Hertz Global Holdings Inc HTZ
Q1 2010 Earnings Call Transcript
Transcript Call Date 04/26/2010

Operator: Welcome to Hertz Global Holdings' First Quarter 2010 Earnings Call.

The Company has asked me to remind you that certain statements made on this call contain forward-looking statements within the meanings of the Private Securities Litigations Reform Act of 1995. Forward-looking statements are guarantees of the performance and by their nature are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of this date and the Company undertakes no obligation to update that information to reflect changed circumstances.

Additional information concerning these statements is contained in the Company's press release regarding its first quarter results issued this morning, and in the risk factors and forward-looking statements section of the Company's 2009 Form 10-K. This filing is available from the SEC, the Hertz website, or the Company's Investor Relations department.

I would also like to remind you that today's call is being recorded by the Company and is also being made available for replay, starting Wednesday, at 9 am Eastern and running through May 10, 2010.

I would now like to turn the call over to our host Leslie Hunziker. Please go ahead.

Leslie Hunziker - IR: Good morning, and welcome to Hertz Global Holdings 2010 first quarter conference call. You should all have our press release and associated financial information. We also provided slide to accompany our conference call, which can be accessed on our website at www.hertz.com/investorrelations. In a minute, I'll turn the call over to Mark Frissora, Hertz's Chairman and CEO. Also, speaking today is Elyse Douglas our Chief Financial Officer. In addition, we have Scott Sider, Executive Vice President and President of Vehicle Rental and Leasing, The Americas, Michel Taride, Executive Vice President and President of Hertz International and Jerry Plescia, Executive Vice President and President of Hertz Equipment Rental. They'll be on hand for the Q&A session.

Today we'll use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers in our press release and at the back of the slide presentation, both of which are posted on our website. We believe that our profitability and performance is better demonstrated using these non-GAAP metrics. Our call today focuses on Hertz Global Holdings, Inc., the publicly traded company. Results for the Hertz Corporation differ only slightly as explained in our press release.

Now, I'll turn the call over to Mark Frissora.

Mark P. Frissora - Chairman of the Board and CEO: Thanks Leslie, and good morning everyone. Thanks for joining us. I'm sure all of you have seen our announcement this morning on our acquisition of Dollar Thrifty. I'll talk more about it later in the call, so let me say briefly that this is a very important and strategic transaction for us and that it fills a gap in our product portfolio with a strong mid-tier value offering. Having Dollar Thrifty under the Hertz family of brands, product and services will allow us to expand our global presence, boost our market position and realize the financial benefits from the substantial synergies between the two companies.

Now, let's take a quick look at the latest quarter on slide six, and then we'll get into the details of the acquisition later on in the presentation today.

2010 is off to a very promising start. In the U.S., rental car volumes are exceeding our expectations, with strong advanced bookings through the peak summer season. Similarly, Europe's reservations for the summer months are robust as well, and while Europe rental got up to a slow start, today the rebound we're seeing is well ahead of where we thought it would be at this point in the year. So the momentum in rental car across the globe is very encouraging.

We're cautiously optimistic about the return of demand for rental equipment. In the first quarter we benefited from the industrial market's early recovery in select regions of the world. In terms of worldwide volume, from the trough to peak, between this January and April, units on rent are up 14.5%, and utilization has increased over the same period by 790 basis points.

This brought a bid of good news to the challenging market conditions for equipment rental overall. Seasonal weakness and a tough year-over-year comp are hurdles we were expecting, but the year-over-year revenue increase in our industrial business exceeded our expectation. The only concern we have going forward is whether pricing in the equipment rental market will improve at the same rate as volume.

In addition to the tough conditions in the equipment rental market for the first quarter, we had two unusual hurdles to overcome. The first was the severe winter weather that affected all of our businesses. We incurred lost revenue in the U.S. and in Europe due to rental cancellations resulting from the severe and erratic storms. We also had incremental cost related to snow removal. And rental car utilization was impacted by the volume interruption, as well as fleet redistribution due to an increase in one way rentals and reduced car sales when some U.S. auctions in the North East were negatively impacted by the harsh winter weather.

In February, we experienced a second disruption when Toyota issued a recall on its most popular vehicles. Ultimately, the recall turned out to be only a two week event and we've already been fully compensated for the lost sales and their associated costs. However, utilization in U.S. suffered, because in the end, we had to ground nearly 13% of our fleet while waiting for details on the specifications of the recall and the resolving repair.

When we first learnt about the recall, we had no idea how long our fleet would be out of service, so we immediately stopped deleting older cars and to a smaller extent took early delivery of future orders for some of our other OEM suppliers. This put us about a month behind plan with fleet sales in the quarter. The good news is that here, at the end of April, right now, we have the fleet right sized to the demand, which puts us in great shape heading into the peak summer months.

Overall, I'm really pleased with our financial performance at the beginning of the year, when you exclude the impact of weather conditions and this prior recall, even our utilization was in line.

On among the topic of fleet efficiency, let me take this opportunity on slide 7 to spell any notion you may have that we are over-fleeting based on inflated demand expectations, and therefore jeopardizing pricing for the sake of share. That's just nonsense.

In the U.S., we have improved fleet efficiency since 2007. In '07, it was 77.82%, in '08, it was 77.7%, in '09, it was 79.63%, and while the first quarter of 2010 was impacted by unusual situations outside of our control, efficiency, so far for April is slightly ahead of last year's level in the similar period. You just can't deliver high utilization if you are over-fleeted.

It's important to remember that Hertz is a highly diversified growth company, executing a much different model than our competitors. With that in mind you understand that we're fleeting appropriately to capture the recovering base demand, including the strong return of the corporate traveler, as well as our own expansion into the leisure economy market, where we have 25 new advantage locations under a year old, with plans to open an additional 25 locations this year.

The off-airport sector, where we're in the process of opening hundreds of locations to service insurance replacements accounts better, and the car sharing market where we are ramping up promotions to convert members into users. Our fleet growth for 2010 is primarily directed at these opportunities, as we are only planning for modest growth in the airport leisure segment.

The bottom line on pricing is that Hertz commands a premium price for our premium service. We will institute price increases as frequently as appropriate; that is when demand is rising and the market is supportive. On the next slide in the U.S in early January we raised prices on February forward rentals. Unfortunately, these met with competitive resistance and had to be rolled back. In early April we tried again, with the price increase nationally for airport leisure rentals beginning in June. This increase has been sustainable because of the strong summer demand. Finally, just last week we raised prices again in about 50% of the U.S locations.

Coming now to recession, we’re starting to gather momentum and transaction days and price are equal drivers of growth strategy across every business. As I told you, our model is differentiated from the rest of the market. We have six lines of business, which individually have total revenues ranging from a $0.5 billion up to $1.8 billion. And each business has a different cadence and its own growth characteristics. On slide nine, we’ve illustrated the expanse of our opportunities in these businesses even if we only get back to the 2007 peak. For example, total rental car revenues in the U.S. from commercial accounts at the airport is down $337 million below 2007 levels. That means at the end of 2009 we still had 33% more growth to capture before we’re back to peak revenue levels in this business. The good news is we’re on our way. You can see that commercial airport revenues improved 7% in the first quarter and that includes a 17% volume increase in March. Similarly, on a consolidated basis, you can see that there is a huge amount of growth opportunity capitalized on over the next couple of years; it is significant.

Okay now let’s get into the specifics for the first quarter starting on slide 10. On Q1 consolidated, total company consolidated revenues was up 6.1% in the latest three months driven by another strong performance in U.S. rental car as the business traveler returned. The increase in rental car demand more than offset a 15% revenue decline in equipment rental. Our worldwide rental car customer satisfaction scores improved nearly 12% in the first quarter as we continued to refresh our fleet, capitalize on our richer mix of car classes, and improved overall service through lean six sigma process initiatives, which are currently being rolled out across our major airport locations in the U.S. and Europe. We took actions in the first quarter to generate cost savings of $99 million or 33% of our total 2010 targeted savings. You can see our progress on the next slide. Worldwide rental car net depreciation per unit improved 12% due to improved fleet management practices on both the buy and sell side. All of this helped drive our consolidated adjusted pre-tax margin 330 basis points higher and our consolidated corporate EBITDA margin 140 basis points higher than last year. As I said, the U.S. rental car business continues to be the catalyst behind the company’s progress as seen.

Switching to U.S rental car. In the U.S. total revenues were up 9.9% in the quarter compared with last year. Other growth, you can see on slide 12 that airport contributed 45%, Advantage accounted for 33% of the increase, off airport added another 21.5% of that increase. Ancillary revenues, which is included in each business unit’s revenue, also made a large contribution. Commercial rentals on airport, which are made up of large corporate customers and small business account programs, delivered a 7.4% revenue increase over last year on escalating demand for our large business accounts. Our small business accounts, which are highly contributory, are not yet seeing the same pace of recovery as their Fortune 500 counterparts. But as that business ramps up, it will incrementally benefit both volume and pricing.

On slide 13, revenue per day or RPD which encompasses both price and mix was up over the prior year. For our Hertz airport operations, excluding Advantage, overall RPD was up 1.2% on 3.1% higher transaction days. In the airport leisure segment, we increased RPD 3.4% despite no change in volume year-over-year. On the flip slide commercial airport RPD declined 1.4% while its transaction days were up 7.1%. Switching to off airport, RPD was up 1.9% on 6.5% higher volumes driven by both the leisure and vehicle replacement businesses.

On the next slide, U.S. fleet efficiency fell 320 basis points in the first quarter. In addition to the Toyota recall and the severe weather conditions, the increase in short-term corporate rentals accounted for the balance of the decline. As I mentioned, utilization is now back on track and up year-over-year. Monthly depreciation per vehicle was 14.4% lower than the 2009 first quarter’s level driven by strategic fleet management actions including lower acquisition cost. U.S. rental car employee productivity improved by 3.7%. Our net promoter score rose 790 basis points in the U.S. or 18%, reflecting the appeal of a newer fleet and the addition of popular new car classes. And on the used car front, residual values are significantly improved from last year when we experienced some of the lowest levels in our history. The U.S. rental car adjusted pre-tax margin was up 410 basis points in the first quarter. For corporate EBITDA, we achieved a 380 basis point margin improvement benefitting from better-than-expected U.S. leisure demand, recovering corporate volumes, and disciplined cost management.

Switching to Europe now, the European rental car on slide 15 got off to a slow start this year, due to adverse weather conditions and an air traffic controller strike in France, and a continued revenue decline in our truck and van business there, which typically follows lagging commercial and industrial trends. But things are getting better. Revenue per transaction was up nearly 2% while direct operating expenses were down about 2% and monthly net depreciation per vehicle favorably declined 10% due to stabilizing residual values across the continents and lower acquisition cost for the 2010 model year vehicles. Europe’s adjusted pre-tax loss improved 25.6% from last year on a nearly 1% decline in revenue. The recovery in select European regions is happening earlier than we had anticipated. We saw a surprising upturn in both price and volume beginning in March for corporate and leisure rentals. In fact, March was the first month in 18 consecutive months that we reported rental rate revenue growth in Europe. We’ll have to monitor this against the travel interruption caused by the volcanic activity in Iceland, but based on the advanced reservation (build) we believe a more favorable trend is underway in Europe.

On the next slide for equipment rental, in the first quarter, rental volume was down 14.4% from last year, but sequentially, year-over-year volumes declined at a much slower pace than the 2009 fourth quarter’s 24.2% decline. The positive catalyst came from momentum in the industrial sector, primarily from new petrochem projects in Canada after oil topped $80 a barrel and from infrastructure project in the southeastern United States. For all of North America, industrial volumes were positive year-over-year in the first quarter and pricing was down only about 5%. Worldwide our pricing in the latest three months was down 8%. I’ll note that the year-over-year pricing comp was much tougher for Hertz than for some of our competitors as our pricing was down only 4.2% in last year’s first quarter. One of our competitors had 11.5% decline in the first quarter of ‘09. In the face of this downturn for the last 10 months, we’ve been tightening Hertz’s cost structure by implementing long-term process improvements, rationalizing locations, and deferring major maintenance projects for underutilized fleet.

Now we’re working to get our equipment overhauled or tuned up in time to capture the early demand in the markets we serve. This requires more substantial investments and maintenance that until recently have been deferred. In the quarter, maintenance costs were equal to last year despite a 15% revenue decline. These factors drove equipment rental’s worldwide corporate EBITDA margin down to 33.8%, still in line with our expectation. By the second half of the year, we expect corporate EBIT margin to return to last year’s 40% plus levels. Based on our positive first quarter volume trajectory, which continued into April, we believe that the first quarter is the bottom of the seasonal and cyclical (trough) and expect to continue to see sequential monthly improvements going forward.

Switching now to revenue opportunities; our diversification of businesses, markets, and products is a competitive advantage for Hertz. We are extending our Hertz umbrella brand across a range of services allowing us to sell more products to existing customers and reach out to new markets. Products like Connect by Hertz, off airport insurance replacements, and our multi-month rental offering will help smooth out the seasonality of our revenue, and new brands like Advantage, appeal to the most price conscious segment of travelers, where we currently have only a limited share.

In support of the Hertz classic brand, we launched a new national TV campaign in the middle of March called Journey On, from which we've received very positive feedback and gotten thousands of online reviews. The advertising campaign is next scheduled to launch in France in May in time for the holiday summer booking season.

Now, let me give you an update on slide 17, on a few of our growth initiatives, before I turn the call over to Elyse for detailed financial review.

For the urban hourly renters, we continue to expand Connect by Hertz, adding five new universities to our car sharing program in the first quarter, including the University of Kentucky, bringing the total to 38 schools. Our Connect membership now exceeds 15,000 subscribers.

For the value conscious travelers, our U.S. pre-paid rental program continued to build momentum, generating $20.7 million of revenue in the first quarter. Since launching in December 2008, this program has delivered nearly a $103 million of revenue.

Our Advantage economy leisure offering, which we acquired in April of 2009 has surpassed our expectations for market share, margin and volume. In the first quarter, we are on pace for annual revenue run rate of nearly a $150 million. Today Advantage is profitable with 25 airport locations, covering major U.S. leisure destinations, including the one recently opened in Texas.

The brand already has 1.3% of the U.S. airport revenue, and we have plans to open an additional 25 airport locations by year-end. In the first quarter, demand for Advantage's rentals and its ancillary rep products were strong, especially in advance of Easter.

In the $10 billion off-airport sector, we opened up a 100 net new locations in the first quarter, primarily collocating with body shops, hotels and repair facilities to serve the needs of insurance replacement customers.

Off-airport rentals, which also include leisure and local business rentals, and monthly or multi-month rentals are typically priced lower than airport rentals due to the higher utilization achieved, but they also have a much lower cost structure than airport rentals, enabling the off-airport business to generate equally profitable growth in mature markets.

Off-airport leisure and business demand continues at a stable pace as airlines cut capacity and consumers opt to drive to their leisure or local business destinations.

Finally, total U.S. ancillary revenue from up-selling car classes and marketing additional products like insurance, refueling, child seats, ski racks and DVD players increased 23% year-over-year in the first quarter as both airport and off-airport locations focus on these revitalize program.

We are investing in our employees, innovating our products offering, and refreshing our fleet. As a result, our service scores are climbing. We are successfully executing a growth plan that is positioning us to deliver even more for our customers.

With that, I’ll turn it over to Elyse for a more detailed financial review.

Elyse Douglas - EVP and CFO: Thanks, Mark, and good morning, everyone.

Let me begin on slide 18; we are very pleased with the first quarter financial performance. The recovery that began in U.S. rental car late last year continues to build momentum and the turnaround is evidenced in the results.

On a consolidated basis, we’ve generated $1.7 billion of revenue, a 6% or $96 million increase over the same period last year. As Mark mentioned, worldwide rental car growth more than offset the continued revenue decline in worldwide Hertz. I’ll talk more about revenue growth drivers when I discuss results by business units in just a minute.

On a GAAP pre-tax and an adjusted pre-tax basis, we were able to reduce last year’s losses by 24.9% and 40.7%, respectively. The improvement was driven by reductions in depreciation expense and SG&A, which were down as a percent of revenue on a GAAP basis by 370 and 50 basis points, respectively. And direct operating expenses remained flat as a percent of sales year-over-year in spite of equipment rentals revenue decline.

Adjusted EPS improved 52% in the quarter, reflecting a $0.12 per share loss in the latest period compared with the $0.25 per share loss in the first quarter of 2009. The improvement was driven by higher revenue, efficiency savings, lower depreciation costs and reduced restructuring expenses.

Diluted earnings per share on a GAAP basis improved by 27% from a loss of $0.51 to a loss of $0.37 per share last year. The strength in U.S. rental car operations, together with the stabilization of European rental car helped to offset the challenging quarter experienced by our worldwide equipment rental business as it came up against the toughest year-over-year comp since the recession began.

Now, let me give you some more detail on the performance trends by business units.

On slide 19, our worldwide car rental revenue for the quarter of $1.4 billion was up 10.8% year-over-year or 7% excluding the benefits of foreign currency. U.S. revenue growth was up close to 10% while Europe was essentially flat. Other international markets saw revenue growth, particularly Brazil, Australia and New Zealand, which were up 19%, 4% and 8%, respectively, excluding currency impact.

Worldwide rent-a-car generated corporate EBITDA of $54.4 million within the quarter, which is seasonally the lowest volume quarter for the Company. The reported earnings represent a $65.3 million year-over-year improvement. This improvement was driven by revenue growth, lower per unit deprecation per month and the realization of cost efficiencies, all contributing to the 450 basis points adjusted per-tax margin improvement experienced during the quarter.

Turning to worldwide rental car fleet efficiency on slide 20, as Mark mentioned, the Toyota recall and the unusually harsh weather had a negative effect on fleet utilization in the latest quarter. In the U.S., in addition to the recall and weather, the return of the corporate traveler whose average rental transaction length is only two to three days had an adverse affect on fleet utilization.

You’ll remember that corporate travel volumes were down significantly in 2009 while off-airport volumes, which have an average transaction length of six days were growing. In the 2010 first quarter, 32% of our domestic risk car deletions were sold through alternative channels, and not through traditional wholesale auctions. As Mark motioned, this typically reduces cost of sales, improves sale price and keeps cars on rent longer.

Now, let’s take a close look at rental car’s fleet cost measured as monthly net fleet depreciation per unit. Our year-over-year worldwide car costs were down 12% in the latest quarter. In the U.S., we reduced car costs on a per unit basis by 14.4% from a year earlier. As you can see on slide 21, our domestic monthly depreciation costs have been decreasing sequentially since the fourth quarter of 2008 when used car residuals were at historic low.

The sequential quarterly improvements in car costs are credited to our execution of disciplined fleet sourcing strategies, better portfolio mix and continued strength in the domestic used car market.

We expect lower year-over-year depreciation for the full year 2010 as we add better priced cars into our fleet and continue to optimize the mix to serve a variety of customer preferences.

In Europe, monthly depreciation per car also continued to improve in the first quarter, falling 9.6% from 2009’s first quarter on a constant dollar basis. And just like U.S. rental car, our purchasing terms have improved with our latest round of fleet negotiations, helping to counter the stabilizing, but still low residual values across the continent. For the full year, we expect U.S. and European car costs to be down 5% to 6%, and 7%, respectively.

On a worldwide basis, our fleet was 66% risk at the end of the first quarter, with an average fleet age of 8.2 months, younger by almost two months versus last year. At quarter end, risk cars in our U.S. fleet also represented 66% of the total domestic fleet and the average age of the overall U.S. fleet was 7.7 months, compared 10.2 months in the first quarter of 2009.

We continue to sell our U.S. risk cars at approximately 20.5 months and bringing in new cars in order freshen-up our fleet to enhance the customer experience. In Europe, we’re also refreshing the fleet with a more appealing mix of cars.

Now, let’s turn to the results of our equipment rental business on slides 22 and 23. Hertz’s first quarter revenue was $237 million, a decrease of 15.2% year-over-year. Volume declined 14.4% in the latest quarter, with pricing down 8% versus down 4.2% in the 2009 first quarter. Industry fleet capacity remains high, keeping pricing pressure on the entire industry.

In the quarter, we reduced the equipment rental’s business’ direct operating and SG&A cost by 6% in the quarter. However, the pace of revenue decline and the increased maintenance cost on an older fleet drove corporate EBITDA margins below 40%. However, we do see demand for industrial and construction equipment beginning to pickup into the second quarter. This is causing us to further increase maintenance spending in order to get underutilized fleet ready for rent, as Mark indicated. You can see that our equipment rental fleet on an average acquisition cost basis was down 6.2% year-over-year.

Moving to slide 24, first quarter equipment fleet repurchases were $31.9 million versus disposals on a first cost basis of $88.8 million. This compares to first quarter 2009 where additions were $31.9 million and disposals were $220 million on a first cost basis. And while there is some improvement in equipment residual values, prices still remain unattractive. Therefore, we currently expect to sell limited amounts of equipment at auction this year. At March 31, our worldwide equipment fleet age was 47 months, a two-month increase from 2009 year end.

Now, let’s move onto slide 25 for an update on our $1.7 billion international refinancing. We expect to complete the remaining fleet debt refinancing sometime this summer. In Europe, where the bulk of the refinancing will take place, we are currently negotiating three related financings; a secured revolving credit facility, amending and extending our existing fleet securitization facility, and a bond offering. We are in the process of finalizing the terms and conditions of these transactions and expect to close in June. In Australia, we expect to utilize securitization or other secured financing as our primary source of fleet financing, and to continue to opportunistically access operating and capital lease financing that is locally available. Finally, we are going to upsize our Brazilian facility through a syndicated loan process with existing and new lenders. We continue to be confident that these refinancings will be in place over the course of the summer. We also feel very comfortable with the progress we’ve made towards completing this refinancing, and we will be providing additional details as each transaction closes.

Net interest expense was a $179 million in the quarter, up $15.7 million over last year, driven by $11.5 million of interest on our convertible debt that was issued in the second quarter of last year. This is on slide 26. For the full year, there’s no change in our estimates. We still expect 2010 interest expense to increase by $90 million to $110 million over the 2009 level based on the fleet debt refinancing that took place in the U.S. in 2009 and the upcoming international refinancing. Restructuring and restructuring-related charges in the latest quarter were $16 million, of which $15.3 was cash compared with $38.4 million in restructuring and related charges in the same period last year. These charges mainly relate to employee reductions, facility closing costs, and consulting fees. We still expect restructuring and restructuring-related charges of no more than $50 million for 2010. This excludes any impact from the acquisition. For the first quarter, the GAAP effective income tax rate was 7%. Cash income taxes paid in the quarter were $24.6 million. The GAAP effective income tax rate is lower than the statutory tax rate, primarily due to losses in certain non-U.S. jurisdictions for which no tax benefit is realized. On an adjusted basis, we use a rate of 34%, which is a normalized rate over the long-term. We estimate cash taxes to be $40 million to $47 million for the full year of 2010.

Now if you turn to slide 27, you will see that we comfortably met both of our quarterly corporate financial covenant tests. In fact, our corporate consolidated leverage ratio was 3.71 times, well below the maximum 4.75 times allowed; and corporate interest coverage ratio was 3.29 times, well above the minimum requirements of 2.25 times. As a reminder, the convertible debt issued under Hertz Global Holdings in May is not counted in these covenant calculations since the covenants only apply to the Hertz Corporation results.

On the next slide, let's take a look at cash flow. Cash flow from operations in the quarter was $301.2 million, a 63.3% improvement over the first quarter of 2009, reflecting improving business trends. The first quarter’s levered cash flow, which is cash available to pay down corporate debt, was negative $148.7 million versus negative $36.7 million in 2009, reflecting the impact of increased investment in fleets. As you are aware, at this time in 2009 we were reducing fleet level and extending the average age of the fleet. The fleeting patterns this year are significantly different as demand is building and we are refreshing our fleet with 2010 model year cars and enhancing our mix with higher end vehicles. And last year Hertz was also de-fleeting aggressively as demand for equipment dropped off precipitously. We’ve slowed the pace of equipment sales to roughly half the level of deletions we had in the 2009 first quarter sales as used equipment residuals remained low. I should also note that a more sizeable portion of our U.S fleet is funded by our recently refinanced domestic fleet debt, which lowered our U.S. advance rate by seven percentage points year-over-year requiring a higher use of corporate cash flow to acquire fleet. In the second quarter, we also expect levered cash flow to be negative as we add rental car fleet to meet peak summer demand, but those seasonal investments will ultimately provide positive cash flow when we’ll de-fleet coming out of the peak to adjust for the lower fourth quarter demand. We ended the quarter with the total net corporate debt of $3.8 billion, total net fleet debt of $5.6 billion, and $800.7 million of unrestricted cash on our balance sheet. At the end of the quarter, we had $1.7 billion of corporate liquidity available to fund our growth initiative.

With that, I’ll turn it back to Mark.

Mark P. Frissora - Chairman of the Board and CEO: Thanks, Elyse. Let’s move to slide 29, if we can. The strength of the U.S. rental business continues to dominate our consolidated financial improvement. And in the first quarter, corporate rental car transactions were the biggest contributor to the progress we delivered year-over-year. Companies are now saying that their cuts in travel spending are behind them, which supports the continuation of this favorable trend. The outlook for leisure travel in the peak season gets better each week with reservations for the third quarter currently up double-digit percentages globally. As we look ahead right now volume represents the biggest upside in the 2010 guidance we issued in February. While conditions are still very uncertain as they relate to rental car and equipment rental pricing and Europe is just recovering from the turbulence in the airline industry sparked by Iceland’s recent volcanic eruption, volumes continue to gain momentum. In rental car even with the recent price increases in the U.S. and Europe, the reservation build continues to be strong. Additionally, the return of the commercial customers supports upside volume opportunities worldwide. In fact, in the U.S. in March, commercial airport volumes were up 17% from a year earlier and March 2010 also marked the first time since July of ’08 that both large corporate accounts and small business accounts reported year-over-year monthly revenue growth.

In the equipment rental business, the demand uptick in the industrial markets helped in part by initial stimulus spending encourages us that the trajectory out of the trough could be a bit better than we expected. Industry pricing across both businesses, however, is still wildcard, but I can tell you with certainty that we will be efficiently fleeted and as always will capitalize on opportunities to improve pricing. In addition to the volume acceleration, strong fleet management execution on both the buy and sell side is driving deprecation lower, outpacing our earlier projections for the year. Our strategy to capture a better residual and improved utilization by keeping our cars on rent right up until the point of sale is generating traction as we pursue alternative used car sales channels in the U.S.

One of our new products is our Rent2Buy offering. We now offer our rental cars for sale direct to consumers in 19 states across the country. On average, since the product launch, we’ve been able to get a much higher price per car than what we would normally get at auction, and our cost of a direct-to-consumer sale is lower than an auction sale. Since the end of 2009, the number of unique visitors to our website has increased 75%, so we are definitely building awareness, and we expect recognition and transactions through this site to continue to grow as a result of our recent partnership with Kelley Blue Book who will provide price comparisons to prospective customers directly from our website, so we’re really stepping up our efforts to capture more retail car sales.

As a result of the higher than expected volumes and the declining deprecation cost as well as the early onset of an economic recovery in Europe, we are updating the guidance we put in place at the beginning of the year to reflect our optimism for the macro environment as well as a greater return on our strategic initiatives. This guidance, however, does not reflect any benefits from the acquisition.

On slide 30, for the year, we now project revenues to be between $7.5 billion and $7.7 billion. The higher revenue coupled with the substantial cost savings achieved in just the first quarter leads us to upwardly revise adjusted per-tax guidance to between $290 million and $305 million, which would be a 46% increase over 2009. Our corporate EBIDTA expectation is roughly 10% higher than that last year as we get more comfortable with the ease of the year-over-year equipment rental comparison in the second half and as the industrial project pipeline expands. Using 410 million shares for the full year, that would deliver earnings per diluted share of between $0.43 and $0.45, a 48% improvement year-over-year.

I’ll remind you that in the second quarter last year, we took salary actions to sustain operations through the most challenging period of the recession. Now that those actions have been reversed, we’ll have a tough comp year-over-year in the current quarter.

For the longer term, one of the things we think people should consider when they think about Hertz is the magnitude of the impact on consolidated profitability when the equipment rental business turns positive. The equipment rental business becomes an unrivaled competitive advantage for us at that point.

Annual adjusted pre-tax margins for equipment rental were 21% at our peak, higher than rental car margins. It has always been an accretive driver of earnings momentum, and with our strong cost focus over the last two years, business segment diversification and global expansion, it should be able to produce even greater profit margins coming out of this cycle.

Now, let’s talk a little bit about the acquisition, starting on slides four and five of the Dollar Thrifty deck. As you know, on Sunday, we signed a definitive agreement, under which Hertz will acquire Dollar Thrifty for $41 per share, including assumed debt in a mix of cash and Hertz common stock. Post acquisition, Hertz will be a $9.3 billion company, with roughly 9,800 locations on six continents worldwide. Our multi-brand U.S. market share will expand from 19% today to 24% post deal, making us the second largest rental car provider.

We’re excited about the opportunity to further expand our customer reach. This is clearly a strategic acquisition, and we believe Dollar Thrifty is an excellent fit for Hertz as you can see on slide six and slide seven

Together, we’ll be able to compete even more effectively and efficiently against other multi-brand car rental companies offering customers a full range of rental options between Hertz, Dollar Thrifty and Advantage brands.

Financially, on slide eight, we believe the deal is attractive as it’s immediately accretive to earnings and structured to maintain Hertz’s strong credit profile. We’ve identified at least $180 million of synergies already, primarily in fleet, IT systems and procurement, enabling the combined Company to operate at even a lower cost.

I’ll note that in our assumptions, we have not included any revenue synergies. But there are actually quite a lot of opportunities there. For example, the Thrifty brand in particular has a strong international presence, which will help to accelerate our leisure value strategy in Europe and other international markets.

Additionally, Dollar Thrifty has a presence off-airport, which will support our strategy to build our position in this growing market. Dollar Thrifty services, suppliers and customers complements Hertz’s business and extend our ability to deliver compelling services to broader base of customers.

With that, let’s open it up for questions, operator?

Transcript Call Date 04/26/2010

Operator: Brian Johnson, Barclays Capital.

Brian Johnson - Barclays Capital: Mark and Elyse, can you give us some sense of how you’re seeing pricing playing out as we go into the summer season, in particular, what’s going on in the leisure market, where do the price increases get you, is it, when you say up, is it over sequentially or is it year-over-year? And then, what’s the tenor of discussions with corporations, especially as they get there employees back on the road again?

Mark P. Frissora - Chairman of the Board and CEO: So, if we just look at leisure pricing for Rent-a-Car, in the U.S., again I mentioned in the script that we were able to pull an increase most recently for the summer season going forward in June. We’re attempting to pull another increase now and are hopeful that with the strong demand that we’re seeing that other rental car companies will see that as well and the fleets will stay tight enough that the industry can support modest increase for the summer season. In Europe, we’re seeing much stronger dynamics on pricing, where pricing in the summer season actually looks significantly stronger than what I just outlined in the U.S., again due to very strong demand and tighter fleets in the Europe continent. On equipment rental side, again on pricing we’re – it’s just, you never know with equipment rental. I mean we expect that as volume continues to improve and as the year-over-year comp becomes easier, that pricing will get down to neutral. As it relates to business travel and our corporate customers, we continue to see pressure, but nothing like we saw last year. We were seeing 500 to 600 basis points reduction in pricing last year as we went through the recession. Things are still tough. We’re certainly not at 500 to 600 basis points, but 100 to 200 basis points kind of pressure we’re seeing with larger customers. That’s been offset though with smaller customers. We’re able to see little bit better increases there. So, net, net, we’re pretty neutral on the environment – the pricing environment and business. We think that the number kind of worst case scenario will be 100 to 200 basis points down, best case scenario flat to up one. So again very difficult because we’re renewing contracts every single month and every single contract, it’s a different competitive set, different play.

Brian Johnson - Barclays Capital: And on the on-airport leisure, the price increases you’re looking at for June, where would that get the year-over-year number to on the leisure side, they might go in like 13?

Mark P. Frissora - Chairman of the Board and CEO: I'm not going to forecast that. I mean if you just look at straight number, the reason I don’t want to forecast, because I don't know what the competitor's response is going to be, we could change that five times in the next three days. Pricing is extremely competitive hour-by-hour, day-by-day, so for me to make a forecast, it’s almost – it's grounded in unreality, I’ll put it that way to you. But I’ll tell you this, if it stuck and we got everything we put forward so far, we did a 200 basis points improvement in third quarter.

Operator: Himanshu Patel, JPMorgan.

Himanshu Patel - JPMorgan: Couple of questions. First on the earnings for the U.S Rent-A-Car commercial pricing, Mark what quarter would you expect that to flip to positive?

Mark P. Frissora - Chairman of the Board and CEO: I don’t have an expectation like that. I mean I wish I could tell you one, but I mean the best – I think the comps become extremely easy by the fourth quarter of this year. So if I were to make a prediction, you can’t count on, because I don’t know what competitors are going to do, I would make a prediction of fourth quarter. It's but the best way I can answer it unfortunately.

Himanshu Patel - JPMorgan: And then I think URI noted that they have started seeing an uptick in used equipment rental – used equipment prices I’m wondering, what are you guys seeing out there on used prices for equipment?

Mark P. Frissora - Chairman of the Board and CEO: I think similar things, I mean we would echo their remarks. And in fact, if you look at cash proceeds on sales for us this quarter, they were $52 million. I think in documents from the other competitors we saw that URI was $35 million and RSC was $27 million. So we were at $52 million, we toped pretty good obviously and we’re seeing that improve. So in terms of cash proceeds on sales, you will see us continue to sell the right fleet as that market continues to be relatively better than it's been last year or so.

Himanshu Patel - JPMorgan: And just historically, is that how upturns in that market start?

Mark P. Frissora - Chairman of the Board and CEO: Absolutely, yes.

Himanshu Patel - JPMorgan: And on the Dollar Thrifty announcement, have you guys had preliminary discussions with the FTC and where are they on sort of antitrust issues here?

Mark P. Frissora - Chairman of the Board and CEO: I mean we haven’t had official discussions with the FTC at this point. We feel pretty good about our position there. We’ve similarly been advised by a great team of lawyers and so is Dollar Thrifty, and based on that review that we’ve had, we feel highly confident the transaction will pass muster. So I think it’s fair to say that we wouldn’t embark on this transaction unless we had a high degree of confidence that this transaction would be approved.

Himanshu Patel - JPMorgan: And then couple of small technical questions. The Dollar Thrifty cash dividend, would that be a tax free distribution?

Elyse Douglas - EVP and CFO: No, it's not.

Himanshu Patel - JPMorgan: It's not. And then the $180 million of synergies, two questions on that. How long would that take to be realized? And then, can you help us just size that relative to sort of the synergies you were able to realize at Advantage? I know orders of magnitude are totally different here, but how are you looking at it in terms of the volumes of the two businesses, the revenues of the two businesses, is this a synergy number that we should be view as being very reasonable or conservative, aggressive relative to sort of what you had seen before at Advantage? How should we think of that number?

Mark P. Frissora - Chairman of the Board and CEO: Yes. Well, Advantage only had four airports so there really weren’t any synergies there, right? We built Advantage from scratch. We used to have about 50 or 60 airports for those had kind of wound down over a two-year period before bankruptcy. So, it’s a very difficult comp. I will tell you that we’ve done a lot of work integrating franchisees and other smaller rental car companies, feel highly confident that $180 million will be realized. In fact, that’s a conservative estimate, and I bring it up because we have the numbers and we know what it is. It’s not like it hasn’t been identified. We have the concrete hard evidence the $180 million is the minimum we’ll deliver and that will be over about an 18-month period after closing. So when the final deal closes, we would expect to get that in at least 18 months, provides about $0.30 a share, about a 25% accretion rate, and, again, very positive about that. So, I don’t feel like there are really any issues around it at all. In fact, our number is much higher than that as we initially did our due diligence, but we feel confident in giving you a number of $180 million.

Operator: Emily Shanks, Barclays Capital.

Emily Shanks - Barclays Capital: A quick question. Can you give us what Dollar Thrifty’s cash balance was as of March 31?

Mark P. Frissora - Chairman of the Board and CEO: No, we can’t. They’re going to give you that on their earnings call.

Emily Shanks - Barclays Capital: Okay. I thought I’d ask.

Elyse Douglas - EVP and CFO: Nice try Emily.

Emily Shanks - Barclays Capital: Thanks. I had to. Around the bond deal for the international financing, can we assume that’s going to be a secured bond deal out of a vehicle related bucket subsidiary?

Elyse Douglas - EVP and CFO: That is what we are working toward right now.

Emily Shanks - Barclays Capital: And then just a question around off-airport generally. We’ve heard some of your competitors that seem like are shuttering their store fronts and was just curious if you view that as an opportunity to take more market share or how you’re viewing that as a growth channel right now?

Mark P. Frissora - Chairman of the Board and CEO: This is on equipment rental right?

Emily Shanks - Barclays Capital: No, I’m sorry, on the U.S. car rental off-airport market.

Mark P. Frissora - Chairman of the Board and CEO: On off-airport, we feel like we’re gaining share right now. We look at it as an opportunity for sure. Scott, you want to talk to that?

Scott Sider - EVP and President, Vehicle Rental and Leasing, The Americas: We see that as an opportunity. We’ve had really strong growth off-airport; middle double-digit growth, and we see that continuing, people closing locations. That’s just more opportunity for us. We opened with over 100 locations the first quarter. We’re going to continue with the growth (still in forecast) through the end of the year.

Emily Shanks - Barclays Capital: Okay. And can we assume that along with the growth it remains a profitable business?

Scott Sider - EVP and President, Vehicle Rental and Leasing, The Americas: The margins are improving significantly and it is a profitable business.

Mark P. Frissora - Chairman of the Board and CEO: Yeah, the margins actually this year, Emily, were double from last year, and we made money, solid pre-tax margins last year kind of mid-single digits margins last year and we expect the margins at a minimum to double. So, we feel really good about the profitability of that business model and how it’s contributory to our earnings.

Operator: Rich Kwas, Wells Fargo Securities.

Richard Kwas - Wells Fargo Securities: I guess on depreciation, how should we think, I know you gave guidance for year-over-year declines of 5% roughly. I guess should we expect that sequentially to continue to come down as the year progresses?

Mark P. Frissora - Chairman of the Board and CEO: Year-over-year it will go down. I don’t know if I’d say sequentially, no. I don’t think we can say that. But we can say year-over-year it’ll continue to probably improve a little bit

Richard Kwas - Wells Fargo Securities: And then, Mark, within the $180 million regarding the synergies with Dollar, could you break those out? I know you gave some detail in terms of what buckets they could fall in, but what’s most significant? And then when you talked about potential revenue synergy, how you’re thinking about that right now?

Mark P. Frissora - Chairman of the Board and CEO: Well, we didn’t put any of those in, as you know, and I guess where we see the opportunity primarily on the revenue synergy side would be in Europe. Obviously, in Europe, there’s big opportunity for leisure because we don’t participate in a huge way there and yet there are markets and locations that Dollar Thrifty has. And using that brand name, we could open up very low cost places, if you will, with the Thrifty brand and leverage that pretty quickly in Europe. I don’t want to give you a number at this point just because we are sizing the opportunity, and as soon as the deal is closed we’ll be able to expand into that footprint. But it’s significant. I mean, in terms of the synergies that we have identified, it’s fair to say that fleet ends up being a big area, probably in the neighborhood of $70 million kinds of numbers, fairly easy to get to that level. And these are on the conservative side, right, information technology, probably at least $20 million there. And the non-fleet procurement supply chain, we have a fairly large supply chain network and by using the same pricing that we have now with the additional buy that we have with Dollar Thrifty could yield as much as $25 million to $30 million. So those are the biggest buckets. I’ve got a lot of other one-offs that I won’t go into, but those are the biggest drivers right now.

Richard Kwas - Wells Fargo Securities: And then just a final question on equipment rental; I think in terms of the original guidance you’d talked about getting to flat revenue performance year-over-year in the middle of the year and then potentially up because to easier comps. You clearly feel more positive on the industrial front. What about non-resi construction?? Things getting any better there because that’s such a big piece of your mix still?

Mark P. Frissora - Chairman of the Board and CEO: Yeah, it is and we still feel good about that. Jerry, would you offer some comments?

Gerald A. Plescia - EVP and President, HERC: Sure. That portion of our business is now down to 38% of the total business, so it is the little bit less. But we are seeing sequential improvement in commercial projects, still negative year-over-year, but warehousing, hotels and the like are starting to move sequentially month over month. So negatives will get less. That combined with our industrial strength and some more stimulus related water and sewer projects, transportation terminals, when you mix it all together the non-res will sequentially get better, mixed with the industrial, we still feel good about the back half positive (revenue turn).

Operator: Chris Agnew, MKM Partners.

Christopher Agnew - MKM Partners: First question, a little bit bigger picture question. Can you give us the sense of where you think you are in terms of fleet management and continuing to improve depreciation per unit cost? I think you talked a little bit about vehicle remarketing initiatives, increasing your risk mix, and how does Dollar Thrifty help you to that end?

Mark P. Frissora - Chairman of the Board and CEO: So on fleet, if we talk about it in two different ways, I’ll frame it with and without Dollar Thrifty. Without Dollar Thrifty, we continue to shift our mix in selling cars on a remarketing basis to non-traditional channels like auction. So our goal is to get to 50% of our sales that would be non-auction. So it would be either Dealer Direct or through Rent2Buy. As that improves, we obviously drive our depreciation down per car, because we’re getting $300 more per car on average and that nets off in the net depreciation number. So we believe the guidance we’ve given so far is conservative and there is upside. As we get better and better with remarketing, there’s a upside in terms of our net depreciation per vehicle. In addition to that, the better utilization numbers that you’re going to see versus the first quarter provide upside for us as well. Then in terms of looking at $1.50 in combination, as you know, Chris, we peak at mid-week in terms of demand. Most of our larger cities will experience 92%, 93% plus utilization on Tuesday, Wednesday’s and Thursday’s. And then as the weekend approached we kind of ramp down to probably 70% roughly. So we have some inefficiencies, obviously, on those airports. $1.50's demand patterns really match ours, so that they supplement and provide a synergy for us. When we combined the fleets of both companies, we treat them all the same and we’ll be able to pull that fleet on the weekend and that same fleet will end up using rentals on the weekend and provide a much higher utilization. We think our utilization could go up maybe as much as 300 basis points just by combining the two fleets.

Christopher Agnew - MKM Partners: A follow-up question to earlier. You said you’ve had no official discussions with the FTC. Have you opened a line of communication at all? And if there are, how are you going to address areas of potential market concentration? How does it work in terms of seeking to reduce that or counter presence or things like that?

Jeffrey Zimmerman - SVP, General Counsel and Secretary: This is Jeff Zimmerman. We have not initiated any formal conversations with the FTC, and we’ll do our formal filing in approximately mid-May. The merger agreement that we entered into requires that we undertake certain divestiture risks if the agency were to determine that there was an unacceptable concentration. Mark mentioned earlier and I want to reiterate that we have looked at this very, very carefully with capable counsel on both sides and remained very, very confident that this deal will be approved.

Mark P. Frissora - Chairman of the Board and CEO: Merger agreement itself calls out for a carve-out, and that carve-out we think provides adequate protection for deal's certainty on this. It’s a large number as a carve-out in the merger agreement. Again, that number provides very, very great deal of certainty, feel confident that this is a deal that will get done and that the FTC will approve it and our market share position at a high level is very low compared to our competitors. I mean I might mention to you that in the slide that we showed you guys on Dollar Thrifty acquisition, the total rental market in the U. S., we have about 20% share, Enterprise has about 53% share and Avis Budget I believe is number two at approximately 20% – what is their share, 20%, no I think it's more than that. It’s on the slide. Let me just tell you what it. They’re 20%. So post acquisition, we will be a 23% compared to Enterprise’s 53%, compared to Avis Budget’s 20%. So we end up picking up a couple of share points against Avis and Enterprise still ends up being over twice our share of the total rental market. So we feel confident given the view of the market that we will be in good shape from antitrust standpoint.

Operator: John Healy, Northcoast Research.

John Healy - Northcoast Research: Wanted to talk a little bit at least about kind of your longer-term view on the capital structure of the Company. Obviously, this deal would help you bring down the leverage ratio of the Company. Can you talk a little bit about kind of your goals there and how Dollar Thrifty may fold into Hertz and get you closer to those goals? And then second part of that question, obviously, the deal increases the percentage of business and profits on the Rent-a-Car side, away from the equipment rental side even further, your thoughts just in terms of the long-term vision of Hertz and the portfolio of its businesses, how you see that you may be over the next cycle?

Elyse Douglas - EVP and CFO: Sure. Obviously, and I think we showed this to you on slide eight of the coded deck or the Dollar Thrifty deck that we provided. This deal closing on a pro forma basis does improve our overall leverage. Obviously, we’re going to be looking at our liquidity so we may actually issue, some of this will clearly be credit positive to credit neutral at a minimum. So, we’ve recently gone to the rating agencies and looked out over the next three years and we think we have a clear path to investment grade, and that’s clearly one of our objectives. So we’ve got a number of initiatives in addition to the acquisition, as well as just growth initiatives in our business and profit improvement that’s going to drive a lower leverage over the next two years. So our goal is to remain investment grade and we think we have a clear roadmap to get there. With respect to our view of the portfolio, we constantly look at the portfolio and opportunities for us to potentially create shareholder value, and we’ll continue to do that. Right now we are happy with where the portfolio sits between Rent-A-Car and equipment rental, but obviously if the right opportunity comes up to create shareholder value, we’ll certainly take a hard look at it.

John Healy - Northcoast Research: And Mark, the strong performance out of Rent-A-Car this quarter in terms of both rates and volumes, could you give some prospective if you feel like you gained market share versus your peers in the first quarter and maybe how you Hertz’s results maybe compared to the market results?

Mark P. Frissora - Chairman of the Board and CEO: I think we definitely gained share, you can see it in the January data and the February data, as well, from the Airport Authority, so we know we’ve gained share against our competitors. I guess in terms of how we stack up on growth versus our competitors. I think it’ll be very favorable and I think it’ll be driven by the fact that again we had a strong business rebound and that business rebound helped us. But in addition to having we think the highest share of the Fortune 500 companies, we also have a couple of other drivers, one is that off-airport growth that’s very strong for us unlike our competitors, and that’s a big growth driver, And the second thing that’s very big for us is, because we have a global network and we have big corporate owned stores and locations in Europe, our inbound business, which is in all sectors, it’s inbound on both leisure and business, that business is a big chunk of our U.S. Rent-a-Car revenues, with up $700 million $800 million a year, an inbound is up significantly. So, people are traveling more inbound as well; from Europe into the U.S. and from U.S. to Europe and that piece is generating fairly large growth. And finally, Advantage, as you know, is up $29.6 million year-over-year so that new leisure brand is driving a lot of growth towards us as well. And these are all things that are new for Hertz that our competitors, arguably, don’t have some of those growth drivers that are helping us differentiate ourselves.

John Healy - Northcoast Research: And then lastly a question, Mark, kind of a bigger picture one as well. Obviously, there’s always been discussion that this industry would consolidate even further to three players over time. I was just hoping to get some color from you on why now and kind of what propelled the deal I guess to come to head at this point?

Mark P. Frissora - Chairman of the Board and CEO: I think we reported that – we started this round of discussions probably in November of last year, and it’s fair to say that those discussions evolved as the stock price and earnings evolved, right? So, we felt that it was a good opportunity for both companies to get together at this time when there’s been a lot of value creation on Dollar Thrifty’s side, and when we look at continued future value creation, it would be enhanced by partnering with Hertz, because we provide basically an awful lot of systems support and investment that’s already been made in our company that they would have to make. And then, of course, the synergies the two companies can combine because they are such a good fit in each airport, where our weaknesses on leisure is their strength. That combination really helps us be a better player in all segments of the leisure market, whether it's mid-range, the (Spartan Traveler) traveler or what we call the high end leisure market where Hertz’s classic brand plays best. So, it just really fits all of those and makes us feel good that now is the right time as the industry is returning. There is so much upside, as you know on the slide I presented on the peak to trough on all of our segments. I mean, there is just tremendous upside right now and what better time to do a merger when the industry conditions are becoming favorable and have been favorable for a little bit of time. So, we thought it was the right time given the marketplace conditions and given the fact that Dollar Thrifty’s journey, both companies could really benefit from having each other’s help and in achieving a lower cost position in the overall industry by partnering together.

Operator: (Sachin Shah), Capstone Global.

Sachin Shah - Capstone Global: Just to clarify some of the regulatory issues. So what regulatory approvals are needed to complete the deal?

Mark P. Frissora - Chairman of the Board and CEO: The FTC will review the deal for antitrust purposes. We will also undergo a similar review by Canadian authorities, will initiate that process as I mentioned earlier in mid-May. We cannot predict with any certainty how long it will take, but we would expect that this process would be concluded no later than the early part of Q4 and then we would move to closing at that point in time.

Sachin Shah - Capstone Global: So you expect the closing of the deal sometime in the fourth quarter of this year, calendar year?

Mark P. Frissora - Chairman of the Board and CEO: Yes, it could be sooner than that. It could be a little later. We think most likely somewhere in the fourth quarter. I think that's the best way to say it. Dealing with the FTC, it's a variable process depending on what the issues are, et cetera, but sometimes these processes go very quickly if they don't offer a review and we would hope that would happen, but if it doesn't happen and it's more longer, what they call review process, typically it's fair to say that could be five to six months, four to six months in that range.

Sachin Shah - Capstone Global: Four to six months to completion from now?

Mark P. Frissora - Chairman of the Board and CEO: Correct.

Sachin Shah - Capstone Global: Just one question about the synergies, you mentioned frequently on the call $180 million of synergies. You also mentioned that it could be slightly higher and then you also mentioned that there are significant revenues synergies. So I am just trying to understand as a numeric amount, what number we should be referencing, because it seems like $180 million is about 7.5% of approximately the deal value, it seems like that it could actually be in the $200 million if not more?

Mark P. Frissora - Chairman of the Board and CEO: No, I think the deal value and the synergies related to deal value are actually fairly high. I mean I studied all the deals over the last couple of years having synergies of $180 million on a deal value of $1.2 billion, as a percent of revenues, it's pretty high if you estimate as a percent of revenue.

Sachin Shah - Capstone Global: I am actually looking at enterprise value, so I am just trying to – it's already high I agree, I am in agreement with you, but it seems that you're understating the synergy amount, I’m just trying to understand quantitatively how much that is?

Mark P. Frissora - Chairman of the Board and CEO: We’re very consistent in the way we try to talk to investors and we always want to give investors the number that they can count on. So certainly when it comes to cost takeout and understanding that we have a core competency of that at Hertz now, that’s been developed over the last four years. We feel really good about our ability to be efficient. And together with the Dollar Thrifty teams we worked on these synergies and feel very confident in that number. If I go over that number, then confidence starts to (indiscernible), always be able to hit the number and over-deliver on it. So that’s why I said it’s conservative. In terms of revenue synergies, again those who are unknown, I wouldn’t want to give you those until we finally get a much better forecasting process in place after working with Dollar Thrifty and their franchisees around the world to see where the opportunity is there.

Sachin Shah - Capstone Global: Just one last question. The special dividends, is it expected to be paid before the deal is closed, any timing on the special dividend payout?

Elyse Douglas - EVP and CFO: It will be at the pretty much simultaneous with the close, right before it.

Operator: (JJ Berney), Citadel.

JJ Berney - Citadel: Given how attractive this deal is for Hertz and the auto rental industry in general, can you please tell us how much consideration was given to a transaction involving a larger component of stock, so that Dollar Thrifty shareholders may participate more fully in value created by this consolidation?

Mark P. Frissora - Chairman of the Board and CEO: It was determined basically off of our financing requirements right. So just like we had shareholders and we also had banks, we looked at the mix as being optimal for our credit profile and at the same time providing value and upside to future shareholders, as well. So we've got a appropriate mix in terms of discussions. I’ve given my best answer, I mean I – we can’t talk about confidential discussions that we had, whether it’d be at the Board level or otherwise. But we feel that this was the best fit given – best financing I guess that we can come up with and yet preserve some value for shareholders a $1.50 on the upside.

JJ Berney - Citadel: And the reason for not providing more equity capital, I can't imagine the banks would have been averse to that kind of structure, where it was done with the larger component of equity involved, particularly given how well the stocks, the deal was being received today. It looks like you're paying something along the lines of three times pro forma EBITDA for Dollar Thrifty, which seems like a complete steal.

Mark P. Frissora - Chairman of the Board and CEO: First of all, that is not true. I don’t even have a three number on any banker statements on either side.

JJ Berney - Citadel: Well, let's do it this way. If you take the midpoint of the guidance that Dollar Thrifty has provided, and we will get a sense of what their numbers are over the next few weeks, and you take a look at the $180 million, which is a number that you've put out in terms of operating synergies, and you look at the enterprise value of Dollar Thrifty, which I believe even on this transaction is about $1 billion in enterprise value. If you run the math and just do one number divided by the other, I think you come up with something that is in the low threes and those are using your numbers?

Mark P. Frissora - Chairman of the Board and CEO: If you want to go up the call with me, I totally disagree with you and I will take it off the call, okay?

JJ Berney - Citadel: Okay. And I’m more than happy to express my views down the road as well. Thank you.

Mark P. Frissora - Chairman of the Board and CEO: You can express your views all you want. I’m just saying, if you want to discuss the details of the evaluation of it, I’d happy to go offline. I don’t think -

JJ Berney - Citadel: I appreciate that. I'm just using the numbers you've given us and the Dollar Thrifty has given us. And so unless there is a change in what Dollar has said, I presumed these numbers – the numbers in the math that I have done is absolutely 100% correct.

Mark P. Frissora - Chairman of the Board and CEO: And my numbers are absolutely a 100% correct as well and I can't go over with you on the call right now.

JJ Berney - Citadel: Great. Okay.

Mark P. Frissora - Chairman of the Board and CEO: So I mean we can agree to disagree on it and I’ll use methodology that’s used by any banker or any one in business as well. So I’m not disputing that your numbers are accurate. I’m just saying that the math and how you do the math there’s a lot of devil in the details, right. So we need to understand what normalized EBITDA is for Dollar Thrifty. We need to understand what normalized EBITDA is for us, and we need to make sure that we’re all calculating the numbers the same way. So in terms of the value to both shareholders it’s excellent and the synergies are unique to these two companies, so I feel like we’ve generated a transaction that will be a win-win for both companies given what the industry is doing now and what the future holds for it. So it sounds like you’re upset about something, but I’d love to go offline with you and we’ll talk about it.

JJ Berney - Citadel: We own both so we’re actually we’re happy today. We just rather be happier.

Mark P. Frissora - Chairman of the Board and CEO: Okay. Let’s see what we can do to make you happy, okay.

Operator: Michael Millman, Millman Research.

Michael Millman - Millman Research: I guess starting off on the deal and then going to some other things. Could you talk about whether there are shareholder approval requirement sort of following up on last question.

Elyse Douglas - EVP and CFO: Yes. It does require their shareholder approval.

Michael Millman - Millman Research: Okay and it seems to me one of the biggest synergies is the ability to price the classic Hertz brand better. You didn’t discuss that at all. Could you give us some idea to what kind of synergies you might envision there over the next couple...?

Mark P. Frissora - Chairman of the Board and CEO: We didn’t put any pricing into the synergies. To me that’s not a synergy, that’s a marketplace condition. And I don’t talk about pricing on calls because of antitrust issues, right. So in general we think obviously industry consolidation is always good. Having said that, we think it makes it a more competitive universe with all the competitors out there given that we compare more favorably to other competitors. Every competitor out there, Michael, has a value brand. We for the first time bought a small one out of bankruptcy, and it’s really at the low end of leisure segment, which is a small piece of it. This allows us to compete in the full leisure segment now. For the first time it allows us to be competitive the marketplace. We’ve been uncompetitive, frankly, having only one brand, which was the Hertz brand. So we feel this allows us to give, you know to be more competitive with our competitors in the marketplace. It gives us that freedom that way. In terms of shareholder approval, yes, the dealers continue upon their shareholders to approve. We feel really good about that. There’s a lot of crossover between shareholders, about a 66%, 67% overlap in terms of their top shareholders and our top shareholders, so that’s a big overlap, and that’s also reasons why we feel pretty confident this will be approved.

Michael Millman - Millman Research: It would seem what you talked about was probably the largest potential, maybe synergy is not a good word for it, I’m not sure if you’re agreeing with that or not?

Elyse Douglas - EVP and CFO: Well, I think what we said, Michael, was that these are just cost saves is all we’re looking at in this particular…

Michael Millman - Millman Research: And regarding current business, could you talk about the U.S. fleet year-over-year as of April whatever date today is?

Mark P. Frissora - Chairman of the Board and CEO: Current fleet levels you mean?

Michael Millman - Millman Research: Fleet levels please?

Mark P. Frissora - Chairman of the Board and CEO: Yeah, I think our fleet roughly is up – how much? – little bit over 10% right now, and obviously we’re seeing demand levels higher than that.

Scott Sider - EVP and President, Vehicle Rental and Leasing, The Americas: We’re actually pretty tight fleeted. If you were to talk to our regional vice presidents in the U.S., they’re all screaming for more fleet right now and we’re not giving it to them right now. So we’re being tightly fleeted. So we want to drive a tight fleet situation to make sure that there’s a opportunity at least to improve pricing.

Michael Millman - Millman Research: And regarding your cost, could you talk about why – I guess you called reconciliation items is actually up year-over-year?

Mark P. Frissora - Chairman of the Board and CEO: Mike, what is the ancillary revenues?

Michael Millman - Millman Research: No reconciliation items. I think what you used to call corporate expense?

Mark P. Frissora - Chairman of the Board and CEO: I don’t know. I’m don’t have that data here in front of me. Are you looking at one of the attachments that we gave on the…?

Michael Millman - Millman Research: I’m looking at your income statement.

Mark P. Frissora - Chairman of the Board and CEO: Yes. We’ll take that question offline, Michael. Happy to take your call after this one. I don’t have a ready answer for you but would be happy to get into it. Overall our costs are definitely down, so we feel pretty good about our ability to manage costs right now.

Michael Millman - Millman Research: And regarding U.S. fleet, it looks like in the first quarter the OEMs sold about twice as much into the fleets as the fleet sold. Is this something you’re seeing continuing. Is this a concern? Was this Toyota?

Mark P. Frissora - Chairman of the Board and CEO: You said it sounds like the OEMs are doing what again? I’m not sure I heard...

Michael Millman - Millman Research: It looked in the first quarter the OEMs sold about twice as many cars to the rental fleet as the daily rental fleet sold into the residual markets.

Mark P. Frissora - Chairman of the Board and CEO: Anything you want to comment on, John, on fleet. I have our fleet Executive Vice President here, but I don’t know…

John A. Thomas - EVP, Supply Chain Management: I think what you’re seeing in the market is just your normal seasonal fleeting up for the summer season, so you see more fleets relatively speaking increase as Q1 going into the summer season. And then as you start to come out of the selling season, you’ll see more aggressive de-fleeting, just a normal seasonal pattern.

Operator: Bob McAdoo, Avondale Partners.

Bob McAdoo - Avondale Partners: Most of my questions have been answered. Just a quick clarification, when you talk about the synergies of the deal and you talk about consolidating the fleet and what goes on there, the portion of it that you’re talking about there, is that in terms of your processes and buying and selling and remarketing or whatever, or are you including in that the value of being able to cross utilize the fleet and then maybe actually have less cars on the fleet because you can use their cars on the weekend?

Mark P. Frissora - Chairman of the Board and CEO: All of the above. You mentioned…

Bob McAdoo - Avondale Partners: It is the consolidated…

Mark P. Frissora - Chairman of the Board and CEO: Each one of those is a distinct, what you mentioned are all cost reduction opportunities we’ve identified, every one of those.

Bob McAdoo - Avondale Partners: And that’s part of that number that you gave us.

Mark P. Frissora - Chairman of the Board and CEO: That’s correct.

Operator: (Jordan Hymowitz), Philadelphia Financials.

Jordan Hymowitz - Philadelphia Financials: First of all, thanks for all the disclosure on the pricing by the various divisions. It makes it much more helpful to analyze. I really appreciate that.

Mark P. Frissora - Chairman of the Board and CEO: You’re welcome.

Jordan Hymowitz - Philadelphia Financials: Question, on the airport market share on-airport. Combined, you guys are at what about, 42, 43 at this point?

Mark P. Frissora - Chairman of the Board and CEO: No. We have about 26% share of airport market share.

Jordan Hymowitz - Philadelphia Financials: 26 (indiscernible), and Dollar Thrifty is what, 12?

Mark P. Frissora - Chairman of the Board and CEO: Dollar Thrifty is around 12, actually it’s 11.38.

Jordan Hymowitz - Philadelphia Financials: That’s 38. That’s combined, but is there is some limit in any region like, can you be 50% in one city or what’s the upper end you think you could be in any one city before you have to start to vest? If 38 is the blended, what’s the high end that you’re allowed to be do you think?

Mark P. Frissora - Chairman of the Board and CEO: Various vagaries of HSR and how the FTC will determine what it is that needs to be carved out if anything. It will probably most likely be determined by shares over 40% or 50% and in addition to that it would be of the total market. It doesn’t necessarily have to be on-airport. What they would look at on-airport is not only share but they would look at pricing and they would determine how many competitors would be on airport. If there’s five competitors on airport, right now most of the major airports that are there today have anywhere from eight to nine competitors. In addition that eight to nine competitors in most of those major airports, the pricing is very low. For example, take Orlando, take LAX, take Chicago, very low pricing already in place at those major airports. So, the likelihood is, if there is going to be any kind of a carveout of airports, it would be a very small airport, and it would be with pricing that’s very high. So that’s just typically it’s a multi-tier approach they use in evaluating that. And that multi-tier approach would be used here obviously. So, we feel confident that we‘ve done all the analysis ourselves. We’ve hired lawyers that actually were former FTC people, and feel good that we’ll get this deal done. And that's not an issue. It's just an issue, there maybe a few airports that maybe carved out, may be not depending on how they look at the share.

Jordan Hymowitz - Philadelphia Financials: What were your gains on off-lease vehicles in the quarter?

Mark P. Frissora - Chairman of the Board and CEO: What were gains? I don’t know if I have that number. Do you guys have a number on gains for the quarter?

Elyse Douglas - EVP and CFO: I do. It was $2.5 million was actually a slight loss. And as you know, we adjust the depreciation to really get as close to zero as we possibly can in the quarter and that's really across the entire rent-a-car fleet.

Jordan Hymowitz - Philadelphia Financials: Final question is in the month of April, you disclosed that your fleet remained pretty tight. One of the sell-side analyst put out a note a day or two ago that said pricing was weak in April. Can you say what pricing in the month of April was specifically in the U.S.?

Mark P. Frissora - Chairman of the Board and CEO: No, we haven’t been forecasting that. No, I’m not going to get into that pricing discussion. My attorney has advised me not to. So all right.

Jordan Hymowitz - Philadelphia Financials: Congratulations and again much appreciated the additional disclosure, makes it much easier to figure things out.

Mark P. Frissora - Chairman of the Board and CEO: Operator, I think it’s time for us to end the call. I want to thank everyone for listening and appreciate your attention and your support throughout this process.

Operator: And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.