EFTA00301312.pdf

J.P.Morgan North America Equity Research 13 May 2014 • Hertz Global Holdings, Inc. Delays 1Q14 10Q; Affirms FY14 Guidance - ALERT As expected previously expected, HTZ filed for an extension with the SEC to obtain additional time to file its 1Q14 Form 10-Q, and resulting earnings release conference call. As HTZ detailed on May 6th, the delay in reporting earnings and filing its 10-Q is a result of additional work required to validate its conclusions related to the capitalization and timing of depreciation for certain non-fleet expenditures. • Financial impact is fairly light and centered on FY11 results. The silver lining in tonight's release is that the "errors" that pertain to charges for certain non-fleet related assets, allowances for doubtful accounts in Brazil and other itcms are fairly small in magnitude (4% variance to reported pre-tax income and net income) and took place in 2011. HTZ does not believe that adjustments to its FY12 and FY13 periods are material and does not expect to restate financial statements for those periods. Key dates to look for — HTZ now needs to file its 10Q by Monday 5/19, and in conjunction, intends to announce its IQ14 results. HTZ needs to give investors 48 hours advance notice for its earnings release/call date. HTZ affirmed its 2014 outlook tonight. The guidance affirmation is likely to give HTZ bulls a sigh of relief following the extreme level of frustration the company has given investors (with the current delay and the delayed 4Q13 earnings release and 10K HTZ is looking for revenues to be in the $11.4- 11.7B range, which compares to our $11.513B estimate, and EBITDA to be $2.06-2.42B, which compares to our $2.308B. Pre-tax income is expected to be in the range of $1.21-1.43B versus our $1.343B estimate. EPS for the FY14 is in the range of $1.70.2.00, versus our $1.88 estimate and the Street's $1.88 (range of $1.76.2.08). Overweight HTZ, HTZ US Price: $28.37 13 May 2014 Leisure Kevin Milota AC Bloomberg JPMA MILOTA <GO> J.P. Morgan Securities LLC See page 2 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com EFTA00301312 Kevin Milota North America Equity Research 13 May 2014 J.P.Morgan Analyst Certification: The research analyst(s) denoted by an "AC" on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an "AC" on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that (I) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures • Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Hertz Global Holdings, Inc. within the past 12 months. • Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Hertz Global Holdings, Inc.. • Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Hertz Global Holdings, Inc.. • Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-relate& Hertz Global Holdings, Inc.. • Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Hertz Global Holdings, Inc.. • Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Hertz Global Holdings, Inc.. • Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Hertz Global Holdings, Inc.. • Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Hertz Global Holdings, Inc.. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan- covered com '‘N b visitin htt :11 mm.comiresearchidisclosures calling 1-800-477-G406, or e-mailing with your request. J.P. Morgan's Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800477-0406 or e-mail Hertz Global Holdings. Inc. (HTZ, HTZ US) Price Chart Date Rating Share Price Price Target (9) (5) IN 14NR I 26-Dec-06 N 17.05 Pricia(S) 02-Mar-07 11-Aug-08 12 Aug 09 OW N N 20.48 8.94 10.80 11.00 36 N IN NUB C•W OW $3.1 24 - 08-Nov-10 N 12.24 15.00 08-Dec-10 N 13.31 16.00 07-Apr-11 N 16.10 19.00 12 - 09-May-11 NR 16.68 -- 09-Oct-13 OW 22.14 29.00 0 05-Nov-13 31 Dec-13 OW OW 21.67 25.91 26.00 35.00 Nov May Nov May Nov Ma 19-Mar-14 OW 27.07 33.00 06 08 09 ii 12 14 Sourco. Bloomberg and t Wigan. rice data **Nod lot stook sots and d/..409nds. Brook in tomago Aug It 20011. Aug 12. 2009. 2 EFTA00301313 Kevin Mil North America Equity Research 13 May 201e J.P.Morgan The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW - Overweight, N- Neutral, UW - Underweight, NR - Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock's expected total return is compared to the expected total return of a benchmark country market index, not to those analysts' coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst's coverage universe can be found on J.P. Morgan's research website, www.jpmorganmarkets.com. Coverage Universe: Milota, Kevin: Avis Budget Group, Inc. (CAR), Carnival Corporation (CCL), Harley-Davidson (HOG), Hertz Global Holdings, Inc. (FITZ), Norwegian Cruise Line (NCLH), Royal Caribbean Cruises (RCL), Ryman Hospitality Properties (RHP) J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014 Overweight Neutral Underweight (buy) (hold) (sell) J.P. 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