Benzinga - by Shivani Kumaresan, Benzinga Staff Writer.
Hertz Global Holdings, Inc (NASDAQ: HTZ) has decided to sell approximately 20,000 electric vehicles (EVs) from its U.S. fleet or about one-third of the global EV fleet.
The divestiture, which was initiated in December 2023 and is expected to take place over the course of 2024, will cover multiple makes and models.
Hertz expects this action to better balance supply against the expected demand of EVs and eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs.
However, the electric vehicles that are marked for sale will remain eligible for rental within its fleet during the sales process.
Hertz will reinvest a portion of the proceeds from the sale of EVs into purchasing internal combustion engine (ICE) vehicles to meet customer demand.
The company anticipates an additional $245 million in depreciation expenses from this proposed sale in the fourth quarter of 2023.
The non-cash charge represents the write down of the EVs’ carrying values as of December 31, 2023, to their fair values, less related expenses associated with the disposition of the vehicles.
The company does not expect the EV fleet reduction and the consequent addition of ICE vehicles to have a material impact on its asset-backed securitization facilities.
The company expects the fleet reduction and reinvestment to improve Adjusted Corporate EBITDA across 2024 and in 2025. It expects the incremental free cash flow generation will be about $250 million - $300 million in the aggregate over 2024 and 2025.
Hertz expects to report revenue for Q4 of 2023 in the range of $2.10 billion-$2.20 billion (consensus $2.20 billion).
The company will report financial results for the fourth quarter ended December 31, 2023, on February 6, 2024.
Price Action: HTZ shares are trading lower by 5.19% at $8.86 on the last check Thursday.
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