Hertz 1Q16 Earnings Call Notes

Hertz Global Holdings (HTZ) John P. Tague on Q1 2016 Results

Excess fleet capacity pressured pricing

“even though our fleet level was on plan, RPD remained under pressure as industry pricing struggled with what we believe was a base level of excess capacity that was then further exacerbated by the mild winter affecting insurance replacement demand and somewhat weaker business travel trends.”

Seeing improving trends now though

“We believe the pricing pressure we’ve experienced is temporary, as evidenced by recently improving trends as we move towards the peak season. “

Decided not to buy back shares given challenging revenue environment

“we elected not to repurchase additional shares of Hertz Global Holdings during the quarter.
While we clearly believe our stock is significantly undervalued, we concluded that given the challenging revenue environment in the U.S. industry in the first quarter, it would be prudent to take a cautious stance for now. Should recently improved pricing trends continue as we expect they will, we will next assess the cadence of our buybacks following the Hertz separation.

Spinning off equipment rental business

“. As you can see from Tom and Larry’s remarks, we are now at the long-awaited eve of separating the HERC business and moving these two companies forward. I think the progress Larry and his leadership team are making outside of the transitory noise of oil and gas is evident.”

historically it’s been difficult to differentiate brands in this business

“differentiation amongst brands is historically a struggle in this business, but there are clearly reasons to have multiple brands. So I think going forward, both in terms of customer experience and brand positioning, we’re going to continue to push Hertz up as the premium rental car brand in the market, while creating appropriate value positions for the other brands that address their own segmentation”

I think it’s too soon to call an inflection point but things are improving

“ I think we expect things to improve in the second quarter, but I think it’s too soon to call it an inflection point. I would expect to see – be more satisfied in the third, but I’m not prepared to say that’s a hockey-stick inflection point. It’s simply things improving. I do truly believe this is transitory. I think all the industry participants are suffering from the consequences of this pricing environment, and I believe this is largely an industry that’s responsible to capital returns to investors.”

Residual values have moderated not collapsed

“So when you think about what we’ve experienced over the last several months, you’ve really got the moderating of a very long bull cycle on residual values. It’s moderating. It’s clearly not a collapse. It’s a moderation. “

moderate level of concern for European tourism from the US

“ As we went through the first quarter, we really didn’t see anything. Previous events such as were experienced in Belgium had turned out in retrospect to be more moderate than we thought. But we are watching given that this is a peak-booking season for the summer as that develops. So I think there’s a moderate level of concern recently in terms of demand, particularly from the U.S. market to Europe, but nothing that we’re prepared to extrapolate or that we believe can’t be mitigated.”

It’s hard to forecast since booking cadence is very short in this industry

“I can appreciate why we’d all like to know the answer to those questions, but we’re not in a position to provide specific guidance there. One of the difficult things about revenue visibility in this industry is the extreme shortness of booking curve, which is partly a function of pricing structure and excess supply. I think it could be a much longer more indicative booking curve than it is, but for the time being most of that activity is incurring within 30 days of pickup. So, I don’t know that – booking trends I would say are positive, but the data sample is small when you go beyond 30 days.”

Miscellaneous Earnings Call Notes 11.12.15

Chicago Bridge & Iron NV (CBI) Philip K. Asherman on Q3 2015 Results

Technology group turning around after slow start to this year

“In our Technology Group, after a slow start this year due to economic headwinds in China and a strong dollar elsewhere, the technology market is turning around.”

The Kraft Heinz (KHC) Bernardo Vieira Hees on Q3 2015 Results

ZBB is more than just a one time event

“The way we like to think ZBB, to be honest, is much less as a one-time event and much more as a systematic approach of doing business. It’s really fighting for the penny in the terms of capturing all the opportunities that allows us to be in a position that you can reinvest more behind working dollars, behind our people, behind our products, behind our brands and so on. So it’s not only a program, but it is really a business tool that we apply in different ways.”

USA Trucks’ (USAK) CEO Tom Glaser on Q3 2015 Results

Environment has been ok, holding up well

“I think it’s holding up well, to be honest with you. The volume hasn’t been exciting like it was last year but it’s consistent, it’s okay volume. As far as pricing, and probably not going to be as aggressive as some of our competitors in saying they are looking at 3% to 5%. We’re looking at probably 2% to 3%, and that’s pretty aggressive given the fact that our last two years”

AP Moeller-Maersk’s (AMKAF) CEO Nils Andersen on Q3 2015 Results

Container shipping rates have deteriorated in 2H

“Essentially, what is basically driving the change in our forecast is that the fundamentals in the container shipping have deteriorated in the second half of Q3; the rates have dropped quite significantly. So on average, the rates are or were 20% or 19.3% to be exact I believe, below last year’s and that became worse during the quarter. So September and October did not give any hopes for an immediate recovery and that’s why we adjusted downwards.’

Capacity has grown faster than demand

“So the challenge in the container business is not new. We’re struggling with all capacity; capacity has grown approximately 9% compared to Q3 last year and the market has only grown 1%. I think the low growth has taken everybody by surprise. At least it was below what we expected and definitely did not meet our hopes for the peak season.”

ArcelorMittal’s (MT) CEO Lakshmi Mittal on Q3 2015 Results

Expecting global steel consumption to decline by 1.5-2%

“This shortfall in volumes reflects the exceptionally challenging market we have faced so far in the second-half of this year. With the exception of Europe, all major markets have seen apparent demand contract in 2015. We are now forecasting global apparent steel consumption to decline by between 1.5% up to 2% this year. China, the ongoing weakness in real estate and machinery end-markets has caused a contraction of real demand by around 3% up to 4% this year.”

Chinese production is sticky but they have no structural cost advantage

“Chinese steel production is sticky, so exports have increased. Here the volumes, price, excluding China have declined to less than $300 per tonne. But this is not a profitable business model for Chinese mills as they have no structural cost advantages. This is highlighted by Sesa reports that mills lost an average of $35 per tonne in the third quarter.”

Customers are holding off on buying while prices are falling

“My view is that this is unsustainable. In order to arrest these losses, steel prices in China need to increase, either as a result of improved demand or as a result of production curtailment. The weak international price environment is eroding prices in our core domestic markets, also prompting customers to hold off on their order and their inventories down, so apparent demand has been running below real demand. And expected stabilization of prices will bring steel buyers back to the table. There is already some indication of this happening at the margin. ”

Hertz Global Holdings (HTZ) John P. Tague on Q3 2015 Results

Rise sharing impact has been less than “logical worriers” might expect

“As it relates to ride-sharing, we’ll talk a little bit about that next week. I think if you look at the highest concentration of ride-sharing markets, New York, San Francisco, and LA, in New York, you’d see an impact or at least what appears to be an impact. I think it would be hard in Los Angeles and San Francisco, given the overall industry trends, to draw a conclusion that there has been much of an impact, although obviously growth would have been higher for the industry without it. So, look, I think the impact continues to be less than the logical worriers might expect.”

The Priceline Group (PCLN) Darren Richard Huston on Q3 2015 Results

Travel is an inherently non-local business

“The case of China is a good reminder that travel is inherently a non-local business. It’s a global scale combined with win-win partnerships like we have with Ctrip, are critical for our mutual success.”

We’re doing a lot more business with Facebook. But Goog still the leader in intent based marketing

“we have been doing more and more business with Facebook. Most of it though is in the category or re-messaging or re-targeting. It’s not really in the big sweet spot which is intent-based marketing. That’s really what search gives you is intent-based marketing. Somebody types in, I want a hotel in New York, and then you are responding to that request. But the folks at Facebook very much understand this. They’re working to try to win that kind of businesses. It’s direct response business, it’s a big prize for any marketing channel, and we’re also trying to work with other large audience versus in Silicon Valley to try to get out that Holy Grail of intent-based marketing.”

Dean Foods (DF) Gregg A. Tanner on Q3 2015 Results

Milk supply is expanding faster than demand

“The EU is a leading contributor as their milk production has increased year-over-year by more than 2.5%, largely due to the elimination of the milk quotas at the end of March. This is particularly meaningful when one considers that the overall size of the European dairy production is approximately seven times larger than that of New Zealand and over one-and-a-half times larger than that of the U.S. Moreover, we see China’s milk supply expanding faster than their weaker consumption and a continuation of the Russian import ban. In the U.S., we continue to see ongoing domestic supply momentum due to a slightly larger herd and productivity growth more than offsetting the impact of the continued drought in California. These supply and demand factors should contribute to a relatively benign dairy environment over the short term.”

The health of the dairy category is as good as it’s been

“The health of the dairy category is probably as good as it’s been in my career at Dean Foods and while lower priced milk in terms of both cost and prices at retail is helping support that, I also believe that the abatement of certain secular headwinds, which we discussed in depth last quarter, is contributing. ”

D.R. Horton (DHI) David V. Auld on Q4 2015 Results

No question labor is tight

“Stephen, David. No question; labor is tight. The reports coming out of other builders – I mean, we’re not immune to it. I think we have mitigated it by having the best operating team in the industry. And the relationships that our people have with vendors, suppliers put us at the front of the line. So it flows back to the time with a company, time in a market.”

Controlling costs is really about people

“You guys are going to get tired of me saying this, but it really is the people. We got the – one of the toughest markets, toughest weather conditions, toughest labor markets, is our Dallas-Fort Worth area. And those two guys, because they have been in the market for 20-plus years, because they have a direct relationship with the vendors and suppliers, make a call and get people to show up. And you just can’t put a – you can’t quantify that and put it into a model.”

We still think there’s legs left in this cycle

“I would say we still think that there’s legs left in this cycle. I mean, we’re not even close to what is a historical demand. So we’re trying to be very judicious and value the capital we have.”

The WhiteWave Foods (WWAV) Gregg L. Engles on Q3 2015 Results

Almond milk sales growth has slowed but is still strong

“These are category growths that are very strong, they’re certainly not what we saw last year where we saw growth, where we still had the expansion of Almond, but it has been mid single-digits over the past several quarters, and we now have a category here that’s approaching $1.4 billion in overall retail sales.”

New distribution channel creates new manufacturing challenges

“I will add to that Ken, that this move into the immediately consumable beverage in the away-from-home market requires some slightly different manufacturing capabilities than we have. So we’re going to have build those – up those products, really want to be aseptic, so they can be distributed in a non-refrigerated way. You can make it work – refrigerated, but it’s somewhat more challenging.”

Energizer Holdings (ENR) Alan R. Hoskins on Q4 2015 Results

Seeing signs of stabilization in the battery category

“First, we continue to see signs of stabilization within the battery category. Value and volumes were essentially flat over the latest 12 weeks and 52 weeks. This is an improvement over the trends we’ve seen in prior years”

TV is still the best ROI for us on advertising dollars

“We were able to understand the return we get on each of those particular mediums. I can tell you that today, given both the effectiveness of our copy, the strength of our brand and the fact that we have global icons, TV is still the best ROI for us. But you will see us over time continue to migrate to shifts in mix of how we approach consumers and shoppers depending on what it is we’re launching, the marketing news that we’re bringing to the market and, again, continued ROI rates on each of those individual investments depending on what’s in the mix. ”

10-K Tuesdays: Hertz Global Holdings

I’m going to try to start doing a weekly post digging into the 10-K of a stock that has been active on Stocktwits over the past week.  I’ll plan on choosing one stock from the social signals list, and will generally try to stay away from companies with less than 500m market cap.

Hertz Global Holdings (10-K filed on 3/4/13)


Market Data:

Current Price: $23.73
Market Cap: $10.65 B
Enterprise Value: $25.5 B

Income Statement:

2012 Revenue: $9.02 B
2012 EBIT: $1.1 B
2012 EBITDA: $3.6 B
Operating Margin: 12.2%
EBITDA Margin: 39.9%

Balance Sheet:

Book Value of Assets: $23.2B
Unrestricted Cash: $533
Intangible Assets: $5.4B
Book Value of Debt: $15.4B
Book Value of Equity: $2.5B

10-K Notes and Quotes:

About the Company:

Car Rental:

Global locations:  “10,270 corporate, licensee and franchisee locations in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand”

Hertz: 8,860 locations; Dollar and Thrifty: 1,410 locations

“We also own Donlen Corporation…which is a leader in providing fleet leasing and management services.”

Equipment Rental:

“340 branches in the United States, Canada, France, Spain, China and Saudi Arabia, as well as through our international licensees.”

Segment/Regional Breakdown:

Hertz Rev By Segment

Company History:

Bought by Ford in 1987, then private equity in 2005, PEs own 26% of outstanding as of Dec 2012.

Hertz acquired Dollar Thrifty in Nov 2012

Car Rental Division: 

worldwide car rental segment: $7.6 B in revenues in 2012. 85% of company revs.  $1.0 B in adjusted operating income (82% of adjusted operating income)

Hertz is premium brand, Dollar Thrifty are value brands.

Market Opportunity:

$37 billion global car rental industry; $24 B US, $13 B Europe.

Segmented by type of customer and airport/off airport:

HTZ Car rental Table

Hertz has to obtain concessions to operate at airports: “obtained from the airports’ operators…typically governmental bodies or authorities.” Require to pay percentage of revs and fixed rent.

Off airport smaller boxes, lower transaction volume.

Hertz may charge on a “hourly (in select markets), daily, weekend, weekly, monthly or multi‑month basis, with rental charges computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge… In addition to car rentals and licensee fees, we generate revenues from reimbursements by customers of airport concession fees and vehicle licensing costs, fueling charges, and charges for ancillary customer products and services”

32% of bookings from travel agents, 30% from websites, other includes by phone, third party websites and local booking sources/tour reservations.

Loyalty members represent 37% of transactions.

Also have Hertz licensees in 140 countries which pay a % of revenue, and franchises of Dollar and Thrifty.

About the Fleet

Hertz is one of the largest private sector purchasers of new cars in the world.

Operated a peak of 490,700 cars in the US and 177,900 cars internationally in 2012.  668,600 total.

Hertz holds cars for 18 months on average in the US and 14 months internationally.

“manufacturers agree to repurchase cars at a specified price or guarantee the depreciation rate on the cars during established repurchase or auction periods”  In 2012 30% of car purchases are made under repurchase programs, fell from 48% in 2011.  Decrease driven by Dollar-Thrifty acquisition. Non-Program cars are cheaper to acquire, but opportunity for ancillary revenue when disposed. 178,300 non-program cars were disposed of in 2012.

25% of US fleet is GM, 16% Ford, 16% Nissan, 13% Toyota

26% of international fleet is Ford, 21% GM, 12% Toyota, 2% Nissan

Non program cars sold 33% auction, 47% through dealers and 13% “Rent2Buy”

Competitors: Avis Budget Group, Enterprise, National, Alamo.  Hertz is largest in US.  International competitors: ABG, Europcar, which operates national and alamo brands.  Enterprise also has Euro presence and local competitor Sixt in Germany.

Car Rental Operating Notes:

Hertz Car Rental completed 29m transactions worldwide in 2012. 148.8m transaction days => 5.1 days/transaction. $40.01 average rental rate per transaction day. 665,000 average fleet size. $1 B adjusted operating income on $10.7 B fleet book value (~$16,105 per vehicle). Capex on revenue earning equipment was $8.9 B.

Equipment Rental Division:

$1,385.4 million in revenues (15% of revs. 18% of adjusted operating income)

Market Opportunity

Equipment rental industry: $31 B annual opportunity, but fragmented, and HERC only addresses a segment.

“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.”

“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”

Long term trend toward renting construction equipment: 50% of all equipment sold into the U.S. construction industry is to rental companies, compared to 5% in 1993.  As much as 50% of the equipment used in the construction industry could be rental equipment by 2015.

“HERC’s customers consist predominantly of commercial accounts and represent a wide variety of industries, such as construction, petrochemical, automobile manufacturing, railroad, power generation, shipbuilding and entertainment and special events.”

No customer >1.5% of revenues. 37% of revenue from construction, 27% from industrial, rest is government/other.

The per-unit acquisition cost of units of rental equipment in HERC’s fleet varies from over $200,000 to under $100. The average per-unit acquisition cost was $38,000.

“the average age of HERC’s worldwide rental fleet was 43 months.”

“In the United States and Canada, the other top national‑scale industry participants are United Rentals, Inc., or “URI,” Sunbelt Rentals, Home Depot Rentals and Aggreko North America. A number of individual Caterpillar, Inc., or “CAT,” dealers also participate in the equipment rental market in the United States, Canada, France and Spain.”

Equipment Operating Notes:

Capex on revenue earning equipment was $762 m.

Notable Risks:

Insurance implications and third party liability associated with renting equipment. Business is highly seasonal. Like kind exchange taxation means that if fleet shrinks, company has significant tax liability. Manufacturer recalls. Reliance on asset based borrowing.


CEO: 6 years with company, previously CEO of Tenneco (7yrs). Also worked at Aeroquip Vickers, GE and Philips. Director at Walgreen and Delphi.

Heads of US and international vehicle rental each been at company for nearly 30 years.  Rest of senior management max six years.

MD&A Notes

“Depreciation rates are reviewed on a quarterly basis based on management’s ongoing assessment of present and estimated future market conditions, their effect on residual values at the time of disposal and the estimated holding periods.”

$9.6 B in capex, $7.1 B in disposal proceeds. “net” capex: $2.5 B. Cash flow from ops is $2.7 B => FCF after “net” capex: ~$200 m.

Debt Profile

$15.5 B in debt outstanding. $6.2 B due 2013, $3.5 B due 2014-2017. $5.8 B due thereafter.

$6.5 B corporate debt. Largest bucket is $3.7 B in senior notes, 6 3/4 average interest rate due between 2018-2022. $8.9 B in asset backed debt. Company has 20 different types of debt outstanding.

In addition to debt, company has $2.4 B in operating lease and concession agreements and $5.8 B in purchase obligations.

Debt/EBITDA: 4.3x. EBIT/Interest Expense: 1.7x

Back of the envelope math:

$25.5 B Enterprise Value = 2.82x sales, 23.2x EBIT, 7x EBITDA, >100x FCF net of “net” capex.

If you assume 85% of EV is car rental business (equal to revenue share) means enterprise value of the car business is $21.67 B.  Global fleet of 665k cars implies $33 k Enterprise value per vehicle in fleet vs. 13k book value

665k cars rented 365 days per year yield 242.7 m potential transaction days.  148.8 m transaction days in 2013 implies 61% fleet utilization.  Stated otherwise, each vehicle was rented about 223 days per year.  100% utilization at $40 in rental revenue per transaction day would get to $9.7 B in rental revenue vs. $5.9 B in 2012.

$7.6 B in car rental revenue in $37 B market opportunity implies 20% market share vs four named competitors.  If fleet market share is also 20%, then the global rental fleet would be about 3.3m vehicles.

$24 B US market opportunity at $51 total revenue per transaction day implies 470m transaction days up for grabs.  At 5 days per transaction, implies 94m transactions made in the US per year, which is about 3.3 per capita.

12.2% operating margin on $51 in rental revenue per transaction day implies $6.22 in operating income per transaction day.  $9.05 B market cap (85% of $10.65B total market cap) needs 1.455B transaction days or 291 m transactions to break even on an operating basis, un-discounted for time value.  Hertz car rental completed 29m transactions in 2012.

Couldn’t find clear disclosures on disposal economics, which are key to business–but disposal proceeds are 74% of purchase capex.

If it holds a car for 18 months, $51 total rev/day, 61% utilization yields 333 transaction days, 17032 in revenue, at 40% EBITDA margin is $6813 per car. If car depreciates by 25% in first 18 months, $27,252 original purchase price is break-even. 10% ROIC (ex-time value) at $19,500 purchase price per car.

Notes From the Merrill Lynch Auto Summit

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$BWA Borg Warner

“as we look ahead, fuel economy and emissions improvements will remain the key objectives for automakers around the world”

“Throughout our history, our technology has competed against alternatives”

“Chinese domestic companies are going to get stronger and better and better, and I think they’re going to get a lot of support for that”

“I think the way to think about what the next technologies look like for us, first of all, each of the products that we have in the portfolio today are all enabling fuel economy and emissions performance across-the-board, every one of those products. And we see area for opportunity and advancements in all of those products, actually. So if I think of turbochargers to pick on an example, we see optimization in the turbo to help the automakers overcome such things as transient response, or turbo lag as some folks may know it. So we’ve got a bunch of examples going on there where we’re looking to use lighter materials, different types of materials. So there’s a whole stream of work around next generation of the products that we have today, and I could list those examples for — across every one of the products that we have. And that’s a big, big part of the work that we do. But the other part of the work that we do, and that’s kind of part of the BorgWarner DNA, is what’s the next thing that’s not in our portfolio, and we approach that both organically as well as through M&A. So we’re looking at what the powertrain may look like 10 years, 12 years, 15 years. We have a Chief Technology Officer, a team of people that are dedicated to — that’s what they do. And that may come externally where we may see a technology that isn’t in play today but will be in a decade”

“The way we interact with the customer is almost always as a system-type approach. But what leads us to the solution with the automaker is our system know-how. Absolutely, our engine system know-how or our clutching and control systems know-how. And integral to that know-how is a tremendous amount of sophistication that we have inside the company about understanding engine and transmissions as a complete system.”

$TRW TRW Automotive

“we’re big, we’re global. We have over 65,000 employees around the world. There is usually not a platform or a car that you can name where we don’t have some kind of content on”

“there’s no one platform, no one product, no one customer that is hugely material to the company, and that speaks to the defensive nature of our business.”

“We do feel that there’s pent-up demand building in Europe. We do think that the normalized level is something more in the 20.5 million to 21 million zone.”

“over many years, it’s gone from a component base to a systems base to an integration.”

“We go through ups and downs, be it the downturn of ’08, ’09, the investment phase that we’re going through now, commodity spikes. But at the end of it, we always generate cash…Two worst years in the history of the auto industry, ’08, ’09, we generated $545 million in those 2 years. And this is something that we highly focus on in the company”

“Yes. We are making money in Europe at these levels. I think at 18.4 million vehicles being produced this year, that’s well above our breakeven. You’d have to get down into the 17 million, sub-17 millions before there’s any concern or worry.”

$DLPH Delphi

“The pace of change in the automotive industry, well, it’s accelerating…global platforms have become a reality. By 2020, they will represent over 1/2 of the global vehicle build.”

“China isn’t the only area that we’re seeing massive change, stricter fuel economy. And emission standards are taking hold worldwide. And consumers are demanding to be connected from the car.”

“we do have the industry’s leanest cost structure.”

“Delphi is a very large and a very complex company that earns the trust of our customers through outstanding, flawless execution…we purchase 0.25 billion parts every day from 6,400 supplier locations. Our 110,000 people in our 141 global facilities deliver 60 million parts every day at quality levels of less than 2 rejected parts per million and with on-time delivery of 99.5%”

“We believe the role of the Tier 1 supplier is becoming increasingly more important. OEMs rely on system integrators like ourselves. And there are only a few Tier 1 suppliers like us that are focused on innovation and even fewer that can execute globally like we do”

“there’s a long list of consumer electronic companies that’s at the top of the game and the connectivity technology. But being able to make that technology, automotive grade and make it work in a car, then that’s a different story, and that’s where we come in at Delphi. Those companies don’t know cars like we do, so we work very closely with companies like Microsoft, NVIDIA and Google”

“we’re a very high-tech company with very special products, and there’s an extra amount of percent of vehicles on the planet that will not utilize ours, particularly, a lot of the entry-level emerging market types of vehicles. They’re not heavily contented in our space, and we do not try to engineer down into that. So there’s probably 35% to 40% on the vehicles that we don’t want to be on because they won’t generate the kind of value that we want to generate, and we don’t plan on taking our technologies and trying to cheapen them, and brand them down to meet into that space. In addition to that, we don’t — we only have about 5% of our business with the Japanese OEs.”

“[on how to achieve fuel efficiency] much improved conventional Powertrain through technology improvement, it will lead the way, it will be the majority of what you see in d vehicle fleet followed by the hybrid and the plug-in and then the EV…when we look at our content for vehicle, it’s actually higher on the electrified vehicle than it is on the conventional vehicle.”

$GPI Group 1 Automotive

“we’re the fourth largest dealership group in the U.S. Last year, we retailed a little bit over 128,000 new vehicles, about 85,000 used vehicles”

“We’re currently up to 142 dealerships, representing over 180 franchises, we have 36 collision centers…we added 18 dealerships in Brazil.”

“brand mix has always been very dominant with Toyota and Lexus, it’s still about 30% of our company. And then you can see Nissan and Honda and BMW and MINI, all around 11%; and Ford, a significant part of our business at a little less than 10%. You can also see that Texas, California and Massachusetts are our primary geographies, and the U.K. showing up there at about 6%, but I expect will continue to grow.”

“While Only 12% of our revenue, our Parts & Service business generates 42% of our profit. Finance and Insurance business also is disproportionate in its contribution to our profit level, 4% of revenues generate 23% of our gross profit. So although a vast majority of our revenues, 57%, come from selling new vehicles, only a little more than 1/5 of our profit comes from that.”

“We continue to see great potential for growth in the U.S. market in the next few years as well. However, still a lot of pent-up demand, the age of the car park is as old as it’s ever been, near 11 years. The number of licensed vehicle drivers is on the rise. Financing is widely available in the market. And used vehicle prices, although they’ve softened recently, are still very strong, which helps consumers trade their vehicles.”

“And as new vehicles trailed off during the recession, our best source of inventory, if you will, is the trade when somebody comes to buy a new vehicle and that fell off as the new vehicle sales fell. We got down to a low of about 50% of our used vehicles being sourced via trade-in, where kind of prior to the recession, we were running about 70%. That puts some downward pressure on our margins…we have to go to auction to source cars. We’re paying $500 to $1,000 more kind of for a similar vehicle. You got auction fees, you got transportation cost, and you’re ultimately bidding against other dealers. So it’s a more expensive place to pick up inventory, so we think there’s opportunities going forward there.”

“the productivity of salespeople over the last decade, or maybe it was even longer than a decade, hadn’t really improved much while you’re selling 8 to 10 cars per month per salesperson. And we’ve got to find a way to change that.”

$HTZ Hertz

“$9 billion of revenue. You can see that a little over 84% of that is in the rental car space…equipment rental business is a $1.4 billion business”

“we’ve really focused over the last couple of years in becoming experts in the used car market. if we can sell a car directly to a dealer, we can make $500 more per car by eliminating that wholesale channel. That’s really the fees that you pay to the wholesaler. And if we can sell directly to the retail channel, there we can make $1,100 more per car”