Hertz fourth-quarter profit beats as costs come down and travel rebounds

Rental car giant Hertz reported fourth-quarter earnings that were better than Wall Street expected, on renewed demand for travel as the Covid-19 pandemic eased in many parts of the world.

The company also benefited from improved operating performance, CEO Stephen Scherr told CNBC, helping to boost earnings even as revenue came in roughly in line with Wall Street’s upbeat expectations.

Here are the key numbers from Hertz’s fourth-quarter earnings report, compared with Refinitiv consensus estimates:

• Adjusted earnings per share: 50 cents vs. 46 cents expected
• Revenue: $2.035 billion vs. $2.033 billion expected

For the full year, Hertz reported adjusted earnings per share of $3.74 on revenue of $8.7 billion. That profit also beat estimates, as analysts polled by Refinitiv had expected earnings of $3.67 on revenue of $8.7 billion, on average.

As of the end of 2022, Hertz had $2.5 billion of total liquidity available, including $943 million in cash.

In an interview with CNBC, Scherr said cost reductions were an important part of the company’s fourth-quarter story. Technology improvements helped lower costs, he said, as did ongoing efforts to hire new employees to replace the contractors who Hertz brought in as demand surged last year.

The key story is that Hertz is making these incremental operating improvements as demand for travel recovers, Scherr said. Business from corporate travelers was up 31% in 2022 versus 2021, he said, and demand from international travelers – what Hertz calls “inbound travel” – rose 88% year over year.

Those trends continued in January, Scherr said, with corporate travel business up 28% from the same month in 2022 and inbound travel up 56%. Another increasingly important business segment – ongoing rentals to ride-hailing drivers – saw demand nearly double over last January’s levels.

Hertz didn’t provide detailed guidance for 2023. But Scherr said investors can expect further cost improvements as the year unfolds and revenue gains as Hertz continues to revitalize its Dollar and Thrifty rental car brands.

Shares of Hertz closed up over 7% on Tuesday.