Hertz 2009 Annual Report Download - page 4

Letter To Shareholders
Dear Hertz Shareholders,
In 2009, Hertz experienced the most difcult macro-
economic conditions in its 91-year history. We began
the year executing plans to mitigate the effects of
unprecedented, double-digit declines in car and
equipment rental volumes, and to eliminate any nancial
impact from auto manufacturer bankruptcies. Because
of a concerted, company wide effort by our employees
and business partners worldwide, these plans were
executed successfully. Despite the recession, we
achieved year-over-year prot improvement for the last
two quarters of 2009, and we generated over $170
million of incremental revenue from new products and
services. While the full effects of the global recession
are not behind us in 2010, Hertz is a much more
efcient company poised for signicant growth from new
revenue-generating initiatives in the car and equipment
rental businesses. As a result, we believe operating
margins, on an adjusted pre-tax basis, should improve
360 basis points as revenues normalize to 2007 levels.
Our diversied revenue sources and a proven ability
to manage costs will become even bigger competitive
advantages as macro-economic conditions improve.
As 2010 unfolds, and consistent with the trend in
the second half of 2009, we continue to experience
improvement in U.S. car rental, our largest business.
The corporate travel business is rebounding along with
our leisure business, which already represents more
than 50% of our revenue and is rapidly expanding
after the acquisition of Advantage Rent A Car in April
2009. Consistent with current economic conditions,
our European business continues to decline modestly
compared with last year, but we achieved our 2009
nancial targets in Europe due to solid expense
management and targeted revenue growth.
Hertz Equipment Rental Corporation (HERC)
continues to suffer through the worst construction-
related recession in its 41 year history. In over two
years, revenues have been cut by 40%. Throughout
2009 HERC maintained Corporate EBITDA* margins of
over 40%, while diversifying and expanding its business
opportunities. The good news is that when Europe and
the construction industry rebound, we believe Hertz
will realize signicant revenue growth and margin
expansion due to the operational improvements we’ve
made and the market opportunities we’ve developed.
We are also successfully developing businesses in key
emerging markets such as Brazil, China and India.
As we worked through the global recession, we never
wavered from our philosophy of managing the business
with balanced emphasis in three key areas: asset
management, employee satisfaction and customer
satisfaction. We made tough decisions and we shared
sacrices to carry us through the worst periods, but by
maintaining a balanced approach we achieved rapid
prot improvement as conditions eased at the end of
the second quarter last year.
Asset Management
Our asset management achievements in 2009
were exemplary given underlying external conditions,
and include:
n Consolidated 2009 operating margin equaled
2008 margin of 2.8%, worldwide car rental margin
increased 360 bps to 7.8%.
n Cost savings of $760 million in 2009, with
cumulative savings of $1.2 billion since 2007.
n 2009 eet costs worldwide were reduced by more
than 4%, with double-digit decreases in the second
half of the year.
n Worldwide car rental eet utilization increased
140 bps to 78.4% and net depreciation per unit
decreased 2.6% compared with 2008.
n Total net cash ow* of over $730 million, easily
beating our targets.
n $3.3 billion of U.S. eet debt renanced a year
ahead of schedule and on favorable terms.
Employee Satisfaction
Despite a difcult operating environment, employee
satisfaction improved throughout the year. Because of
the severity of the recession, we reduced staff and
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