The equipment rental industry serves a broad range of customers from small local contractors to larg

I m going to try to start doing a weekly post digging into the 10-K of a stock that has been active adventure alaska cruise private vacation on Stocktwits over the past week.  I ll plan on choosing one stock from the social signals list , and will generally try to stay away from companies with less than 500m market cap.
Hertz may charge on a hourly (in select markets), daily, weekend, weekly, monthly or multi‑month basis, with rental charges computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge In addition to car rentals and licensee fees, we generate revenues from reimbursements by customers of airport concession adventure alaska cruise private vacation fees and vehicle licensing costs, fueling charges, and charges for ancillary customer products and services
manufacturers agree to repurchase cars at a specified price or guarantee the depreciation rate on the cars during established repurchase or auction periods  In 2012 30% of car purchases are made under repurchase programs, fell from 48% in 2011.  Decrease driven by Dollar-Thrifty acquisition. Non-Program cars are cheaper to acquire, but opportunity for ancillary revenue when disposed. 178,300 non-program cars were disposed of in 2012.
Competitors: Avis Budget Group, Enterprise, National, Alamo.  Hertz is largest in US.  International competitors: ABG, Europcar, which operates national and alamo brands.  Enterprise also has Euro presence and local competitor Sixt in Germany.
Hertz Car Rental completed 29m transactions worldwide in 2012. 148.8m transaction days = 5.1 days/transaction. adventure alaska cruise private vacation $40.01 average rental rate per transaction day. 665,000 average fleet size. $1 B adjusted operating income on $10.7 B fleet book value (~$16,105 per vehicle). Capex on revenue earning equipment was $8.9 B.
HERC rents a broad range of earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, generators, pumps, small tools, compaction equipment and construction‑related trucks. HERC also derives revenues adventure alaska cruise private vacation from the sale of new equipment and consumables as well as through its Hertz Entertainment adventure alaska cruise private vacation Services division, which rents lighting and related aerial products used primarily in the U.S. entertainment industry.
The equipment rental industry serves a broad range of customers from small local contractors to large industrial national accounts and encompasses a wide range of rental equipment from small tools to heavy earthmoving equipment
Long term trend toward renting construction equipment: 50% of all equipment sold into the U.S. construction industry is to rental companies, compared to 5% in 1993.  As much as 50% of the equipment used in the construction industry could be rental equipment by 2015.
HERC s customers consist predominantly of commercial accounts adventure alaska cruise private vacation and represent a wide variety of industries, such as construction, petrochemical, automobile manufacturing, railroad, adventure alaska cruise private vacation power generation, shipbuilding and entertainment and special events.
In the United adventure alaska cruise private vacation States and Canada, the other top national‑scale industry participants are United Rentals, Inc., or “URI,” Sunbelt Rentals, Home Depot Rentals and Aggreko North America. adventure alaska cruise private vacation A number of individual Caterpillar, Inc., or “CAT,” dealers also participate in the equipment rental market in the United States, Canada, France and Spain.
Insurance implications and third party liability associated with renting equipment. Business is highly seasonal. Like kind exchange taxation means that if fleet shrinks, company has significant tax liability. Manufacturer recalls. Reliance on asset based borrowing.
Depreciation rates are reviewed adventure alaska cruise private vacation on a quarterly basis based on management s ongoing assessment of present and estimated future market conditions, their effect on residual values at the time of disposal and the estimated holding periods.
If you assume 85% of EV is car rental business (equal to revenue share) means enterprise value of the car business is $21.67 adventure alaska cruise private vacation B.  Global fleet of 665k cars implies $33 k Enterprise value per vehicle in fleet vs. 13k book value
665k cars rented 365 days per year yield 242.7 m potential transaction days.  148.8 m transaction days in 2013 implies 61% fleet utilization.  Stated otherwise, each vehicle was rented about 223 days per year.  100% utilization at $40 in rental revenue per transaction day would get to $9.7 B in rental revenue vs. $5.9 B in 2012.
$7.6 B in car rental revenue in $37 B market opportunity implies 20% market share vs four named competitors.  If fleet market share is also 20%, then the global rental fleet would be about 3.3m vehicles.
$24 B US market opportunity at $51 total revenue per transaction day implies 470m transaction days up for grabs.  At 5 days per transaction, implies 94m transactions made in the US per year, which is about 3.3 per capita.
12.2% operating margin on $51 in rental revenue per transaction day implies adventure alaska cruise private vacation $6.22 in operating adventure alaska cruise private vacation income per transaction day.  $9.05 B market cap (85% of $10.65B total market cap) needs 1.455B transaction days or 291 m transactions to break even on an operating basis, un-discounted for time value.  Hertz car rental completed 29m transactions in 2012.
If it holds a car for 18 months, $51 total rev/day, 61% utilization yields 333 transaction days, 17032 in revenue, at 40% EBITDA margin is $6813 per car. If car depreciates by 25% in first 18 months, $27,252 original purchase price is break-even. 10% ROIC (ex-time value) adventure alaska cruise private vacation at $19,500 purchase price per car.
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