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2nd Place Final 284ecbeab0 PDF
2nd Place Final 284ecbeab0 PDF
(NYSE: HTZ)
Long: $21.75 Intrinsic Value: $34.50 (+59%) Time Horizon: 1 Yr
March 23, 2015 Analyst: David R. Hanson
Metrics (3/23/2015 - Intraday)
100
90
30.00
14e
15e
Now
12.4x
10.7x
EBITDA
(mm) Adjusted
14e $2,240
15e $2,491
P/E
Target
20.0x
16.5x
EV / EBITDA
Now
Target
7.2x
9.8x
6.4x
8.8x
EPS
Adjusted
$1.75
$2.04
Sum-of-the-Parts
31.37 - 35.92
26.32 - 32.72
29.52 - 33.64
25.00
70
20.00
60
21.75
50
15.00
40
Current
L-T
Midpoint
80
30
10.00
20
5.00
0.00
7.2
10
Upcoming Events:
- Financial Statements Re-Filed TBD
- Debt Covenant Waiver Expires ~6/30
Recommendation
Conclusion: Leading rental car company (substantially higher margins & fleet efficiency vs. peer CAR)
trading at 59% discount to IV ($34.50); Multiple near-term, reasonably-attainable catalysts to reach IV
Long Price: $21.75 Target: $34.50 (+59%) Position Size: ~5-7% position until HERC spin-off (~Q415)
Executive Summary & Situation Overview (Update to HWPs October 2013 Underwriting Memo.)
Consistent w/ HWP 2013 thesis, HTZ announced Q114 that it would separate HERC via tax-free spinoff
o Management recognized that pure-play equipment rental & rental car valuation multiples had
returned to and above pre-Crisis levels, but that HTZ was still trading at a discounted multiple
o Post-spin, HTZ estimated to receive net cash proceeds of $2.5bn, to be used to Pay down Hertz
debt and Support a new $1 billion share repurchase program (may increase up to 20% of o/s);
o Spinoff will give 1) HTZ better transparency, optimized capital structure, the ability to return
capital to shareholders 2) HERC ability to grow, and becomes best pure-play comp to URI
HTZ has been hit by a plethora of woes (accounting, ERP roll-out, management, Ebola)
Core operating results for rental car (RAC) & equipment rental (HERC) progressing nicely
o From 12-14, HTZ revenue, EBITDA, FCF grew nicely
o RAC business has grown to ~$10bn in revenue, driven by 48% growth in US RAC
o HERC revenue is approaching pre-Crisis levels, but with a more-balanced business mix
o While HERC revenues & margins have not year reached pre-Crisis peaks, cost-cutting and
efficiency measures have pushed RAC to all-time high levels
HWP thesis on improving industry pricing proved correct as reflected by peer Avis (CAR)
o Since 9/2013, CAR (lower-margin peer) returns +113% vs HTZ -12%
Vast majority of actual & potential material negative business updates already announced and/or
reflected in current share price - with no credit for future improvement
New, strong management team is in place and is working quickly to right the ship
o CEO, CFO, CRO, CIO, Lead Independent Director, 3 additional Independent Directors are all
new within last ~1 year, with substantial rental-car industry expertise
Icahn/Jana own 19% / top 15 non-passive 50%; Pressuring HTZ mgmt. to address subpar share
returns; Jana (2/5/15) said HTZ EPS could double and shares could triple over the next few years
Bull-case: several years out, HTZ could earn $3.50+/share with very reasonable margin and growth
assumptions; Using a 20x P/E multiple, this would equate to $70/share (+222%)
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Hertz is the largest airport & general use car rental brand in the world; 95-year old company
o 10,270 locations worldwide and 700,000 vehicles
o NAm (79% of locations) Europe, Africa, Middle East (17%), LatAm (2%), Asia (2%), ANZ
o #1 on-airport market share (39% / Ent 33% / CAR 26%)
o #2 OAP (12% / Ent 69% / CAR 10% / Other 9%)
Rental car (RAC):
o On-airport (946 locations / 2/3rds US; ~67% of RAC revenue)
o Off-airport (3,400 locations / 75% US; ~27% of RAC revenue)
o Hertz peak business is mid-week servicing business renters
o Dollar & Thrifty acquired 11/2012; peak business is weekends & renting to business travelers;
o Car Sharing (24/7) Zipcar (Avis) competitor; rents cars by the hour and/or the day in NAm
o Services: Equip (child seat, nav, XM), Insurance (damage waiver, theft, liability & accident)
Equipment Rental (HERC) - $1.6bn revenue; 70% US (232 locations), 21% Canada (35), 7% EU (67)
Fleet leasing and management (Donlen Corp.) manages commercial fleets and tracks data such as
fuel management, vehicle maintenance, and accident management
Hertz is a market leader in RAC with a leading equipment rental business bolted-on
U.S.
$7.2 Billion
Leasing /
Other (~5%)
$0.6 Billion
Intl
$2.7 Billion
Construc.
~$0.6Bn
Industrial
~$0.4Bn
Other
~$0.5Bn
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Catalysts For Intrinsic Value To Be Realized / Update on Prior Catalysts (Realized / ~In-Progress)
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Summary of Catalysts For Intrinsic Value To Be Realized / Update on Prior Catalysts (continued)
Post-Spinoff, HERC & HTZ will each trade up towards peer multiples (URI/ CAR)
New: Filing of restated financial statements and update of 2014 results / 2015+ Guidance
o The vast majority of actual and potential material negative business updates have already been
announced and/or are reflected in the current share price with no credit given for future results
/ solid results from core operating business
o Financials will likely be restated before YE2015, with expectations for ~6/30/15; Waiver
on debt covenants gives management a financial incentive to re-file by this date
o A new, strong management team is in place and is working quickly to right the ship (CEO,
CFO, CRO, CIO, Lead Independent Director, 3 additional Independent Directors are all new
within the last ~1 year, with substantial rental-car industry expertise)
o Two significant share re-ratings are on the horizon:
Given HTZ size (1.5x Avis), non-activist investors will re-enter shares post restatement (driving a re-rating towards CAR multiples)
Post-Spinoff, HERC & HTZ RAC will each trade up towards peer multiples (URI / CAR)
New: Activists (Icahn, Jana, Fir Tree own 19% / top 15 non-passive 50%) will maintain pressure
on management team to address subpar share returns; HERC is a key lever to unlock value
o Even post-appointment of new HTZ CEO, Icahn and Jana have increased stakes and citing
ongoing focus on fixing HTZ
New (lower-quality catalyst): Lower gas prices spur additional leisure trip spend / RAC demand
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
HWP October 2013 thesis Spin-off or sale of HERC (non-core) would delever corporate balance sheet
and free up capital, as much of the corporate debt supports HERC; Only recently became able to
separate HERC
March 2014: HTZ announced that it would separate HERC into a standalone public co. via tax-free spin
o Hertz estimated the HERC spinoff would close by early 2015
Target HERC net leverage ratio of 3.5x-4.0x at separation
Target HTZ net corporate leverage ratio of 2.5x-3.5x
o Post-spin, Hertz estimated to receive net cash proceeds of $2.5 billion, to be used to:
Pay down Hertz debt
Support a new $1 billion share repurchase program (may increase up to 20% of
o/s); Replaces $300 million program announced in 2013 / $87.5 million utilized
o Received Private Letter Ruling from IRS giving comfort to tax-free nature of spin
The spinoff will allow:
o HTZ to be the leading pure-play rental car co. in a consolidated industry
Better transparency, and an optimized capital structure (currently skewed by HERC)
Primarily focus on cash generation and growth
Fixed leverage target range / FCF profile may provide for ongoing return of capital to
shareholders
o HERC to grow and reduce costs through cycle
Will be the only other US public peer to URI
Hertz management recognized that pure-play equipment rental and rental car companies had both
returned to and above pre-Crisis levels, but that HTZ was still trading at a discounted multiple
Source: Hertz
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
In Sept 2013, HTZ revised its fleet cost guidance (cost to dispose of each rental car) upward
In December of 2013, HTZ also adopted a 1-year poison pill (shareholder rights plan) in response to
Icahn/Activist share accumulation
In March of 2014, HTZ delayed filing its 10-K citing delays due to its newly-implemented ERP system
o HTZ also identified adjustments relating to prior periods which would require restatements that
were immaterial to Hertzs reported results of operations, financial condition, or liquidity
On March 18, 2014, HTZ announced its plan to spin-off its equipment rental business, HERC, to
dividend cash from HERC to HTZ, and to buyback ~$1bn of HTZ shares outstanding
On June 6, In a reversal to prior comments, HTZ announced that it had found a material weakness in
internal controls, and would need to restate 2011, 2012, and 2013 financials
o HTZ also previewed that Q1 would be below consensus reflecting costs associated with the
accounting review, other unusual items, and certain anticipated operating results
During/after Q314, airlines and car rental firms hit by slower world growth estimates + Ebola concerns
In mid-August, Hertz withdrew its full-year financial estimates, saying it would be well below the low end
of its 2014 guidance, citing costs and challenges relating to the GM recalls, higher expenses in the US
rental car segment, the rollout of an enterprise resource planning (ERP) system, and soft demand in the
equipment rental segment
o This represented the straw that broke the camels back
o Activist investors Carl Icahn, Jana Partners, Fir Tree Partners all reported large stakes, and
cited management missteps with regard to accounting errors and operational issues
o Under pressure from Icahn, Chairman & CEO Mark Frissora resigned In September
o Icahn added 3 Directors to Board, 2 of which will be part of 5-person CEO search committee
o Hertz also reported that Scott Sider retired as group president of RAC Americas / Linda Fayne
Levinson would become independent lead director; Seen as tough outside director (among first
female partners ever at McKinsey & Co.) who will push management to resolve problems
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
In late-November, HTZ appointed John Tague as CEO (selected unanimously, indicating support from
Icahn), former President and COO of United Airlines, CEO of Cardinal Logistics
o Icahn: "I have been involved in a number of CEO searches during the last decade and have
been quite impressed by the knowledge and imagination of a number of these candidates,
many of whom have turned into very successful CEOs," Icahn said. "I am happy to say that
after listening to John's ideas concerning Hertz and evaluating what he has accomplished at
United, I believe he ranks at or near the top of the group."
As of December 2014, Icahn, Jana and Fir Tree collectively represented 21% of HTZ shares, and
overall the top-15 non-passive investors represented 43%
HTZ announced that it was raising pricing across-the-board as of Jan 1, 2015 and cutting expenses by
an additional $100mm annually
o Driven by fleet depreciation increases, primarily related to residual value declines
o +1% change in RAC pricing = +$67mm pretax income ~5%; CAR saw 2% price change in 14
o $100mm expense cut equals ~1% of total expenses / $0.22 per share
HWP believes:
o The vast majority of actual and potential material negative business updates have
already been announced and/or are reflected in the current share price
o Financials will be restated before YE2015, with expectations for ~6/30/15; Waiver on debt
covenants gives management a financial incentive to re-file by this date
o Hertzs core operating business (US rental car) and the US rental car industry are
progressing in-line with our prior expectations
o A new, strong management team is in place and is working quickly to right the ship
(CEO, CFO, CRO, CIO, Lead Independent Director, 3 additional Independent Directors are
all new within last ~1 year, with substantial rental-car industry expertise)
o HERC spinoff and subsequent HTZ share buyback will continue as announced
o Activist investors will maintain pressure on management team to address subpar share
returns, with HERC being a key lever to unlock value
o Two significant share re-ratings are on the horizon:
Given HTZ size (1.5x Avis), non-activist investors will re-enter shares post restatement (driving a re-rating towards CAR multiples)
Post-Spinoff, HERC & HTZ will each trade up towards peer multiples (URI/ CAR)
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
65.00
60.00
60.00
55.00
03/03/14 Delays Q4'13 Results
03/18/14 Q4 Results & HERC Separation
05/13/14 Delays Q1'14 & Bus. Update
05/19/14 Delays Q1'14
06/02/14 B.MacDonald new HERC CEO
06/06/14 Announces Broader Acctg. Issue
50.00
52.52
45.00
50.00
45.00
08/20/14 Icahn increases stake to 8.5%
09/08/14 M. Frissora Resigns as CEO
09/11/14 Agreement w Icahn
09-10/14 Ebola Scare in US
10/20/14 JANA increases stake to 7%
40.00
40.00
11/14/14 Bus. Update / Guid. Low'd
11/17/14 JANA increases stake to 8.3%
11/20/14 J. Tague new HTZ CEO
11/26/14 Icahn increases stake to 10.8%
12/18/14 Icahn increases stake to 11.3%
02/25/15 Business update
35.00
30.00
25.00
35.00
30.00
25.00
55.00
21.75
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
15.00
Nov-13
15.00
Oct-13
20.00
Sep-13
20.00
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Holder
Carl Icahn
Jana Partners
Vanguard
Glenview Capital
Fir Tree
SRS Investment
Tiger
York Capital
JGD Management
Wellington
Iridian Asset
BlackRock
GSAM
Highfields
Fidelity
DEShaw
State Street
Sab Capital
TIAA-CREF
Neuberger
Ivory Investment
Owl Creek
Eminence Capital
Top 5 Active
Top 15 ex-Passive
Active Ex-Icahn
Shares Amount
(mm)
$mm
% of OS
51.9
$1,177.1
11.3%
34.8
789.4
7.6%
24.6
558.6
5.4%
18.5
420.2
4.0%
15.2
343.5
3.3%
15.0
340.1
3.3%
14.3
323.3
3.1%
13.5
305.6
2.9%
13.5
305.6
2.9%
13.3
301.3
2.9%
12.6
284.8
2.7%
11.8
267.4
2.6%
10.6
239.2
2.3%
9.2
208.2
2.0%
8.9
201.1
1.9%
8.8
199.7
1.9%
8.5
193.1
1.9%
7.5
170.3
1.6%
7.1
159.9
1.5%
6.3
143.3
1.4%
4.8
108.8
1.0%
4.6
104.4
1.0%
4.5
101.6
1.0%
135.4
228.6
176.7
$3,070.1
5182.4
4,005.4
From Prior
#mm
%
13.1
34%
23.8
217%
-1.3
-5%
-1.0
-5%
-2.9
-16%
-5.0
-25%
-1.6
-10%
1.9
7.2
3.3
-0.2
1.6
-4.8
1.3
-0.3
0.4
0.0
0.4
-1.6
4.8
16%
120%
36%
-1%
18%
-34%
17%
-3%
5%
0%
6%
-20%
New
Date
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
12/31/2014
29.6%
49.9%
38.6%
Icahn (8/20/2014) [We believe HTZ shares] were undervalued [and] intend to have discussions with [HTZ]
management and board of directors relating to shareholder value, accounting issues, operational failures,
underperformance relative to its peers and the Reporting Persons' lack of confidence in management. The
Reporting Persons may also seek shareholder board representation if appropriate.
Fir Tree (8/20/2014) The CEO has had some serious missteps, and its time for a change. We believe Hertz has an
incredible brand and an opportunity to show leadership in the car-rental industry. We look to work constructively with
management and the board to address these issues.
Jana Partners (Q3 2014 Letter) Hertz is a leader in a consolidated industry that we believe has substantial
unrealized pricing power. We have been following HTZ and the transformation of the car rental industry over the last three
years. Against a backdrop of healthy industry fundamentals, HTZ has been plagued recently by fleet mismanagement
problems and an accounting restatement. The dreadful share price performance of HTZ relative to its peers has fostered a
shareholder rebellion that led to the ouster of CEO Mark Frissora and important changes to the HTZ board. What HTZ needs
now is new leadership a CEO who can reposition and right size the fleet, take the lead on improving pricing, resolve the
accounting problems, reinvigorate the troops, and complete the spin-off of Hertz Equipment Rental (HERC).
With the right CEO at the helm be it Scott [Thompson, former CEO of Dollar Thrifty] or an equally qualified
leader and the appropriate strategy and capital allocation plans in place, we believe HTZ is capable of
generating nearly $3.00/share of free cash flow. This combined with an estimated value for HERC of roughly
$6.00 per share, suggests that HTZ is trading at a very deep discount to intrinsic value.
Jana Partners (10/20/2014) Jana continues to believe that Hertzs shares are undervalued and that it may hold
discussions with management.
Jana Partners (2/5/2015) Hertz could double earnings per share over the next couple of years and the stock
could triple - EnTrust Investment Summit
Source: Company Filings, Morningstar, HWP Analysis
CONFIDENTIAL
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Exit of investor with large stake in HTZ, given concentration of current shareholder base
o Potential mitigant(s):
Given HTZ size (1.5x Avis), non-activist investors will re-enter shares post re-statement
(driving a re-rating towards CAR multiples)
Europe risk
o Potential mitigant(s):
Europe only represents 22% of HTZ 13a revenues
Hertz is expanding its franchise arrangements in Europe (risk is on partners capital)
Hertz is expanding its discount/value brands in Europe, including Firefly (ex Advantage
Europe) which would appeal to budget-strapped Europeans
CONFIDENTIAL
10
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Valuation
Valuation Multiples
Low
High
Implied
Multiple
Valuation Range
High
Low
Midpoint
SOTP Current
$31.37
$35.92
$33.64
SOTP Long-Term
$26.32
$32.72
$29.52
P/E ('14)
$1.75
19.0x
21.0x
20.0x
$33.24
$36.73
$34.98
P/E ('15)
$2.04
16.0x
17.0x
16.5x
$32.59
$34.63
$33.61
Memo: Y/Y
16%
EV/EBITDA ('14)
$2,240mm
9.5x
10.5x
10.0x
$33.18
$38.08
$35.63
EV/EBITDA ('15)
$2,491mm
8.5x
9.5x
9.0x
$32.95
$38.39
$35.67
$32.77
$31.61
$36.32
$36.08
$34.55
$33.84
Memo: Y/Y
11%
Median
Average
HWP Estimate
Implied P/E
Implied EV/EBITDA
EV/EBITDA ('15)
$32.95
$38.39
EV/EBITDA ('14)
$33.18
$38.08
P/E ('15)
$32.59
P/E ('14)
SOTP Long-Term
SOTP Current
CONFIDENTIAL
$34.50
$21.75
+59%
$34.63
$33.24
$26.32
Target
Current
Upside
$36.73
$32.72
$31.37
$35.92
11
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Valuation (continued)
HTZ Adj. 2014 Results / HWP 2015e Est.
($ mm)
Rev
2013a
10,772
2014a
11,018
2.3%
5.5%
1,153
1,234
1,302
10.7%
11.2%
11.2%
1,234
801
1.75
135
1,437
932
2.04
Rev Growth
PTI
PTI %
Price Inc.
Adj PTI
NI
EPS
1,153
748
1.67
2015e
11,624
Memo
Pre DTG growth 6-10% p.a.
Assumes PTI +50bps (sub mgmt est); Upside from margin inc. /cost cuts
Assumes 2% price increase in 2015 (CAR +2% in 2014)
Sum-of-the-Parts Valuation
Using conservative assumptions, adjusted 14 EBITDA & EPS in-line with 3/14 Mgmt Guidance
3/14 '14e
Corp.
Midpoint
($ Millions)
RAC
+
HERC
Other
=
Total
Guidance
Revenue
Corp. EBITDA
9,444
1,558
16.5%
PTI
1,386
937
2.05
699
300
435
19.0%
9.9%
EPS
44.4%
14.7%
NI
1,574
194
330
12.3%
0.42
0.72
11,018
11,550
2,257
2,240
20.5%
19.4%
1,250
1,320
11.3%
11.4%
801
855
7.3%
7.4%
1.75
1.85
FCF
600
Current SOTP yields a $34.58 valuation, with several peers (CAR, URI) trading near cyclical-high
valuation multiples; using HTZ and URI L-T multiples results in a $30 Price Target post spinoff
P/E
RAC
$28.57
1,558.3
10.3x
16,031.3
9,943.3
$21.72
Per Share
193.9
17.3x
3,364.1
$7.35
698.9
6.3x
4,417.0
$9.65
Total
Per Share
16,442.4
$35.92
14,360.3
$31.37
Midpoint
Upside
$33.64
55%
Equity
EV
Per Share
HERC
647.1
20.2x
13,078.3
CONFIDENTIAL
Memo
CAR
P/E
647.1
20.0x
12,942.7
$28.27
1,558.3
8.5x
13,245.2
7,157.2
$15.63
193.9
10.5x
2,036.3
$4.45
698.9
7.0x
4,892.0
$10.69
14,979.0
$32.72
12,049.2
$26.32
HTZ L-T
URI 10-Year
$29.52
36%
12
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Comparables
($ millions)
Company
Auto Rental
Hertz Global Holdings
Avis Budget Group
Ticker
HTZ
CAR
23-Mar
Price
21.75
58.81
HTZ
URI
AHT LN
AGK LN
HEES
21.75
88.24
11.16
15.78
24.10
Market
Cap
($mm)
EV
($mm)
EPS
CAGR
'11-'14
'13E
P/E
'14E '15E
'16E
'13E
EV / EBITDA
'14E '15E
9,957.37
6,254.44
16,045.37
9,012.24
20.4%
12.6%
13.3x
26.7x
29.4x
20.2x
17.1x
16.7x
13.4x
14.4x
7.8x
11.7x
11.1x
10.3x
8.7x
9.3x
7.8x
8.7x
17%
10%
18%
11%
19%
10%
8,105.91
8,105.91
12,528.81
12,528.81
12.6%
12.6%
26.7x
26.7x
20.2x
20.2x
16.7x
16.7x
14.4x
14.4x
11.7x
11.7x
10.3x
10.3x
9.3x
9.3x
8.7x
8.7x
14%
14%
15%
15%
14%
14%
59%
78%
63%
(50%)
45%
3%
(7%)
(33%)
8%
(7%) (11%)
+6%
+7%
+9%
9,957.37
8,516.92
5,617.27
4,041.57
849.77
16,045.37
16,443.30
6,867.27
4,503.57
1,695.93
20.4%
61.5%
124.1%
(2.2%)
13.3x
18.0x
35.3x
16.3x
19.1x
29.4x
12.9x
24.5x
19.2x
15.4x
17.1x
11.0x
18.1x
18.4x
14.6x
13.4x
9.4x
14.4x
16.9x
12.2x
7.8x
7.2x
13.2x
6.9x
6.7x
11.1x
6.1x
10.3x
6.5x
5.5x
8.7x
5.5x
8.8x
17%
34%
18%
43%
34%
38%
19%
41%
38%
40%
12%
39%
41%
41%
8,216.49
8,443.33
12,357.81
13,138.80
51.0%
41.0%
22.2x
18.5x
18.0x
17.3x
15.5x
16.4x
13.2x
13.3x
8.5x
7.1x
7.1x
6.3x
6.3x
5.5x
25%
25%
33%
36%
34%
39%
33%
40%
1.2x
1.2x
50%
(28%)
69%
(26%) 128%
5%
55%
1%
43%
11%
8%
76%
82%
59%
59%
HTZ vs Median
HTZ vs URI
'16E
7.8x
'11A
EBITDA Margin
'12A '13E '14E
12%
10%
4.8x
CONFIDENTIAL
13
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
14,000
19%
12,000
10,000
11,550
10,772
7%
9,025
8,299
8,000
7,102
2%
7,563
6,000
10%
-33%
26%
4,000
2,000
11,018
974
1,094
1,371
2009
2010
2011
1,626
2012
2,044
2,240
2013
2014e 3/14
1,375
2014e
Similarly, HTZ Pre-Tax Income, EPS, Free Cash Flow all grew nicely 12-13, and were originally estimated to continue for 2014
1,600
2.00
1.85
14%
Pre-Tax Income
29%
1,400
1.80
Free Cash Flow
1,153
1,200
1.63
1.60
1,320 13%
EPS
892
1,000
1.40
1.31 24%
800
1.20
662
600
600 34%
463
0.94
1.00
449
400
193
0.80
340
190%
200
63
155
0.60
0
2009
2010
2011
2012
2013
2014e 3/14 2014e 11/14 0.40
0.51
-200
0.28
-347
0.20
-400
Adjusted EPS ($)
-600
0.00
CONFIDENTIAL
14
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
2,000
Donlen / Other
9,234
10,000
1,672
9,748
7,640
8,000
6,274
6,801 6,730
5,873
6,355
6,941
6,000
6,628
4,000
2,000
1,755
Construction
Industrial
48%
Fragmented
1,657
1,538 1,548
1,600
HERC Revenue ($mm)
US RAC
4,469
12,000
HERC revenue is approaching pre-Crisis levels, but with a morebalanced business mix
1,385
30%
1,210
36%
1,110 1,071
1,200
18%
800
26%
52%
400
38%
0
2006
2008
2010
2012
2006
9M'14 ann.
2008
2010
2012
9M'14 ann.
While HERC revenues, EBITDA margins, and PTI margins have not year reached pre-Crisis peaks,
cost-cutting and efficiency measures have pushed RAC to all-time high levels
46%
47%
25%
44%
41%
38%
40%
40%
42%
43%
RAC Total
US RAC
10%
20%
Int'l RAC
20%
11%
11%
10%
12%
14%
6%
0%
2006
2007
2008
16%
6%
2009
2010
21%
RAC
2011
2012
19%
16%
19%
US
20%
Equipment
30%
Equipment
21%
50%
16%
16%
Int'l
13%
15%
14%
10%
10%
17%
15%
12%
8%
9%
18%
9%
7%
5%
7%
6%
4%
8%
4%
0%
2013
2006
2007
2008
2009
2010
2011
2012
2013
CONFIDENTIAL
15
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Source: Hertz
CONFIDENTIAL
16
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
8,000
5.0x
7,054
423
666
613
1,000
500
882
1,041
1,146
525
1,157
6,081
6,274
5,935
3.0x
5,000
4,000
3.0x
2.6x
3.0x
2.5x
2.0x
3,000
2,000
2,044
1,363
611
4.0x
-3%
3.5x
1,929
1,029
3.7x
3,676
1,542
6,000
1,390
1,580
1,757
3.6x
-33%
1.5x
876
750
1,000
0
Q4'12
Q2'13
Q3'13
Q4'13
Q3'14
1.0x
0.5x
357
Q4'11
4.5x
2,000
1,636
2,070
1,500
4.4x
7,000
6,083
ABL Capacity
1,375
Cash
2,062
2,500
0.0x
Q4'11 Q4'12 Q2'13 Q3'13 Q4'13 Q3'14
CONFIDENTIAL
17
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
HTZ (Total)
Sales
'13
'14e
CAR
HTZ/CAR
Memo
10,772
11,296
8,707
9,181
7,937
8,533
10%
8%
2,088
2,372
1,436
1,636
769
870
87%
88%
19%
21%
16%
18%
10%
10%
70%
75%
Leverage
4.3x
3.5x
23%
FCF (adj.)
'13
441
460
-4%
71%
9%
EBITDA (adj.)
'13
'14e
Fleet Efficiency
78%
RAC Locations
NAm
Int'l
Total
5,874
3,876
9,750
60%
40%
467,225
160,800
628,025
74%
26%
3,150
5,650
8,800
36%
64%
342,430
145,262
487,692
70%
30%
CONFIDENTIAL
18
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Source: Hertz
CONFIDENTIAL
19
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
100%
87%
87%
86%
95%
87%
45.00
44.00
80%
43.00
73%
42.00
60%
+2%
41.00
40.00
+1%
40%
39.00
86%
95%
94%
38.00
20%
37.00
0%
36.00
2006
2007
2008
2009
2010
2011
CAR NA Pricing
2012
2013
2014
HTZ NA Pricing
CONFIDENTIAL
20
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
3,500
38%
40%
35%
32%
30%
25%
20%
15%
15%
15%
12%
240
235
229
230
2,939
222
2,639
220
211
2,500
36%
203
210
2,156
2,000
200
193
1,698
190
1,500
1,260
175
180
30%
4%
226
3,000
40%
% of HTZ Fleet in Alternative Resale Channels
1,000
10%
170
500
500
5%
160
187
0%
0
2011
2012
2013
2014e
0
2006 2007 2008 2009 2010 2011 2012 2013
150
Source: Hertz
CONFIDENTIAL
21
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Financial Sensitivity
Pre-Tax Sensitivity to Incremental 1% Changes
Source: Hertz
CONFIDENTIAL
22
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be
shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Ten years of consolidation have led to a landscape where 3 competitors control 94% of the market
100%
90%
9%
6%
8%
6%
7%
7%
7%
7%
6%
7%
5%
7%
80%
13%
13%
14%
14%
14%
15%
70%
9%
10%
7%
8%
8%
60%
50%
40%
19%
20%
19%
19%
11%
11%
10%
11%
6%
6%
6%
6%
20%
19%
20%
19%
8%
7%
8%
7%
7%
18%
18%
20%
20%
19%
20%
13%
13%
Budget
Avis
Dollar Thrifty
Hertz (inc. DT)
30%
20%
Others
47%
33%
33%
34%
35%
33%
34%
2003
2004
2005
2006
2007
2008
48%
49%
49%
National / Alamo
Enterprise
10%
0%
2009
2011
2012
Other,
2%
Other,
9%
CAR,
26%
2010
HTZ,
39%
HTZ,
12%
CAR,
10%
ENT,
50%
ENT,
69%
ENT,
33%
On-Airport $12.5bn
HTZ,
26%
CAR,
19%
CONFIDENTIAL
23
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
80%
55%
60%
51%
38%
40%
26%
20%
13%
0%
0%
Q3'06
Q2'07
Q4'10
Q4'11
Q4'12
Q1'13
Q2'13
M&A Activity
Americas Car Rental (5 since 2010)
o Eileo (2008)
o Donlen (2011)
o Navigation Solutions (2011)
o Dollar Thrifty (2012) / Divested Advantage in connection with DT acquisition
o Penske Automotive Memphis Franchise (2012)
International Car Rental (3 + minority)
o Flexicar (2010)
o Ace Rental Cars (2011)
o Emil Frey Group Franchise (2012)
o China Auto Rental (10% - 2013)
Worldwide Equipment Rental (10)
o Forces, Western Machinery, 24/7 Studio Equipment, 1st Call Studio Equipment (2010)
o Offshore equipment business of Delta Rigging & Tools, We Got It Rentals, DW Pumps (2011)
o Cinelease, Arpielle, Pioneer Rentals (2012)
Source: Hertz, Company Filings, HWP Analysis.
CONFIDENTIAL
24
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
CONFIDENTIAL
25
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
CONFIDENTIAL
26
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
HERC has diversified away from Construction and has deepened its Industrial & Fragmented verticals
2006
2012
Const.
35%
Const.
50%
Frag.
35%
Frag.
40%
Indu.
15%
Indu.
25%
Similarly, HERC has balanced its fleet mix; Higher dollar utilization with Specialty equipment
2006
Spec.
Other
7%
9%
2012
Spec.
15%
Earth
moving
30%
Other
9%
Trucks
13%
Trucks
14%
Mat.
Handl.
19%
Earth
moving
22%
Aerial
22%
Mat.
Handl.
16%
Aerial
24%
CONFIDENTIAL
27
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Lease
CAGR 14%
100,000
80,000
60,000
40,000
530
471
500
CAGR
Lease 4.6%
Mgmt 4.3%
120,000
Vehicles
600
CAGR
Lease 11.0%
Mgmt 14.5%
Mgmt
160,000
140,000
CAGR 1.6%
400
361
362
2007
2008
329
408
340
351
2009
2010
300
200
100
20,000
0
2006
2007
2008
2009
2010
2011
2012 2013e
2006
2011
2012
2013e
CONFIDENTIAL
28
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Source: Columbia Business School Presentation April 2013 (Hunt, Lieu, Raymoulik)
CONFIDENTIAL
29
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Strategy
1) Transforming Hertz
Transforming Hertz: All pieces in place for a transformation
CONFIDENTIAL
30
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
CONFIDENTIAL
31
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
US OAP locations have lower labor costs, direct op. expenses, SG&A, and higher utilization;
This lower cost structure coupled with longer-rentals drives higher off-airport margins
CONFIDENTIAL
32
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Commitment to Accelerating Cash Flow Generation: Hertz generated approximately $2.7 billion in net
cash flow from operations in 2012, a $485 million year-over-year improvement. Having completed the
Dollar Thrifty acquisition last year, and 11 HERC acquisitions over a 3-year period, as well as investing
heavily in our rental fleets as the U.S. economy recovered, we believe we will now rapidly accelerate
corporate cash flow generation in 2013 and beyond.
DTG and lower overall fleet investment requirements will drive future corporate cash flow:
o HERC fleet growth: 2013E investment declining YoY vs. increasing over past 3 years
o RAC fleet growth: 2013E stabilizing / declining due to initiatives: risk fleet, remarketing
channels, and higher utilization
o DTG: positive cash flow + synergies more than offset incremental interest expense
o Non-fleet capital: increasing as we invest in technology and new / updated facilities slight
offset to cash flow
o Expect 2013 Free Cash Flow of $500M to $600M
CONFIDENTIAL
33
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
7%
7%
47%
47%
70%
19% 7%
80%
9%
90%
8% 11%6%
100%
7%5%
Hertz has shifted away from the Auction remarketing channel; Shift into more profitable resale
channels increases margins and mitigates potential drop in used car prices
33%
20%
10%
23%
30%
Retail/Rent2Buy
Auction
23%
40%
13%
Dealer Direct
65%
50%
75%
Other
88%
60%
0%
2009
2010
2011
2012
2013e
CONFIDENTIAL
34
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Source: Hertz.
CONFIDENTIAL
35
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
While HTZs total debt figure, $17.8bn (Q2 2013) seems high, please note:
o Only $7.6bn ($7.1bn net) is at HTZ Corporate level
o Remainder ($10.2bn) is Fleet level and is bankruptcy remote, not guaranteed by HTZ
3,064.8
3,000
2,950.0
2,500
2,000
1,500
1,005.8
1,000
523.4
500
0
2014
2015
2016
2017
2018
2018+
Corporate Debt
Senior Term Facility
Senior ABL Facility
357.3
Senior Notes
4.25% Senior Notes due April 2018
7.50% Senior Notes due October 2018
6.75% Senior Notes due April 2019
5.875% Senior Notes due October 2020
7.375% Senior Notes due January 2021
6.25% Senior Notes due October 2022
Senior Notes
Promissory Notes
Convertible Senior Notes
Other Corporate Debt
Unamortized Net Discount (Corporate)
357.3
Total Corporate Debt
Available
Under
Borrow B
357.3
Avg. Int.
Rate at
6/30/2013
3.26%
2.89%
4.25%
7.50%
6.75%
5.88%
7.38%
6.25%
6.58%
6.96%
5.25%
3.51%
357.3
5.58%
Fixed or
Floating?
Floating
Floating
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
Maturity
3/2018
3/2016
4/2018
10/2018
4/2019
10/2020
1/2021
10/2022
4/2018-10/2022
6/2012-1/2028
6/2014
Various
12/31/2011
1,389.5
0.0
2,638.6
2,638.6
224.7
474.7
49.6
(72.3)
4,704.8
12/31/2012
2,125.5
195.0
6/30/2013
2,114.8
1,005.8
0.0
700.0
1,250.0
700.0
500.0
500.0
3,650.0
48.7
474.7
88.7
(37.3)
6,545.3
250.0
700.0
1,250.0
700.0
500.0
500.0
3,900.0
48.7
474.7
58.5
(23.7)
7,578.8
CONFIDENTIAL
36
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
3.26%
2.89%
Floating
Floating
3/2018
3/2016
4.25%
7.50%
6.75%
5.88%
7.38%
6.25%
6.58%
6.96%
5.25%
3.51%
Avg. Int.
Rate5.58%
at
6/30/2013
3.26%
2.89%
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
4/2018
10/2018
4/2019
10/2020
1/2021
10/2022
4/2018-10/2022
6/2012-1/2028
6/2014
Various
4.25%
1.04%
7.50%
N/A
6.75%
N/A
5.88%
1.04%
7.38%
6.25%
5.37%
6.58%
3.77%
6.96%
2.86%
5.25%
1.68%
3.51%
3.37%
Fixed
Floating
Fixed
Floating
Fixed
Floating
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
4/2018
3/2014
10/2018
3/2013
4/2019
4/2012
10/2020
1/2021
10/2022
3/2013-3/2015
4/2018-10/2022
2/2014-2/2018
6/2012-1/2028
3/2015-3/2017
6/2014
8/2016-8/2018
Various
5.58%
1.03%
357.3
Appendix: Debt
Other
Fleet
Debt
HVF U.S.
Fleet
MTNs
US
Financing
HVFFleet
Series
2009-2 Facility
European
HVF
SeriesRevolving
2010-1 Credit Facility
European
Notes
HVF SeriesFleet
2011-1
European
HVF
SeriesSecuritization
2013-1
Hertz Canadian Securitization
DollarU.S.
Thrifty
Canadian
RCFC
ABS
ProgramSecuritization
Australian
Securitization
RCFC
US Fleet
VFN
Brazilian
Fleet2010-3
Financing Facility
RCFC
Series
Capitalized
Leases
RCFC
US Fleet
MTNs
Unamortized
Premium
RCFC Series 2011-1 (Fleet)
RCFC Series 2011-2
Total ABS
FleetProgram
Debt
Donlen
Total
Donlen GN II VFN
Available
Under
357.3
Borrow B
European Securitization
357.3
0.0
19.0
58.5
157.4
85.0
66.9
112.3
60.0
767.9
1,125.2
60.0
Corporate
Other FleetEBITDA
Debt
Cash
US Fleet Financing Facility
Net
Corporate
Debt Credit Facility
European
Revolving
Corporate
EBITDA
EuropeanDebt
Fleet/ Notes
357.3
0.0
0.0
357.3
19.0
58.5
157.4
CONFIDENTIAL
66.9
112.3
767.9
1,125.2
0.0
357.3
Fixed or
Floating?
Floating
Floating
Maturity
3/2018
3/2016
1,389.5
0.0
2,638.6
2,125.5
195.0
2,114.8
1,005.8
0.0
700.0
1,250.0
700.0
500.0
500.0
3,650.0
48.7
474.7
88.7
(37.3)
6,545.3
12/31/2012
2,125.5
195.0
250.0
700.0
1,250.0
700.0
500.0
500.0
3,900.0
48.7
474.7
58.5
(23.7)
7,578.8
6/30/2013
2,114.8
1,005.8
1,384.3
2,638.6
749.8
224.7
598.0
474.7
0.0
49.6
2,732.1
(72.3)
4,704.8
0.0
0.0
2,350.0
700.0
0.0
1,250.0
0.0
700.0
2,350.0
500.0
500.0
1,095.9
3,650.0
749.8
48.7
598.0
474.7
0.0
88.7
2,443.7
(37.3)
6,545.3
519.0
250.0
2,590.0
700.0
0.0
1,250.0
0.0
700.0
2,590.0
500.0
500.0
807.5
3,900.0
749.8
48.7
598.0
474.7
950.0
58.5
3,105.3
(23.7)
7,578.8
540.0
2,638.6
224.7
474.7
49.6
(72.3)
4,704.8
12/31/2011
1,389.5
0.0
2,638.6
1,000.0
170.0
175.0
1,345.0
Floating
12/2013
2.81%
3.21%
1.04%
2.25%
N/A
1.00%
N/A
1.04%
Fixed
Fixed
Floating
Floating
Floating
2/2015
5/2015
3/2014
3/2013
12/2013
4/2012
0.0
0.0
1,000.0
0.0
170.0
811.2
175.0
1,345.0
500.0
400.0
2,350.0
1,419.0
0.0
899.3
0.0
2,350.0
500.0
400.0
2,590.0
1,440.0
0.0
943.8
0.0
2,590.0
2.95%
5.37%
2.67%
3.77%
8.50%
2.86%
2.50%
1.68%
2.14%
3.37%
2.13%
4.17%
13.89%
1.03%
4.08%
Floating
Fixed
Floating
Fixed
Fixed
Floating
Fixed
Floating
Floating
Floating
Floating
Floating
Floating
9/2015
3/2013-3/2015
6/2015
2/2014-2/2018
7/2015
3/2015-3/2017
7/2014
8/2016-8/2018
6/2013
8/2014
12/2014
2/2013
12/2013
Various
2/2015
5/2015
136.0
1,384.3
200.6
749.8
517.7
598.0
256.2
0.0
68.3
2,732.1
0.0
169.3
23.1
0.0
363.7
(10.9)
0.0
1,724.0
0.0
0.0
6,612.3
11,317.1
811.2
166.0
1,095.9
185.3
749.8
529.4
598.0
242.2
0.0
100.5
2,443.7
55.3
148.9
14.0
519.0
337.6
12.1
500.0
1,791.3
400.0
1,419.0
8,903.3
15,448.6
899.3
171.0
807.5
357.9
749.8
520.5
598.0
363.0
950.0
124.2
3,105.3
76.4
119.7
13.0
540.0
429.6
8.8
500.0
2,184.1
400.0
1,440.0
10,263.2
17,842.0
943.8
1,389.5
931.8
136.0
3,773.0
200.6
2.7x
517.7
1,635.6
533.3
166.0
6,012.0
185.3
3.7x
529.4
2,155.0
483.1
171.0
7,095.7
357.9
3.3x
520.5
4.44%
256.2
68.3
0.0
169.3
23.1
363.7
(10.9)
1,724.0
242.2
100.5
55.3
148.9
14.0
337.6
12.1
1,791.3
363.0
124.2
76.4
119.7
13.0
429.6
8.8
2,184.1
2.64%
3.89%
6,612.3
11,317.1
8,903.3
15,448.6
10,263.2
17,842.0
1,389.5
931.8
3,773.0
2.7x
1,635.6
533.3
6,012.0
3.7x
2,155.0
483.1
7,095.7
3.3x
2.81%
4.44%
3.21%
2.25%
2.64%
3.89%
1.00%
Fixed
Fixed
Floating
12/2013
2.95%
2.67%
8.50%
2.50%
2.14%
2.13%
4.17%
13.89%
4.08%
Floating
Floating
Fixed
Floating
Floating
Floating
Floating
Floating
Floating
9/2015
6/2015
7/2015
7/2014
6/2013
8/2014
12/2014
2/2013
Various
37
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
TTM P/E
50.0x
40.0x
30.0x
20.0x
14.2x
13.9x
10.0x
13.0x
12.0x
Nov-13
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
Feb-08
Nov-07
Aug-07
May-07
Feb-07
Nov-06
0.0x
HTZ pre-LBO pre-IPO P/E was volatile, in the 8-20x range, but averaging 16x
CONFIDENTIAL
38
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
12.0x
9.3x
TTM EV/EBITDA
10.0x
7.4x
8.0x
8.9x
8.1x
6.0x
4.0x
2.0x
Nov-13
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb-09
Nov-08
Aug-08
May-08
Feb-08
Nov-07
Aug-07
May-07
Feb-07
Nov-06
0.0x
CONFIDENTIAL
39
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Historically, forward P/E for CAR & DTG was in the 10-20x range
Source: JPMorgan
CONFIDENTIAL
40
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Pre-crisis, DTG, the weakest of the 3 RACs, was trading in the 15x EV/EBITDA range; mid-crisis, ~0-1x; post-crisis 3-4x
Source: JPMorgan
CONFIDENTIAL
41
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Source: Hertz
CONFIDENTIAL
42
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
CONFIDENTIAL
43
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for informational purposes only. This information is not to be shared,
distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
Disclaimer / Disclosure
This document is not a solicitation to invest in any investment product, nor is it intended to provide investment advice. It is
intended for information purposes only and should be used by sophisticated investors who are knowledgeable of the risks
involved. Past performance is not a guarantee of future results. Please refer to the relevant confidential offering document for
full details on investment products and strategies.
The information contained herein reflects the opinions and projections of Hanson Wells Capital Management LLC, and its
affiliates (collectively HWP) as of the date of publication, which are subject to change without notice at any time subsequent
to the date of issue. HWP does not represent that any opinion or projection will be realized. All information provided is for
informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sell any
specific security. While the information presented herein is believed to be reliable, no representation or warranty is made
concerning the accuracy of any data presented. This communication is confidential and may not be reproduced without prior
written permission from HWP. Performance returns reflect the time weighted return, net of expenses and full fees, for a
hypothetical partner. Returns are shown net of the incentive allocations. Performance returns are estimated pending the
year-end audit. Past performance is not indicative of future results. Actual returns may differ from the returns presented.
Each partner will receive individual returns from HWPs administrator. Reference to an index does not imply that the
Partnership will achieve returns or other results similar to the index. The total returns for the index do not reflect the
deduction of any fees or expenses which would reduce returns. Weightings, exposure, attribution and performance
contribution information reflect estimates and are the result of classifications and assumptions made in the sole judgment of
HWP. Positions reflected in this letter do not represent all the positions held, purchased, or sold, and in the aggregate, the
information may represent a small percentage of activity. The information presented is intended to provide insight into the
noteworthy events, in the sole opinion of HWP, affecting the Partnership.
THIS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY INTERESTS
IN ANY FUND MANAGED BY HWP OR ANY OF ITS AFFILIATES. SUCH AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY INTERESTS MAY ONLY BE MADE PURSUANT TO CONFIDENTIAL OFFERING DOCUMENT
BETWEEN A FUND AND AN INVESTOR.
An investment in Hanson Wells Partners Fund, LP (the Fund) is subject to a high degree of investment risk, including the
possible loss of the entire amount of an investment in the Fund. An investor should carefully read and review the
confidential offering document, including the description of risk factors, before making an investment in the Fund.
Statements herein that reflect projections or expectations of future financial or economic performance of the Fund are
forward-looking statements. Such forward-looking statements are based on various assumptions, which assumptions may
not prove to be correct. Accordingly, there can be no assurance that such assumptions and statements will accurately
predict future events or the Funds actual performance. No representation or warranty can be given that the estimates,
opinions or assumptions made herein will prove to be accurate. Any projections and forward-looking statements included
herein should be considered speculative and are qualified in their entirety by the information and risks disclosed in the
confidential offering document. Actual results for any period may or may not approximate such forward-looking statements.
Prospective investors are advised to consult with their own independent tax and business advisors concerning the validity
and reasonableness of the factual, accounting and tax assumptions. No representations or warranties whatsoever are made
by the Fund, the Partners, or any other person or entity as to the future profitability of the Fund or the results of making an
investment in the Fund. Past performance is not a guarantee of future results.
This presentation and its contents are confidential and proprietary information of the Fund and any reproduction of this
information, in whole or in part, without the prior written consent of the Fund is prohibited. Additional information is available
from the Fund upon request. The Fund, the Partners, and their respective affiliates are not acting as your adviser or agent.
Partners generally refers to Limited Partners of Hanson Wells Partners Fund, L.P.
Sources: JPMorgan, Credit Suisse, Columbia Business School Presentation April 2013 (Hunt, Lieu, Raymoulik), Company Filings, HWP Analysis.
CONFIDENTIAL
44
This presentation does not constitute an offer to purchase securities of Hanson Wells Partners Fund, LP. The information contained herein is confidential and is provided to you solely for
informational purposes only. This information is not to be shared, distributed, or otherwise used, for any other purpose or by any other person without the written permission of Hanson
Wells Partners Fund, LP. See Disclosures page.
David R. Hanson / hanson@hansonwells.com
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