growth is due to the successful integration of 11 small
acquisitions since 2010. These acquisitions give us entry
or further penetration into entertainment, pump &
power, and oil & gas production markets. Additionally,
HERC continues to grow in the industrial segment of
the equipment rental business, supporting factory
expansion and turnaround activity. There are signs that,
after a four-year recession, the non-residential con-
struction business could begin to recover in 2013, which
would provide additional stimulus to HERC’s growth.
Culture of Operational Excellence
In 2007, we embarked on a mission to become the most
efficient company in our businesses. To date, we’ve
reduced costs by more than $2.6 billion, including
$483 million in 2012. We’ve also increased employee
productivity for 24 consecutive quarters, including the
2008–2009 recession when our revenues decreased
by almost 20%. We achieve operational excellence by
applying Lean/Six Sigma principles and practices to
field and support functions across the company. We
proceed location-by-location, at airport and equipment
rental stores worldwide, to further improve efficiency,
customer service and employee satisfaction by reengi-
neering key rental processes. And in the spirit of con-
tinuous improvement, the quest to be more efficient
will never end at Hertz.
Leadership in Advanced Technology
As mentioned earlier, Donlen is already the technology
leader in fleet leasing and management. Likewise, Hertz
is staking its claim as the technology leader in car rental.
We’ve created, via acquisition of Eileo, the leading
car sharing technology company based in Paris, and
DEAR HERTZ SHAREHOLDERS,
PAGE 2