Hertz Global Holdings (NYSE:HTZ) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Fleet Costs Details
Brian Johnson – Barclays Capital: Just want to drill down with two questions on fleet costs. If we look at the difference between your prior guide of minus 4% to 5% and your new guide of down 2% to 3%, what portion of that headwind is relative to where you were earlier? Is DTG related, auction related perhaps slower ramp of retail lots? Then the second question is on housekeeping. Can you remind us of the gains on sale in 3Q and 4Q of 2012, of last year, so we can get a finer, sharper pencil in modeling year-over-year fleet costs in those quarters?
Mark P. Frissora – Chairman and CEO: Well, on the fleet cost issue, going from 4% to 5% to 2% to 3%, I think the only issue is that the residuals that we saw – the drop if you will, that we saw in kind of the April-May time period was more than we thought it would be. However, the good news is the residuals on the, what we call, Retail side, have pretty much stayed flat. So we’ve been accelerating our plans at Retail to obviously take advantage of that strong market. The year-over-year hurdle for us in the second quarter is fairly large. I think that we made – someone tell me here in the room, what did we make last year in the…
Elyse Douglas – EVP and CFO: $44 million.
Mark P. Frissora – Chairman and CEO: We made $44 million in car sale gains last year in the second quarter. This year, we generated, how many in losses total, $11 million?
Elyse Douglas – EVP and CFO: $10 million…
Mark P. Frissora – Chairman and CEO: Roughly about $10 million. So it’s about a $54 million year-over-year hurdle to overcome. Obviously, we overcame it and still had significant, what I call, significant earnings improvement year-over-year. That’s the toughest comp for the whole year, Brian. We’re not going to have anything like that in the third or fourth quarter. So we just thought it was prudent for us to take the net depreciation per unit to 2% to 3% versus the 4% to 5% that we had based on what we saw was a drop. It was a little bit more than we anticipated in the second quarter. So, that’s why we took it down just to be prudent. Next question?
Brian Johnson – Barclays Capital: You don’t benefit from the better pricing in rental residual?
Mark P. Frissora – Chairman and CEO: Please speak up a little bit, Brian. I’m having trouble hearing you.
Brian Johnson – Barclays Capital: Yeah. Do you benefit at all? It looks like the Manheim numbers continue to diverge between rental consignments and overall market. Isn’t that providing somewhat an offset to the headline Manheim?
Mark P. Frissora – Chairman and CEO: No. Just not I mean not for us. No, I mean again, we are not. Again, I don’t think everyone’s like worry about this 4% to 5%, 2% to 3%. It’s like – it’s all in a rounding here. I mean we could come in at 4% to 5%. I’m just – we took it down just because we saw them being a little weaker, but they’ve actually stabilized since then. I’m not – again, it’s something that we are not concerned about, but we thought it was prudent to bring it down given that there was a little weaker. We’ve seen signs that it has stabilized for the Cars that we sell. So, in order to offset anything, we decided to sell more Cars at retail in the second half of the year. So, we did accelerate some plans, but again, we feel – overall, we feel pretty good about the residual market.
Michael Millman – Millman Research: You’ve mentioned that you expect volumes to be softer than expected you gave some reasons. Related to that, are you expecting to reduce your fleet that you see the industry reducing fleet in line with that? My other question relates to what extent is there any prohibition against you buying a discount brand or making the capital expenditure of some other brand in the U.S.?
Mark P. Frissora – Chairman and CEO: So, in terms of the first question around the fleet, we certainly are tiding our fleet and always do so if see any kind of a volume softening in the environment. So yes, we’re definitely tightening our fleet and always try to do so if we feel there’s any softness in volume. In terms of the other question, I can’t comment on any kind of acquisitions. It’s just pretty much against our company policy to do so.
Michael Millman – Millman Research: Well, the question wasn’t whether or not you’re making it. It is, is there any prohibition, an FTC-type prohibition, for example?
Mark P. Frissora – Chairman and CEO: I think the FTC prohibition on making any other buys, there is none. In other words, we don’t have any prohibition on making other acquisitions. But if we were to make an acquisition over $50 million, I think that’s the threshold that the FTC has and roughly, roughly, that doesn’t require FTC review. So, acquisitions over $50 million do require FTC review for the most part. So, but we have no prohibition after making the Dollar Thrifty acquisition at all.
Michael Millman – Millman Research: And how much you are tightening the fleet?
Mark P. Frissora – Chairman and CEO: I am not going to talk about operating statistics with you, Michael. So, I mean, we tighten the fleet based on where we see by market demand. So, the issue is that the overall retail environment right now and leisure environment for consumers has softened. That’s pretty consistent with everything you will see and hear in the retail environment. So, I think there’s a lot of retail statistics to support the notion that consumers are a little tighter right now and the sequester impact has been fairly significant in the commercial sector. Anything that’s related to the government, as well as the government business itself, has been weaker. Those accounts that are tied to the government are traveling a lot less, and so overall, that’s – those are the primary drivers. It’s more of an economy; it has nothing to do with Hertz. We’re not losing share or anything. So it’s the overall economic environment that we’re seeing right now.