Investment Idea - Hertz Forward

(NYSE: HTZ)
Richard Hunt '14 ([email protected])

Stephen Lieu '14 ([email protected])
Rahul Raymoulik '14 ([email protected])
Investment Thesis Multiple Drivers of Value
We recommend investors buy Hertz (HTZ) stock with a
target share price of $36.00, which represents ~52% upside
from the current share price
Four Main Points to Investment Thesis
The market significantly underestimates the impact of
Hertz's recent merger with Dollar Thrifty, which marks the
completion of a ten-year consolidation that dramatically
improves the competitive dynamics of the industry
The market underestimates the levers Hertz can pull to
counter the negative impact of falling used car prices
Hertz has strong revenue growth opportunities in the U.S.
and will realize significant revenue and cost synergies
through its acquisition of Dollar Thrifty
Divestiture of non-core Equipment Rental business would
unlock substantial value by deleveraging the balance sheet
2
As of 4/19/13; in USD m except per share data
Stock Price $23.72
Diluted Shares Outstanding (M) 462.0
Market Cap $10,959
Corporate Debt 6,545
Cash (1,105)
Unfunded Pension Liability 227
Enterprise Value $16,626
52-Week Range $10.22-$24.28
Dividend Yield 0.0%
Avg. Daily Volume (M) 7.7
Short Interest as % of Float 11.0%
2013e 2014e
EV / Revenue 1.5x 1.4x
EV / EBITDA 7.4x 6.4x
P / E 12.5x 9.9x
Current Capitalization
Trading Statistics
Summary Valuation
Business Overview
Car Rental (2012 rev: $7.6bn): Operates through the
Hertz, Dollar and Thrifty brands. Rents cars that the
company owns or leases. Maintains a substantial network of
car rental locations both in the United States and
internationally, and the largest number of airport car rental
locations in the world
Equipment Rental (2012 rev: $1.4bn): Operates through
HERC brand. Rents a broad range of industrial, construction
and material handling equipment. Also sells new equipment
and consumables. One of the largest equipment rental
companies in North America
3
Business Description Rental Locations
Revenue Breakdown
With the acquisition of Dollar Thrifty, the Company has
over 10,000 locations across the United States and 17
other countries
International Countries
Puerto Rico France Slovakia
U.S. Virgin Islands Germany United Kingdom
Canada Italy China
Brazil Luxembourg Australia
Belgium Netherlands New Zealand
Czech Republic Spain
Segment Geography
U.S. Intl Total
Staffed rental locations 3,210 1,215 4,425
Airport 642 304 946
Off-airport 2,568 911 3,479
Non-staffed locations 1,360 150 1,510
Total Corporate 4,570 1,365 5,935
Franchised / Licensee 4,335
Total Locations 10,270
Car
Rental
85%
Equip
ment
Rental
15%
United
States
70%
Intl
30%
Consolidation Improves Industry Competitive Dynamics
4
Pricing Environment Already Improving
Hertz's acquisition of Dollar Thrifty marks the
completion of an industry consolidation that,
over the past ten years, has gone from six
separate rental car companies to only three
today
The three remaining players now have incentive
to focus on profitability instead of market share
Focus Shifted to Profitability Industry Consolidation
0%
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100%
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Enterprise Hertz
Avis Dollar / Thrifty
National / Alamo Budget
Other
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$35
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$65
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2012
2013
Market Underestimates Improved Pricing Environment
5
We made a strategic decision to minimize our
participation with less profitable commercial accounts.
Hertz CEO in February 2013
Overly Conservative Pricing Guidance Strong Pricing Environment w/ Price Signaling
We're seeing our competitors move for profitability, rather
than share, and that has a positive impact on all of us.
Avis CFO in February 2013
We've been very aggressive in initiating price increases
over the last 4 months or so and I think that's had a
positive impact. And we've seen a fairly good matching of
increases by both Hertz and the Enterprise.
Avis CFO in March 2013
Impact of Pricing on Valuation
On pricing, it's very conservative assumptions where we
really don't try to assume any price increases in our
models.
Hertz CEO in April 2013
1% increase in U.S. RPD results in a 6% increase in share
price
Management's revenue and EPS guidance assumes no
pricing growth
Sell-side analyst consensus estimates assume a 1% increase
in pricing
One of the headlines I'd like to make is we don't want to
gain share by reducing price. We want to gain share by
increasing value, and that's how we're doing it.
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
2014e EBITDA $2,610 $2,734 $2,859 $2,985 $3,112 $3,239
2014e EPS $2.44 $2.62 $2.79 $2.96 $3.14 $3.31
Price Target $30.80 $32.88 $34.97 $37.08 $39.20 $41.34
PT % Increase 6.8% 6.4% 6.0% 5.7% 5.4%
Sensitivity to U.S. RPD Growth Y/Y
Misunderstood Impact of Used Car Prices
6
Hertz Does Not Track Manheim Index
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Manheim Index Hertz Residual Values
+10%
-3%
Non-Program Car Purchases Reduce Fleet Costs
Sharp Decline in Program Car Purchases: Since 2006,
the percentage of program cars purchased fell from 61%
to just 19% today. Program cars are repurchased by car
manufacturers for a specific price
Save 1% on auto purchase price
Allow for more profitable resale channels
Significant Shift Away from Auctions: Since 2009,
auction sales fell from 88% of non-program car sales to
just 33% today
Only Halfway Through this Successful Transition:
Depreciation per month should be flat (even if used car
prices fall) as fewer program cars are purchased and
more profitable channels are utilized
Strong Growth Opportunities in U.S.
12% share in a three-player market: Since 2006,
Hertz has increased its off-airport locations by more
than 60% and expects a 9.6% increase in 2013. It has a
significant opportunity to capture more share from the
insurance replacement market
Significant opportunity to expand Dollar Thrifty to
off-airport locations
7
Off-Airport Locations 14% yoy Growth
Hourly Rentals 30% yoy growth
Value Segment 25% yoy Growth
Dollar Thrifty will capitalize on value trend: The value
segment is the fastest growing on-airport rental car market
with over 25% growth in 2012. We expect the Dollar
Thrifty brands to continue double-digit growth in 2013-
2014
Hertz On Demand (hourly rentals) will expand to 3,500
locations by Q3 2013: We expect little to no
cannibalization from the continued expansion of this
business
All of Hertz's ~500,000 U.S. vehicles will have On
Demand technology by the end of FY2014
24/7 Video Kiosks Increase Efficiency
Expands Hours to 24/7: Self-serve kiosks allows 24/7
rentals, which increases fleet utilization in a cost-effective
manner
Allows for Rapid Expansion of Off-Airport Network:
Asset-light model will increase returns on capital. Kiosks
make it significantly easier to move into body shops, auto
dealerships, and hotels
Significantly Reduces Labor Costs: Live agents
maintain a high-quality, personal experience for customers
in a cost-effective manner
Significant Synergies from Dollar Thrifty Acquisition
8
Revenue Synergies ~$300 million Cost Synergies ~$300 million
Leverage Global Partners: Hertz's travel partners such as
airlines, hotels, and AAA currently represent 30% of Hertz
revenue. These partners have strong interest in adding the
Dollar Thrifty brands. Lufthansa and AAA have already
started to offer all three brands
Europe Corporate Expansion: Dollar Thrifty currently
has no corporate locations in Europe. Hertz is adding Dollar
Thrifty to its European locations
Expand Off Airport: Hertz is adding the Dollar Thrifty
brands to the majority of its off-airport locations
Fleet: With the combined company, Hertz will see
savings from more efficient buying, selling, and
optimizing vehicle usage during ownership
IT: Savings driven by the roll-out of advanced
technology to Dollar Thrifty
Procurement: The combined company will see savings
from more efficient non-fleet purchasing
Financing, Other: DTGs blended fleet interest rate is
4.9% while Hertz's is 4.0%. The combined company
will be able to command lower financing rates
Leverage
Global
Partners, 40%
Europe
Corporate
Expansion,
37%
Expand Off
Airport, 17%
Other, 6%
Revenue Synergies $300M
Fleet, 40%
IT, 31%
Procurement,
15%
Financing,
Other, 14%
Cost Synergies $300M
HERC Divestiture 20% Incremental Upside
9
HERC operates in an extremely cyclical and fragmented industry, follows an acquisitive growth strategy, and has caused a
chronic drag on Hertz's consolidated ROIC relative to the car rental business
We believe divesting HERC would be most prudent for the company as it would:
Significantly deleverage Hertz's balance sheet and help the company reach investment grade corporate debt rating sooner
Lower interest expense and unlock value by causing an immediate EPS accretion in the range of $0.14-$0.19 plus
additional value of $2.90 per share
Allow deployment of FCF towards a share buyback and/or dividend program
Allow Hertz management to focus solely on the core and higher-return car rental business, Dollar Thrifty integration, and
new growth areas
Allow HERC management to focus on growing the business organically and through acquisitions
Potential buyers of HERC include United Rentals, Sunbelt Rentals, and private equity firms
We've always maintained
the position that if there
was a reason to divest it
that was shareholder
friendly, we're not resistant
to looking at other things
and other variables in
terms of the equipment
rental business.
Hertz CEO in
February 2013
Proceeds from Sale of HERC Before Divestiture Sale Spinoff
HERC EBITDA (2014e) $675 After-Tax Proceeds $0 $3,820 $2,836
x EV/EBITDA 6.2x Long-term debt (2013e) 6,184 2,363 3,348
Pre-tax proceeds $4,187 Total Debt / EBITDA 2.6x 1.2x 1.7x
Cost Basis 3,140 Interest Expense 340 83 117
Gain on Sale 1,047 Blended Cost of Debt 5.5% 3.5% 3.5%
Tax on Gain 366 Fleet Interest 343 300 300
After-Tax Proceeds $3,820 Fleet Interest Rate 4.0% 3.5% 3.5%
Decrease in Interest Expense 300 266
Proceeds from Monetizing Spin-off Net Income less income from HERC 87 65
HERC EBITDA (2014e) $675 EPS $0.19 $0.14
x Debt / EBITDA 4.2x Forward P / E 12.5x 12.5x
After-tax proceeds $2,836 Increase in Value per Share from EPS $2.35 $1.75
Remaining Value to Shareholders 1,350
Remaining Value per Share 2.90
Total Value to Shareholders $2.35 $4.65
Valuation Analysis
10
Hertz currently trades at 7.4x forward
EV/EBITDA versus its pre-crisis average
of 8.5x
On a forward P/E basis, Hertz currently
trades at 12.5x
This is a significant discount relative
to its historical average forward P/E of
14.0x and pre-crisis average of 15.4x
Based on an average of P/E, EV/EBITDA
and SOTP analysis, we arrive at a target
share price of $36 or +52% upside to
today's share price
Divestiture of HERC would lead to
incremental 20% upside
Methodology Target Price
($ millions except per share) Base Bear Bull Street
FY2014 Estimates
Car Rental EBITDA $2,413 $1,828 $2,727 $2,143
Equipment Rental EBITDA 509 432 539 453
Consolidated EBITDA $2,922 $2,261 $3,266 $2,596
EPS $2.87 $1.90 $3.39 $2.38
Target Forward Multiples
P/E 12.5x 11.0x 13.0x 12.5x
EV/EBITDA 7.4x 6.0x 8.0x 7.4x
SOTP: Car Rental 7.4x 6.0x 8.0x 7.4x
SOTP: Equipment Rental 6.2x 5.0x 6.5x 6.2x
Price per Share
P/E x EPS $35.93 $20.91 $44.06 $29.80
EV/EBITDA x EBITDA $36.73 $18.87 $46.90 $31.53
SOTP $35.41 $17.89 $45.16 $30.36
Target Price $36.00 $19.00 $45.00 $30.56
Upside (Downside) 52% (20%) 90% 29%
Key Assumptions
RPD CAGR (FY'12-'14) 2.5% (1.0%) 3.5% 0%-1%
Manheim Index CAGR (FY'12-'14) (3.0%) (5.0%) (2.0%) (2%)-(4%)
Chg. in Residual Value due to Channel Mix Shift $256 $0 $383 $125-$175
Cost Synergies (FY2014) $250 $150 $300 $300
Strong Management Team & Cash Returns
Strong management team with
laser focus on costs, returns,
and customer satisfaction
Sales per employee +6% and
operating margin +520bps
from 2008 to 2012
Management incentives are
aligned with shareholders
Changing incentives: increased
weighting of EVA reflects
structurally healthier company
and industry
Consistently conservative
guidance: Frissora has beaten
the high end of his guidance
every year except 2008
11
Key Management Cash Return to Shareholders

Elyse Douglas
Chief Financial Officer
Mark P. Frissora
Chairman & CEO
Strong FCF generation would allow Hertz to pay down
corporate debt and achieve target Net Debt/EBITDA ratio
of 1.6x by 2014
Management has repeatedly asserted that Hertz will return
cash to shareholders once it meets its target leverage ratio
We expect Net Debt/EBITDA to fall below 1.6x in 2014,
which should be followed by significant dividend and/or
share repurchase programs
Payout of 35% of FCF as share repurchase could
accelerate EPS growth by an incremental +6%
There was one time when we had a customer complain to
corporate. Frissora happened to be in town that week and
showed up here unannounced in jeans and a sweater to
figure out with us a way we could resolve the issue.
Manager, Hertz Off-Airport Manhattan Location
Risks and Mitigants
12
A drop in global GDP or enplanements could materially impact Hertz's profitability
Hertz has been profitable through cycles. During phases of weak demand, Hertz sells down its fleet to cut
capacity and maintain stable pricing. In 2008 and 2009, Hertz reduced its fleet size by 1% and 10% and
earned $237 and $199 (EBT) respectively
We believe that Hertz's shift to off-airport locations, especially the non-cyclical insurance market, mitigates
this risk

Our expectations of a cooperative oligopoly could be incorrect
We believe that there is a high probability that Hertz, Avis, and Enterprise will avoid destructive price wars,
especially given the changing incentives and price signaling seen from Hertz

Given Hertz's high financial leverage, rising interest rates may adversely impact profitability and FCF conversion
The option to sell HERC and use the sale proceeds to pay down debt mitigates this risk
Investment Recommendation: Buy Hertz at $23
13
Industry consolidation dramatically improves pricing environment
Used car market risk is misunderstood
Strong revenue growth opportunities in the U.S. and significant revenue and cost
synergies from Dollar Thrifty acquisition
Divestiture of Equipment Rental segment would unlock substantial value
Multiple drivers to realize Hertz's intrinsic value of $36 per share
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Primary Research Source List
14
Mark Frissora Chairman & CEO
Elyse Douglas Senior Exec. VP & CFO
Scott Sider President RAC Americas
Lois Boyd President Hertz Equipment Rental
Tom Callahan President Donlen
Bob Stuart Exec. VP Global Sales & Marketing
Rob Moore Sr. VP, IT Services
Scott Massengill Sr. VP & Treasurer
Jatindar Kapur Sr. VP & Corporate Controller
Cannot disclose Tech Initiative Project Manager
Cannot disclose Former Sr. Director of Remarketing
Cannot disclose Dealer Direct Salesman
Cannot disclose Former Hertz Franchisee
Current and Former Employees
Luke Froeb Former Chief Economist of the FTC
Tom Webb Chief Economist of Manheim
Neil Abrams Leading Industry Source for Pricing
Scott White Former Head of Bus Dev at Budget
John Hunt Hunt Ford Chrysler Dealer Principal

Industry Sources
Oscar Schafer Rivulet Capital
Michael Smeets** Fir Tree Partners
Dan Monaco Fidelity Investments
Dennis Hong Altimeter Capital
Steve Bischoff 40 North Industries
Current Shareholders
Michael Karsch Karsch Capital Management
Anna Baghdasaryan**
Ethan Binder Slate Path Capital
Danilo Santiago Rational Asset Management
Jon Luft Eagle Capital Partners
Cristiano Amoruso** Starboard Value
Pallav Gupta MSD Capital
Jason Perri Apollo Global Management
Investment team Roystone Capital
Other Investment Funds
David Lim Wells Fargo
Chris Agnew MKM Partners
Sell-Side Analysts
** Former Pershing Square Challenge Winner
Supplementary Materials

15
16
Table of Contents
Appendix A: Thesis 17
Industry Consolidation 18
Used Car Market 27
Growth Opportunities 38
Dollar Thrifty Acquisition 42
Equipment Rental Business 44

Appendix B: Base Case Financials and Valuation 46
Financial Summary 47
EPS Bridge 53
EBITDA Bridge 54
Model Sensitivities 55
Equity Trading Comps 56
Sum-of-the-Parts Valuation 58
Unit Economics 59

Appendix C: Management 61
Key Management Biographies 62
Track Record 63
Compensation Incentives 65

Appendix D: Ownership 66
Private Equity Ownership 67
Current Shareholder Base 68

Appendix E: Additional Analysis 69
Industrys Improved Pricing Sustainable? 70
Rental Car Pricing Sources 71
Why Hertz Over Avis? 72
European Car Rental Market 73
Economic Downturn 74
Debunking Myths About Hertz 75
Stock Price History 76
Competitor Overview - Avis 77
Fit with Pershing Square Criteria 78

Appendix F: Downside Case Financials 79

Appendix G: Upside Case Financials 85

Appendix H: Team Member Bios 91
Appendix A: Thesis

17
Industry Consolidation Timeline
18
A Series of Acquisitions have Consolidated the Car Rental Market
2002 2007 2008 2009 2010 2011 2012 2013
November 2002:
Avis acquires
Budget
August 2007:
Enterprise acquires
National / Alamo
March 2009:
Hertz acquires
Advantage
October 2011:
Avis acquires
Avis Europe
November 2012:
Hertz acquires
Dollar Thrifty
March 2013:
Avis acquires
ZipCar

Hertz Corporation

Avis Budget Corp

Enterprise Holdings
Industry Consolidation Current Snapshot
19
Today, Three Players Comprise >90% of the U.S. Rental Car Industry
U.S. Market Share Over Time
20
Source: Auto Rental News
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Other
Budget
National / Alamo
Dollar / Thrifty
Avis
Hertz
Enterprise
U.S. Market Share: On-Airport and Off-Airport
21
On-Airport Market in U.S. Off-Airport Market in U.S.
~$12.5 billion market
Other 2%
Avis
Budget
26%
Enterprise
33%
Hertz 39%
Other 9%
Avis
Budget
10%
Enterprise
69%
Hertz 12%
U.S. Car Rental RPD Hertz
Since Hertz's IPO in late 2006, Hertz's U.S. rental car rates (RPD) have decreased 19 out of the past 24
quarters, including the last nine quarters
Following the close of the Dollar Thrifty acquisition in November 2012, Hertz's management noted that
U.S. pricing improved during the latter portion of the fourth quarter, culminating in December airport
RPD increasing 1.6% and January airport RPD increasing 6.0%
22
Hertz has seen pricing improve since the Dollar Thrifty acquisition
(8%)
(6%)
(4%)
(2%)
0%
2%
4%
6%
8%
R
P
D

G
r
o
w
t
h

(
y
/
y
)

Hertz U.S. RPD Growth (y/y)
U.S. Car Rental RPD Avis
Since Q1 2007, Avis' U.S. rental car rates (RPD) have decreased 17 out of the past 24 quarters,
including the last 11 quarters
Following the close of the Dollar Thrifty acquisition in November 2012, Avis' management noted that
U.S. pricing improved in December, January, February and March
23
Avis has seen pricing improve since the Dollar Thrifty acquisition
(4%)
(2%)
0%
2%
4%
6%
8%
10%
R
P
D

G
r
o
w
t
h

(
y
/
y
)

Avis U.S. RPD Growth (y/y)
Post-Consolidation Pricing Environment
24
With respect to pricing, we are seeing a pretty healthy
environment toward the end of the fourth quarter and into
the first quarter. And I think there are a few things that are
probably driving it. The first is that we've redoubled our
own efforts to push for pricing wherever we can. And I think
those are having an impact. I think we have an industry that
is generally right-fleeted. And then on top of that, I think
we're seeing our competitors move for profitability, rather
than share or other potential objectives, and that has a
positive impact on all of us.
- Avis CFO in March 2013
We've been very aggressive in initiating price increases
over the last 4 months or so (post the Dollar Thrifty
acquisition), and I think that's had a positive impact. What
we watch for is the extent to which our competitors react to
that with increases. And we've seen a fairly good matching
of increases by both Hertz and the Enterprise.
Avis CFO in March 2013
One of the headlines I'd like to make is we don't want to
gain share by reducing price. We want to gain share by
increasing value, and that's how we're doing it.
We made a strategic decision to minimize our participation
with less profitable commercial accounts. In January
commercial revenue per day was actually positive compared
with the prior year.
Unprecedented RAC pricing is converting skeptics to
believers. U.S. RAC pricing turned positive just after HTZ-
DTG, fuelling the bull case for a new era of pricing power
(top 3 players control 98% of U.S. on-airport). U.S. pricing
was +5% in Jan and also strong in Feb/Mar. Avis initiated
another price increase effective for Apr 8, which was
quickly followed by Enterprise.
- Morgan Stanley in March 2013
Post-Consolidation Pricing Environment (cont.)
25
The real issue becomes whether anyone is taking a very
different view on pricing and not moving pricing up when
the rest of the industry is, because that clearly can have an
impact. I think in an environment where there are three
competitors rather than four, there's obviously a little bit
less risk of that happening.
- Avis CFO in March 2013
Enterprise says rates at some of the top 200 airports their
brands serve were up to 4% higher in February than
during that month last year.
- USA Today, February 2013
Average Pricing of Six Major Airports, May 2011 to February 2013
Source: Rate-Highway
In (car rental) markets with four brands, each separately
owned, the merger of two brand-owners increases average
prices 4%.
- Former Chief Economist of the FTC
$25
$35
$45
$55
$65
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
2011
2012
2013
Structural Shift in Rental Car Pricing Environment
Historically, the major auto manufacturers (GM, Chrysler, Ford) overproduced cars and used the rental
car market as a means to unload excess production
This resulted in consistent over-fleeting and under-utilization in the car rental market
In order to increase utilization, car rental companies were incentivized to lower prices, ultimately
resulting in a highly competitive pricing environment marked by low returns
As a result of the major restructurings of GM, Chrysler, and Ford, auto manufacturers have become
much more rational with their production
This has significantly mitigated over-fleeting in the car rental market and increased utilization
Car rental utilization rates across the industry are at their all-time high
High utilization dis-incentivizes car rental companies from competing on price
Renewed focus on returns and profitability
26
Restructuring in the Auto Manufacturing Industry marks a
Structural Shift in Rental Car Pricing Environment
Used Car Market Analysis
27
Used car prices must fall by 5.7% to return to pre-crisis levels
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Manheim Used Car Value Index is within 5% of All-Time High
Used Car Market Analysis (cont.)
28
Supply is definitely going to increase. The off-retail
lease volume is a competitive impact.
Tom Webb, Manheim's Chief Economist
The widely expected supply increase is around the corner
Supply Increase is Around the Corner
Competing supply of off-lease vehicles expected to
significantly rise in 2013-2014
Off-lease volumes are set to increase 55% by 2014.
Off-lease vehicles directly compete with Hertz's
supply of used cars, which put downward pressure
on residuals
Ford, GM, and Chrysler drastically reduced vehicle
leases during the financial crisis. Off-lease volumes
today, which lag lease originations by 33 months,
are close to an all-time low. We expect them to
increase 6% in 2013 and 27% in 2014
By 2014, we expect an increase of 550,000 off-lease
vehicles, which represents 42% of 2012 car rental
sales
Despite the significant increase, we expect off-lease
volume in 2014 to be less than that in 2008
0.0
0.5
1.0
1.5
2.0
2.5
3.0
'05 '06 '07 '08 '09 '10 '11 '12 '13E '14E
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Off-Lease Volume New Lease Originations
Competing
Supply
+55%
29
We are in a new era of structurally higher used car residual values
Healthier OEMS = Healthier Residuals Shift to Online Purchases = Healthier Residuals
Restructured OEMs have abandoned destructive
practices
Rationalized capacity at Big 3 automakers means
that practices that destroyed residual values will be
gone: big incentives, high dealer inventories,
excessive lease subsidies, and short rental cycles
Rental car companies now have rational relationships
with OEMs
The shift to a risk model means that OEM excess
capacity is no longer pushed through to rental car
companies, which leads to a more rational supply
and protects residual values

Online buying makes retail and direct-to-dealer
channels much easier to operate and more likely to
succeed
Rapid changes in technology has changed the way
dealers and individuals buy cars
58% of used car buyers say the Internet was the
most influential element in their vehicle search
Online buying transforms local markets to national
markets
Fewer national used car market inefficiencies leads
to structurally higher residual values
The average distance between buyers and sellers is
190 miles for local auction purchases vs. 439 miles
for online purchases
Upcoming Increase in Supply It's Different This Time
30
If Prices Fall, Hertz has Many Levers to Pull
Increase Direct-to-Dealer Mix Increase Retail Mix
Hertz can increase its Dealer Direct mix to mitigate
falling prices
Increasing the Dealer Direct channel by 10%
decreases depreciation/unit/month by 1.1%

Hertz can increase its Retail/Rent2Buy mix to mitigate
falling prices
Increasing the Retail/Rent2Buy channel by 10%
decreases depreciation/unit/month by 3.1%
Increase Holding Period in a Downside Scenario
Hertz can increase its rental holding period to mitigate
falling prices
Increasing average fleet holding period by three
months decreases depreciation/unit/month by 0.6%

Increase Prices in a Downside Scenario
Falling residuals affect all rental car companies
In the past, pricing has increased after significant
declines in used car residual values (72% R-squared)
Hertz has many ways to mitigate declines in used car prices
31
While people are forecasting this headwind
from a drop in the Manheim Index, we are not
experiencing it. It's due to the shift in channels,
where we're selling the cars and how we're
selling them, and that's improving our fleet
costs.

Is [lower depreciation] sustainable? We
believe it is sustainable in our business model.
We believe that used cars are probably the most
liquid currency out there, and that if you look
at over the last 40 years used cars have always
held their value. I mean, after 9/11 they
bounced back in four months. After 2008, 2009
they bounced back in six months to higher
levels than they were before.

We feel really good about fleet costs
continuing to go down, based on only being
about 50% of the way deployed on the car
channel shift.
-- CEO Mark Frissora

Hertz's remarketing strategy is working
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Manheim Index Hertz Residual Values
+10%
-3%
Hertz has significantly outperformed the Manheim Index since Jan 2011
7% 8% 9%
13%
23%
33% 33%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013E 2014E 2015E
Pct of Fleet Sold - Retail/Rent2Buy
5% 6% 7% 7% 7% 7% 7%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013E 2014E 2015E
Pct of Fleet Sold - Other Channels
0%
11%
19%
47% 47% 48% 48%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013E 2014E 2015E
Pct of Fleet Sold - Dealer Direct
88%
75%
65%
33%
23%
13% 13%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013E 2014E 2015E
Pct of Fleet Sold - Auction
Remarketing Channel Mix Overview
32
% of Fleet Sold through Auction % of Fleet Sold through Retail/Rent2Buy
% of Fleet Sold through Dealer Direct % of Fleet Sold through Other Channels
The shift away from auctions into more profitable resale
channels mitigates the expected drop in used car prices
Remarketing Channel Mix Overview (cont.)
33
Dealer Direct - $500 Premium over Auction Retail/Rent2Buy - $1,300 Premium over Auction
Retail/Rent2Buy and Dealer Direct offer
significant premiums over the auction channel
$100
$90
$75
$75
$160
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Premium Over Auction - Dealer
Direct
Extra Interest and
Depreciation
Price Differential
Transportation to
Auction
Auction
Reconditioning Fees
Auction Sales Fee
$100
$90
$75
$1,035
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Premium Over Auction -
Retail/Rent2Buy
Price Differential
Transportation to
Auction
Auction
Reconditioning Fees
Auction Sales Fee
Remarketing Channel Overview Retail/Rent2Buy
34
We expect the shift to retail/Rent2Buy to
continue to offset the decline in residuals
1. Retail Sales Cut Out the Middleman 2. Innovative Sales Process Provides Advantage
Hertz cuts out the cost of the auction for the buyer
and seller, which enables it to charge the lowest retail
prices
Average retail price is 20% below Blue Book Value
Instead of 30-minute test drives, Hertz offers
refundable 3-day test drives, which customers love
and traditional car dealerships cannot offer
Prices are non-negotiable (no-haggle price)
3. Retail Sales Growth Obscured by Accounting 4. Strong Reviews from Customers
With the steady supply of used cars and an attractive
value proposition to retail customers, we believe
Rent2Buy will ultimately become an effective
competitor to CarMax
Retail stores have grown from nine in 2011 to over 30
today
Continued growth in retail sales is only reflected in a
lower depreciation cost, a much less visible metric
than sales growth
Better price, recent model years, the ability to 'try
before you buy,' hassle-free buying, a warranty, and
buying the cream of the crop
The prices are VERY good
Remarketing Channel Overview Dealer Direct
35
We expect the shift to Dealer Direct sales to increase utilization and decrease fleet cost
Hertz has significantly built up its Direct-to-Dealer sales
infrastructure
Direct-to-Dealer sales force increased from 15 in 2011
to over 120 today
Dealer Direct increases fleet utilization by advertising
active rentals
Attractive value proposition for dealers
$45 buyer fee compared to $300-$500 from Manheim,
the largest used car auction
No change in dealer behavior required. Enterprise has a
long history of selling direct to dealers
Strong growth despite relatively infant infrastructure
This channel didn't exist in 2009, but now represents
40% of remarketing. The channel more than doubled
from 2011-2012
Only 6% of vehicles have condition reports and pictures
Vehicles with condition reports and pictures are
eight times more likely to sell, according to
Manheim
Management has indicated that most Dealer Direct
vehicles will have electronic condition reports by
2014
Capitalization Costs
36
Hertz is Less Reliant on Ford and GM
Consolidation Increases Purchasing Scale
40%
13%
17%
25%
13%
16%
43%
33%
0%
20%
40%
60%
80%
100%
2006 2012
% of Vehicles Purchased by Manufacturer
Others
Nissan
Toyota
General Motors
Ford
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2010 2011 2012
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Donlen
International (Hertz
and Dollar Thrifty)
Domestic (Hertz and
Dollar Thrifty)
Hertz has moved to a significantly more diverse fleet
Reduced reliance on Ford and GM:
Since the spin-off from Ford in 2005, Hertz has
reduced its reliance on Ford and General Motors
from 57% of purchases to just 38% today
More suppliers = more bargaining power
Shift from program cars saves 1% on capitalization
costs
Consolidation concentrates vehicle purchasing and
increases buyer power
Deep analytics on trim packages minimizes
depreciation/unit/month
New software packages ensure that vehicles have the
trim packages that balance customer satisfaction,
capitalization costs, and residual values
This analysis significantly reduced purchases of exotic
trim packages on cars for leisure customers
Fleet Efficiency
37
Fleet Efficiency is Improving
Improved Fleet Efficiency Reduces Costs
R = 86%
70.0%
72.0%
74.0%
76.0%
78.0%
77.5% 78.0% 78.5% 79.0% 79.5% 80.0% 80.5%
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U.S. RAC Fleet Efficiency
Increases in fleet efficiency can significantly reduce costs
Fleet efficiency explains 86% of the variation in DOE
+ SGA margin
Three main factors are leading to increased utilization
Synergies from Dollar Thrifty opposite demand
schedules means that Hertz's excess supply of weekend
cars get used at Dollar Thrifty
Technological Changes kiosks, Hertz On Demand,
and mobile apps, reduce the need for staffed locations
and expand hours to 24/7
The Shift to the Dealer Direct Remarketing Channel
reduces the time cars spend grounded by up to 16 days,
which saves approximately $10 per day in depreciation
and interest expense
We expect these factors to increase utilization by
130bps to 80.5% by 2015
77.9%
77.1%
78.5%
78.3%
78.6%
79.3%
80.0%
80.3%
80.5%
75.0%
76.0%
77.0%
78.0%
79.0%
80.0%
81.0%
'07 '08 '09 '10 '11 '12 '13E '14E '15E
Growth Initiative U.S. Off-Airport Market

38
Source: Hertz investor presentation
Growth is Accelerating
Off-Airport Revenue Mix
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 2008 2009 2010 2011 2012
Off-Airport Locations
2004-2008:
+5.5% CAGR
2009-2012:
+14.0% CAGR
43%
38%
19%
Retail
Replacement
Business
12% share in $11bn off-airport market = significant
growth opportunity
While off-airport revenue per day is lower than that in
airport markets, rental periods are longer, leading to
higher utilization and lower costs
The insurance replacement market is particularly
attractive, with long rental periods and stable revenues
and profits, even in economic downturns
Changes in technology (Hertz On Demand, kiosks)
reduce the up-front investment costs, making this
market expansion particularly attractive
We expect off-airport locations to grow by >10% per
year through 2015
Off-Airport vs. On-Airport Cost Differentials
Off-Airport Location On-Airport Location Difference
Labor Costs $4.09 $4.47 9% lower
DOE $18.54 $28.00 34% lower
SG&A $1.63 $3.12 48% lower
Utilization 80.3% 78.3% 2% higher
Growth Initiative ExpressRent Kiosks / iPhone App
39
iPhone App ExpressRent Kiosk
A parking space is the only requirement
Hertz can use technology to leapfrog Enterprise on off-
airport markets
Opens up body shops, car dealerships, and hotels to
Hertz rental cars. Requires a modest $6000 kiosk
investment
Increasing consumer preference towards mobile
applications reduces costs
70% of Hertz On Demand customers used mobile apps
Mobile check-in increases labor productivity and
customer satisfaction
How it works
iPhone App: Text message after plane lands notifies
customer where their car is located. Eliminates the
need to stop by the counter
24/7 kiosk: Videophone connects to agent in
Oklahoma, City who guides customer through the
process. Customer scans driver's license at kiosk
Investors underestimate the impact of these volume-
enhancing product and service improvements.
Buyside Investment Analyst
Growth Initiative Hertz On Demand (Hourly Rentals)
40
Significant Advantages Over ZipCar
Scale: approximately 500,000 U.S. rental cars by
2014 vs. 9,700 for ZipCar
No membership required and free to join, compared
to Zipcar's $25 application fee and $60/year
Second-mover advantage
Cheaper and better technology
Does not have to educate the public about car
sharing
Increases Fleet Utilization
Car-sharing customers and traditional rent-a-car
customers do not overlap
24/7, short-term car sharing minimizes idle time
Reduces Costs
On Demand technology is completely self-serve

Hertz On Demand is Self Serve
Growth Initiative Donlen Fleet Management
41
Donlen is the best
remarketer I've ever seen.
Former Hertz Licensee
Our Donlen acquisition has turned
out to be a much better acquisition
than we anticipated. The revenue
synergies that we're getting out of
this acquisition are large.
CEO Mark Frissora
Donlen Fleet Management Solutions
Donlen gives Hertz an end-to-end solution for its
customers. No other rental car company offers this
solution
Significant revenue synergies continue to be realized
E.g. Hertz Value Lease expands Donlen's product
offering to large companies by leveraging Hertz's
rental car network
Revenue growth is accelerating. We expect 2012
revenues of ~$460 million to grow by 16% to $534
million
Donlen's expertise in remarketing is an
underappreciated asset
Our primary research discovered that Donlen has
significant expertise in sourcing and remarketing
that will be a substantial benefit to Hertz as it
continues to move away from program cars
Dollar Thrifty Acquisition Terms
42
Hertz completed its acquisition of Dollar Thrifty in November 2012
$87.50 per share purchase price
Equity Value of $2.6 billion
Corporate Enterprise Value of $2.3 billion
2012E EV/Corp EBITDA multiple of 7.8x (based on mid-point of DTG
2012E Corp. EBITDA guidance of $285 million to $310 million )
Purchase Price
Deal Structure
100% cash consideration
Antitrust clearance required Hertz to divest its Advantage brand
Advantage divestiture (~$30 million of Corp. EBITDA)
Transaction Benefits
Highly attractive transaction for HTZ owners EPS accretion & positive EVA
Including impact of Advantage divestiture (~$30 million of Corp.
EBITDA)
Estimated $600 million in synergies
Acquisition multiple of 2.6x EV/EBITDA (including synergies)
Synergies from Dollar Thrifty Acquisition
Hertz operated primarily in the premium segment of the car rental market
The Dollar Thrifty acquisition gives them a leading brand in the faster growing mid-tier and value market or the
leisure segment
Revenue synergies of $300M per year and cost synergies of $300M per year. Revenue synergies have incremental
margins of 20-30%
By 2015, these synergies would contribute $0.57 in incremental EPS. $1.5B NPV of incremental operating profits
43
Equipment Rental (HERC) Business Overview
44
Business
HERC offers a broad range of equipment for rental in the U.S., Canada, France,
Spain, China and Saudi Arabia. Ancillary to its rental business, it is also a
dealer of certain brands of new equipment in the U.S. and Canada
Customers range from local contractors to large industrial plants. As of
December 31, 2012, no customer accounted for more than 1.5% of HERCs
global sales
HERC revenues and margins are cyclical due to high exposure to the
construction and industrial markets
U.S. represents approximately 70% of worldwide revenues
Fleet
HERC acquires its equipment from a variety of manufacturers. The equipment
is typically new at the time of purchase and is not subject to any repurchase
program
The per-unit acquisition cost of rental equipment varies from over $200,000 to
under $100. As of December 31, 2012, the average per-unit acquisition cost
(excluding small equipment purchased for less than $5,000 per unit) for rental
fleet was approximately $38,000
Average age of worldwide rental fleet is 43 months

HERC Revenue Mix by Markets
HERC Fleet by Equipment Type
Equipment Rental Divestiture to Unlock Value
HERC operates in an extremely fragmented industry, with the top 10 North
America rental companies making up only 30% of revenue
United Rentals (NYSE:URI) is the market leader with 13% share
Sunbelt Rentals (LSE:AHT) is 2
nd
with 5% market share
HERC is 3
rd
with 4% market share
Management has previously discussed the possibility of divesting HERC
Potential buyers include United Rentals, Sunbelt Rentals, and private equity
firms
We spoke with an analyst who asked the CEO if he foresees any FTC
issues with regards to an acquisition of HERC by United Rentals or
Sunbelt Rentals. He replied that has already looked into it and there would
not be any issues
We believe a monetizing spinoff would maximize shareholder value. Hertz
should:
Issue debt at HERC level, transfer the proceeds of debt issuance to parent
(Hertz Global Holdings), and then spin-off HERC
Sell HERC after six months to qualify for tax-free treatment under IRS
Section 355(e) Safe Harbor rule
An outright sale of HERC could also be pursued based on the cost-basis
(undisclosed) of HERCs historical acquisitions
45
We've always maintained the
position that if there was a reason
to divest it that was shareholder
friendly, we're not resistant to
looking at other things and other
variables in terms of the equipment
rental business.
United
Rentals
13% Sunbelt
5%
HERC
4%
Other
78%
Appendix B: Base Case Financials
and Valuation
46
Model Summary Base Case
47
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Income Statement Metrics
Total Revenue $8,525 $7,102 $7,563 $8,298 $9,021 $11,163 $11,952 $12,670 $13,055 $13,465
Total Revenue Growth (1.8%) (16.7%) 6.5% 9.7% 8.7% 23.8% 7.1% 6.0% 3.0% 3.1%
Car Rental 0.8% (12.8%) 8.5% 9.2% 7.8% 26.7% 7.1% 6.1% 3.1% 3.2%
Equipment Rental (5.5%) (33.0%) (3.7%) 13.0% 14.5% 7.6% 6.6% 5.6% 2.8% 2.8%
EBITDA 1,240 998 1,089 1,356 1,607 2,420 2,922 3,258 3,407 3,568
EBITDA Margin 14.5% 14.1% 14.4% 16.3% 17.8% 21.7% 24.4% 25.7% 26.1% 26.5%
Net Interest Expense 429 404 436 279 274 386 365 336 308 253
EBT 238 199 347 681 901 1,571 2,062 2,398 2,561 2,761
EBT Margin 2.8% 2.8% 4.6% 8.2% 10.0% 14.1% 17.3% 18.9% 19.6% 20.5%
Car Rental 4.2% 7.8% 9.9% 12.0% 13.4% 19.2% 22.3% 23.6% 24.0% 24.4%
Equipment Rental 16.4% 6.9% 7.3% 13.3% 16.4% 16.3% 17.7% 18.8% 19.4% 20.0%
Cash Tax Expense 83 70 121 238 315 550 722 839 896 966
Net Income on Operating Basis 134 115 208 423 586 1,021 1,341 1,559 1,665 1,795
EPS $0.41 $0.31 $0.51 $0.95 $1.31 $2.20 $2.87 $3.33 $3.53 $3.79
EPS Growth nm (25.5%) 63.7% 88.1% 37.5% 68.4% 30.6% 15.7% 6.2% 7.3%
Balance Sheet Metrics
Net Debt 3,260 3,339 3,249 3,465 5,440 4,355 2,804 1,044 (898) (3,011)
Total Debt to Equity 3.12x 2.25x 2.77x 2.11x 2.61x 1.68x 1.15x 0.80x 0.53x 0.30x
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 1.80x 0.96x 0.32x (0.26x) (0.84x)
Return on Equity 9.1% 5.5% 9.9% 18.9% 23.4% 27.7% 27.0% 24.2% 20.8% 18.5%
Return on Invested Capital 7.2% 5.8% 6.4% 9.0% 8.4% 12.9% 14.8% 15.3% 15.2% 15.5%
Return on Assets 2.6% 2.5% 2.9% 3.5% 3.3% 5.3% 6.3% 6.9% 7.1% 7.4%
Cash Flow Metrics
Cash Flow - Operating 2,096 1,775 2,209 2,233 2,718 3,714 4,359 4,762 5,003 5,235
Capex 1,317 1,579 1,063 1,832 2,663 2,629 2,808 3,001 3,061 3,122
FCF 779 196 1,146 402 55 1,085 1,551 1,761 1,942 2,113
Income Statement Base Case
48
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Sales $8,525 $7,102 $7,563 $8,298 $9,021 $11,163 $11,952 $12,670 $13,055 $13,465
Bloomberg Consensus: $10,911 $11,695 $12,548
Expenses:
Direct Operating 4,930 4,084 4,283 4,566 4,796 5,464 5,651 5,882 6,004 6,132
Deprec. of revenue earning equip, leases 2,194 1,931 1,868 1,906 2,148 2,640 2,808 2,979 3,082 3,191
SG&A 769 641 665 745 946 1,309 1,491 1,615 1,655 1,697
Interest Expense 870 680 773 700 650 710 683 649 614 551
Interest Income 25 65 12 6 5 6 6 7 7 7
Impairments, Others 1,169 0 0 63 36 0 0 0 0 0
Total Expense 9,907 7,272 7,577 7,974 8,570 9,816 10,126 10,519 10,747 10,964
GAAP Pre-Tax Income (1,382) (171) (15) 324 451 1,348 1,826 2,151 2,307 2,501
Adjustments for non-cash and non-recurring items:
Purchase Accounting 101 90 90 88 110 129 138 146 150 155
Non-Cash Debt Charges 100 172 183 130 84 94 98 101 103 105
Other charges 1,419 108 89 138 258 0 0 0 0 0
(Restructuring Charges, Derivative Loss, Pension Adjustment, Acquisition Charges, Other)
Total Adjustments 1,620 370 362 356 451 224 236 247 254 260
Adjusted Pre-Tax Income 238 199 347 681 901 1,571 2,062 2,398 2,561 2,761
Cash Tax 83 70 121 238 315 550 722 839 896 966
Less: Noncontrolling interest 21 15 17 20 0 0 0 0 0 0
Net Income to Hertz 134 115 208 423 586 1,021 1,341 1,559 1,665 1,795
Diluted EPS $0.41 $0.31 $0.51 $0.95 $1.31 $2.20 $2.87 $3.33 $3.53 $3.79
Bloomberg Consensus: $1.90 $2.38 $2.68
Fully Diluted Share 323 372 412 445 448 464 466 469 471 473
EBITDA Reconciliation Base Case
49
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Car Rental Segment:
GAAP Pre-tax income (385) 190 442 756 784 1,733 2,172 2,452 2,571 2,701
+ D&A and other purchase accounting 2,107 1,785 1,724 1,774 2,007 2,509 2,669 2,834 2,932 3,038
+ Interest, net of interest income 445 302 390 329 312 298 292 286 279 271
+ Impairment charges 443 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 2,610 2,276 2,556 2,858 3,103 4,539 5,133 5,572 5,783 6,010
- Car rental fleet interest 425 316 377 313 297 285 280 275 268 261
- Car rental fleet depreciation 1,844 1,614 1,595 1,651 1,876 2,347 2,495 2,650 2,743 2,842
+ Non-cash expenses & charges 83 130 135 33 41 51 54 58 59 61
+ Extraordinary, unusual charges 108 105 30 24 136 0 0 0 0 0
RAC Segment EBITDA 532 582 749 950 1,107 1,958 2,413 2,705 2,831 2,968
Equipment Rental Segment:
GAAP Pre-tax income (629) (20) (15) 69 152 190 225 256 274 292
+ D&A and other purchase accounting 417 383 338 324 356 380 405 428 440 453
GAAP EBITDA before adjustments 624 416 363 439 561 617 675 729 757 787
+ Non-cash, extraordinary, unusual charges 106 39 35 42 25 0 0 0 0 0
HERC Segment EBITDA 731 455 398 481 586 617 675 729 758 787
Other reconciling items:
GAAP Pre-tax income (368) (340) (442) (501) (486) (575) (571) (557) (537) (492)
+ Noncontrolling interest (21) (15) (17) (20) 0 0 0 0 0 0
GAAP EBITDA before adjustments (76) (36) (117) (188) (191) (199) (213) (226) (233) (240)
+ Extraordinary, unusual charges 24 (39) 21 85 78 0 0 0 0 0
Corporate Segment EBITDA (23) (38) (59) (74) (86) (155) (166) (176) (181) (187)
Total Adjusted EBITDA 1,240 998 1,089 1,356 1,607 2,420 2,922 3,258 3,407 3,568
Balance Sheet Base Case
50
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Assets:
Cash & ST investments 1,326 1,351 2,582 1,240 1,105 1,828 2,879 4,140 5,111 5,956
Receivables 1,911 1,325 1,357 1,616 1,887 2,335 2,500 2,650 2,730 2,816
Inventory 96 93 87 84 106 131 140 148 153 158
Revenue Earning Equipment 8,692 8,852 8,924 10,105 12,908 12,675 12,436 12,205 11,923 11,585
Other Property & Equipment 1,255 1,188 1,164 1,252 1,436 1,457 1,253 1,071 852 594
Goodwill & Intangibles 2,886 2,893 2,879 2,954 5,374 5,287 5,194 5,096 4,994 4,889
Other 287 300 353 422 470 470 470 470 470 470
Total Assets 16,451 16,002 17,345 17,674 23,286 24,183 24,872 25,779 26,234 26,469
Liabilities & S.E.:
Payables 931 659 954 897 999 1,236 1,324 1,403 1,446 1,491
Fleet Debt 6,387 5,675 5,476 6,612 8,903 8,742 8,578 8,418 8,224 7,991
Corporate Debt, Leases 4,586 4,689 5,831 4,705 6,545 6,184 5,684 5,184 4,213 2,945
Deferred Income Taxes 1,482 1,471 1,508 1,688 2,700 2,700 2,700 2,700 2,700 2,700
Other 1,577 1,410 1,457 1,535 1,631 1,631 1,631 1,631 1,631 1,631
Total Liabilities 14,963 13,905 15,226 15,439 20,779 20,493 19,916 19,336 18,213 16,758
Shareholders' Equity 1,488 2,097 2,118 2,235 2,507 3,690 4,956 6,443 8,021 9,710
Total Liabilities & S.E. 16,451 16,002 17,345 17,674 23,286 24,183 24,872 25,779 26,234 26,469
Key Statistics:
Net Debt 3,260 3,339 3,249 3,465 5,440 4,355 2,804 1,044 (898) (3,011)
Net Debt / Equity 2.19x 1.59x 1.53x 1.55x 2.17x 1.18x 0.57x 0.16x (0.11x) (0.31x)
Total Debt / Equity 3.08x 2.24x 2.75x 2.11x 2.61x 1.68x 1.15x 0.80x 0.53x 0.30x
Receivables Turnover 4.46x 5.36x 5.57x 5.13x 4.78x 4.78x 4.78x 4.78x 4.78x 4.78x
Receivables Days 80.7 67.2 64.6 70.1 75.3 75.3 75.3 75.3 75.3 75.3
Cash Flow Statement Base Case
51
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Operating Activities:
Net Income 134 115 208 423 586 1,021 1,341 1,559 1,665 1,795
Revenue Earning Equip. D&A 2,194 1,931 1,868 1,906 2,148 2,640 2,808 2,979 3,082 3,191
Other PPE D&A 239 226 219 228 257 289 298 303 299 295
Changes in Working Capital (331) 316 270 (313) (190) (236) (87) (79) (42) (45)
Others (141) (813) (357) (10) (82) - - - - -
Cash Flow from Operating Act. 2,096 1,775 2,209 2,233 2,718 3,714 4,359 4,762 5,003 5,235
Investing Activities:
Fleet Equip. Capex, net disposals (1,178) (1,502) (922) (1,604) (2,488) (2,406) (2,569) (2,748) (2,800) (2,853)
Other PPE Capex, net (139) (77) (140) (228) (175) (223) (239) (253) (261) (269)
Acquisitions, net cash acquired (71) (76) (48) (227) (1,905) - - - - -
Others (79) 35 (1) (30) 90 - - - - -
Cash Flow from Investing Act. (1,466) (1,621) (1,111) (2,089) (4,477) (2,629) (2,808) (3,001) (3,061) (3,122)
Financing Activities:
Proceeds from Debt Issuance, net (816) 523 (799) (1,320) 443 (112) (250) (250) (971) (1,268)
Proceeds from Rev. Line of Credit 199 (1,126) 1,026 57 1,273 (250) (250) (250) - -
Proceeds from Equity Issuance - 529 - - - - - - - -
Dividends Paid - - - - - - - - - -
Others (78) (54) (93) (224) (92) - - - - -
Cash Flow from Financing Act. (695) (129) 134 (1,487) 1,625 (362) (500) (500) (971) (1,268)
Cash Flow for Year (66) 25 1,231 (1,342) (135) 723 1,051 1,261 971 845
Cash at Beginning of Year 1,391 1,326 1,351 2,582 1,240 1,105 1,828 2,879 4,140 5,111
Cash at End of Year 1,326 1,351 2,582 1,240 1,105 1,828 2,879 4,140 5,111 5,956
CFO less Capex (FCF) 779 196 1,146 402 55 1,085 1,551 1,761 1,942 2,113
Key Model Assumptions
52
Actual Base Bear Bull
2012a 2013e 2014e 2015e 2013e 2014e 2015e 2013e 2014e 2015e
Sales 9,021 $ 11,163 $ 11,952 $ 12,670 $ 10,828 $ 11,222 $ 11,715 $ 11,168 $ 12,048 $ 12,812 $
EBITDA 1,607 2,420 2,922 3,258 2,042 2,280 2,458 2,585 3,250 3,481
EPS 1.31 2.20 2.87 3.33 1.60 1.92 2.27 2.44 3.37 3.85
Critical revenue drivers:
U.S. RPD - growth Y/Y (3.1%) 2.5% 2.5% 0.0% (1.0%) (1.0%) (1.0%) 3.5% 3.5% 0.0%
U.S. Enplanements - growth Y/Y 4.0% 3.5% 3.5% 3.0% 2.0% 2.0% 2.0% 4.0% 4.0% 3.0%
International RPD - growth Y/Y (2.9%) 0.0% 0.0% 0.0% (2.0%) (2.0%) (2.0%) 0.0% 0.0% 0.0%
International Enplanements - growth Y/Y (2.9%) 1.0% 1.0% 1.0% 0.0% 0.0% 0.0% 1.5% 1.5% 1.5%
Critical cost drivers:
Manheim Index (Used Car Prices) - growth Y/Y (1.0%) (4.0%) (2.0%) 0.0% (6.0%) (4.0%) 0.0% (3.0%) (1.0%) 0.0%
Fleet utilization 79.3% 80.0% 80.3% 80.5% 79.5% 79.5% 79.6% 80.5% 81.0% 81.5%
+ Y-Y gain from DTG integration nm 0.50% 0.00% 0.00% 0.25% 0.00% 0.00% 0.75% 0.00% 0.00%
+ Y-Y gain from technology improvements nm 0.25% 0.25% 0.25% 0.00% 0.00% 0.00% 0.50% 0.50% 0.50%
+ Y-Y gain from incremental 1% share of off-airport sales nm 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%
Channel mix
Dealer direct 47.0% 47.3% 47.5% 47.5% 47.0% 47.0% 47.0% 48.5% 50.0% 50.0%
Retail & R2B 13.0% 22.8% 32.5% 32.5% 13.0% 13.0% 13.0% 25.3% 37.5% 37.5%
Auction, other 40.0% 30.0% 20.0% 20.0% 40.0% 40.0% 40.0% 26.3% 12.5% 12.5%
Average resale value rel. auctions
Dealer direct 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $
Retail & R2B 1,300 1,300 1,300 1,300 1,100 1,100 1,100 1,500 1,500 1,500
Final impact on Depreciation per Car per Month Y/Y
*
5.2% 0.6% 0.5% - 7.1% 1.0% 5.6% (2.7%) (2.8%) -
* (determined by Manheim Index, fleet utilization, channel mix,
and average premium of resale price over auction channel)
DTG cost synergies ($mn) - $ 150 $ 250 $ 300 $ 100 $ 200 $ 300 $ 200 $ 300 $ 300 $
EPS Bridge Base Case
53
EBITDA Margin Bridge Base Case
54
Model Sensitivities
55
Sensitivity to U.S. RPD Growth Y/Y Sensitivity to Fleet Utilization
-2.5% 0.0% 2.5% 5.0% 7.5% 78.3% 79.3% 80.3% 81.3% 82.3%
2014e EBITDA $2,445 $2,610 $2,922 $3,239 $3,562 2014e EBITDA $2,872 $2,897 $2,922 $2,946 $2,970
2014e EPS $2.22 $2.44 $2.87 $3.31 $3.76 2014e EPS $2.80 $2.84 $2.87 $2.91 $2.94
Price Target $28.06 $30.80 $36.02 $41.34 $46.74 Price Target $35.19 $35.61 $36.02 $36.42 $36.81
Sensitivity to U.S. Enplanements Y/Y Sensitivity to Manheim Index Y/Y
0.0% 1.8% 3.5% 5.3% 7.0% -8.0% -6.0% -4.0% -2.0% 0.0%
2014e EBITDA $2,852 $2,887 $2,922 $2,957 $2,992 2014e EBITDA $2,755 $2,838 $2,922 $3,006 $3,089
2014e EPS $2.78 $2.83 $2.87 $2.92 $2.97 2014e EPS $2.65 $2.76 $2.87 $2.99 $3.10
Price Target $34.86 $35.44 $36.02 $36.60 $37.18 Price Target $33.38 $34.70 $36.02 $37.35 $38.67
2012 2014e Scenarios
Actual Base Down Up
Channel used car resale price relative to Auction channel
Dealer Direct $500 $500 $500 $500
Retail & R2B $1,300 $1,300 $1,100 $1,500
Share of Vehicles Sold via Channel
Dealer Direct 47% 48% 47% 50%
Retail & R2B 13% 33% 13% 38%
Auction, other 40% 20% 40% 13%
EBITDA $1,607 $2,922 $2,280 $3,250
EPS $1.31 $2.87 $1.92 $3.37
Price per Share Estm. $36.02 $19.37 $45.14
Impact of Used Car Prices and Resale Channel Mix
Equity Trading Comps
56
Share Market Enterprise CAGR '12a-'14e EV / EBITDA Price / Earnings Net Debt/
Company Price Cap Value Sales EBITDA EPS 2013e 2014e 2013e 2014e EBITDA
Car Rental
Hertz Global Holdings $23.72 10,959 16,626 14% 26% 34% 7.4x 6.4x 12.5x 9.9x 3.4x
Avis Budget Group $28.00 3,083 5,382 6% 6% 10% 6.6x 5.8x 12.0x 9.6x 2.7x
Average 10% 16% 22% 7.0x 6.1x 12.3x 9.8x 3.1x
Equipment Rental
United Rentals $51.69 4,871 11,888 15% 23% 26% 5.3x 4.8x 10.7x 8.5x 4.2x
Ashtead Group (Sunbelt) $9.31 4,658 6,301 13% 22% 42% 7.0x 6.6x 20.1x 16.5x 2.2x
Average 14% 22% 34% 6.2x 5.7x 15.4x 12.5x 3.2x
Historical Comps
57
Sum-of-the-Parts Valuation
58
We use a forward EV/EBITDA range of 6.0x-8.0x
for the Car Rental segment
Our base case multiple is Hertz's current NTM
EV/EBITDA of 7.4x
However, we believe Hertz's valuation could
re-rate to its historic average EV/EBITDA of
8.5x given industry dynamics, improving
pricing, strong execution by management team
especially on integration of Dollar Thrifty, and
efficient capital allocation with potential for
cash returns in the next 18 months
We use a forward EV/EBITDA range of 5.0x-6.5x
for the Equipment Rental segment
The Equipment Rental companies currently
trade at an average 6.2x forward EV/EBITDA
and historically traded in the 2.4x-7.5x range
($ in millions except per share) Base Bear Bull
Revenue (2014e) Car Rental 10,361 9,630 10,457
Equipment Rental 1,589 1,560 1,619
Total $11,952 $11,192 $12,078
EBITDA (2014e) Car Rental 2,413 1,828 2,727
Equipment Rental 509 432 539
Total $2,922 $2,261 $3,266
Forward EV / EBITDA Car Rental 7.4x 6.0x 8.0x
Equipment Rental 6.2x 5.0x 6.5x
Enterprise Value Car Rental 17,854 10,970 21,814
Equipment Rental 3,158 2,139 3,505
Total $21,012 $13,109 $25,320
Less: Debt (2013e) (6,184) (6,259) (5,894)
Plus: Cash (2013e) 1,828 1,677 1,756
Less: Unfunded Pension Obligation (2013e) (227) (227) (227)
Excess Value $16,430 $8,301 $20,954
Price per Share $35.41 $17.89 $45.16
Upside to Current Price 49% (25%) 90%
Unit Economics
59
Per Car in US$ units
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e

Average Rate per Day $44.31 $43.68 $43.14 $41.33 $40.01 $40.69 $41.40 $41.40 $41.40 $41.40
Growth Y/Y nm -1.4% -1.2% -4.2% -3.2% 1.7% 1.7% 0.0% 0.0% 0.0%
Number of Transaction Days 281 286 286 287 289 292 293 294 294 294
Utilization 77.1% 78.5% 78.3% 78.6% 79.3% 80.0% 80.3% 80.5% 80.6% 80.6%

Rental Rate Sales $12,461 $12,513 $12,323 $11,858 $11,577 $11,880 $12,128 $12,169 $12,171 $12,173

Fleet Interest Expense $989 $764 $901 $696 $615 $458 $430 $401 $386 $369
% of Sales 7.9% 6.1% 7.3% 5.9% 5.3% 3.9% 3.5% 3.3% 3.2% 3.0%
Fleet Depreciation Expense $4,029 $3,904 $3,582 $2,683 $2,821 $2,837 $2,852 $2,852 $2,852 $2,852
% of Sales 32.3% 31.2% 29.1% 22.6% 24.4% 23.9% 23.5% 23.4% 23.4% 23.4%

Operating Profit before DOE $7,444 $7,845 $7,840 $8,479 $8,140 $8,585 $8,847 $8,916 $8,934 $8,952
% of Sales 59.7% 62.7% 63.6% 71.5% 70.3% 72.3% 72.9% 73.3% 73.4% 73.5%

Direct Operating Expense $4,272 $4,337 $4,227 $3,988 $3,719 $3,488 $3,420 $3,363 $3,328 $3,293
% of Sales 34.3% 34.7% 34.3% 33.6% 32.1% 29.4% 28.2% 27.6% 27.3% 27.0%
SG&A $1,106 $1,100 $1,036 $1,021 $1,153 $1,183 $1,208 $1,212 $1,212 $1,212
% of Sales 8.9% 8.8% 8.4% 8.6% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Operating Profit $2,065 $2,408 $2,577 $3,470 $3,269 $3,913 $4,219 $4,341 $4,393 $4,447
% of Sales 16.6% 19.2% 20.9% 29.3% 28.2% 32.9% 34.8% 35.7% 36.1% 36.5%
NOPAT $1,342 $1,565 $1,675 $2,256 $2,125 $2,544 $2,742 $2,822 $2,856 $2,891
% of Sales 10.8% 12.5% 13.6% 19.0% 18.4% 21.4% 22.6% 23.2% 23.5% 23.7%

ROIC 21.7% 25.2% 27.0% 36.4% 34.3% 41.0% 44.2% 45.5% 46.1% 46.6%
Debt Maturity
60
$475
$700
$1,250
$700
$500 $500
$195
$2,081
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
'13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '28
Corporate Debt Maturity Schedule ($ mn)
(Weighted Average Interest Rate 5.51%)
Fixed Floating
Appendix C: Management

61
Scott Sider
President, Vehicle Rental
Elyse Douglas
Chief Financial Officer
Mark P. Frissora
Chairman & CEO
Key Management Biographies
62
Joined Hertz as Treasurer in July 2006 and became CFO in October 2007
Prior to joining Hertz, served as Treasurer of Coty Inc. from 1999 until 2006
Previously served as an Assistant Treasurer of Nabisco from 1995 to 1999. Also served in various
financial services capacities for 12 years at Chase Manhattan Bank (now JPMorgan Chase)
CPA and has three years experience in public accounting
Currently serves as a Director of Assurant Inc.

Name Biography
Joined Hertz as CEO and Director in July 2006; elected as Chairman in January 2007
Prior to joining Hertz, served as Chairman and CEO of Tenneco Inc. (NYSE:TEN) from 2000 and
as President of the automotive operations of Tenneco Inc. from 1999 to 2006. From 1996 to 1999,
held various positions within Tenneco Inc.'s automotive operations
Previously worked at Aeroquip Vickers, General Electric, and Philips Lighting Company
Currently serves as a Director of Walgreen Co. and Delphi Automotive PLC
Joined Hertz in 1983 and currently serves as President, Car Rental and Leasing, the Americas
Also oversees the fleet planning and re-marketing functions for the Americas
Has held several senior management positions in the U.S. car rental business since 1983, including
Manhattan Area Manager, Vice President of the New England, West Central and Western Regions
and, since 2008, Vice President and President, Off-Airport Operations for North America

Track Record vs. Management Guidance
63
Guidance
2007 2008 2009 2010 2011 2012
Revenue $8,500-$8,600 $8,900-$9,000 no guidance $7,400-$7,600 $7,950-$8,100 $8,850-$8,950
Corporate EBITDA $1,540-$1,570 $1,575-$1,615 no guidance $1,045-$1,060 $1,265-$1,305 $1,520-$1,590
Adjusted EPS $1.15-1.22 $1.38-1.44 no guidance $0.37-0.39 $0.75-$0.81 $1.16-$1.26
Actual
2007 2008 2009 2010 2011 2012
Revenue $8,686 $8,525 $7,102 $7,563 $8,298 $9,021
Corporate EBITDA $1,542 $1,100 $980 $1,101 $1,390 $1,636
Adjusted EPS $1.26 $0.42 $0.29 $0.52 $0.97 $1.33
Management has proven to be very conservative in its financial guidance. Since CEO Mark Frissora
joined Hertz in July 2006, management has beat the high end of its guidance every year, except in 2008
We believe management's 2013 estimates are extremely conservative
Management's Consensus
Guidance Estimates
Revenue $10,850-$10,950 $10,898
Corporate EBITDA $2,210-$2,270 $2,212
Adjusted EPS $1.82-1.92 $1.89
2013
Track Record vs. Consensus Estimates
64
Since CEO Mark Frissora took office in July 2006, Hertz has beat consensus estimates 21 of the past 25
quarters, including the last 15 quarters in a row
Actual Consensus Beat Beat / Actual Consensus Beat Beat /
Period Result Estimate Consensus Miss % Period Result Estimate Consensus Miss %
Q4 12 $0.33 $0.31 yes 5% Q3 09 $0.31 $0.22 yes 41%
Q3 12 $0.63 $0.61 yes 4% Q2 09 $0.12 $0.11 yes 12%
Q2 12 $0.35 $0.32 yes 9% Q1 09 ($0.25) ($0.22) no (14%)
Q1 12 $0.05 $0.00 yes 2,400% Q4 08 ($0.22) $0.07 no nm
Q4 11 $0.24 $0.20 yes 20% Q3 08 $0.33 $0.53 no (38%)
Q3 11 $0.51 $0.50 yes 3% Q2 08 $0.30 $0.31 no (4%)
Q2 11 $0.26 $0.21 yes 22% Q1 08 $0.02 $0.01 yes 300%
Q1 11 ($0.03) ($0.04) yes 27% Q4 07 $0.29 $0.26 yes 12%
Q4 10 $0.10 $0.07 yes 37% Q3 07 $0.65 $0.57 yes 15%
Q3 10 $0.40 $0.37 yes 7% Q2 07 $0.30 $0.26 yes 14%
Q2 10 $0.14 $0.12 yes 18% Q1 07 $0.02 ($0.05) yes nm
Q1 10 ($0.12) ($0.13) yes 8% Q4 06 $0.14 $0.13 yes 12%
Q4 09 $0.06 $0.01 yes 500%
Given management's impressive track record, we believe they
are extremely conservative in nature and the $600 million
Dollar Thrifty synergies estimates is very achievable
Management's Incentives Aligned with Shareholders
65
EVA Weighting in Incentive Comp Increasing
Cash Incentives Aligned with Shareholders
Based 40% on Economic Value Added (EVA).
This incentive was introduced in 2010 and increased
in 2011
Increases in EVA are highly correlated with
shareholder returns
The increased weighting reflects management's
confidence in generating returns on capital
above its cost of capital over the long term
$300 million of incremental EVA has been
generated since 2009
Hertz's top 400 managers are paid based on
EVA
Based 40% on adjusted pre-tax income
Based 20% on revenue
Stock Incentives Aligned with Shareholders
CEO Mark Frissora owns 1.4% of the company
New focus on EVA reflects structurally healthier industry and company
0%
30%
40% 40%
0%
10%
20%
30%
40%
50%
2009 2010 2011 2012
E
V
A

W
e
i
g
h
t
i
n
g

We have a very EVA/asset-light
strategy focus in the company
today.

We have a very positive
movement in economic value
added, 40% of my bonus and the
top 400 managers in the
Company is tied to EVA.
CEO Mark Frissora
I think the competitors have all
settled on the market share
numbers that they're at right now.
I don't think anyone in the
industry is looking to cut price.
The fleets right now are
adequate, so we feel pretty good
about the fact that the industry is
very rational.
CEO Mark Frissora
Compensation Incentives
Appendix D: Ownership

66
Private Equity Ownership
67
In December 2005, Clayton, Dubilier & Rice (CDR), The
Carlyle Group (Carlyle), and Merrill Lynch (collectively, the
Sponsors) acquired Hertz from Ford Holdings for $5.6
billion ($2.3 billion in equity)
Over the past three years, the company's Private Equity
Sponsors have been gradually divesting their stakes
In the past six months, the Sponsors sold 110 million,
reducing their stake from 38% to 13%
72%
55% 55%
51% 51%
38%
26%
13%
0%
20%
40%
60%
80%
2006 2007 2008 2009 2010 2011 2012 2013
Sponsors Ownership %
Sponsors Investment History
The Sponsors have been invested in Hertz since 2005 and have generated a strong return on its investment
Dec-05 Jun-06 Nov-06 Jun-07 May-09 Mar-11 Dec-12 Mar-13 Apr-13
Investment ($2,300) ($200)
Special Dividend $991 $260 Sponsors' IRR 33%
Shares Sold $1,111 $782 $789 $1,209 Cash-on-Cash Return 2.6x
Remaining Shares $1,316
Total Cash Flows ($2,300) $991 $260 $1,111 ($200) $782 $789 $1,209 $1,316
Current Shareholder Base
68
Market % of Market % of
Investor Shares Value CSO Investor Shares Value CSO
Wellington Management 44.4 $1,053 11.1% SRS Investment Management 6.0 $142 1.5%
Clayton, Dubilier & Rice 22.8 542 5.7% BNP Paribas Investment Partners 5.9 140 1.5%
Carlyle Group 20.3 482 5.1% S.A.C. Capital 5.7 136 1.4%
The Vanguard Group 17.6 418 4.4% Merrill Lynch 5.5 131 1.4%
Wells Capital Management 15.9 378 4.0% Senator Investment Group 5.3 126 1.3%
BlackRock 15.5 369 3.9% State Street Global Advisors 4.7 112 1.2%
T. Rowe Price 14.4 342 3.6% Systematic Financial Management 4.5 108 1.1%
Highbridge Capital Management 14.1 334 3.5% Fir Tree Partners 3.9 92 1.0%
York Capital Management 11.7 276 2.9% Valinor Management 3.5 82 0.9%
Lord, Abbett & Co. 10.5 250 2.6% The Roosevelt Investment Group 3.4 82 0.9%
UBS Global Asset Management 9.6 229 2.4% Norges Bank Investment Management 3.4 81 0.9%
Columbia Wanger Asset Management 9.1 217 2.3% Fidelity Investments 3.4 81 0.9%
Discovery Capital Management 7.5 178 1.9% Goldman Sachs 3.3 79 0.8%
Owl Creek Asset Management 7.3 174 1.8% Westchester Capital Management 3.3 78 0.8%
Columbus Circle Investors 6.6 157 1.7% Columbia Management 3.1 73 0.8%
Key Shareholders Summary
Market % of
Investor Shares Value CSO
PE Owners (CD&R, Carlyle, Merrill Lynch) 48.7 1,155 12.2%
CEO Mark Frissora 2.2 53 0.5%
Other Insiders 1.7 39 0.4%
Appendix E: Additional Analysis

69
Industrys Improved Pricing Sustainable?
70
Today, the U.S. car rental industry has three players that make up 95% of the market: Hertz, Avis, and Enterprise. From
the blatant price signaling in earnings call and conference call transcripts, it is clear that Hertz and Avis are focused on
profitability and keeping the industrys car rental rates high. The main question is whether or not privately-held
Enterprise will follow.
There are four main reasons why we believe Enterprise will cooperate with Hertz and Avis pricing increases:
The industrys price spoiler has historically been Dollar Thrifty, who is now owned by Hertz

Since the Dollar Thrifty acquisition closed in November 2012, Enterprise has matched the price increases by Avis
and Hertz

It no longer makes sense to lower prices because none of the three remaining players have dominant market share.
If Enterprise lowers prices, Hertz and Avis will follow and no one will gain market share. Lower pricing would
only result in lower profitability for all three players

Due to auto OEM restructurings and more rational car production, car rental companies finally have right-sized
fleets. With utilization rates at all time highs, there is no longer incentive to lower prices to raise utilization rates
1
2
3
4
Rental Car Pricing Sources
71
Hertz and Avis Earnings Calls
We instituted 2 price increases for January, 2 for February
and 2 effective for March rentals. January pricing was up year-
over-year, more in fact than December was, and our existing
reservations give us a measure of confidence that pricing could
end the quarter being positive.
Avis CEO, February 2013
Sell-Side Analysts
Auto Rental News publishes monthly auto rental rate
surveys for six major airports: BOS, MIA, ORD, HOU,
SEA and LAX. The rates are based on weekly surveys
and are published monthly
May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12
Pre-DTG Acquisition (5%) (22%) (19%) (11%) (6%) (4%)
Nov-12 Dec-12 Jan-13 Feb-13 Mar-13
Post-DTG Acquisition 18% 48% 15% 12% 8%
Auto Rental News
USA Today
Enterprise says rates at some of the top 200 airports their
brands serve were up to 4% higher in February than during
that month last year.
USA Today, February 2013
Avis initiated another price increase effective for Apr 8, which
was quickly followed by Enterprise.
Morgan Stanley, March 2013
Our research suggests rental car pricing in 1Q13 continued to
firm, and was likely up year-over-year throughout the quarter.
In regards to monthly performance, improvements in March
were the strongest of the quarter.
Northcoast Research, April 2013
Avis
North Hertz Dollar Thrifty
America US Airport Total
Dec 2012 > +1.0% +1.6% +4.6%
Jan 2013 > +5.0% +6.0% +2.6%
Feb 2013 > +3.0%
Mar 2013 ~ +4.0%
Hertz
Why Hertz Over Avis?
72
Because of the improved pricing environment, we believe both Hertz and Avis are attractive investment opportunities.
However, we favor Hertz over Avis for the following reasons:
Management: Hertzs CEO Mark Frissora is extremely well-regarded in the industry. Since Frissora joined in July
2006, Hertz has beaten managements guidance every year except for in 2008 and the company has beaten
consensus estimates for the past 15 quarters in a row. Prior to joining Hertz in July 2006, Frissora had a
phenomenal track record at Tenneco
During Frissoras tenure as CEO of Tenneco (1999-2006), the company dramatically improved its operating
efficiency and financial performance, which translated into significant increases in Tennecos market
capitalization. In 2004, Tenneco earned the industrys top award for auto supply companies, which recognized
the company for delivering the highest shareholder returns 158% in one year and 745% in three years of
any global automotive supplier

Dollar Thrifty Acquisition: After taking into account synergies, Hertz paid less than 3.0x EBITDA to acquire
Dollar Thrifty, which we believe was a very prudent deal for management

Zipcar Acquisition: In March 2013, Avis acquired Zipcar for $500 million to enter the Hourly Rentals segment.
Hertz acquired technology to implement hourly rental capabilities in its fleet and will have its entire fleet upgraded
with hourly rental technology by 2014 for a fraction of the cost
1
2
3
European Car Rental Market
73
European Car Rental Market Share
Highly fragmented market, with large percentage of
independent and small car-rental companies. Analysts
expect industry to consolidate over the next five years
Plans to implement three brand offering across Europe
Hertz: premium
Dollar Thrifty: mid-tier
Firefly (formerly Advantage): value
Dollar Thrifty opportunity in Europe
Other 29%
Avis
Budget
18%
Europcar
21%
Hertz 16%
National
Alamo 5%
Sixt 10%
Size of European Car Rental Market (millions) $13,000
Low Base High
Size of Market $13,000 $13,000 $13,000
Dollar Thrifty Market Share 1% 2% 3%
Dollar Thrifty Revenue $130 $260 $390
Pre-Tax Margin 20.0% 22.5% 25.0%
Pre-Tax Income $26 $59 $98
Taxes @ 35% $9 $20 $34
Net Income $17 $38 $63
Shares Outstanding 427 427 427
EPS Impact $0.04 $0.09 $0.15
Economic Downturn
The rental car industry is not as cyclical as intuition would suggest.
During phases of weak demand, car rental companies cut down their fleet size by selling cars
This reduces capacity, balancing supply-demand and keeping pricing stable
Hertz has been profitable through business cycles
During 2008 and 2009, Hertz generated pre-tax income of $237 and $199 respectively by reducing fleet size by
1% and 10% respectively to maintain supply-demand balance
Furthermore, Hertz's mix shift to off-airport locations, especially the non-cyclical insurance market, mitigates risk
of cyclical earnings and cash flows
74
Debunking Myths About Hertz
75
Myth #1
Car rental is too
capital intensive
Myth #2
Car rental is a
commodity business
Myth #3
Used car prices are
a big unknown
Car rental is a good business, as evidenced by a long history of relatively stable market share
among competitors and a recent history of >10% ROICs.
Hertz's subpar profitability from 2005-2009 was the result of inefficient operations, excess
capacity in U.S. auto makers, and poor fleet management. These issues are now fixed.
Over 37% of transactions were made by Hertz Gold Club Members. Gold Club Members are
3x more likely to rent from Hertz over other companies.
The company has a 99.3% retention rate on corporate contracts.
More than 70% of Hertz's fleet is acquired using fleet debt, which is non-recourse to the
company. Fleet interest expense is akin to cost of goods sold. Acquiring fleet does not tie up
significant capital.
Non-fleet capex is relatively small, especially given technological changes that allow Hertz to
expand its network without major infrastructure investments.
Over 40.5 million used cars were sold in the U.S. in 2012 the used car market is extremely
large, efficient, and liquid. After 9/11, used car prices rebounded in four months. After the
financial crisis, prices bounced back in six months.
All rental car companies are equally affected by changes in used car prices. If prices fall more
than expected, rental car companies can raise prices to maintain profitability (72% R-squared).
Lower used car prices are correlated with lower new car prices (81% R-squared).
Stock Price History IPO to Today
76
$0
$5
$10
$15
$20
$25
$30
March 2007: Enterprise
announces Alamo /
National acquisition
2008-2009 Recession
April 2010: Hertz
announces bid for
Dollar Thrifty
November 2012:
Hertz closes Dollar
Thrifty acquisition
March 2009: Hertz
announces Advantage
acquisition
June 2011: Avis
announces Avis
Europe acquisition
February 2013:
Hertz increases
synergies estimate
from $160 million to
$600 million
Competitor Overview Avis
Car Rental (2012 rev: $7.0bn): Operates through the
Avis, Budget, and ZipCar brands. Rents cars that the
company owns or leases. Maintains a substantial network
of car rental locations both in the United States and
internationally. Rental fleet of 496,000 vehicles. The
company completed more than 29 million vehicle rental
transactions worldwide. 71% of revenue generated on-
airport, 29% generated off-airport
Truck Rental (2012 rev: $0.4bn): Operates through the
Budget brand.
77
Business Description Rental Locations
Revenue Breakdown
With the acquisition of Dollar Thrifty, the Company has
over 10,000 locations across the United States and 17
other countries
Segment Geography
North
America Intl Total
Avis
Company-operated 1,350 1,300 2,650
Licensee 300 2,800 3,100
Total Avis 1,650 4,100 5,750
Budget
Company-operated 1,000 550 1,550
Licensee 400 1,200 1,600
Total Budget 1,400 1,750 3,150
Combined 3,050 5,850 8,900
NA
Car
Rental
63%
Intl
Car
Rental
32%
Truck
Rental
5%
NA
68%
Intl
32%
Fit with Pershing Square Criteria
78
Criteria Ideal Acceptable Hertz
Expected Profit ($MM) $300+ $150+ $300+
Expected Return (IRR) 40%+ 25%+ 50%+
Upside/Downside 4 to 1 3 to 1 2.6 to 1
Realization Horizon 1 year 2 years 1 year
Target TEV $5bn+ $2bn+ $16bn
Buy Liquidity 2 months < 3 months 1.5 months
Sell Liquidity 2 months < 3 months 1.5 months
Domicle Domestic (English) Foreign (English) Domestic (English)
Strategy Value/Large MoS Value/Free Growth Value/Free Growth
Corporate Resilence Intrinsic Extrinsic/Deep Value Intrinsic
Governance Uncontrolled Rational Large Shareholder Uncontrolled
Stance Passive Active Passive
Value Ascertainability High Moderate High
Appendix F: Downside Case
Financials
79
Model Summary Downside Case
80
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Total Revenue $8,525 $7,102 $7,563 $8,298 $9,021 $10,814 $11,192 $11,668 $11,985 $12,325
Car Rental 0.8% (12.8%) 8.5% 9.2% 7.8% 22.3% 3.2% 4.2% 2.8% 2.9%
EBITDA 1,240 998 1,089 1,356 1,607 2,033 2,261 2,429 2,516 2,613
EBITDA Margin 14.5% 14.1% 14.4% 16.3% 17.8% 18.8% 20.2% 20.8% 21.0% 21.2%
EBT 238 199 347 681 901 1,118 1,343 1,593 1,696 1,828
EBT Margin 2.8% 2.8% 4.6% 8.2% 10.0% 10.3% 12.0% 13.7% 14.2% 14.8%
Car Rental 4.2% 7.8% 9.9% 12.0% 13.4% 15.5% 16.8% 17.5% 17.7% 17.9%
Cash Tax Expense 81 68 118 231 306 380 457 542 577 622
Net Income on Operating Basis 136 117 212 430 595 738 886 1,051 1,120 1,207
EPS $0.42 $0.31 $0.51 $0.97 $1.33 $1.59 $1.90 $2.24 $2.38 $2.55
EPS Growth nm (25.5%) 63.6% 88.0% 37.4% 19.8% 19.5% 18.0% 6.0% 7.2%
Net Debt 3,260 3,339 3,249 3,465 5,440 4,582 3,253 1,619 (156) (2,075)
Return on Equity 9.3% 5.6% 10.1% 19.2% 23.7% 21.0% 20.8% 20.4% 18.5% 17.1%
Return on Assets 2.7% 2.5% 3.0% 3.6% 3.3% 4.3% 4.9% 5.3% 5.5% 5.9%
Cash Flow Metrics
Capex 1,317 1,579 1,063 1,832 2,663 2,604 2,740 2,905 2,977 3,051
FCF 779 196 1,146 402 55 859 1,329 1,634 1,775 1,919
Income Statement Downside Case
81
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Sales $8,525 $7,102 $7,563 $8,298 $9,021 $10,814 $11,192 $11,668 $11,985 $12,325
Expenses:
SG&A 769 641 665 745 946 1,223 1,362 1,512 1,545 1,580
Interest Income 25 65 12 6 5 6 6 6 6 7
Total Expense 9,907 7,272 7,577 7,974 8,570 9,915 10,075 10,309 10,527 10,741
GAAP Pre-Tax Income (1,382) (171) (15) 324 451 899 1,117 1,360 1,458 1,585
Other charges 1,419 108 89 138 258 0 0 0 0 0
Cash Tax 81 68 118 231 306 380 457 542 577 622
Net Income to Hertz 136 117 212 430 595 738 886 1,051 1,120 1,207
Diluted EPS $0.42 $0.31 $0.51 $0.97 $1.33 $1.59 $1.90 $2.24 $2.38 $2.55
EBITDA Reconciliation Downside Case
82
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Car Rental Segment:
Balance Sheet Downside Case
83
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Assets:
Receivables 1,911 1,325 1,357 1,616 1,887 2,412 2,496 2,602 2,673 2,749
Inventory 96 93 87 84 106 127 131 137 140 144
Other Property & Equipment 1,255 1,188 1,164 1,252 1,436 1,457 1,071 539 (44) (684)
Other 287 300 353 422 470 470 470 470 470 470
Total Assets 16,451 16,002 17,345 17,674 23,286 23,936 24,004 24,031 23,656 23,229
Liabilities & S.E.:
Payables 931 659 954 897 999 1,198 1,240 1,292 1,327 1,365
Fleet Debt 6,387 5,675 5,476 6,612 8,903 8,636 8,348 7,949 7,507 7,016
Other 1,577 1,410 1,457 1,535 1,631 1,631 1,631 1,631 1,631 1,631
Key Statistics:
Net Debt 3,260 3,339 3,249 3,465 5,440 4,582 3,253 1,619 (156) (2,075)
Cash Flow Statement Downside Case
84
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Income 136 117 212 430 595 738 886 1,051 1,120 1,207
Other PPE D&A 239 226 219 228 257 297 296 297 293 289
Others (143) (815) (360) (17) (91) - - - - -
Others (79) 35 (1) (30) 90 - - - - -
Proceeds from Debt Issuance, net (816) 523 (799) (1,320) 443 (36) (193) (250) (888) (959)
Proceeds from Rev. Line of Credit 199 (1,126) 1,026 57 1,273 (250) (250) (250)
Dividends Paid - - - - - - - - - -
Others (78) (54) (93) (224) (92) - - - - -
Cash Flow from Financing Act. (695) (129) 134 (1,487) 1,625 (286) (443) (500) (888) (959)
Cash Flow for Year (66) 25 1,231 (1,342) (135) 573 886 1,134 888 959
CFO less Capex (FCF) 779 196 1,146 402 55 859 1,329 1,634 1,775 1,919
Appendix G: Upside Case Financials

85
Model Summary Upside Case
86
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Total Revenue $8,525 $7,102 $7,563 $8,298 $9,021 $11,182 $12,078 $12,860 $13,341 $13,863
Car Rental 0.8% (12.8%) 8.5% 9.2% 7.8% 26.8% 8.1% 6.5% 3.8% 4.0%
EBITDA 1,240 998 1,089 1,356 1,607 2,593 3,266 3,505 3,656 3,823
EBITDA Margin 14.5% 14.1% 14.4% 16.3% 17.8% 23.2% 27.0% 27.3% 27.4% 27.6%
EBT 238 199 347 681 901 1,723 2,394 2,746 2,911 3,094
EBT Margin 2.8% 2.8% 4.6% 8.2% 10.0% 15.4% 19.8% 21.4% 21.8% 22.3%
Car Rental 4.2% 7.8% 9.9% 12.0% 13.4% 20.8% 25.1% 25.3% 25.5% 25.7%
Cash Tax Expense 81 68 118 231 306 586 814 934 990 1,052
Net Income on Operating Basis 136 117 212 430 595 1,137 1,580 1,812 1,921 2,042
EPS $0.42 $0.31 $0.51 $0.97 $1.33 $2.45 $3.39 $3.87 $4.08 $4.31
EPS Growth nm (25.5%) 63.6% 88.0% 37.4% 84.6% 38.3% 14.1% 5.5% 5.7%
Net Debt 3,260 3,339 3,249 3,465 5,440 4,139 2,487 618 (1,423) (3,617)
Return on Equity 9.3% 5.6% 10.1% 19.2% 23.7% 30.3% 29.8% 25.5% 21.4% 18.6%
Return on Assets 2.7% 2.5% 3.0% 3.6% 3.3% 5.8% 7.3% 7.6% 7.7% 7.8%
Cash Flow Metrics
Capex 1,317 1,579 1,063 1,832 2,663 2,608 2,788 2,982 3,043 3,107
FCF 779 196 1,146 402 55 1,302 1,652 1,869 2,040 2,195
Income Statement Upside Case
87
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Sales $8,525 $7,102 $7,563 $8,298 $9,021 $11,182 $12,078 $12,860 $13,341 $13,863
Expenses:
SG&A 769 641 665 745 946 1,361 1,554 1,635 1,685 1,739
Interest Income 25 65 12 6 5 6 7 7 7 8
Total Expense 9,907 7,272 7,577 7,974 8,570 9,683 9,922 10,365 10,688 11,036
GAAP Pre-Tax Income (1,382) (171) (15) 324 451 1,499 2,156 2,495 2,652 2,827
Other charges 1,419 108 89 138 258 0 0 0 0 0
Cash Tax 81 68 118 231 306 586 814 934 990 1,052
Net Income to Hertz 136 117 212 430 595 1,137 1,580 1,812 1,921 2,042
Diluted EPS $0.42 $0.31 $0.51 $0.97 $1.33 $2.45 $3.39 $3.87 $4.08 $4.31
EBITDA Reconciliation Upside Case
88
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Car Rental Segment:
Balance Sheet Upside Case
89
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Assets:
Receivables 1,911 1,325 1,357 1,616 1,887 2,178 2,353 2,505 2,599 2,700
Inventory 96 93 87 84 106 131 142 151 156 162
Other Property & Equipment 1,255 1,188 1,164 1,252 1,436 1,457 1,413 1,401 1,360 1,286
Other 287 300 353 422 470 470 470 470 470 470
Total Assets 16,451 16,002 17,345 17,674 23,286 24,012 24,786 25,689 26,538 27,165
Liabilities & S.E.:
Payables 931 659 954 897 999 1,238 1,338 1,424 1,478 1,535
Fleet Debt 6,387 5,675 5,476 6,612 8,903 8,794 8,739 8,697 8,624 8,517
Other 1,577 1,410 1,457 1,535 1,631 1,631 1,631 1,631 1,631 1,631
Key Statistics:
Net Debt 3,260 3,339 3,249 3,465 5,440 4,139 2,487 618 (1,423) (3,617)
Cash Flow Statement Upside Case
90
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Income 136 117 212 430 595 1,137 1,580 1,812 1,921 2,042
Other PPE D&A 239 226 219 228 257 307 320 327 326 325
Others (143) (815) (360) (17) (91) - - - - -
Others (79) 35 (1) (30) 90 - - - - -
Proceeds from Debt Issuance, net (816) 523 (799) (1,320) 443 (401) (576) (685) (1,020) (1,317)
Proceeds from Rev. Line of Credit 199 (1,126) 1,026 57 1,273 (250) (250) (250)
Dividends Paid - - - - - - - - - -
Others (78) (54) (93) (224) (92) - - - - -
Cash Flow from Financing Act. (695) (129) 134 (1,487) 1,625 (651) (826) (935) (1,020) (1,317)
Cash Flow for Year (66) 25 1,231 (1,342) (135) 651 826 935 1,020 878
CFO less Capex (FCF) 779 196 1,146 402 55 1,302 1,652 1,869 2,040 2,195
Appendix H: Team Member Bios

91
Team Member Bios
Richard Hunt ([email protected])

Richard is a first-year student at Columbia Business School. Richard is Co-President of the
Columbia Student Investment Management Association. Prior to CBS, Richard was a Senior
Financial Analyst at New Constructs.

Richard received a B.B.A. in Economics and Finance from University of Kentucky.
92
Stephen Lieu ([email protected])

Stephen is a first-year student at Columbia Business School. Stephen is Co-President of the
Columbia Student Investment Management Association. Prior to CBS, Stephen worked for four
years in investment banking and private equity.

Stephen received a B.S. in Economics from the Wharton School, University of Pennsylvania.

Rahul Raymoulik ([email protected])

Rahul is a first-year student at Columbia Business School. Prior to business school, Rahul was a
Sector Specialist at Fidelity Investments, initially in Boston and later in Tokyo. Rahul focused
on the media and telecom industries in the U.S. and the technology industry in Asia.

Rahul received a B.S. in Information Science from Northeastern University and an M.S. in
Finance from Boston College.
Thank you for your time!
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What are the four main points of the investment thesis?

What are Hertz's revenue growth opportunities in the US?

(NYSE: HTZ)

Richard Hunt '14 ([email protected])

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